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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.
Operator: Good day, and thank you for standing by. Welcome to the Jazz Pharmaceuticals Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, John Bluth, Head of Investor Relations. Please go ahead. John Bluth: Thank you, and good afternoon, everyone. Today, Jazz Pharmaceuticals reported its Fourth Quarter and Full Year 2025 Financial Results. The slide presentation accompanying this webcast is available on the Investors section of our website, along with the press release and annual report on Form 10-K for the fiscal year ended December 31, 2025. On the call today are Renee Gala, President and Chief Executive Officer; Sam Pearce, Chief Commercial Officer; Rob Iannone, Global Head of R&D and Chief Medical Officer; and Phil Johnson, Chief Financial Officer. On Slide 2, I'd like to remind you that today's webcast includes forward-looking statements, such as those related to our future financial and operating results, growth potential and anticipated development, regulatory and commercial milestones which involve risks and uncertainties that could cause actual events, performance and results to differ materially from those contained in these forward-looking statements. We encourage you to review these risks and uncertainties described in today's press release and under the caption of Risk Factors in our annual report on Form 10-K for the fiscal year ended December 31, 2025, and our subsequent filings with the SEC. We undertake no duty or obligation to update our forward-looking statements. As noted on Slide 3, we will discuss non-GAAP financial measures on this webcast. Descriptions of these non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures are included in today's press release and the slide presentation available on the Investors section of our website. I'll now turn the call over to Renee. Renée Galá: Thanks, John. Good afternoon, everyone, and thank you for joining us to discuss Jazz's Fourth Quarter and Full Year 2025 results, as well as our outlook for 2026. I'll begin on Slide 5. Jazz had an exceptional year in 2025, representing our 21st consecutive year of topline revenue growth and underscoring our commitment to operational excellence as we deliver meaningful innovation for patients. We achieved record total revenue in 2025 of $4.3 billion. This included fourth quarter revenue of $1.2 billion, reflecting 10% year-over-year growth and our highest revenue quarter ever. We expanded our portfolio through multiple approvals and launches. Following our acquisition of Chimerix in April, we rapidly received approval of and launched Modeyso, bringing this new therapy to patients who previously had no approved drug options. From its launch in August, Modeyso generated $48 million in 2025 revenue. In October, we received approval of Zepzelca in combination with atezolizumab in the first-line maintenance setting following the strong overall survival data presented at ASCO in June. Our most significant R&D progress came with the presentation of practice-changing data from our first randomized Phase III clinical trial of zanidatamab supporting the opportunity for Zani to become the HER2-targeted agent of choice across a number of tumor types. Zanidatamab in combination with atezolizumab in chemotherapy demonstrated more than 2 years of median overall survival in first-line HER2-positive metastatic GEA, an unprecedented survival benefit for these patients whose 5-year survival rates remain below 10%. In addition to our outstanding execution on the commercial and regulatory front, we resolved nearly all major litigation for the company. We settled outstanding ANDA litigation for Epidiolex, increasing the runway into the very late 2030s, and we resolved the majority of litigation in our rare sleep franchise. These achievements are all underpinned by our strong financial position and performance, which Phil will cover later in the call. As we look ahead to the next decade and beyond, we are sharpening our strategic focus on rare disease. Our rare disease strategy is centered on strengthening our current franchises and expanding into new areas of rare disease, supported by multiple dynamics that make this space attractive for Jazz as outlined on Slide 6. Built on the capabilities we have developed over many years and our long-standing commitment to delivering life-changing medicines we believe Jazz is particularly well suited to have a meaningful impact for patients with rare disease. We look forward to announcing future pipeline advancements and new business development transactions. Our proven track record in corporate development, as outlined on Slide 7 includes a number of successful value-creating transactions in rare disease. For example, we acquired zanidatamab through a licensing agreement with a modest upfront payment. Since then, we've made significant progress with an approval in second-line BTC, practice-changing data in GEA and what is now an extensive development program across breast and other HER2-expressing cancers. With the Chimerix acquisition, in addition to securing Modeyso, we generated significant financial value by recognizing a deferred tax asset that will reduce our future cash taxes by over $200 million. And as announced in January, we sold our priority review voucher for $200 million in gross proceeds, half of which will flow to Jazz. In fact, each of the deals outlined here has added new areas of strength and expertise, which we intend to leverage to continue building a more valuable company. 2025 was an outstanding year for Jazz. One that we're proud of and one that provides us with immense confidence in the future. We are building upon this momentum in 2026 as we prepare for the potential launch of Zanidatamab in GEA and sustain the launch execution for Modeyso and Zepzelca. We also remain focused on reinforcing the differentiated profiles of Epidiolex and Xywav as the leading branded treatments for epilepsy and narcolepsy, respectively. In parallel, we continue to advance our R&D pipeline and pursue a business development strategy that is aligned with our rare disease focus, aiming to deliver durable growth and long-term value creation for patients and shareholders. I'll now turn the call over to Sam to discuss our commercial performance. Samantha Pearce: Thanks, Renee. I'm pleased to share the strong commercial execution we delivered across our diversified portfolio in 2025. Starting on Slide 9 with our rare sleep therapeutic area, which includes Xywav, Xyrem and High-Sodium Oxybate Authorized Generic royalties, we delivered more than $2 billion in total revenue in 2025, including $559 million in the fourth quarter. Xywav revenue grew 12% to approximately $1.7 billion for the year. In the fourth quarter, Xywav generated $465 million representing 16% growth compared to the same period in 2024. Our sleep team delivered exceptional performance in 2025, and we remain committed to providing a safer, low-sodium option for patients with Narcolepsy and IH? As estimated by the FDA, Xywav is superior for High-Sodium Oxybate based on the greater safety provided by a low sodium medicine. These benefits continue to resonate with physicians and patients, driving approximately 500 net patient adds in the fourth quarter and more than 2,000 net patient adds in 2025, including a 34% increase in net active IH patients. Xywav remains the #1 branded treatment for Narcolepsy and the only FDA-approved treatment for IH. Field execution continues to be supported by our disease awareness digital campaigns across both Narcolepsy and IH. These efforts are increasing awareness of these distinct disease states, the availability of Xywav and encouraging patients to engage in treatment discussions with their health care providers. We enter 2026 in a position of strength with more than 16,000 patients taking Xywav. Two generic versions of High-Sodium Xyrem are entering the market and are expected to negatively impact High-Sodium Xyrem revenues. There is also a modest step down in the royalty base from 2025 to 2026 with the Hikma authorized generic or AG with significant economics still flowing to Jazz. Given that Xywav is not AG rated to High-Sodium Oxybate, we do not anticipate a material impact on low-sodium Xywav revenue in the first half of 2026. Whilst we expect the competitive sleep landscape will evolve in the second half of the year, it's important to note in an increasingly competitive environment, Xywav remains clearly differentiated offering a safer, low-sodium profile and continues to be the only FDA-approved treatment for IH. As a separate and unique indications to Xywav, we see the most opportunity for patient growth coming from IH. Moving to Slide 10 and Epidiolex. Epidiolex reached a significant milestone in 2025, achieving blockbuster status, $1.1 billion in revenue, up 9% year-over-year with strong underlying demand, driving 7% volume growth in 2025. Fourth quarter 2025 revenue was $287 million, representing 4% growth compared to the fourth quarter of 2024. I'll note that year-on-year growth was negatively impacted by higher-than-normal inventory levels at the end of fourth quarter '24. Looking ahead, we see our greatest growth opportunity in the adult patient population, particularly through expanded reaching long-term care settings. In addition, our Navigator program, continues to meaningfully improve patient persistency, and we're focused on increasing utilization of this resource in 2026. Given the long runway for Epidiolex, we will continue to invest in additional development opportunities, including new formulations with a clear focus on driving growth in adult patients. We believe Epidiolex is well positioned to remain an important antiseizure medicine for patients over the long term. Moving to our Rare Oncology portfolio. I'll start with Ziihera on Slide 11. Ziihera is a highly differentiated HER2-targeted therapy that represents a key pillar of Jazz's future growth. We are focused on maximizing Ziihera's potential across HER2-positive cancers, supported by the strong Phase III Horizon GEA results, which exceeded existing standards of care. Beyond GEA, zanidatamab had demonstrated an encouraging activity across additional [ HER2-breast ] tumor positioning it as a meaningful multi-indication commercial opportunity. Our largest near-term opportunity is in first-line metastatic GEA, where we have the potential to launch zanidatamab in this indication in the second half of 2026. Awareness and experience in Ziihera continue to build particularly across academic centers and large community networks with additional opportunity to expand familiarity as we move into GEA and other tumor fronts. From an access standpoint, Ziihera benefits from an established permanent J-code through its FDA approval in second-line HER2-positive Biliary Tract Cancers, simplifying reimbursement and reducing administrative burden. This is complemented by our comprehensive Jazz care support services, along with flexible ordering and fulfillment options. Our existing commercial footprint, capabilities and experienced teams position us well to execute effectively in GEA and to support broader development across additional HER2-expressing achievements. Turning to Slide 12 and Modeyso. Product launched in August to the end of 2025, Modeyso generated $48 million in revenue. This strong early performance reflects the significant unmet need, high awareness driven by advocacy groups and the value physician see for patients with H3K27 mutant diffuse midline glioma. Early uptake has been driven by new patient start, largely within academic centers of excellence. As the launch progresses, we are focused on expanding use in the community setting and gaining further insights into real-world treatment patterns, including duration of treatment. Based on what we see today, we believe Modeyso recommends a compelling [ pre-serve ] opportunity of greater than $500 million in the U.S. In 2025, more than 360 patients received Modeyso, offering new hope for patients and their families facing this devastating disease which has a median survival of approximately one year from diagnosis and less than 6 months following progression from frontline radiotherapy. The launch is supported by highly experienced uro-oncology focused filed sales, medical and access teams appropriately tied to deliver targeted engagement to both personal and nonpersonal channels. In addition, our exclusive distribution partnership with Onco360, provides robust patient-centric support services, and we are encouraged by strong payer coverage and continued positive launch for Modeyso. Moving to Slide 13 and Zepzelca. In October, we received FDA approval for the combination of Zepzelca and Tecentriq, expanding Zepzelca into the first-line maintenance setting for extensive stage small cell lung cancer. This approval broadens Zepzelca's addressable market and represents an important milestone for the brand. In 2025, Zepzelca generated $307 million in revenue. In the fourth quarter, revenue was approximately $90 million, representing a 15% year-over-year growth compared to the fourth quarter '24. We believe the growth in the fourth quarter was primarily driven by initial demand in the front-line segment. Given the strength of the clinical data and the opportunity to improve outcomes for patients with extensive stage small cell lung cancer, we are prioritizing our commercial efforts on the first-line maintenance setting going forward. As we look to 2026, we expect a shift in utilization with declining second line [ move ] and increased adoption in the first-line maintenance setting. I'll now turn the call over to Rob to review the development program that is underway to zanidatamab and provide an update on our pipeline. Rob? Robert Iannone: Thank you, Sam. 2025 was a transformative year across our R&D pipeline, and we look to build on this momentum in 2026. Starting with the practice-changing data we presented at ASCO GI on Slide 15. The zanidatamab plus atezolizumab and chemotherapy arm demonstrated a clinically meaningful and statistically significant improvement in OS with more than 7 months improvement and a 28% reduction in the risk of death versus the trastuzumab control arm. The benefit was observed in PD-L1 positive and PD-L1 negative patient subgroups. Zanidatamab plus chemotherapy showed a clinically meaningful survival benefit with the median OS of over 2 years with a strong trend to our statistical significance at the time of this first interim analysis for OS. An additional planned interim OS analysis for this comparison is currently expected mid this year. For PFS, there was a clinically meaningful and statistically significant benefit in the zani plus chemo arm compared to the control arm as represented by a greater than 4-month median difference. We are moving quickly to bring zanidatamab to HER2-positive first-line metastatic GEA patients. As we previously noted, we submitted the Horizon GEA data to NCCN for inclusion in the oncology guidelines. On the regulatory front, we expect to complete the submission for our supplemental biologics license application for zanidatamab under real-time oncology review in the first quarter of this year. I'm also pleased to share that the FDA has granted breakthrough designation for zanidatamab in GEA. We expect these designations will allow us an even closer interaction with FDA and potentially greater speed to approval. Based on this, there is the potential to launch zanidatamab in GEA in the second half of this year. Our data firmly positions zanidatamab as the HER2-targeted agent of choice in first-line GEA replacing trastuzumab as the standard of care, offering unprecedented durability and survival benefits. We believe zanidatamab's role as the new standard of care will extend across multiple tumor types. And on Slide 16, you can see the robust development program that is underway for zanidatamab, which we believe has been meaningfully derisked by the strength of the GEA data. The next pivotal Phase III trial for zanidatamab is in metastatic breast cancer patients who have progressed on or are intolerant to in HER2. The treatment landscape is evolving as we anticipated, within HER2 moving into frontline metastatic breast cancer, laying the groundwork for zanidatamab potential move into the second-line plus metastatic breast cancer setting. Our EmpowHER trial represents the first clinical trial to evaluate a HER2-targeted agent after treatment within HER2. Based on early data generated to date, zanidatamab has shown clinical activity after trastuzumab-based regimens, including HER2, which is an antibody drug conjugate of the monoclonal antibody trastuzumab. We believe zanidatamab will be able to fill an unmet need in the breast cancer space and believe the compelling first-line GEA data helped to derisk the ongoing metastatic breast cancer trial. We are incredibly excited about this opportunity in breast cancer, and we are also hearing similar excitement from physicians and sites that continue to enroll patients to this trial. We expect to complete enrollment in the EmpowHER trial in the first half of 2027 with top line data anticipated in late 2027 or early 2028. As we continue to evaluate the potential for zanidatamab to be used in multiple HER2-expressing solid tumors, we're pursuing collaborations with partners to combine zani with novel therapies. For example, a Phase I trial in combination with Boehringer Ingelheim's zongertinib was recently initiated to explore the combination in metastatic HER2-positive breast cancer, along with other potential tumor types. Other earlier-stage trials continue to progress across new indications, including a potentially registrational PAN-tumor basket trial and a neoadjuvant, adjuvant breast cancer trial. We're also exploring other areas like non-small cell lung cancer and colorectal cancer. We have great confidence in zanidatamab and intend to fully maximize the value it may offer to HER2-positive cancer patients. Beyond zanidatamab, we have a number of promising development opportunities across our diversified pipeline, which are outlined on Slide 17. We have strengthened our early-stage pipeline with two recently initiated clinical trials. As we refine our strategy to focus on rare disease, in areas where we have deep expertise, we will continue to build on our research and early development capabilities. A great example of this is JZP047 which was developed in-house at Jazz, and I'm pleased to share was cleared to proceed into a Phase I study under a new IND. We initiated a Phase I healthy volunteer trial in January to evaluate JZP047 for the treatment of absence epilepsy. Building on our expertise in epilepsy and as we explore areas of growth for Epidiolex, we also initiated a Phase Ib trial of Epidiolex in focal onset seizures. Looking ahead to later this year or early 2027, we anticipate the ongoing Phase III ACTION trial will have an interim overall survival readout. This trial is designed to confirm the benefit of Modeyso and support regulatory approval as frontline therapy directly following radiation instead of waiting for signs of tumor progression before treating with Modeyso. Before I turn over the call, I will share an update on JZP441 and orexin we brought into the clinic with our partner, Sumitomo. Based on our continued assessment of this molecule, we have made the decision to stop the development of JZP441 and end the partnership with Sumitomo. As leaders in sleep, we see promise in the orexin receptor agonist mechanism of action as complementary to oxybate and Xywav as the only low sodium oxybate, and we are continuing to investigate our backup orexin program. Overall, we have a number of exciting clinical trials that are advancing across our pipeline from early stage to registrational trials, and we're looking forward to sharing further updates this year. Now I will turn the call over to Phil for a financial update. Phil? Philip Johnson: Thanks, Rob. I'll start with our top line results on Slide 19. Please note that our full financial results are available in today's press release and 10-K. In the fourth quarter of 2025, we achieved a record total revenues of $1.2 billion, with Xywav, Zepzelca, and Rylaze all posting their highest ever revenue quarter. Total revenue growth of 10% was driven primarily by 16% growth in Xywav and strong initial uptake of Modeyso. For the full year of 2025, we recorded $4.3 billion in total revenues, also a record, representing 5% growth over 2024. Full year revenue growth was driven by Xywav, Epidiolex and Modeyso partially offset by Xyrem. Turning to Slide 20. Our full year 2025 non-GAAP adjusted net income was approximately $522 million, and we reported non-GAAP adjusted EPS of $8.38. Moving to Slide 21. We're pleased to share our full year financial guidance for 2026. Our 2026 total revenue guidance range of $4.25 billion to $4.50 billion equates to growth of about 2.5% at the midpoint compared to 2025. We have strong momentum in our rare oncology and epilepsy revenues. Sales of these products totaled $2.2 billion in 2025 and in 2026, we expect double-digit growth in this part of our business, driven primarily by Epidiolex, Modeyso and Ziihera. Revenue from our rare sleep franchise on the other hand, which totaled $2.01 billion in 2025 may decline due to the evolving sleep market that Sam mentioned, including the introduction of multiple generic high sodium oxybate products. We expect total Rare Sleep revenue of $1.8 billion to $1.9 billion, which represents a modest decrease in 2025, primarily driven by Xyrem and Hikma AG revenue. Specifically with two generic high sodium oxybate products on the market, we expect a further reduction in sales of Xyrem, which generated $146 million in revenue in 2025. For the Hikma AG, there is a modest step down in the royalty rate from 2025 to 2026 with significant economics still flowing to Jazz. For branded low sodium, Xywav, we expect revenue to be flat to up mid-single digits. Moving to the rest of our guidance line items. Our non-GAAP adjusted gross margin percent guidance is 90% to 91%. This is a slight decline from 2025, primarily due to higher sales of products like Modeyso and Ziihera, driving higher royalties and to a lesser extent, the potential for higher tariffs on products imported into the U.S. Our non-GAAP adjusted SG&A guidance range is $1.26 billion to $1.32 billion. Excluding the Xyrem and Avadel litigation settlement expenses from 2025, this means we expect SG&A expenses to be relatively unchanged in 2026 as increased launch expenses from Modeyso and Ziihera in the first-line GEA setting as well as increased investment in key commercial capabilities and AI are offset by productivity efforts across our global commercial organization, lower facilities expenses and lower legal fees. Our non-GAAP adjusted R&D guidance range is $725 million to $775 million. This represents an increase over 2025, driven by increased spend for zanidatamab, both for ongoing and new studies across multiple potential indications, including breast cancer, higher expenses for [indiscernible] as we recognize a full year's worth of activity, higher spend on preclinical and early clinical programs, including JZP898, JZP815, JZP3507, formerly ONC206 and JZP053, the Saniona molecule and higher spend on advanced analytics and AI. We expect our non-GAAP adjusted effective tax rate to be between 11.5% and 13.5%. Finally, our guidance range for fully diluted shares outstanding of 65 million to 66 million. The increase from 2025 is driven by normal factors like shares issued for employee compensation and those purchased by employees via our stock purchase program as well as by accounting for our 2026 and 2030 convertible notes now that our stock price exceeds the conversion price of those notes. We've included an Excel worksheet in the Investors section of our website to help you model this impact. You'll note that we're not guiding to adjusted net income or EPS this year. This reflects both a review of questions we've received and not received from investors and analysts as well as a review of peer guidance practices. Moving to Slide 22. Our balance sheet remains strong. We continue to generate significant cash from our business, recording approximately $1.4 billion of cash from operations for the full year 2025 and we ended the year with $2.4 billion in cash and investments. Our overall financial position and robust operating cash flows provide significant flexibility to invest in value driving commercial and R&D programs as well as in promising corporate development opportunities to support our refined strategy on rare disease. I'll now turn the call back to Renee for closing remarks. Renée Galá: Thank you, Phil. I'll conclude our prepared remarks on Slide 24. 2025 represented a truly transformational year for Jazz. We delivered record financial performance, achieved multiple regulatory approvals successfully launched innovative therapies and generated practice-changing clinical data that positions us for significant future growth. Our refined strategic focus on rare disease leverages our proven capabilities and positions us to compete and win in areas where we can make the greatest impact for patients. We have the opportunity to invest in our pipeline, the growth of our commercial products and also in corporate development where we think there is a solid foundation for us to transact in our existing areas of sleep, epilepsy and oncology, as well as in other areas of rare disease. With our strong financial position, diversified commercial portfolio and robust pipeline, we are well positioned to drive durable growth and create long-term shareholder value. That concludes our prepared remarks. I'd now like to turn the call over to the operator to open the line for Q&A. Operator: [Operator Instructions] Our first question comes from the line of Jason Gerberry with Bank of America. Jason Gerberry: I just wanted to follow up, Phil, on just, I guess, the guidance around Xywav for 2026. So I believe it's flat, potentially growing mid-single digit. So is the right way to think about the dynamics there that in a flat scenario, IH is growing and maybe the conservatism to a guidance of flat is just payer contracting concessions that may need to occur? And there was some commentary about limited generic impact in the first half, but second half, I'm just wondering, I know there was like not total clarity earlier in the year on when you'd have a full line of sight on what the generic Xyrem impact is. So is there something that you're kind of reserving in the guidance conservatism wise in terms of like what the second half impact could be? Philip Johnson: Yes, Jason, thank you for the question. So as we think about the evolution over 2026 of Xywav, we come into the year really well positioned, both from a contracting perspective, the kind of net patient adds we had throughout the year, including in the fourth quarter and the recognition that patients and physicians have for the unique safety benefit that's offered by Xywav as the only low sodium oxybate. We also now have better line of sight into the timing of entry for generic high sodium oxybate products where it appears that now we've got two as we speak, that are in the process of having their launch that could have occurred as early as December 31 of last year, but is occurring now. It will probably just given the dynamics in this marketplace with the need to register physicians and patients into the REMS program take some time for those generics to build their volumes over time. That's one of the dynamics that could lead to maybe different effect on branded Xywav in the first half versus the second half. And we also have an evolving landscape more broadly in sleep where there is the potential for a couple of wake-promoting agents to be entering the market in the second half of the year. And often, we do see with new patients in narcolepsy, for example, they'll typically go on to wake-promoting agent first. They may even go through one or more of those before they would then progress on to sodium oxybate to give them some of the nighttime benefits that oxybate can offer that the daytime waking agents cannot. So those some of the dynamics that are factoring into our thinking. We're really pleased with where we're at and the outlook we have for the year. Maybe I'll just ask Sam, is there anything that she would want to complement to my answer from her commercial perspective. Samantha Pearce: I think it was a great answer, Phil. Yes, I think you mentioned we're carrying really fabulous momentum into 2026, and we have payer contracts in place for this year. We're very happy with the patient adds that we saw in 2026, 2,000 additional patients at the end of the year. And most of that is coming from IH. We actually had 34% growth in the numbers of active IH patients by the end of the year. So you mentioned around that, and we do feel as though the IH business is probably going to be the major driver of continued growth for Xywav being the only approved medication in that space. So yes, we entered the year with some confidence. We also know that what we've seen through the course of 2025 is really significant support from health care physicians and also from patients. We know patients with narcolepsy and IH, the vast majority of them have some kind of cardiovascular or cardio metabolic issue. And therefore, the low sodium option is one that is -- resonates extremely well for this particular patient type. And even with any payer action that may be taken, we do believe a strong commitment from HCPs to ensure that those patients can access a low sodium option. Operator: Our next question comes from the line of Sean Laaman with Morgan Stanley. Michael Riad: This is Mike Riad on for Sean. Are you able to provide any more color on the level of that modest step down on the Hikma royalty rate in '26 relative to last year? And then any commentary on the overall impact to the AG volume with two more generics coming on market? Philip Johnson: Yes, Mike, this is Phil. Maybe I'll handle that, the first part. We're not able to disclose the specific royalty percentages. We had said in the past that the prior royalty rate that we had for the latter part of '24 and through '25 was quite high. So I think that sort of links that there is a step down coming into 2026, but we do still have significant economics flowing to Jazz, but I can't be more specific than that. Sam, do you want to comment maybe on the AG? Samantha Pearce: Nothing too much more to add, Phil. We've -- the AG has obviously been in the market for some time. And we -- nothing much more to add to what you said, Phil, in terms of our expectations there. Operator: Our next question comes from the line of Marc Goodman with Leerink. Marc Goodman: Rob, can you talk a little bit more about JZP047, the background of the asset? Is this cannabidiol from GW deal? Or what kind of preclinical data do you have? I mean, what's the proof of concept, the mechanism, why absent seizures? Anything you're willing to give us? Robert Iannone: Yes. Thanks for the question, Marc. So we haven't yet disclosed the specific mechanism of action for competitive reasons. But I can say that it's not in the cannabinoid space. It's a novel chemical entity that we developed -- discovered and developed at Jazz. We have strong preclinical data, we believe in absence epilepsy and that will be our initial focus of development. The development starts in healthy volunteers where we think we'll get meaningful information around safety and exposures that we expect would be efficacious to derisk the asset before going into a patient population. Operator: Our next question comes from the line of Akash Tewari with Jefferies. Anastasia Parafestas: This is Anastasia on for Akash. Can you give us a little more context on that post-in HER2 breast cancer population, potential uptake? Like how big is the population what kind of treatments to patients typically take positive HER2? Any kind of context on like potential penetration, whether you consider dropping price to enhance access and the like? Robert Iannone: So I can -- Renee, would you like me to start with regard to the clinical treatment landscape there and how we're viewing that? Renée Galá: Yes. Why don't you go ahead and start with that, Rob? Robert Iannone: Yes. So we see this landscape, I think, is evolving just as we had predicted within HER2 moving to front line potentially with pertuzumab. And HER2 being an ADC that is developed on top of herceptin and possibly given with pertuzumab, it really disrupts the subsequent therapies. And so it becomes unclear what therapies to use after in HER2 after patients have had in HER2. That's the opportunity for zanidatamab where we have prior data showing activity. So we're positioning this positive HER2. We said there are about 150,000 patients with HER2-positive breast cancer in the markets that we serve. And we think it would be the first to have data in this positive HER2 setting. The study is being conducted essentially in third line plus because currently, patients get the CLEOPATRA regimen, which is chemo, Herceptin and Perjeta in HER2 is approved in the second line. But if that moves forward, you can imagine use in the second line [indiscernible]. Samantha Pearce: Just to wrap up the second part of that question. Yes, we're obviously very excited about the opportunity to bring Ziihera into the breast cancer setting. Too early for us to comment at the moment on the pricing strategy there. Renée Galá: And just to add there that, that study currently is expected to read out at the end of next year or early the following year. So we should complete enrollment next year, and we will have some time to continue to consider price, as Sam mentioned. Operator: Our next question comes from the line of Mohit Bansal with Wells Fargo. Mohit Bansal: Congrats on all the progress. Just wanted to double click on your Xywav comments regarding first half being mostly unaffected versus second half. Can you just talk a little bit more about that? So what are you expecting the competitive pressure on Xywav to be like in the second half in your guidance? And then as you get into like next year, like how do you see this franchise evolving in the face of low sodium competition? Samantha Pearce: Yes. We're obviously very pleased with the momentum that we've generated through 2025 Xywav of delivering $1.7 billion, 12% growth year-over-year, and that momentum was carried into the fourth quarter with 16% growth in the fourth quarter. I've already mentioned the numbers of patient adds that we saw throughout the year. So the messages that we've been conveying to the market are really resonating. Xywav is highly differentiated in the market, the only low sodium option, the only oxybate with an IH indication. So that gives us enormous confidence. We have good payer contracts in place as we go into the year. But of course, the landscape -- the sleep landscape is evolving. From where we sit today, knowing what we know, we know that there are two generics coming into the market to multisource generics plus we have Hikma in the market as well. We don't expect significant -- we really expect minimal impact on the Xywav business in the first half of 2026. In the second half of the year, obviously, we've got that increasing competitive dynamics. Phil mentioned that generics are likely to build their volumes throughout the year. We could see also the entry of at least one new wake-promoting agent in the market as well. So given all of those things, we may see more a different dynamic emerging in the second half of the year. But we will continue to focus on conveying the significant differentiation of Xywav, which is clearly resonating with prescribers and patients. And we'll be continuing to convey those messages to those customers. And we expect to continue to see the product being highly appreciated in the market. Operator: Our next question comes from the line of David Hoang with Deutsche Bank. David Hoang: Congrats on the quarter. So maybe a follow-up to some of the questions here on the Sleep-Wake franchise. Just in terms of your payer contracts, you mentioned that you feel confident about the ones you have in place. Is there any possibility for the payers to ask you to come back to the table to maybe negotiate over the course of the year? And could you envision any step edits or other restrictions being put into place by payers that might favor the multisource generics? Samantha Pearce: Yes. Whilst we do have good contracts in place as we enter the year, there's always the possibility that the payers may want to approach us if there's a significant event in the market with multisource generics. But one thing that is worth considering is that the rebates that the payers have for products as significant as Xywav are quite material and very significant. So of course, they'll be wanting to consider coming back to us to renegotiate and walking away from those rebates. So in order for them to have confidence to do that, of course, they want to be confident that the generics are built enough volume and support in the market. And also another consideration there is that even if the step edits were put in place, and certainly, that is an option. We know that physicians and patients really value the low sodium option. I mentioned before that well over half, about 70% of patients with narcolepsy and IH have a cardiovascular or a cardio metabolic comorbidity. And so really, the last thing is one to be giving those patients is a heavy salt dose every single day for a chronic condition. So even with a step edit, we believe that there will be a strong commitment from health care providers to move through those step edits to get to low sodium Xywav. So all of these things are possible. But I think the strength of our differentiation, it doesn't change. We're still the only low sodium option in the market and that will, I believe, will resonate with some prescribers and patients. Philip Johnson: Davis, I'll add something really quickly. We have had a small number of accounts, for example, in 2025, where the AG was put in more privileged position and basically had to step through that to get to Xywav. And we saw physicians very motivated to do that for their patients given the unique safety advantage as Xywav conveys, as Sam has mentioned, and we had leading share effectively in that account. So -- we've seen this happen at least on a small scale already. And again, it reinforces our belief that Xywav has a unique value proposition in the marketplace that neither the AG in the past or the emergence of the high sodium generics can replace. Operator: Our next question comes from the line of Brian Skorney with Baird. Brian Skorney: Congrats on the quarter. Maybe for Sam, the Modeyso launch looks really off to a much better start than I think a lot of us expected. I'm just wondering -- how do you think about these initial launch metrics? And I understand that they're early and contextualizing the greater than $500 million U.S. sales guidance, and how the ACTION study may come into play there? Do you think you need to hit in that study to achieve that guidance? Or can you get there given the current label and if ACTION were to hit, do you envision that would change the peak guidance? Samantha Pearce: Yes. Thanks for the question. Yes, we're clearly delighted with the early phase of the launch of Modeyso at $48 million in 2025, which was just 4.5 months of launch is really terrific. We -- obviously, this market is a market which has seen very little development over the last 60 years. So the launch of Modeyso was one that was highly anticipated by physicians and by patients. We had very high awareness and really strong advocacy support from patient organizations, and obviously, a very high unmet need for this treatment. So we've seen really strong uptake. I think in relation to the peak sales opportunity, we obviously, as we see the uptake and the way this product has been accepted into the market, we're increasingly confident about the $500 million peak sales opportunity. That does assume that we hit on the first-line action study to achieve that because what that means is that the product will get used earlier, immediately after radiotherapy as opposed to waiting for progression, which is the label that we currently have. There's still quite a lot that we need to understand about this market. For example, what really is the real-world duration of treatment. That's going to be quite an important factor in the overall size of the opportunity. And also, what is the true epidemiology in this market as well. We've used the best available data to do that. But obviously, the longer we're on market, the more confidence we're going to get around these areas. Testing rates is also something that we've been working on. We've seen that steadily increasing as well. So all the launch metrics are very positive, and we are increasingly confident about that $500 million sales opportunity. Operator: Our next question comes from the line of David Amsellem with Piper Sandler. David Amsellem: So maybe a bigger picture question about the sleep-wake franchise. So obviously, you mentioned 441. You are looking at other orexin agonist. But absent that, would you consider making a significant acquisition, in other words, an inorganic way of trying to extend the life of your sleep-wake franchise bearing in mind that eventually Xywav will go off patent? And maybe taking a step back, strategically, do you just simply toggle over to oncology and neuroscience and neurology more completely and look at sleep-wake as sort of a more mature franchise that you manage for cash. How are you thinking about that? Renée Galá: Yes, I'll jump in on that one. So as we look at our strategy going forward and where we're investing, we are investing in the growth of each of these current franchises, sleep and epilepsy and oncology. And we think there are multiple opportunities there, both within our current portfolio and opportunities to invest in licensing and M&A to augment those opportunities. With being specific on particular opportunities we're interested in probably isn't that helpful. I would say from a medical perspective, we're excited to see the new innovations coming from orexins. And as Rob mentioned, we continue to be active in this area in terms of early programs, but we also see there's still opportunity there in terms of really understanding is there a benefit for nighttime disrupted sleep. We seem to see right now data that points to orexins being complementary with oxybate, and we have yet to see any PSG data or otherwise on orexins that will tell us that we'll have therapies that can be fully treated without being augmented with a therapy like an oxybate that can address the nighttime symptoms, but if we just step back and look at our business and the growth drivers, we believe we have a highly differentiated product in Xywav, as Sam has described, we're in a strong position as we go into this year. We have a highly differentiated franchise in Epidiolex with multiple early-stage programs that we're advancing. A lot of opportunity across oncology whether that's Modeyso or the Zepzelca first-line approval and a really meaningful growth driver with zanidatamab that we're investing in heavily. So that's how we're thinking more broadly about our investments and where we're headed and how we think about investing across the franchises. Operator: Our next question comes from the line of Joseph Thome with TD Cowen. Joseph Thome: Maybe one on the -- it looks like another trial from the Chimerix acquisition was launched in PCPG. Can you just talk a little bit about the size of that market maybe as it relates to the market for [indiscernible] for H3K27M? And then maybe a bit of a follow-on to the last question. Obviously, with Epidiolex, you levered up the balance sheet and you work to kind of delever that over the years. You just mentioned BD several times through the call. I guess how comfortable are you to lever up the balance sheet again? Is that something that you're considering and kind of the size of the transactions, that would be helpful. Renée Galá: Rob, can you cover PCPG in terms of what we're aiming to achieve there with that study? And then maybe, Phil, do you want to jump in on the balance sheet? Robert Iannone: Sure. Happy to. So just to remind the group that 206 asset is a follow-on to Modeyso hitting the same [indiscernible] and dopamine receptors but potentially with greater potency. And we have an opportunity based on preclinical data that we have to evaluate that in pheochromocytomas and paragangliomas which are rare neuroendocrine tumors. And so this will serve as a proof of concept, at least in that tumor type, which we prioritized to demonstrate the activity of that next-generation molecule. Philip Johnson: And John, your question regarding leverage, we certainly have deleveraged substantially on a net basis, down to about 1.5 turns of EBITDA at the end of 2025. And we do have the ability to go ahead and lever up for a transaction or a series of transactions. If we find ones that are particularly compelling in terms of benefit they can bring to patients and our conviction that we can create significant value for Jazz shareholders as well. I would say over a longer arc of time, I think the expectation is that you will see debt to be less and less of the capitalization of the company over time, but I would encourage you to think of that as probably a sawtooth with some peaks as we do transactions, particularly if they're M&A, but over the long term, we'd expect that overall capitalization be more weighted towards equity and less towards debt as we move forward. Operator: Our next question comes from the line of Leonid Timashev with RBC. Leonid Timashev: I wanted to ask on Epidiolex. You mentioned both the fact that patent settlements extending the cliff out to the late 2030s, and interesting continuing to grow that franchise. So I guess I'm curious how you're seeing or what you need to do to continue to grow the adult side of that business? And maybe what you're seeing currently with adult uptick, maybe where education -- additional education is needed and sort of how you think about the size of that opportunity relative to the pediatric side? Samantha Pearce: Yes. Thanks for the question. Yes, we were delighted in 2025 to achieve $1.1 billion blockbuster status for Epidiolex, delivering 9% growth year-over-year. I think we've continued to drive really strong momentum behind this brand. With our current license indications, there still remains significant opportunity for us to make an impact. We've identified the adult segment has been a key source of future growth. We have invested that in long-term care, teams that are going to those long-term care facilities because what we do know is that there are a significant number of patients particularly LGS patients who reside in long-term care settings that have not had a definitive diagnosis of LGS. So we've invested with that team in particular tool, the rest LGS tool to help physicians diagnose those patients so that they can have the opportunity to benefit from Epidiolex. So that's a key source of growth. In addition to that, we know that persistence is the key hallmark of Epidiolex. Patients do very, very well in Epidiolex and they can stay on treatment for a long time. But if the patients have access to our JazzCares, with the nurse team that we have supporting those patients, then they stay on treatment even longer. So we're investing a lot in making sure that more patients can benefit from our JazzCares program. In addition to that, we've generated data that become data that really reinforces the benefit of Epidiolex in seizure and nonseizure -- seizure and non-seizure benefits. So there's a number of things within our existing label indication sources of growth which we're very confident in that we're going to be making investments in. And in addition to that, given the very late 2030s durability of the brand. We're also investing in other areas as well. So for example, new formulations of Epidiolex that will be particularly beneficial for adults as well as a Phase Ib trial in focal onset seizures as well. So we're excited about the potential of Epidiolex to continue to grow and bringing it to more patients. Operator: Our next question comes from the line of Ami Fadia with Needham & Company. Ami Fadia: Just on the zani breast cancer study, can you remind us if you've shared any details around the powering of the study. And ahead of the final readout, is there opportunity to see any interim data? And also maybe just remind us of the regulatory end points that we would be -- that -- all the regulatory requirements in terms of the endpoint? Robert Iannone: Sure. Thanks for the question. It's a two-arm trial, where patients are assigned their chemotherapy backbone by the treating physician and then randomized to receive either herceptin versus zanidatamab. So a head-to-head comparison of zani versus herceptin again, but in a different setting. It's 550 patients, which is listed on clinicaltrials.gov, and we have an opportunity to look at progression-free survival along with an interim analysis of overall survival before the final readout on overall survival. Operator: This concludes the question-and-answer session. I would now like to hand the call back over to Renee Gala for closing remarks. Renée Galá: Great. Thank you, operator. And just a quick reminder to our listeners. Thank you for joining in the call today. To give you a quick overview of some of our upcoming catalysts. As we've mentioned, we're really excited about zanidatamab in the breast cancer study that Rob was just describing. We also have the opportunity, as we mentioned on the call, for an approval and a launch in the second half of this year. We do plan to get our FDA submission complete this quarter, and expect an upcoming publication in a premier peer-reviewed journal with our second interim OS readout for our zani plus chemo arm B anticipated to occur mid-year. In addition to the broader development program, as I mentioned earlier, we have readout planned at the end of next year for metastatic breast cancer study or early in 2028, and we're excited about the opportunity there. Given the underlying backbone comparison is again zani versus herceptin. This year, we have the opportunity for our first full year of sales in dordaviprone and expect the ACTION trial supporting that Sam described to read out at the end of this year or the beginning of next year, and that will be our first OS readout of that study. So strong momentum coming into this year from 2025, and we do expect to announce one or more deals in 2026 on the corporate development front. So I'd like to close today's call by thanking all of our Jazz colleagues for their efforts, our partners and stakeholders for their continued confidence and support. 2025 was quite an impactful year for Jazz, and I look forward to continuing our work together in 2026. So thank you all for joining. Operator: This concludes today's conference. Thank you for your participation. You may now disconnect.
Operator: Good afternoon, and welcome to Supernus Pharmaceuticals Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to hand the conference over to Peter Vozzo of ICR Healthcare, Investor Relations representative for Supernus Pharmaceuticals. You may now begin. Peter Vozzo: Thank you, Antoine. Good afternoon, everyone, and thank you for joining us today for Supernus Pharmaceuticals Fourth Quarter and Full Year 2025 Financial Results Conference Call. Today, after the close of market, the company issued a press release announcing these results. On the call with me today are Supernus' Chief Executive Officer, Jack Khattar, and Chief Financial Officer, Tim Dec. This call is being made available via the Investor Relations section of the company's website at www.ir.supernus.com. During the course of this call, management may make certain forward-looking statements regarding future events and the company's future performance. These forward-looking statements reflect Supernus' current perspective on existing trends and information. Any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in the Risk Factors section of the company's latest SEC filings. Actual results may differ materially from those projected in these forward-looking statements. For the benefit of those of you who may be listening to the replay, this call is being held and recorded on February 24, 2026. Since then, the company may have made additional announcements related to the topics discussed. Please reference the company's most recent press releases and current filings with the SEC. Supernus declines any obligation to update these forward-looking statements, except as required by applicable securities laws. I'll now turn the call over to Jack. Jack Khattar: Thank you, Peter. Supernus had a remarkable 2025 with significant progress made against our strategic objectives. The company achieved record total revenues of $719 million, delivered strong growth of 40% in revenues from our 4 growth products, successfully executed an integrated acquisition of Sage Therapeutics, obtained the FDA approval of ONAPGO and launched ONAPGO in the Parkinson's market. Our financial performance in 2025 once again underscored our emphasis on growing our core business despite the loss of exclusivity on both Trokendi XR and Oxtellar XR. With our 4 growth products, Qelbree, GOCOVRI, ZURZUVAE and ONAPGO, we have built a solid foundation for a new phase of accelerated growth for Supernus. During the fourth quarter of 2025, revenues from these 4 growth products accounted for approximately 76% of total revenues. Starting with ONAPGO, during the fourth quarter of 2025, ONAPGO generated net sales of $8.9 million, up from $6.8 million in the third quarter of 2025, and finished its first year on the market with $17.3 million in total net sales. Demand for the product continues to be healthy despite the announced supply constraints with more than 540 prescribers submitting over 1,800 enrollment forms since the launch of the product and through the end of January 2026. We have been focused on resolving the supply constraints that we discussed on our third quarter 2025 earnings call. Progress with the current supplier has been made, allowing us to resume new patient initiation while continuing to service our existing ONAPGO patients with maintenance therapy. Our current outreach effort of verifying health benefits and coverage includes more than 700 patients whose forms are currently in the queue for processing. In the fourth quarter of 2025, prescriptions grew by 29.6% and the number of prescribers grew by 28% compared to the third quarter of 2025. Switching now to ZURZUVAE. The brand had strong performance in 2025 with $32.8 million in collaboration revenues in the fourth quarter, and $53 million for the 5-month period since the closing of the Sage acquisition on July 31, 2025. Full fourth quarter 2025 U.S. sales of ZURZUVAE, as reported by Biogen, increased approximately 187% compared to the same period in 2024, and approximately 19% compared to the third quarter of 2025. The number of prescribers in 2025 doubled compared to 2024 with more than 70% being repeat prescribers. Total prescriptions in 2025 increased by more than 150% compared to 2024. Regarding Qelbree, the product had another year of robust performance with 21% growth in total annual prescriptions in 2025 compared to 2024, and as reported by IQVIA. Qelbree exceeded $300 million in net sales for the year 2025, delivering 26% growth compared to 2024. In 2025, the brand delivered double-digit prescription growth of 29% and 18% in both the adult and pediatric patient populations, respectively. For the fourth quarter of 2025, total prescriptions increased by 18% compared to the same period in 2024, while net sales increased by 9% as net sales were impacted by an annual gross to net deduction. This was due to an unexpected bill of $4 million received from one of the PBMs covering the full year of 2025, and which was fully reflected in the fourth quarter. For full year 2025, gross to net for Qelbree ended up approximately 49%. Our expectation for 2026 continues to be consistent with our previously disclosed target of 50% to 55%. Switching now to GOCOVRI. For full year 2025, net sales reached $146 million, increasing by 12% compared to 2024, and total annual prescriptions reached an all-time high of approximately 67,000, growing by 14% compared to 2024. The brand finished 2025 with strong prescription growth of 16% in the fourth quarter compared to the same period last year and with net sales of $38.6 million. Moving on to R&D. We initiated a follow-on Phase IIb randomized, double-blind, placebo-controlled trial with SPN-820 in approximately 200 adults with major depressive disorder. This study will examine the safety and tolerability of SPN-820 and its efficacy at a dose of 2,400 milligram, given intermittently twice per week as an adjunctive treatment to the current baseline antidepressant therapy. Our Phase IIb randomized, double-blind, placebo-controlled study of SPN-817 is ongoing with a targeted enrollment of approximately 258 adult patients with treatment-resistant focal seizures. This trial utilizes 3-milligram and 4-milligram twice daily doses. And for our SPN-443 program, we expect to initiate a Phase I single ascending and multiple ascending dose study in adult healthy volunteers in the second half of this year. We have completed our evaluation of the early-stage pipeline assets from the Sage acquisition. As a result, we will retain certain assets for internal development, and we will be seeking partnerships for the remaining assets. Finally, corporate development will continue to be a top priority for us as we look for additional strategic opportunities to further strengthen our future growth and leadership position in CNS through revenue-generating products or late-stage pipeline product candidates. With that, I will now turn the call over to Tim. Timothy Dec: Thank you, Jack. Good afternoon, everyone. As I review our fourth quarter and full year 2025 results, please refer to today's press release that was filed earlier today. We achieved record total revenue of $211.6 million for the fourth quarter of 2025, an increase of 21% compared to the same quarter last year. Excluding net product sales of Trokendi XR and Oxtellar XR, total revenue for the fourth quarter of 2025 increased 34% compared to the same quarter last year. Total revenue in the fourth quarter of 2025 was comprised of net product sales of $158.1 million, collaboration revenues associated with ZURZUVAE of $32.8 million, and royalty, licensing and other revenues of $20.7 million. This includes $15 million of licensing revenue recognized in the fourth quarter of 2025 related to the achievement of a regulatory milestone under our collaboration agreement with Shionogi. Please note, collaboration revenues represent approximately 50% of the sales of ZURZUVAE reported by Biogen. This increase was primarily due to the increase in net product sales of our growth products, Qelbree and GOCOVRI, as well as the addition of collaboration revenues from ZURZUVAE, and from the launch of ONAPGO in April of 2025. For the fourth quarter of 2025, combined R&D and SG&A expenses were $150.2 million as compared to $108.1 million for the same quarter last year. Operating loss on a GAAP basis for the fourth quarter of 2025 was $4 million as compared to operating earnings of $21.4 million for the same quarter last year. The change was primarily due to higher Sage operating costs in the fourth quarter of 2025, and incremental intangible asset amortization for ZURZUVAE and ONAPGO. GAAP net loss was $4.1 million for the fourth quarter of 2025 or a loss of $0.07 per diluted share compared to GAAP net earnings of $15.3 million or $0.27 per diluted share in the same quarter last year. On a non-GAAP basis, which excludes amortization of intangibles, share-based compensation, contingent consideration, depreciation and acquisition-related costs, adjusted operating earnings for the fourth quarter of 2025 was $48.5 million compared to $48.3 million in the same quarter of last year. Total revenues for the full year 2025 were a record $719 million. Excluding net product sales of Trokendi XR and Oxtellar XR, total revenue for the full year 2025 increased 27% compared to last year. Total revenues were comprised of net product sales of $626.6 million, ZURZUVAE-related collaboration revenues of $53 million, and royalty and licensing and other revenues of $39.4 million, including the aforementioned $15 million of licensing revenue received due to a regulatory milestone. During 2025, collaboration revenues represented sales reported by Supernus since the close of the Sage acquisition on July 31, 2025. Combined R&D and SG&A expenses for the 12 months ended December 31, 2025, were $591.8 million as compared to $430.4 million last year. The change was primarily due to higher SG&A expenses, including approximately $73 million of acquisition-related costs from the Sage acquisitions and approximately $50 million related to the Sage operating costs recorded since the closing of the acquisition. Operating loss on a GAAP basis for the full year 2025 was $62.3 million as compared to operating earnings of $81.7 million for 2024. GAAP net loss was $38.6 million for the full year 2025 or a loss of $0.68 per diluted share, compared to GAAP net earnings of $73.9 million or $1.32 per diluted share in 2024. On a GAAP non basis, which again excludes amortization of intangibles, share-based compensation, contingent consideration, depreciation and acquisition-related costs, adjusted operating earnings were $158.7 million compared to $183.7 million for last year. As of December 31, 2025, the company had approximately $309 million in cash, cash equivalents and marketable securities compared to $454 million as of December 31, 2024. The decrease in our cash was primarily due to the funding of the Sage acquisition, offset by cash generated from operations. The company's balance sheet remains strong with no debt and significant financial flexibility for potential M&A and other growth opportunities. Now turning to 2026 guidance. For full year 2026, we expect total revenues to range from $840 million to $870 million, comprised of net product sales, ZURZUVAE collaboration revenues and royalty and licensing revenues. Note, total revenue guidance for full year 2026 assumes approximately $45 million to $70 million of net sales from ONAPGO. As Jack mentioned, new patient initiation for ONAPGO begin in the first quarter of this year. For the full year 2026, we expect combined R&D and SG&A expenses to range from $620 million to $650 million. Overall, we expect full year 2025 (sic) [ 2026 ] operating income loss in the range of breakeven to a loss of $30 million. And finally, we expect non-GAAP operating earnings to range from $140 million to $170 million. Please refer to the earnings press release issued prior to this call that identifies the various ranges of reconciling items between GAAP and non-GAAP. With that, I will now turn the call back to the operator for Q&A. Operator? Operator: [Operator Instructions] Our first question comes from Andrew Tsai from Jefferies. John Cox: This is John Cox on behalf of Andrew Tsai. Congrats on the quarter. So -- just so we understand the current supplier can supply $45 million to $70 million of sales. And to get to that $70 million, can that be done by the current supplier? Or does the high end require you to lock in the second supplier, say, like earlier than 2027? Jack Khattar: Yes. For the current supplier, they'll be able to -- the plan is to get us supplied through 2026. So certainly, that will cover us for the guidance that we gave, the $45 million to $70 million. And then we expect the second supplier to provide us product in 2027. Now regardless of when in 2027, the second supplier comes in, the current supplier will be there for us to be able to bridge to the second supplier. So the plan is that we will have continuity of supply between the 2 suppliers with the current one covering 2026, maybe a little bit in 2027, depending on when the new supplier comes online. John Cox: Okay. And then maybe one more, if I can, on ONAPGO. To get to that second supplier, what kind of data, assuming nonclinical would ultimately be needed to obtain FDA approval. Is that kind of the ultimate gating factor here? Jack Khattar: Yes. Typically, you'll have to produce some batches at the new site or new supplier. You produce some stability data, key basic data, you put a package together, submit it to the FDA. And on an average, I mean, it could be 6 months review, 9 months review. We will get more clarity fairly soon in the next month or so. And then based on that, we will expect the approval, hopefully. So that's typically the time line and the kind of package. So the answer is yes, there will be no clinical study or data that you need to provide. Operator: Our next question comes from David Amsellem from Piper Sandler. David Amsellem: So 2 for me. First on ONAPGO, and I apologize if I missed this. I just want to clarify. So with the additional capacity, how much of underlying demand can you meet? Or maybe ask another way, can you fully clear the backlog, if you will, with the additional capacity that you now have in place? So that's number one. And then secondly, regarding the R&D organization with the integration of Sage, you mentioned you're taking on some early-stage products. And just wondering out loud, how you're thinking about prioritizing those, especially relative to your legacy pipeline assets and when we might get some updates on what you're going to bring forward into the clinic there? Jack Khattar: Yes. Regarding ONAPGO, the current supplier will certainly help us clear the backlog through the continuous supply that we will be able to have throughout 2026 and more than just the backlog, of course, and because we are initiating new patients, not just with the current situation, meaning the 1,800 forms or 700 patients in the process, of course, that number will continue to be refilled during the year as we continue to grow the number of forms and so forth. So we expect the current supplier to be able not only to clear the backlog, but also, of course, continue to provide for whatever needs we have throughout 2026 until we get the second supplier online. As far as the Sage R&D programs and so forth, I mean, these are really early-stage assets. So -- for now, we will be doing some early preclinical work, things like this to verify the activity, the mechanism of action, the selection of an indication and so forth. So there will be a lot of preclinical type of work that has to be done on these assets. So as far as prioritizing them within the portfolio that we have, we look at every product separately on its own merits from a timing perspective, market opportunity, ROI and so forth. So I mean, they will go through the same process of prioritization from a portfolio perspective. David Amsellem: Okay. And if I may just sneak in a follow-up. Does that mean with the early-stage assets you have and with your mid-stage assets in the pipeline, your BD focus is really more focused on market-ready and commercial stage assets. Is that a good way to think about it? Jack Khattar: Yes, that is correct. We are focused on revenue-generating situations, products on the market and potentially late-stage pipeline assets. So products that are in the pipeline that are at a later stage than our own pipeline. So they can get us to the marketplace or give us some other product launches, somewhere between '27 and '30, '31 time frame, that will be something that will be ideal for us. Operator: Our next question comes from Stacy Ku from TD Cowen. Stacy Ku: Congratulations on an earnings update and the ONAPGO supply update. So first, just as we think about the ONAPGO guidance for the year and the patient demand that clearly all the analysts are trying to triangulate around. Maybe first, could you talk about the learnings on the patient profile since launch? Maybe talk about the frequency of use that you're seeing. What we're trying to understand -- better understand, obviously, there's going to be a range, but how should we be thinking about the potential net pricing for a year of treatment? So that's the first question. And then when it comes to the resumption of the new patient initiations for ONAPGO, should we be thinking about that 1,800 enrollment forms is reflecting a more limited writing from clinicians despite the supply disruption? Just a bit of a point of clarification for our second question. And then the third, as we're just, again, trying to understand the enrollment forms, as the sales force is going back to the clinicians and patients, what kind of dynamics are you seeing in terms of ONAPGO demand and switches [indiscernible]. Our understanding is that behind the scenes with commercial reimbursement and infrastructure was kind of continuing even though we didn't know whether there's going to be supply or not. Happy to clarify the first question. Jack Khattar: Hopefully, I'll get all of them. I'll start with the first one. As far as the profile of the patient, I mean, these are folks that are advanced in the disease. A lot of the oral medications are not enough anymore. So they continue to have certainly a lot of episodes during the day. And they're not really well controlled with levodopa/carbidopa and with any of the other adjunctive oral therapy that they're taking. And therefore, they would be -- and in the physician's mind, they would be good candidates for subcutaneous continuous infusion for something that is different than levodopa/carbidopa, if that is the case, and that's what the physician is looking for. And therefore, they would choose something like ONAPGO, apomorphine as a molecule, as a drug for that patient. As far as the potential moving forward and where the net pricing is going to land, I mean, clearly, the product has been on the market a fairly short period of time, only 8 months or 9 months. Certainly, that will, over time, will calibrate depending on what we end up doing, if we do any contracting and so forth. But we talked historically about -- on an average, it's probably $105,000, $100,000 per year on a WAC basis per patient. Now that certainly assumes a certain usage, which we are starting to get a better feel for. I don't have the data as much as I would like to before I say that's exactly how people are using the product and how frequently they're using it. But the $100,000 typically assumes about a cartridge a day, give or take, to get to that price or cost per year -- per patient. And then the next question, I believe, was basically on the 1,800 forms and so forth. If I really understood the question, I mean, think about it, that's like a funnel, that's like a bucket of all the demand. So that's why we try to give you this number to give you an idea of what the demand is. And then clearly, as we process these forms as eventually as patients get the shipments eventually, you're going to lose some forms or some patients on the way. I mean that's typical in any process or any specialty type of product. Typically, that's what happens. And you could lose certain patients in the process for many different reasons as whether it's incomplete information, you can never finish the form or complete it, you'll be surprised sometimes how many phone calls you have to make, whether to the patient or to the doctor's office to even complete the form so that you can start processing it. And then when the hub starts processing the form and then doing the adjudication for insurance, reimbursement, you could lose some patients there. And then as time goes on, a patient may change their mind or their situation might change, medical situation. So for all these factors, clearly, the 1,800 don't necessarily end up being 1,800 patients at the end of the day. And I don't know what was it -- I don't know if there is another question after that. Stacy Ku: No, no, that's understood. I think we were hoping to hear whether or not more of these enrollment forms were being processed for reimbursement while waiting for the supply to be replenished. But understood. Just one quick follow-up to your answer on the first net pricing piece then. What kind of gross net would you have expected for a specialty product? Jack Khattar: For a product -- I mean, we've been in this space, I mean, typically, it ranges somewhere between 20% and 30% depending on the quarter, right? Because Q1 is typically on the higher end and then it decreases over time, and then the cycle starts again. I mean that's typically the range, 20% to 30%. If I were to guess, it's a pure guess at this point based on our experience in the category. Stacy Ku: Got it. And then last, if you may, if we could sneak one in on Qelbree. Just the Q1 dynamics in light of the normal seasonality and maybe some of the onetime impacts this winter, just curious how you all are thinking about the following quarter for Qelbree? Jack Khattar: Seasonality on Qelbree? Stacy Ku: Correct, for Q1. Jack Khattar: I mean Q1, typically, it's not a seasonality because of school or anything. Typically, it's your typical seasonality from an insurance point of view. And that's not just Qelbree and all products in general because of the high deductibles that patients are facing. So I mean, for the last couple of years, I think we were more like flattish from a prescription or maybe went up a little bit. So I mean it's going to fluctuate. I'm not saying that's exactly what will happen this quarter. But I mean you get some pressure. Now we also calibrate some of the co-pay business rules so we can help patients as much as possible in Q1. We typically do that to offset some of that pressure. So sometimes, we're pretty successful and actually prescriptions do grow nicely in Q1. So we'll see where we land, but nothing really unusual, I guess, I'd have to say versus previous years. Operator: Our next question comes from Kristen Kluska from Cantor Fitzgerald. Kristen Kluska: Jack and Tim, congrats on a great quarter of revenues and progress here. On ONAPGO and the second supplier, I wanted to ask if you can provide a little bit more color about the profile of the supplier. So for instance, if we see in 2027, 2028 that demand is continuing to outpace how you're thinking about it internally? Are they going to be the type of supplier that can be flexible and add more capacity for your product? How important has that component been in your decision-making when it comes to who's going to be best to supply this product? Jack Khattar: Yes. The second supplier is actually our own partner in Europe. So they have their own manufacturing facility, and that's the same facility that produces product for the European market. So it's exactly the same product. And obviously, they have significant experience in making the product. Capacity-wise, they have significant capacity, much larger capacity than the current supplier. And we're also -- I mean, have discussions with the third supplier. So I mean, our plans, obviously, is we're going to secure the supply for the long term. This is not a just 1-year situation. We want to make sure that should the demand be as large as everybody is expecting, clearly, we will have enough supply to meet that demand. So that's really the plan that we have in place and we are executing on. And that's why we feel pretty confident to the extent we can, obviously, that 2027, we should be really good for the second supplier and even beyond that. Kristen Kluska: Okay. And you had mentioned earlier that you'll have more clarity in a month or so. Is that just on what you'll exactly need to show in terms of more process runs or any comparability -- stability data, excuse me, that you need to conduct prior to getting that approved on board. Is that my understanding? Jack Khattar: Yes. I mean in the next month or so, we will be having more communication with the FDA. So we will have more clarity what are the different pieces. Again, the product is exactly the same product as is in the U.S., European and U.S. There are some differences in like specifications and things like this. But from a production point of view, it's exactly the same product. So we feel pretty good. But again, until we have that discussion, it will be difficult for us to know the exact timing and the extent of the package itself. Kristen Kluska: Okay. And then at what point during this cycle are you going to be comfortable enough telling physicians, hey, we're going to have more supply in X months from now, so you can kind of get patients towards this therapy again. I know you've talked about the fact that this community has been really supportive of you for the fact that you've worked hard for these patients. You've had 4 drugs approved for this community. So I'm just trying to understand at what point they can kind of give the patients the green light that you don't have to wait much longer a solution is coming. Jack Khattar: I mean that, in a way, it's now happening, meaning we have already communicated to physicians that we are back to normal, so to speak. We will be processing forms. We will be initiating new patients. We will be sending shipments to patients. So we want them to continue to submit forms as they had. I mean it was really remarkable the support we got it from the physician community. Last time we talked we had 1,300 forms, even despite the supply constraint, we were up to 1,800, as I mentioned in my prepared remarks. So the physicians continue to think of ONAPGO as a really -- real treatment for a lot of the patients, and they're with us, and they'll continue to serve their patients. So we're pretty much at normal. Now I can't say normal, normal because we have to work through the backlog. So I mean, things don't happen like overnight where overnight, you're going to initiate another 700 patients, right? So it's going to be over time that given the capacity we have, you have to think about nurses, initiations, all that. So we will be able to provide a little bit more update later on by May, clearly. But as far as keeping the demand and being able to serve our patients, we are in that position right now. Operator: Our next question comes from Pavan Patel from BoA. Pavan Patel: Jack and Tim, so first, congrats on the supply constraint resolution. I think this is a best case scenario. So really happy with you and the patients. I know our own survey work has shown that the demand for this product is really strong among both movement disorder specialists and patients. So my first question is, as you work through initiating these 700 patients out of the queue, should we expect a temporary drag on ONAPGO's gross to net in the first half of 2026? And will a significant portion of these patients require bridge supply or quick start programs while their benefits are being verified? And then I guess just like a modeling question, can we do more than $70 million with the supply that your current supplier is able to offer you, assuming that state and the second supplier are not online in 2026? And then just maybe one on ZURZUVAE since I think that's a topic worth hitting as well. I think the 70% repeat prescriber rate is pretty strong. So maybe as you plan your commercial efforts in 2026, are you shifting your focus towards driving deeper penetration volume among those existing repeat prescribers? Or is the priority going to be start -- start being to expand the absolute number of OB/GYNs and psychiatrists writing their first prescription? Jack Khattar: Yes. Maybe I'll start with the last question. On ZURZUVAE, clearly, I mean, we are still -- and the way we think about it, we are still launching the product. That's the mindset we always have with new products, clearly, always launching. And as we mentioned earlier, this is a market that hasn't been really prepared a lot before the product was launched because the initial indication was supposed to be MDD instead of PPD. So basically, the product was launched and the market is being built at the same time. So we still have a lot of work to do in building the market, education-wise. The brand actually enjoys a very, very high awareness, but we need to turn that awareness into action. We need to turn that awareness into confidence by physicians and to have the courage to actually screen, diagnose and treat PPD. So we will continue a lot of the great programs that Biogen and Sage had actually had started way back when they launched the product and into 2025. We will continue a lot of these type of programs into 2026. And actually, this year in 2026, and some people may have already seen the commercial, we have DTC efforts as well to educate as well the consumer and make more and more women and mothers comfortable in talking about their condition and come forward and seek treatment because there is treatment and they can really feel much better after taking a product that is only a 14-day treatment and not waiting too long for it to actually kick in only within day 3. So a lot of activity behind ZURZUVAE because we're only scratching the surface at this point as far as the potential of this product. I mean, launch to date, we treated around 20,000-plus patients. That's it. And -- as some of you probably recall, every year, you have 500,000 women who actually experience symptoms of PPD and only about half of them get diagnosed and then 60% to 70% of those are treated. So there's a lot of people there who need help and where ZURZUVAE can really help them pretty well. As far as current prescribers or new prescribers, I mean, like every other product, when it's still early in the launch, you're certainly getting a lot of new prescribers, clearly from a reach perspective. And also as time goes on, you can have more frequency on these physicians. And certainly, those prescribers who are current prescribers, actually, the data shows us that 70% of the prescribers are repeat writers. So clearly, we are getting a lot of business from the current prescribers, that speaks for, of course, also the high satisfaction level with the product and how it's performing. So once the physician actually takes that first step and has the confidence, the conviction and the courage to diagnose and treat. And once they see the results from the first patient, they tend to be repeat writers. And that's really very encouraging for the product at this stage. Moving on to ONAPGO. I mean, could we do more than $70 million? That is always potential. I mean that is also -- could happen. I don't know right now. But everything we have today, all the information we have as far as demand and everything got us to the point where we believe the range is really $45 million to $70 million. Could it be that we could go above $70 million? I truly don't know right now. Otherwise, we would have had a higher end if we had comfort that we could go above that. So we feel pretty good right now where we stand on ONAPGO and the supply situation, and that's -- so the guidance that we gave is really to help folks to see where the goalposts are on both ends. Pavan Patel: And then just on the gross to net in the first half of '26, do you think that... Jack Khattar: I'm sorry... Pavan Patel: ONAPGO... Jack Khattar: Yes. I mean for ONAPGO on the gross to net, as I mentioned earlier, I mean, it's probably going to be somewhere in the 20% to 30% again, higher in Q1 typically and lower as the year goes on because typically, Q1, you're going to have more incentives and things that will pressure the gross to net. Operator: Our next question comes from Annabel Samimy from Stifel. Jack Padovano: This is Jack on for Annabel. Congrats again on the quarter. Just quickly on the -- for the CNS pipeline products for 817 and 820, do you have anything you can give us on the pace of enrollment there for either trial and when we might be expecting top line data? And then on BD, are there any particular areas of focus you're looking at for new products? I know you've mentioned previously possibly broadening scope outside of CNS, potentially expanding into other areas like in women's health now that you have ZURZUVAE. Have those priorities changed at all? And are you looking more at stand-alone specialty commercial products or small portfolios of assets? Jack Khattar: Yes. Regarding the CNS, the pipeline on 817 and 820, I mean, 820, we just basically initiated the trial. So that's still early as far as enrollment. But you would expect an MDD trial to recruit much quicker than typically an epilepsy trial. So for 820 and 817, both trials, we're looking at data sometime in 2027. It's not going to be this year. Hopefully, as time goes on, we'll have a much better trajectory, specifically on 817 because epilepsy trials tend to be much slower from a recruitment point of view. And also, these are multicenter trials, specifically the one in 817, which is also geographically extends beyond the U.S. So typically, those are also -- could potentially be slower. So -- but data is not going to be any time before 2027. As time goes on, maybe in May or August this year, we'll be able to give you a better feel, is it first half, second half, first quarter, fourth quarter, whatever, we'll update folks as time goes on. As far as BD, absolutely. I mean, our focus has been CNS will continue to be CNS, and we're agnostic, whether that's neurology or psychiatry. And yes, we did say historically that we are willing to go outside CNS. And obviously, the Sage acquisition in a way, overlapped on both. It is a CNS product, but it got us into women's health. So clearly, that's an area we are looking at right now. And our priorities will continue to be revenue-generating, cash flow generating opportunities. And if there are any assets there that are pipeline assets, our preference would be more on later-stage assets. Again, that could potentially give us new product launches in the '27 to 2030, 2031 time frame. So that's really the prioritization that we have and what we're working towards from that perspective. And as Tim said, we have a nice clean balance sheet. So we have flexibility on whether the transaction is a product, is it a company? Is it a portfolio of products? So I mean that gives us some flexibility there, obviously. Operator: This concludes the question-and-answer session. I will now turn it back to Jack Khattar for closing remarks. Jack Khattar: Thank you for joining us on this call today. 2025 was a special year for Supernus. It marked our 20th year anniversary and the completion of our successful transition from our legacy products, Trokendi XR and Oxtellar XR. In 2025, Supernus delivered one of its best performances ever with record revenues of $719 million behind the robust performance of its growth portfolio consisting of Qelbree, GOCOVRI, ZURZUVAE and ONAPGO. Supernus has now a diversified portfolio of growth products where our future success is not solely dependent on one single product. We expect to see continued healthy growth from Qelbree and GOCOVRI, augmented by significant growth from ZURZUVAE and ONAPGO, 2 products that have been on the market for 2 years or less and have a significant market opportunity. In addition to our 4 growth products, we continue to advance our pipeline and to explore corporate development opportunities to position Supernus as a long-term growth company while generating at the same time, strong cash flows behind the strength of our expanded product portfolio and through the efficiency of our operations. Thanks again for joining us this afternoon. We look forward to providing you with updates throughout the year. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Operator: Welcome to Amarin Corporation plc's conference call to discuss its fourth quarter 2025 financial results. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please note this conference is being recorded. I will now turn the conference call over to Devin Sullivan, Investor Relations for Amarin Corporation plc. Devin Sullivan: Thank you for your time and attention this morning as we discuss Amarin Corporation plc's 2025 fourth quarter and full year financial results. On the call today are Aaron Berg, President and Chief Executive Officer, and Peter L. Fishman, Chief Financial Officer. Other members of the senior management team will be available as needed during the Q&A session that will follow these prepared comments. Turning to today's agenda, Aaron will provide a state of the company, and Peter will walk through the numbers. Before we begin, I would like to remind everyone that today's press release is available on the Investor Relations section of the company's website www.amarincorp.com, as will a replay of this call shortly after its completion. Our Annual Report on Form 10-K will also be available in the Investor Relations section of the website in the coming days. Please be aware that during this call, we may make certain statements related to our business that are deemed forward-looking statements under federal securities laws. These statements are not guarantees of future performance, but rather are subject to a variety of risks and uncertainties. Our actual results could differ materially from expectations reflected in any forward-looking statements. Additionally, we assume no obligation to update these statements as circumstances change. For a discussion of the material risks and important factors that could affect our actual results, please refer to our SEC filings, which are available either on our company website or the Securities and Exchange Commission's EDGAR system. I will now turn the call over to Amarin Corporation plc's President and CEO, Aaron Berg. Aaron, please go ahead. Aaron Berg: Thanks, Devin. 2025 was a year of substantial achievement for Amarin Corporation plc. The strategy we have been developing to transform our business model and expand the global market where our Vascepa/Vazkepa franchise took shape began producing measurable results. Midyear, we established our exclusive long-term partnership with Recordati to commercialize Vazkepa across Europe, with the overarching goal of better capitalizing on the untapped potential of Vazkepa to tackle the growing challenge of cardiovascular risk worldwide. This strategy was the catalyst for us to examine the entirety of our operations and identify areas where we could realize significant and durable efficiencies that would support this strategic pivot. Our expectation is that this combination of a refined strategy via our relationship with Recordati and enterprise-wide operating efficiencies generated by our global restructuring will result in a whole that is greater than the sum of its parts, allowing us to efficiently generate revenue and cash flow globally and position us to be a stronger, leaner operation. We are very pleased with the progress to date. For full year 2025, we achieved a significant reduction in our operating expenses, generated positive cash flow earlier than anticipated, and maintained a debt-free balance sheet and ample cash balance. As of 12/31/2025, we realized approximately half of the estimated $70 million in total operating expense savings associated with our global restructuring plan and expect to achieve the full savings benefit from these initiatives by 06/30/2026 as planned. While there is still work to be done, we are operating from a much stronger position due to the hard work and dedication of our exceptional team. The operational progress we made this year reflects their shared commitment to enhancing long-term shareholder value. Everything we do as a company is driven by our commitment to reduce cardiovascular disease as a leading cause of death. With approximately 30 million total prescriptions written since the launch of Vascepa in 2013, and a large and growing library of validating studies, analyses, and scientific evidence that support Vascepa's ability to reduce cardiovascular events by 25% when added to a statin, we remain confident in the durability of our core franchise and its global growth potential. In the U.S., Vascepa has retained clear market leadership across all available icosapent ethyl products, branded and generic, a remarkable achievement five years since the first generic product was introduced. We maintained all major managed care exclusives through 2025, and successfully regained exclusive status midyear with a large national PBM. Our continued revenue generation reflects the effectiveness of our commercial strategy, as well as our success in maintaining market share leadership due to both accessibility and affordability. We know from our experience with Vascepa in the U.S. that Europe offers a significant growth opportunity because of the growing awareness about lipid management protocols and the need for therapies that address cardiovascular disease, which is the number one killer globally and on the rise across the world. While our team in Europe made very good progress in various markets, as we considered our options to address this promising opportunity for the future, it became clear that the best way to accelerate and maximize access to this large untapped market where we have IP protection through 2039 was via a partnership with an established leader in cardiovascular disease in Europe. Our exclusive long-term license and supply agreement with Recordati, which commenced in Q3 2025, includes commercializing Vazkepa across 59 countries with a focus in Europe. This agreement has significantly transformed our international commercial strategy into a fully partnered model comprised of seven parties in close to 100 countries. This approach is designed to generate substantial economies of scale and offer significant revenue opportunities while providing extensive infrastructure and commercial experience. Recordati is now fully managing European promotional activities for Vazkepa. As a result, we are providing this therapy with greater effectiveness and efficiency to an expanded international patient population. I would like to share with you some of the initial highlights from this agreement. Delivered immediate, meaningful financial value, including a $25 million upfront cash payment from Recordati with eligible future milestone payments totaling up to $150 million, with the first milestone payment contingent upon Recordati achieving annual net sales of $100 million. Commercial momentum continues, with both volume and end-market demand growing across all launch markets. Commercialization was advanced in Italy, a key market, initiating sales efforts and building on Amarin Corporation plc's strong pre-deal groundwork for pricing and reimbursement. Expanded patient access including securing pricing and reimbursement in two additional countries, Austria and Slovenia. The position for further European expansion with Recordati actively evaluating additional launch opportunities and timing broadly across the full 59-country territory. Outside of Europe, our partners continue to make progress in their respective regions. Of note, together with our partner Lotus, we secured two regulatory approvals in 2025, South Korea and Singapore, and are preparing to launch in these countries in the future. We expect the regulatory reviews of previously submitted applications in Thailand and the Philippines will be significantly advanced by the respective local authorities across 2026, with new regulatory filings to be made in Vietnam and Malaysia this year. Overall, the success of our partners is fundamental to our global strategy of making Vascepa available to the millions of patients in need of cardiovascular risk reduction today. Supported by more than 500 peer-reviewed publications, science is the foundation of everything we do, providing both us and our partners robust, credible evidence to support confident decision making and long-term patient impact. It guides our decisions and underpins our continued analyses that further explore and validate Vascepa's ability to reduce major adverse cardiovascular events across diverse patient populations, further strengthening its established therapeutic value. We ended 2025 having supported a total of 45 abstracts, posters, and papers that further expanded the body of knowledge for our product. Our most recent publications in late 2025 and 2026 include three REDUCE-IT post hoc analyses that were previously presented at major medical congresses. We had two papers published online in the American Journal of Preventive Cardiology, or the AJPC. The first demonstrated that icosapent ethyl reduced cardiovascular risk in patients with baseline characteristics of cardiovascular, kidney, metabolic, or CKM, syndrome. The second showed that icosapent ethyl reduced the rate of cardiovascular events across the range of standard modifiable cardiovascular risk factors that included hypertension, diabetes, smoking, and hypercholesterolemia at baseline for established cardiovascular disease patients. A third paper published online in the European Journal of Preventive Cardiology, or EJPC, demonstrated that icosapent ethyl treatment in the REDUCE-IT study was associated with fewer total hospitalizations and increased the chances of an individual living without hospitalization. We look forward to sharing more about this paper soon, which provides additional insights on the effects of icosapent ethyl on patient-centered measures of total disease burden. In addition, we are preparing to attend the American College of Cardiology scientific sessions in New Orleans in March, where we and our collaborators will present a new REDUCE-IT patient subgroup analysis and additional mechanistic data on EPA's multifactorial biologic activities. We expect to share more details as we approach the ACC conference. Building on the substantial body of evidence we have generated and supported this year, we are also encouraged by the ongoing progress across the complex lipid-lipoprotein research landscape. Recent FDA breakthrough therapy designations highlight the growing recognition of the risks associated with elevated triglycerides and the need to address them. Innovation is reshaping the future of cardiovascular care, with promising research into multiple pathways, and as this landscape evolves, we believe Vascepa remains uniquely positioned for sustained relevance and growth. While multiple forces are shaping today's treatment environment, our perspective is straightforward. Currently available, proven, safe, and evidence-backed therapies are often overlooked as attention shifts to new innovations, but should not change the reality that some of the most effective treatment options are those that have consistently delivered meaningful outcomes over many years, including Vascepa. Such conviction is supported by two key factors. Firstly, the FDA's recent update to fenofibrate labeling marks a meaningful turning point in regulatory clarity. While fenofibrates remain approved to lower triglycerides in patients with severe hypertriglyceridemia, the updated label reflects what decades of outcomes data have shown: fibrates do not reduce cardiovascular events, even when added to statins. While fibrates continue to be prescribed frequently for patients in conjunction with statins to reduce cardiovascular events, this clarification is helping reset expectations across the healthcare system and reinforcing a shift toward therapies supported by proven clinical outcomes, not simply biomarker changes. Against this backdrop, Vascepa stands apart as the only FDA-approved oral therapy with indications for both severe hypertriglyceridemia and cardiovascular risk reduction, with the demonstrated ability to reduce the risk of major cardiovascular events by 25% when added to statin therapy in appropriate patients, as shown in the REDUCE-IT cardiovascular outcomes trial. As prescribers and payers increasingly align decisions with evidence-based medicine, this differentiation becomes even more important, especially with nearly half of all U.S. adults affected by cardiovascular disease. Secondly, as research activity across lipids and lipoproteins expands, we believe it continues to highlight the role of established, proven options such as Vascepa. As we have mentioned previously, we are closely monitoring payer-driven step therapy dynamics as premium-priced triglyceride-lowering therapies enter the market. In many cases, payers are already requiring patients to step through approved, established, lower-cost options before accessing newer agents. Historically, this type of formulary design has driven broader use of proven oral therapies; we believe a similar dynamic is likely to emerge in severe hypertriglyceridemia. Taken together, these developments reinforce our confidence in the global opportunity for the Vascepa franchise, grounded in outcomes-based evidence. All that said, we have entered 2026 with an established U.S. therapeutic franchise that continues to deliver lifesaving results supported by industry tailwinds emphasizing widely available, cost-effective treatments such as Vascepa, as a crucial part of preventing cardiovascular disease in patients with elevated triglycerides. We have what we view as a significant growth driver via our relationship with Recordati that has strengthened our presence in Europe and helped define our fully partnered international commercial strategy. We significantly lowered our corporate expense base and enjoy a financial position that ranks among the strongest in our recent history. At the same time, the Board and management, with the assistance of our exclusive adviser, Barclays, will continue to explore value-enhancing strategic opportunities. We have come a long way over the past year, addressing challenges and meeting opportunities head on and emerging stronger. But I will say it again, we still have much work to do. 2026 will be a pivotal year for Amarin Corporation plc, working to defend our U.S. franchise, working efficiently and effectively to expand our global presence through our international partnership model, and working to stay the course to unlock sustainable long-term value for shareholders. I am confident that we have the right product, strategy, and team in place to meet these objectives and position the company for long-term success. As the year progresses, we expect to be able to provide greater insight to our progress and look forward to sharing that with you. I will now turn the call over to Peter L. Fishman to take us through the numbers. Peter L. Fishman: Thanks, Aaron. Our results for 2025 reflected the initial success of our global restructuring plan, specifically with respect to optimizing our operations and creating a platform for sustainable, efficient growth. For 2025, total net revenue was $49.2 million compared to $62.3 million in last year's fourth quarter. By geography, U.S. sales declined 7% due to a decline in net selling price, driven by proactive pricing to align with market dynamics. Looking ahead, we typically see the majority of the full-year U.S. decline in volumes in the first quarter of the year based on annual changes for payers. As we continue our transition of commercial activities to Recordati in the fourth quarter, product revenue for Europe was $2.3 million, including $0.9 million in supply shipments to Recordati. This revenue was generated at significantly lower cost compared to the $4.0 million of direct sales in 2024. Once the transition is complete, Europe product revenue will come entirely from supply shipments to Recordati. Rest of world revenues were $3.1 million compared to $11.9 million in last year's fourth quarter. This variance was driven by the impact of $7.8 million in stocking orders in 2024 in advance of market launches. Importantly, we continue to see end-market demand growth across all launch geographies, evidenced by the year-over-year increase in our royalty revenue. While early in most markets, we are pleased by our partners' focus on expanding the reach of Vascepa. In particular, we are encouraged by the commitment and results from the Recordati team, especially maintaining momentum during this transition, and we look forward to accelerated end-market growth as they expand their commercial efforts and footprint. As a reminder, our partnered model will result in revenue variability quarter to quarter, driven by the current scale of operations, as well as the impact of launch timing, end-market demand, and the structure of individual partnership agreements. Moving to our expenses, the global restructuring we announced in mid-2025 produced meaningful cost savings in the fourth quarter. Total operating expenses declined by 31%, or $13.5 million. By category, cost of goods sold declined by 63%, reflecting 2024 one-time inventory write-offs, as well as the restructuring impact from negotiations of our supply agreement. Excluding these one-time items, COGS declined by 10%. SG&A declined by 46% and represented 41% of total net sales, compared to 59% of total net sales in last year's fourth quarter, reflecting the early benefits from our global restructure. R&D expenses were stable, in line with our ongoing commitments to global regulatory support and to the science underlying our global branded product. Restructuring expense was $4.1 million, down from $9.4 million in 2025, bringing our total annual restructuring expense to $36.2 million. As previously announced, we expect to incur the last of these expenses in early 2026. Excluding the restructuring charge of $4.1 million, total OpEx declined by 41% from last year's fourth quarter. Our operating loss in the fourth quarter narrowed to $2.3 million from an operating loss of $16.0 million in last year's fourth quarter, excluding restructuring charges in both periods. Turning to the balance sheet, we generated positive cash flow from operations of $7.0 million in 2025, ending the year with $303 million in cash and investments, no debt, and working capital of $455 million. I will echo what Aaron said earlier. 2026 will be a pivotal year for Amarin Corporation plc. It will also be a period of transition and recalibration, defined largely by the first full year of a partnered model in Europe. We are confident that our financial position will support our business activities for 2026, including the normal first-quarter seasonality in the U.S. and quarterly fluctuations in revenue from supply shipments inherent in partnership agreements. We expect to generate positive cash flow for the full year in 2026 through cost-efficient revenue generation with our U.S. franchise and our new international business model while operating with a significantly improved OpEx profile reflecting the approximately $70 million in annualized savings to be achieved by 2026. Thank you again for your attention. I would now ask the operator to open the call to questions. Operator: Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for questions. Your first question for today is from Michael with Leerink Partners, on for Roanna Ruiz. Michael (Leerink Partners): Hi. This is Michael on for Roanna Ruiz at Leerink Partners, and thank you for taking our question. Our question is, could you provide more color on the volume versus price dynamics in 4Q? And given that there seems to be net pricing pressure, has the calculus on launching an authorized generic changed at all, and what would the trigger look like? Thank you. Thank you, Michael. It was a little bit hard to hear, but did you say volume versus price? Are you talking about the U.S.? Aaron Berg: Peter, do you want to comment on volume versus price in the U.S.? Peter L. Fishman: In Q4, our volume and price compared to Q3 remained relatively consistent. So we have seen that consistency. As mentioned, when we look into 2026, that is when, in the first quarter, we typically see that initial bump to both our volume decline. And from a pricing perspective, we always have some pricing pressure as we deal with the market dynamics related to being in the generic environment. Aaron Berg: The normalized trend tends to flatten. So as we have seen in Q1 each year, there is more volume pressure in Q1, but that tends to level out going into Q2. And the pricing as the year goes on should also be relatively consistent. Just again a reminder, we are focused on exclusives, and as long as we maintain those exclusives, then it should be fairly consistent. It is a dynamic market, a number of generic competitors, and things can happen during the year. But we are confident we are starting the year well, with our exclusives in place. And the strategy continues to work here in the U.S. where we are focused on payer access and not as much on the sales and marketing effort, as you know. Looking forward to continuing to generate cash, profitable revenue here in the U.S. for 2026. Alright. Thank you. Operator: Your next question for today is from Daniel with Goldman Sachs, on for Paul Choi. Daniel (Goldman Sachs): Good morning, team. This is Daniel on for Paul. So we have a question for 2026 in the U.S. How confident are you you are able to sustain exclusivity with your existing exclusive formulary? Thank you. Thanks, Daniel. Aaron Berg: So we are now five years into the introduction of a generic. And at the end of each year and beginning of each year, we say how long can we maintain it, and our team has done an exceptional job. We have started the year maintaining our exclusives. We are confident that we can maintain them through the year. But we also know that, for example, in 2024, in the middle of the year, we lost a PBM but got it back in 2025. So it can be relatively dynamic, but we are starting the year in a confident position with our exclusives in place. And we continue to be profitable. So I look forward to a good year. Thank you. Operator: We have reached the end of the question and answer session, and I will now turn the call over to Aaron Berg for closing remarks. Aaron Berg: Thank you. Thank you all for your interest in Amarin Corporation plc and for taking the time to listen to us today. Appreciate it. Have a good day. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Michal Ben Ari: Please refer to our Annual Report on Form 20-F filed with the SEC on 02/25/2026 for a discussion of the factors that could cause actual results to differ materially from those expressed or implied. We do not undertake any duty to revise or update such statements to reflect new information or subsequent events. You can find reconciliations of these metrics within our earnings release. With that, I will now turn the call over to Yoram Salinger. Yoram Salinger: In global high-tech companies, my background is in building and scaling technology companies through key growth phases. And that is exactly what I intend to do here at Valens Semiconductor Ltd. I am really excited to have joined this company. I have only been here a few months, but it is already clear to me that Valens Semiconductor Ltd. has exceptional technology, a strong executive team, dedicated and professional employees, and a very compelling opportunity ahead. Before I dive into Q4 numbers and our annual overview, I want to take this opportunity, my first Valens Semiconductor Ltd. earnings report, to present you with my initial thoughts about the company and to set expectations around Valens Semiconductor Ltd.’s growth in the years ahead. This company has delivered some remarkable achievements over the years. We created the HDBaseT standard and founded the HDBaseT Alliance, which boasts over 200 member companies. We sell to nearly all the leading players across the audio video industry, supporting their innovation across various verticals they serve. In the automotive market, we are a longtime supplier of chips for Mercedes-Benz, powering the state-of-the-art MBUX infotainment system. We were a key contributor to the A5 standard, and we have become a pillar within the growing A5 ecosystem, achieving four design wins for the next generation ADAS systems. We feel confident that both the audio video and automotive industries represent significant long-term growth pillars for the company, and the first number I want to share with you is a new growth projection. We expect that in 2026, our revenues will reach between $75,000,000 and $77,000,000. The midpoint reflects growth of approximately 8% over last year. While we expect to maintain growth in 2026, the pace and extent of the growth may be affected by macroeconomic conditions and the pace of adoption of new technologies, which could continue to reduce visibility and increase uncertainty. Given the current environment and reduced visibility beyond the near term, we will provide single-year growth projections going forward. My outlook for Valens Semiconductor Ltd. and my strategy for achieving our growth target is as follows. From now on, we are concentrating our resources on our core businesses: audio video and automotive. Those are the markets where Valens Semiconductor Ltd. brings unmatched technology leadership and where we see sustained, profitable growth opportunities. That said, we remain proactive, focusing on seizing large, revenue-generating opportunities that may arise in additional verticals that require high-performance connectivity solutions in challenging environments. But our priority will be to ensure disciplined execution, profitability, and innovation within our core markets. With that as a starting point, I would now like to dive into our Q4 and 2025 full-year performance. We are pleased to report a strong fourth quarter, well above our initial expectations. We delivered revenues of $19,400,000, exceeding our guidance range of $18,200,000 to $18,900,000 as customer demand exceeded expectations in the audio video market. This marked the seventh consecutive quarter of growth for our company. GAAP gross margin for Q4 2025 came in at 60.5%, better than the guidance, and adjusted EBITDA loss was $4,300,000, within the guidance range. Our full-year revenues for 2025 were $70,600,000, also exceeding our guidance range of $69,400,000 to $70,100,000. GAAP gross margin for the full year 2025 came in at 62.4% and adjusted EBITDA loss was $16,990,000, both above our guidance. Looking ahead to Q1 2026, we expect revenue to be in the range of $16,300,000 to $16,700,000. Beyond the numbers, I want to begin our quarterly discussion with a review of one of our core growth engines, audio video. Valens Semiconductor Ltd. is offering two unique and cutting-edge chipsets that fill market gaps for this industry: the VS3000 and the VS6320. Let us start with the VS3000, the only chip on the market that can extend uncompressed HDMI 2.0 over widely used category cable. Our chip is the solution of choice for products that need to reliably send high-resolution video over long distances. Think projectors, lecture halls and auditoriums, boardrooms, warehouses, sports bars, casinos—anything that requires multiple displays and high-quality video. Our VS3000 is basically the most suitable option. In 2025, our VS3000 finally transitioned from high-end only to more mainstream products. Major companies that year, marking a nearly 100% increase in VS3000 sales from 2024. This is great news for Valens Semiconductor Ltd., as the VS3000 is the most advanced HDBaseT chip we offer in our core audio video market and is the pillar of our growth opportunity. As 4K video becomes more mainstream, and as lower-quality solutions become less viable for professional deployment, we expect VS3000 sales to continue to ramp up as we move further into 2026 and beyond. The second cutting-edge chip I want to discuss in relation to the audio video market is our newest VS6320. As a reminder, this is the first and only high-performance USB 3.2 extension solution built on a dedicated chip. While USB 2.0 has long been sufficient for extending basic peripherals such as keyboards, mice, audio devices, and early-generation cameras, USB 3.2 is increasingly being used in this market to enable a new generation of products: high-resolution USB cameras, interactive displays, and more. Applications include digital signage and interactive kiosks in airports, video walls in museums, retail stores, telemedicine setups in hospitals, and high-end conference rooms. One of the world’s top three ProAV manufacturing based on this chip. We expect the VS6320 to be another growth engine for us in 2026 and beyond. As for automotive, our opportunity in automotive is on the market for high-speed sensor noise immunity, reaching error rates that are orders of magnitude lower than what our company has achieved in milestone over recent months. To four VA7000 A5 design wins globally and reinforces the connectivity standard as a front-runner for next-generation ADAS and autonomous systems. We also announced our partnerships around our VA7000 A5 chipset. Mobileye, a global leader in ADAS systems, selected our chips for the sensor-to-compute connectivity infrastructure underpinning their most advanced ADAS product. We successfully completed internal viability testing with seven vendors of A5 silicon. We support a Japanese company, Sakai Riken, as they unveiled a VA7000-based e-mirror with an order of magnitude more imaging data than other solutions on the market. And in Q1 2026, a major Korean supplier, MCNEX, launched the industry’s first automotive-grade QHD front and rear cameras over low-cost channels, based on our chipset. A5 reached other milestones as well. A different silicon vendor announced its own A5 design win with a major Chinese OEM. Sony Semiconductor Solutions introduced to the market the first sensor in the world which integrated A5 extension, positioning us well for future design wins. Of course, our first-generation VA6000 has been in mass production since 2021 with Mercedes-Benz. The contract generated revenues of $18,400,000 during 2025. I would like to conclude by mentioning the difficult but necessary decision to reduce our workforce. In late January, we announced that we will be reducing our workforce by approximately targeted disciplined, designed to optimize our cost structure, streamline operations, and sharpen execution across the company. This was not a decision I took lightly. Valens Semiconductor Ltd. was built by exceptional people, and I am grateful for the contributions of those who are leaving the company. At the same time, this step allows us to continue to invest in our core business segments with clarity, urgency, and confidence while maintaining the flexibility to capitalize on the right opportunities as they arise. With that, Guy, please go ahead and discuss our financial performance in more detail. Guy Nathanzon: Thank you, Yoram. I will start with our fourth quarter revenue of $19,400,000, which exceeded our guidance range of $18,200,000 to $18,900,000. The Cross-Industry Business, or CIB, accounted for $13,900,000 of total revenue this quarter. This compares to Q3 2025 revenues of $13,200,000 from CIB and $4,100,000 from automotive, which represented approximately 75% and 25% of total revenue, respectively. In Q4 2024, revenues from CIB were $11,700,000, and $5,000,000 were from automotive, or approximately 70% and 30% of total revenue, respectively. Q4 2025 gross profit was $11,700,000 compared to $10,900,000 in Q3 2025 and compared to $10,100,000 in Q4 2024. Q4 2025 GAAP gross margin was 60.5%, compared to Q3 2025. Q4 2025 gross margin for CIB was 66.4% and automotive gross margin was 45.9%. This compares to Q3 2025 gross margins of 69.1% and 43.2%, respectively, and for Q4 2024, gross margins of 64.7% and 50.5%, respectively. Non-GAAP gross margin in Q4 was 63.9%, which compares to 66.7% in Q4 2024. Operating expenses in Q4 2025 totaled $20,900,000 compared to $19,000,000 in Q3 2025 and $18,500,000 in Q4 2024. The increase was due to lower income from a certain batch production incident in an amount of $1,000,000 and higher payroll expense. Change in earnout liability in Q4 was an income of $300,000 compared to an expense of $700,000 in Q3 2025 and an expense of $100,000 in Q4 2024. The change compared to Q3 2025 is mainly due to a reassessment of the demand to be paid to Achronix. Adjusted EBITDA loss in Q4 2025 was $4,300,000 compared to an adjusted EBITDA loss of $4,300,000 in Q3 2025 and an adjusted EBITDA loss of $3,700,000 in Q4 2024. GAAP loss per share for Q4 was $0.09 compared to a GAAP loss per share of $0.07 for Q3 2025 and a GAAP loss per share of $0.07 for Q4 2024. Non-GAAP loss per share in Q4 2025 was $0.04, compared to a loss per share of $0.04 in Q3 2025 and a loss per share of $0.02 in Q4 2024. I will now turn to the full year 2025 results. Total revenues for the year 2025 were $70,600,000, exceeding our guidance of between $69,400,000 to $70,100,000. This compares to full-year revenue for 2024 of $57,900,000. Revenues from the Cross-Industry Business were $51,600,000, representing 73% of the total revenue, compared to $36,300,000 in 2024. This increase was due to the recovery in the audio video market. Automotive business revenue was $19,000,000, representing 27% of total revenue, down 12% from $21,600,000 in 2024 due to gradual price erosion and a reduction in the number of units sold to Mercedes-Benz. GAAP gross margin was 62.4% for the full year 2025, compared to 59.2% in 2024. On a segment basis, 2025 gross margin from the Cross-Industry Business was 68.1%, and gross margin from automotive was 47%. This compares to gross margins of 71% and 39.5%, respectively, in 2024. The increase in 2025 automotive gross margin was due to an optimization of our product cost. The decrease in gross margin of the CIB was due to a product mix shift. Non-GAAP gross margin was 66.1%. Operating expenses were $75,600,000 in 2024. The primary increase in operating expense was related to R&D expense, which increased by $2,200,000 mainly due to increased payroll expense that was driven by two factors: the U.S. dollar/Israeli shekel currency influence and additional headcount in 2025. Adjusted EBITDA loss for the full year 2025 was $16,900,000, a decrease compared to $21,100,000 in 2024. GAAP net loss per share for 2025 was $0.31, a decrease compared to $0.35 in 2024. Non-GAAP loss per share for 2025 was $0.14, a decrease compared to $0.15 in 2024. Turning to the balance sheet, we ended Q4 with cash, cash equivalents, and short-term deposits totaling $92,600,000 and no debt. This compares to $93,500,000 at the end of Q3 2025 and $131,000,000 at the end of 2024. The decrease in cash from the previous year is attributed in large part to our share repurchase program, which totaled $24,000,000 in 2025. This means that the company consumed $14,400,000 in ongoing operations during 2025. Our working capital at the end of Q4 was $95,700,000 compared to $98,900,000 at the end of Q3 2025 and $133,600,000 at the end of 2024. Our inventory as of 12/31/2025 was $10,100,000, a decrease from $11,000,000 on 09/30/2025 and $10,200,000 on 12/31/2024. Now I would like to provide our guidance for the first quarter and full year of 2026. We expect Q1 revenues to be in the range of $16,300,000 to $16,700,000. We expect gross margin for Q1 to be in the range of 57% to 59%, and we expect adjusted EBITDA loss in Q1 to be in the range of For the full year 2026, we expect revenues to be in the range of $75,000,000 to $77,000,000. The midpoint reflects growth of approximately 8% compared to the annual revenues of 2025. We expect an adjusted EBITDA loss of approximately $7,500,000 for the full year 2026. I will now turn the call back to Yoram for his closing remarks, before opening the call for Q&A. Yoram Salinger: Thank you, Guy. We believe that Valens Semiconductor Ltd. is in a strong position. We have a healthy balance sheet, are market leaders in audio video, and we are well positioned to take a leadership position in automotive as well. We are using our newest chipsets to open up new growth opportunities while focusing now more than ever on our core businesses. We expect good things ahead in 2026 and we will now open for questions. The first question is from Suji Desilva of Wolfe Capital. Please go ahead. Suji Desilva: Hi, Yoram. Hi, Guy. And congrats on the progress here. The fourth quarter guide, just to review that, what were the drivers of the upside on the fourth quarter versus the prior guidance? Yoram Salinger: So thank you for your question. So usually, Q4 is categorized by end-of-year budget to be breakout. Between the AV business, the auto business, we sorry. For. Yes. Yes. So, basically, we are not splitting our guidance between the different business units, so we are not going to go into that today. You know, having more design wins in automotive is obviously something that we are striving towards and maintaining our very strong position within the audio video business is something that we will be focusing on in 2026 and beyond. Suji Desilva: Okay. And then my last question. Yoram, can you talk maybe about how you would leverage the channel and partnership success in the ecosystem that Valens Semiconductor Ltd. has had to try to drive further growth and maybe touch on the incremental areas like medical instruments and industrial factory automation as how you will ramp those? Thanks. Yoram Salinger: You know, Valens Semiconductor Ltd. has been known for years for establishing the HDBaseT standard and the HDBaseT Alliance. I think that, you know, inculcating 200 leaders in the audio video market is an amazing tool for us to drive our products into the market for the years to come. So we will be focusing on that and enhancing our closer relations with the channel. When we speak about automotive, I think there are two distinct partners that we need to focus on. One is Mobileye, and Mobileye is a very strong and close partner for Valens Semiconductor Ltd. And the other one is the announced Sony sensor, kind of supporting AI. Those two are marking the road for us for looking for more partnerships in order to drive our success in the automotive ADAS business. Was there another part of the question that I missed? Suji Desilva: Just the newer areas, medical, industrial, any thoughts on driving the growth? Yoram Salinger: So I think that the technology is relevant for any market that is looking for high-performance connectivity solutions in challenging environments. So this is kind of a larger category. We announced some deals in both industrial and medical over the past year. We will continue pursuing large opportunities in those markets. But the emphasis is that we have two very strong anchors that we are going to be extremely focused on, and this is why we kind of outlined the two, other than automotive and ProAV. But we would obviously chase large, significant opportunities both in industrial and medical alike. Suji Desilva: Okay. Appreciate all the detail there, Yoram. Thanks. Operator: The next question is from Quinn Bolton of Needham and Company. Please go ahead. Quinn Bolton: Hi, Yoram. Welcome to Valens Semiconductor Ltd. I guess I wanted to follow up on Suji’s last question there. It was a little confusing to me where it sounds like you are trying to refocus Valens Semiconductor Ltd.’s efforts on your two core markets of ProAV, or the AV market in general, as well as automotive. And so it is not entirely clear. Are you deemphasizing the machine vision and medical opportunities? Will you be more selective with opportunities you pursue in those markets? Or are you still focused on the machine vision and medical markets leveraging the technologies you have developed in the AV and automotive markets? Yoram Salinger: So that is actually a very good question, and I am happy to clarify our position. So being in the AV market for so long, having so many achievements, so many large and good customers, is something that the company should not look at in a light way. So by saying that, we are just kind of stating pretty much the obvious that we are going to focus on that. A company like ours having the Mercedes-Benz deal for, I think, like six years now, having four design wins in the ADAS market, is something of significance for us. We are going to focus on the automotive, trying to leverage our partnerships in order to win more deals in the automotive. I think in your question, you pretty much outlined our position. We are still looking at medical and industrial. That being said, we are looking to find anchor deals, sizable deals that could make an impact on the industry, making our name as the newcomers into this industry. We need to see some large anchor deals in order for us to become a player that could play this game, the entire game, of those two relatively new markets for the company. Quinn Bolton: Understood. Thank you for the clarification. And then just wanted to come back to the AV market. You highlighted both the VS3000 and the VS6320. And in your prepared comments, you mentioned both of those devices are expected to continue to grow year on year in 2026. Are there legacy businesses that you would expect to decline, or are the VS3000 and VS6320 the vast majority of the AV business? Just wanted to make sure we identify those headwinds if there are some. Yoram Salinger: So just to be clear on that, we are segmenting our revenues based on our chipset families. You know, the VS3000 and the VS6320 are the newest generation of our product. It takes time for products to ramp up into their entire capacity or market adoption. Market adoption in the chipset industry takes time, because we are introducing chips that are being introduced to our customers, which are building their products and then launch to the market. It takes time for those to gain momentum and actually be influential on the total result. Therefore, I highlighted those as growing factors in our business, not to say anything or conclude anything about other families of chips that we have in the market. Quinn Bolton: Got it. And then just last question for me. You mentioned that sort of year-end budget flush drove some of the upside in the fourth quarter. When I look at the March guidance, it is down slightly on a year-over-year basis after some pretty healthy year-on-year growth in the past three quarters. Just wondering, is the first quarter guidance sort of reflecting, do you think, this year-end budget flush created a little bit of an inventory accumulation in Q4 that you sort of work through in Q1? And is that the reason for sort of down year-on-year guidance for March? Are there other factors, macro or just the rate of new product adoption that you had mentioned in the script that accounts for the sort of year-on-year decline in the first quarter? Yoram Salinger: So guidance for the year represents growth, yet another growth year for the company. The guidance is $75,000,000 to $77,000,000 for the year. Macroeconomics and instability and tariffs are things that are influencing, you know, our business, pretty much everybody else. So we see Q1 to be a little bit slower than the rest of the year. But we are still, as we said, confident that this is going to be yet another growth year for the company. Q1 would be slower after a very strong Q4. Usually what happens is that our customers will utilize what they have acquired from us, and then as the year advances, it is going to ramp up. Quinn Bolton: Understood. Thank you. Operator: The next question is from Oppenheimer. Please go ahead. Wei Mok: Hi. This is Wei on the line for Rick. Wanted to welcome you, and thanks for taking the question. So my first question is on the strategic vision of the company, and I appreciate the commentary in the prepared remarks and on the questions about focusing on core business like audio video and auto. But as you step into the CEO role and evaluate the company’s position, where do you see the key strengths? Where are the biggest opportunities to sustain growth? I just wanted to ask if you could help us better understand the long-term strategic vision and the competitive position of the company. That would be great. Thanks. Yoram Salinger: So it is actually your question kind of driving me to the core competency of this company, right? And we are a high-performance connectivity solution in challenging environments. This is what we are extremely strong at. When it comes to noise immunity and extenders, we are probably the leading technology in the world. I think that the reason we are focusing on the two core businesses of the company is because we see great growth opportunity within those two markets. And I think that in order for us to be appreciating the opportunity, we are pretty much stating that those markets are not declining, and it is not something that we are going to shift our eyes from the ball, so to speak. That being said, we would definitely seize opportunities within other markets in order to explore other opportunities in adjacent markets. Wei Mok: And, you know, I have been asked the direct question about medical or industrial. Are you pursuing those? Yoram Salinger: Yes. We are pursuing some large opportunities with global players in both of those markets. And we hope that those markets would materialize for us in order to drive the growth of the company for the years to come. But I think that it is important to me and essential for me, coming into this job, to reemphasize the strength of this company in the markets that we have operated in for years now. Wei Mok: Great. Appreciate it. Thank you. So my second question is on the fourth A5 design win. Is there anything you can share with us on timing or the size of this win? Does this win for the Chinese market provide a bigger revenue opportunity than the other earlier three wins? Any additional details would be great. Thank you. Yoram Salinger: Well, thanks for the question. So we are not able to disclose the name, obviously, or the size of those deals, as those deals have been done with OEMs and partners, and we have to be conscious of privacy. So sorry for that, but that is the nature of this business. That being said, we could say that we assume that the start of revenue generation for those deals is going to be somewhere in 2027. And we need to put an asterisk on that because we know that automotive projects tend to be delayed somewhat at times. And the other thing that needs to be acknowledged is that the ramping up of model years takes some more years for this to get to full capacity. So at that point, the only thing I could say is we are extremely proud to have those four design wins. We are extremely happy to have one in China, which is obviously signaling a lot in what is happening in the automotive business. And what we are focusing on is actually achieving more design wins, because when you actually achieve those design wins, it takes time, but when it materializes, it could be big business for us. And, you know, the best example for us is obviously our long, black relations with Mercedes. Wei Mok: Great. Thank you. And maybe lastly, I wanted to ask about the cost cuts. One of the first actions taken was the $5,000,000 cost reduction. I was wondering if you can expand on that a little bit. Were the cuts equally between the I think, what was previously called the CIB, or Cross-Industry Business, and the auto business? And I believe previously you talked about top-line revenues of around $100,000,000 to $110,000,000 in order to get EBITDA breakeven. Has the target or timing of this breakeven changed? Guy Nathanzon: Okay. So first of all, the cuts were across the company in order to reduce OpEx and increase efficiency. So this is the first part of the question. And with respect to the second part, we are still in the same ballpark of the breakeven in terms of revenue. Given the same level of operating standards and the same level of gross margin, the company can be EBITDA positive anywhere between $110,000,000 to $120,000,000 revenue. And there is no change on that aspect. Operator: Thank you. The next question is from Dave Storms of Stonegate. Please go ahead. Dave Storms: Morning, and thank you for taking my question. I wanted to circle back to some of the remarks. Have you given a cadence for when those savings will take place? Will they be will they be more first-half or second-half weighted? Yoram Salinger: Sorry. It was extremely hard for us to understand the question. You were cutting off. Operator: Dave, are you there? Dave Storms: Apologies. The cadence for the cost savings—will they be evenly distributed through the year, or when will they take place? Yoram Salinger: So it is very hard for us to give you a full answer without the full question. I assume you are asking how the cuts were conducted, right? Dave Storms: Right? Yoram Salinger: If I got the question right, it was cross-company. So the cuts were done across company departments, so it was not one segment or the other that has been impacted. It was cross-company. And I think it is part of being an extremely responsible management team that looks at our very strong balance sheet and tries to actually optimize the operation of the company to ensure further growth in the years to come. Dave Storms: Understood. Thank you. For the customer acquisition environment, you had a lot of strong wins in 2025. How do you see the customer acquisition environment changing in 2026? Yoram Salinger: Are you referring to a specific statement, or are you speaking in general regarding customer acquisition? Dave Storms: Primarily in automotive. But if you would like to map the automotive customer acquisition environment into maybe machine vision or medical, and how you see those, you know, potential to win more contracts there, that would be helpful as well. Yoram Salinger: So, obviously, in the automotive business, in order to have design wins, you need to be in connection with the ecosystem, including the OEMs, the Tier 1s, and the suppliers of the industry. Being close to the entire chain is something that you need to be focusing on in order to be able to ensure customer acquisition in the short term, midterm, and long term. And this is exactly what we are working on. We are working with the partners I mentioned and others in order to be in a position to be considered for winning more business in the year to come. So that is on the automotive. On the industrial and medical, as I have indicated earlier, we are focusing on large opportunities, which suggests that we are looking to have wins with leading providers in both of those industries. And that is exactly what we are doing. For obvious reasons, I cannot disclose names, but you can be rest assured that once we have something to share, we would definitely share with you how we advance in those markets. Dave Storms: Understood. Thank you. Operator: If there are any additional questions, please press 1. If you wish to cancel your request, please press 2. Please standby. We will report for more questions. There are no further questions at this time. Mr. Salinger, would you like to make a concluding statement? Yoram Salinger: Thank you. I would like to thank you all for joining us today for our fourth quarter and full year 2025 earnings call and for your continued support and interest in Valens Semiconductor Ltd. I hope to meet you again in our next earnings call. Operator: Goodbye. Thank you. This concludes the Valens Semiconductor Ltd. results conference call. Thank you for your participation.
Ashley Curtis: Tanger Inc. Fourth Quarter and Full Year 2025 Conference Call. Yesterday evening, we issued our earnings release as well as our supplemental information package and investor presentation. This information is available on our IR website, investors.tanger.com. Please note this call may contain forward-looking statements that are subject to numerous risks and uncertainties; actual results could differ from those discussed in the supplemental information. This call is being recorded for rebroadcast for a period of time in the future. As such, it is important to note that management's comments include time-sensitive information that may only be accurate as of today's date, 02/25/2026. At this time, all participants are in listen-only mode. Following management's prepared remarks, the call will be open for your questions. We request that everyone ask only one question and one follow-up question. The call today will be Stephen J. Yalof, President and Chief Executive Officer, and Michael Jason Bilerman, Chief Financial Officer and Chief Investment Officer. In addition, other members of our leadership team will be available for Q&A. I will now turn the call over to Stephen J. Yalof. Please go ahead. Stephen J. Yalof: Thank you, Ashley, and good morning. I am pleased to report that Tanger Inc. delivered another strong quarter, capping off a productive year and positioning us for continued growth. These results demonstrate how our differentiated platform is powering our ability to drive sustained growth across our portfolio, supported by limited new retail development, consolidating department store business, and favorable demographic and economic trends in the markets and communities we serve. Fourth quarter core FFO was $0.63 per share, growing 7.17% over the prior year period, 9% for the full year, and ahead of our guidance. We attribute this strong performance to our focused execution across all facets of our business, including record-breaking leasing production, the accretive integration of our recent acquisitions, and disciplined expense management across our enterprise. This contributed to robust core FFO and same-center NOI growth. Turning to leasing, we achieved leasing volume over 3,000,000 square feet, our highest annual production on record. Occupancy at year end was 98.1%, a 70 basis point sequential increase, and we delivered another quarter of positive rent spreads. We extended lease terms for both renewals and new deals. Tenant sales productivity remained high at $473 per square foot, up 7% from the prior year, and OCR remains at 9.7%, providing additional runway for growth. We have proactively addressed our 2026 lease roll and, as of January, we have addressed over 40% of the space scheduled to expire this year, providing an opportunity to focus on the tenanting opportunities and center merchandising initiatives. These metrics demonstrate the sustained retailer demand for our open-air outlet and lifestyle centers. We remain laser focused on our core strategy of adding new uses and categories and replacing poor-performing tenants, allowing for continuous refreshment of our merchandising and offer. This strategy has served to deliver improved retailer sales performance and has been a significant driver of traffic growth, increased customer visit frequency at our centers, and NOI growth. Favorable market conditions supported by both a dearth of new retail center development and a consolidation in the department store business have contributed to strong leasing demand across our portfolio, which we expect will continue. Growing local populations, robust retailer open-to-buys, and our focus on diversifying our tenant mix to meet our growing customer base create a flywheel for sustained long-term growth across our portfolio. During the holiday season, we saw positive traffic performance as we leveraged print and digital channels to communicate retailer messaging, compelling value and offers, and community events. We anniversaried our successful proactive holiday selling season marketing campaigns highlighted by our Every Day Is Black Friday promotion starting in November. Our holiday social media marketing initiatives furthered our engagement with younger shoppers, who are taking everyday value pricing at their favorite brands across our platform. Additionally, this important cohort are increasingly discovering and engaging with our growing Tanger Club and loyalty platform to enjoy even better deals during their shopping visits. Our ability to grow NOI through multiple avenues is key to Tanger Inc.’s sustained success. 2025 was a notable year for intensifying and upgrading our real estate through peripheral land activation, center renovations, and the strategic addition of food, beverage, and entertainment uses. These initiatives contribute to the elevated dining and entertainment experience that our customers enjoy when they visit our centers. Better on-center experiences have proven to support our ability to attract more elevated brands that today’s consumers demand. Across our portfolio, we are experiencing substantial population growth as families and businesses relocate to our growing markets. This is fundamentally changing the customer base, which creates sustained demand and drives traffic throughout the week across all seasons and will continue to be a positive tailwind for our business. The strong population and domestic tourism growth in many of our markets has been widely recognized as major attractions and economic drivers, planting flags in our communities. Recent examples include the announced Sphere development adjacent to our National Harbor Center in the Washington, D.C. MSA; the Kansas City Chiefs stadium relocation to the Village West Entertainment District, home of our newly acquired Tanger Kansas City at Legends; and the announced relocation and development of Space Force on the Redstone Arsenal campus in Huntsville, Alabama, at the interchange shared by our Bridge Street Town Center. These announcements only reinforce our centers’ positioning as the center of the thriving, dynamic communities, and offer long-term opportunities to invest additional capital, grow NOI, and increase value for stakeholders. We are making significant advancements in our tech initiatives, leveraging AI across our enterprise, enhancing operational efficiency, communicating with our shoppers and Tanger Club members, and supporting our customer service. For example, our multilingual AI chatbot successfully handled more than half of our customer service interactions last year. Tanger Inc.’s enhanced technology platform positions us to unlock even greater opportunities for innovation, transformation, and actionable insights for the future. We strengthened our balance sheet by completing several post-year-end transactions, which addressed upcoming bond maturities, strengthened our liquidity position, and mitigated refinancing costs. Our well-positioned balance sheet provides us the flexibility to reinvest in retenanting our existing portfolio and align our assets with the growing opportunities in our markets while pursuing selective external growth opportunities. As the retail landscape continues to evolve, Tanger Inc.’s value proposition remains highly relevant, combining desirable shopping and valued brands and experiences in thriving communities. We are creating the shopping destinations that resonate with the consumers of the future while delivering consistent value to our retailers, shoppers, and shareholders. Finally, I am very proud that Tanger Inc. was recently named by Newsweek as one of America’s Greatest Workplaces for Culture, Belonging, and Community in 2026, as well as one of America’s Greatest Workplaces for Women, which recognizes companies that have made an inclusive workplace environment the foundation of their organizational success. I want to thank our dedicated Tanger team members, retail partners, loyal shoppers, and shareholders for your continued support as we build on this momentum in 2026. I will now turn the call over to Michael to discuss our financial results, recent capital markets activity, and 2026 guidance in more detail. Thank you, Steve. We delivered core FFO of $0.63 per share in the fourth quarter, representing a 16.7% increase compared to the $0.54 per share in the prior year period, and we ended 2025 delivering core FFO of $2.33 per share, up 9.4% from the $2 and cents we produced in 2024. This growth was driven by solid same-center NOI growth of 4.3% for the year, which reflects the success of our leasing, operating, and marketing strategies along with contributions from our accretive external growth activity. Our full-year results came in just above the high end of our recent guidance, on modestly higher same-center NOI growth, and better performance from our acquisitions. Leasing activity across our portfolio continues to be positive, allowing us to capture total rent growth through a combination of improved base rents and increased tenant reimbursements. We also continue to grow the contribution from other revenues while remaining disciplined with cost management. Our tenant watch list remains at manageable levels, and we were not surprised by the recently announced tenant bankruptcies, which we believe provide attractive opportunities to remerchandise over time. Now turning to our balance sheet. We completed a number of significant capital markets transactions in early January, raising and refinancing $800,000,000 of debt, which improved an already strong balance sheet by enhancing our liquidity, increasing our flexibility, extending our debt duration, lowering our pricing, expanding our bank group, and, importantly, reducing risk. We thank our lenders and investors for their support. Now let me just spend a couple of minutes detailing these transactions and how they fit into our overall capital structure and forward liquidity. At the end of 2025, we had $1,800,000,000 of prorated debt, with $350,000,000 of unsecured debt coming due this September at 3.125%. We also had $44,000,000 drawn on our $620,000,000 lines of credit, and we had an overall debt duration of under three years. Pro forma for the upsized term loans and the exchangeable that we completed in January, the company now has over $1,000,000,000 of immediate liquidity, which includes $270,000,000 of cash, another $150,000,000 available to us under delayed draws on the new term loans, and the full availability on our $120,000,000 lines of credit. This capacity provides us with significant financial flexibility to invest in our portfolio, explore external growth opportunities, and have the capital to repay the unsecured notes that mature in September. Through these transactions, and assuming we pay off the September bonds and the Kansas City mortgage in 2027, we will have extended our debt duration by two years, locked in forward rates for the next five to seven years, and lowered our weighted average interest rate by approximately 10 basis points. Now in terms of the deals, we first closed on $550,000,000 of unsecured term loans due in 2030 and 2033, which increased our total term loan capacity by $225,000,000, with $150,000,000 of that increased capacity on delayed draw features over the next four to seven months. Blended, these new term loans are priced at just over 100 basis points over SOFR at our current ratings grid, and we have swaps in place to fix this debt attractively. We were also able to remove the 10 basis point credit spread adjustment on the term loans and our lines of credit. At the closing in early January, we borrowed $400,000,000 of the $550,000,000, which increased our term loan borrowings by $75,000,000 from year end. Second, we issued $250,000,000 of five-year exchangeable senior notes, which carry a coupon of 2.375%. While the conversion price was set at $41.55 per share, which was up 22.5% from the close on January 7, the company entered into capped call transactions which raised the effective conversion price to $47.49 per share, or up 40% from the January 7 close. If we amortize the cost of the capped call and the transaction expenses into the coupon, the effective yield on the notes rises to the mid-3% range over the next five years. The $250,000,000 of par value notes are to be settled in cash with the premium above par paid in shares or cash at our option. Overall, these refinancing moves underscore our long-term focus, positioning the balance sheet with conservative leverage metrics that provide the company with significant financial flexibility to support both our operational needs and our strategic growth initiatives to drive value for stakeholders. Our leverage remains below peers and our targets, providing additional capacity, with net debt to adjusted EBITDA at pro rata share of only 4.7x at year end, which is benefiting from our continued strong EBITDA growth and the retention of free cash flow after dividends, with our growing dividend only representing 61% of our funds available for distribution. Pro forma for the financing transactions, 100% of our debt is at fixed rates, inclusive of our swaps, and our pro forma weighted average interest rate stands at about 4% with a weighted average term to maturity of four years, rising to five years, assuming the payoff of the September bonds and Kansas City mortgage. Note that we have added a pro forma debt chart to our supplemental on Page 18 and one in our investor presentation on Page 15 to provide additional details. Now turning to our inaugural guidance for 2026. We expect core FFO per share in the range of $2.41 to $2.49 a share, which is up over 5% at the midpoint, reflecting continued organic growth and the contribution of our external growth activity. We expect strong same-center NOI growth in the range of 2.25% to 4.25%, with only Pinecrest and Kansas City remaining in the non-same-center pool. In addition, as we have discussed, our quarterly same-center NOI can vary given the timing of our operating expenses throughout the year against fixed CAM recoveries, which are more evenly distributed throughout the year. Also, following usual seasonal patterns, our occupancy peaks at year end and then rebuilds throughout the year. We expect recurring CapEx in the range of $65,000,000 to $75,000,000, which reflects the growing size of our portfolio and our focus on retenanting and reinvestment, with CapEx overall remaining in the mid teens as a percentage of NOI. For additional details on our key assumptions, please see our release issued last night. One housekeeping note: we do plan to file our 10-Ks tomorrow after the close, which will also be followed by the filing of an updated shelf, which reaches its three-year term in 2026, the resale agreement for our convert, and we will also be refiling our ATM, where no issuances have occurred since late 2024. We are greatly looking forward to seeing many of you at upcoming events over the next few months. Please reach out to the respective firms if you would like to join and meet with us. And with that, operator, I would now like to open the call up for questions. Ashley Curtis: Thank you. We will now be conducting a question and answer session. Our first question today comes from Andrew Reale of Bank of America. Please proceed with your question. Andrew Reale: Good morning. Thanks for taking my questions. First, you have previously highlighted success in recapturing underpaying space, bringing in better use tenants, and it sounds like Saks would be no different this year. But with Saks potentially rejecting leases this year, how should we think about the 2026 CapEx implications just in terms of timing and magnitude? And is a range of Saks outcomes fully contemplated in the CapEx guide? Stephen J. Yalof: Good morning, Andrew. I will speak first to Saks’ plan and strategy with those stores. They have not rejected any of the leases, and we certainly do not anticipate them doing so. If they do, obviously we have spoken about the fact that there is great upside for us long term. With regard to how we plan the capital, Michael, do you want to... Michael Jason Bilerman: Yes. I would say, at this juncture, any spend, depending on if and when we get those stores back, we would underwrite. There would not be much CapEx this year, so that is not embedded in the $65,000,000 to $75,000,000 CapEx that we have given. Andrew Reale: Thanks. And then just follow-up. I would just be curious to hear the latest from your conversations with retailers. First, if there has been anything on tariffs, just given some very recent headlines. And then second, how retailers might be thinking about sales and the promotional environment this year versus last? Stephen J. Yalof: Well, I think first of all, the last year ended very promotionally. I think when tariffs were announced in April of last year, I think a lot of retailers were strategic. The ones that were most nimble and able to move their distribution and their manufacturing around saw great success of getting product into the stores, so much so that even in the fourth quarter, we saw an excess of inventory, particularly in our outlet channel. We speak to our retailers frequently. We do our plan for 2026. A lot of that is informed by the growth strategies the retailers have, their open-to-buys, which do not seem to be decelerating by any stretch of the imagination. We also speak to them with regard to what their sales expectations are going to be for that year so that we can work in concert with them, because as you know, overage is an important part of our business too. Ashley Curtis: The next question is from Juan Sanabria of BMO Capital Markets. Please proceed with your question. Juan Sanabria: Hi, good morning. Thanks for the time. I am just hoping you guys could talk a little bit about leasing trends. The spreads, if you pick the comparable numbers, came down in 2025 versus 2024, but the CapEx spend for those leasing was pretty good and the term you are getting, the length of the leases, has increased. Curious if the longer term is something you guys are proactively looking for or something the retailers want, given the limited amount of space available in markets with little supply coming? Stephen J. Yalof: Yes. Well, look, Juan, I would say that retenanting is clearly a far more profitable program for us than renewing leases. If you take a look at our trend over the last five years, where we were renewing tenants at a rate of 95%, and this year we will renew tenants at a rate of about 80%, because that gives us a lot more opportunity to go after that renewal, which obviously brings more growth to our portfolio. I have to remind us that we are operators and every decision that we make is in service of long-term growth. I think that is important to note as we think about the tenants that we choose to renew versus the tenants that we go to work to replace as we add new brands, entertainment, restaurants, to diversify the mix of our properties, which just increases the utility over time. Juan Sanabria: Thanks for that. And then just to follow-up, have you any statistics you have talked about historically on trying to increase the length of stay of customer visits and adding the food and beverage and entertainment component? Is there any statistics you can share with regards to those metrics? Stephen J. Yalof: We have mentioned in previous quarters that we are in the early innings. I think dwell time is what we are talking about. That is a pretty important metric for us. We are starting to measure dwell time now. But when I say early innings here, we have to create a baseline before we can figure out how to build upon that baseline. Anecdotally, we have got management teams on all of our shopping centers, so we know when our parking lots are full. We know when customers are there for a long period of time. We live and breathe on those centers. Anecdotally, I can tell you that restaurants definitely add not only to the dwell time of the individual customers coming to visit us, but we see a lot of later business too. We are increasing traffic at key times during the shopping day where we are seeing a lot more customers at night. Ultimately, the longer people stay in our centers, the more they will spend, and that will help us continue to drive sales through our platform. Thank you. Ashley Curtis: The next question is from Craig Allen Mailman of Citi. Please proceed with your question. Sydney McInty: Hi, guys. It is Sydney McInty on for Craig. Just curious on the acquisition side, private capital continues to provide competition for available assets. What has been the volume of deals you guys have seen so far in 2026? And are the transactions you are looking at mainly marketed or off-market deals? Thanks. Michael Jason Bilerman: Thanks, Sydney. Our pipeline remains active. We are going to really lean into assets where we can create value. We are pleased with the assets that we have bought, and we have case studies now of how we can use our platform to create value. There is competition in the market. I think that is against a backdrop of very little retail new development and very positive retail fundamentals, which is a good thing overall for the marketplace. And then for us, it is really where we can find value in the two channels, whether it is outlet or open-air lifestyle centers, which we believe gives us a competitive advantage, and then the synergistic nature of these two verticals together, which through the acquisitions that we have done, have really proven out the growth potential of our platform. Sydney McInty: Great. Thank you. And then maybe one more for me. Just with the ongoing remerchandising efforts, I am curious if you have continued to see any shift in the customer demographic at some of your outlets? And then maybe just an update on consumer health overall today? Thanks. Stephen J. Yalof: Sure. I would say definitely. I think a lot of things are contributing to seeing a shift in consumer demographic. I think number one is our shopping centers, with the population shifts and a lot more people moving into the markets where we have centers. We are seeing more families come and shop with us, and we are seeing a much younger consumer too. If you take a look at the brands and the categories that were really successful at the end of last year—family apparel, the health and beauty category, and a lot of those younger-driven consumer brands. We have enhanced our digital marketing and our local marketing initiatives in such a way to really speak to that local customer, and the digital initiatives, whether it is TikTok and Instagram we are using right now to get in front of our customers, is really resonating with that much younger customer. And the younger customer also likes our loyalty program, and we have a loyalty program that incents the customers to come back and shop with us more frequently, and they are rewarded. That is increasing traffic. We see a lot of younger consumers taking advantage of that for doing so with additional discounts to their favorite brands as well. Sydney McInty: Thank you, guys. Ashley Curtis: The next question is from Richard Allen Hightower of Barclays. Please proceed with your question. Richard Allen Hightower: Thanks. Could you talk about the cadence for 2026 and help us understand any other variations seasonally that we should think about in terms of the modeling to get to the full-year number? And the perennial question, what set of circumstances gets you to the high end versus the low end? Michael Jason Bilerman: Thanks, Rich. I would say from an occupancy perspective, what we try to highlight is not every point of occupancy is worth the same. So you cannot just assume we get to a certain occupancy or we drop a certain occupancy, that it has a direct correlation one-for-one relative to NOI, as evidenced last year during our numbers. Now there is cadence just given the seasonal nature where we do peak at the end of the year for the holidays, and then typically in the first quarter, where we do have most of our roll—you look back at our long-term history, averaged about 150 basis points coming off of that fourth quarter. We talked about in the release we are ahead of our 2026 roll in renewals. We continue to see very strong demand, and we are at record leasing volumes. In terms of the second part of your question, the same-center NOI range of 2.25% to 4.25%, as part of NOI, there are variables related to sales, our RCD, our rent commencement dates, tenant credit, the downtime, our operating efficiency. And so when you roll spreads and timing all into the mix, each one of those variables could have a positive or a negative impact. And we weight all of these variables to provide a range of about 200 basis points in same-center that we feel very comfortable with at this juncture today, knowing all of the things that we know. Richard Allen Hightower: I guess maybe a bigger picture question, sort of a follow-up to a prior question as well. As you think about potential future M&A on top of what you guys have already done the last couple of years, we have heard anecdotes from certain peers in retail that they are having active conversations with retailers about specific centers that the retailer might want to expand to under different ownership. Any color on those sorts of conversations from Tanger Inc.’s end? Stephen J. Yalof: Yes. Look, I mentioned earlier that we are in conversations with our retailers all the time. I think our retailers have really gotten behind what we have done as an organization to grow our business, grow dwell time, how we market to the consumer. And because of that, when we pick up the phone and call a retailer and say, hey, this is a prospective shopping center that we are looking at—something that you are in, something that you are not in—what are your thoughts? We usually get positive feedback. I think our brands are definitely rooting for us. They like the fact that we have gotten into that second vertical of lifestyle shopping centers. They believe, and we have proven, that we add value when we take ownership of those centers. We have got a very clear strategy. We work well with our retailer partners. And I think they are supporting our growth. And when we mention a particular market that we are interested in, whether it is an acquisition, or even if there is a greenfields development opportunity across the country, we work closely with them to make sure that they are on board, so we are making really smart decisions from the very beginning of any transaction. Ashley Curtis: The next question is from Hong Zhang of JPMorgan Chase. Please proceed with your question. Hong Zhang: Yes, hi. Michael, I think you talked about CapEx being in the mid-teens this year. Is that something we should expect as kind of a run rate going forward? Or is there any room for your CapEx/TILC spend to fall given customer retention? Michael Jason Bilerman: Thanks, Hong. We expect it to continue in this mid-teens range, which is, for our channel, much lower relative to others. Right? So you look at your models, upwards of 20% to 30% CapEx relative to NOI, and so we feel really good at our levels to be able to generate positive return on invested capital and, given a payout ratio of only 60%, be able to have that free cash flow to reinvest in our business. Hong Zhang: Got it. Thank you. Ashley Curtis: The next question is from Greg Michael McGinniss of Scotiabank. Please proceed with your question. Viktor Fediv: This is Viktor Fediv on with Greg McGinniss. So, coming out of the holiday season and your Black Friday Everyday campaign, what is your current read on the health of your consumer and overall profitability of your retail partners and potential expansion of them within your centers? Stephen J. Yalof: Well, thanks for the question. As far as the health of the retailers, there has been no deceleration with regard to retailers and open-to-buys. We see the retailers are looking to expand. There is not a lot of new retail space being built across the country. And there has been a consolidation in the department store business where we are seeing it, most notably Saks Fifth. Brands need to expand. They are looking for places to expand, and a lot of our markets really support a lot of that growth and that planned growth. So we are definitely optimistic about open-to-buy and about the upside and opportunity that we have with the retailers. To go into the customer, you know, look, particularly in our outlet space, we provide value every day. And I think in whether it is uncertainty caused by tariff noise in the marketplace, or interest rates, or inflation or pricing, I think that the customer is always going to think where can I get brands I want at the best possible price? And that is what we offer every day in the 38 outlet shopping centers across our portfolio. We see that customer. That is why our traffic numbers were up as much as they were this year, particularly in the fourth quarter. We will continue to drive traffic into our shopping centers through our marketing initiatives, social media campaigns. But I think the customer, when they have the chance to vote, they vote at the cash register. They are looking for their favorite brands and value pricing. And again, we want that you shop Tanger Inc. Viktor Fediv: No worries. Maybe my follow-up. Having walked the property last year in Kansas City, and obviously there were rumors at the time that the Chiefs might be moving there. What kind of investments do you foresee happening potentially at that center? I think it is still a couple of years out before the stadium gets built, but what kind of opportunities do you see for Tanger Inc. in redoing the— Stephen J. Yalof: That might not have been here before. I think that there is opportunity for our peripheral land for us to continue to develop and grow on that. There is some development opportunity in that shopping center that we are going to take advantage of. I think it is very top of mind. That is why we talked about it in our opening remarks. Very top of mind for this company. We think it is a center that has an outlet profile and has also attracted non-traditional outlet retailers that see value being where the consumer is and where the customer is going. And I think that the customer is only going to continue to grow and build in this market, and we are going to make sure that we bring that customer not only the value that they want, but the retailers they want, the experiences they want, the food and beverage that they want, across that portfolio. We see Legends as being not only a great buy that we made, but one of the great growth vehicles for this company going into the future. Viktor Fediv: Thanks, Steve. Ashley Curtis: The next question is from Caitlin Burrows of Goldman Sachs. Please proceed with your question. Harrison Slater: Hi, good morning. This is Harrison Slater on for Caitlin. Thanks for taking my question. What does guidance assume for bad debt in 2026? To what extent does that incorporate sort of known versus the unknown headwinds at this point? Michael Jason Bilerman: Thanks, Harrison. So as I mentioned before, our guidance range contemplates a range of credit scenarios. It does take into account what we know today. So within that range, we have taken into account the announced and different projections of how those will manifest themselves, as well as a normal credit reserve. I would say our watch list remains at very manageable levels. None of the recent bankruptcies were a surprise to us. And importantly, it creates long-term opportunities to grow NOI. As Steve talked about our temp strategy, in many cases we are able to mitigate some of that exposure because we are able to backfill on a short-term basis, number one, and then number two is the ability to grow over time by bringing in a new permanent tenant or working with the existing tenant to bring them along. Harrison Slater: Got it. Thank you. That is helpful. And then just a quick follow-up. Leasing spreads were lower in 2025 than 2024 in part due to tougher comps in the lease expirations. To what extent do you think tougher comps will continue to limit reported leasing spreads and ultimately same-store NOI growth? Michael Jason Bilerman: Thanks, Harrison. So I think when you look at our leasing spreads, and when you look at Page 12 in the supplemental, a greater percentage of our growth is coming from remerchandising, whether that is retenanting space, and you can see how we almost tripled the amount of square footage that we leased at almost 30% spreads with lower tenant allowances, but then what we are leasing on a non-comp basis where we are either replacing vacancy or a temp, and that added another 300,000 square feet, which has significant impact on NOI growth. Sometimes metrics will contradict each other. We do not take metrics to the bank. What we take to the bank is cash flow and same-center NOI growth, and all of that is supportive of where we stand. So we look to being able to drive these spreads, work with our retail partners to continue to grow the enterprise, keeping our renewals short, and keeping the new deals attractive on a return on invested capital basis. Thank you. Ashley Curtis: The next question is from Naishal Shah of Green Street. Please proceed with your question. Naishal Shah: Hi, good morning. This is Naishal on for Vince today. It feels like we have recently seen an uptick in retailer bankruptcies and store closures thus far in 2026. Eddie Bauer is another name that has been struggling. It sounds like they may also close some locations. Was curious if you could provide their share of total portfolio GLA and their annualized base rent. Michael Jason Bilerman: Thanks. So none of the tenants that have announced are in our top 25. So each of them, they are small, I mean, obviously, all of our centers are open, so you can go to those centers, and, you know, we have, I think, 14 Eddie Bauer stores in the portfolio. And as we have been talking about on the call, none of these are a surprise to us. This is typically the season post-holiday where you see it. Our watch list remains at very manageable and low levels. And while we focus on these things, it is the opposite that we are really excited about, which is all the demand. When we have record leasing activity, increasing occupancy. But the main side of the equation is so much stronger than the bankruptcies, and that is part of retail. It is the best thing that you constantly reinvent, and we cannot control people’s capital structures or their margins. We can drive traffic to our centers and do as much as we can to help their performance. Naishal Shah: Thank you. That is helpful. And maybe just a quick follow-up. Every quarter over the last year, the number of new lease deals signed has increased in the Tanger Inc. portfolio. Is there a certain category of tenant from which you are seeing an increasing level of demand? Justin C. Stein: Yeah. This is Justin. It is not one specific category. But like Steve mentioned earlier, the family category, like all the Gap brands, are doing extremely well. The athleisure brands are starting to do more deals throughout our portfolio. And obviously, we love health and wellness. We also spoke a lot about our focus on food, beverage, and entertainment, and activating and monetizing our peripheral land. So I think you are going to start to see a lot more of that throughout our portfolio. Those of you that went to NAREIT in December in Dallas, you saw our peripheral strategy in action. And when you walk that asset, you saw a Portillo’s, you saw the Cracker Barrel, the 151 Coffee, and the Wag Bar under construction. That is just one center where we are focusing on food, beverage, and entertainment, and I think you are going to start to see that category expand throughout our portfolio in multiple centers around the country. Naishal Shah: Awesome. Thanks so much. Ashley Curtis: Our next question is from Omotayo Okusanya of Deutsche Bank. Please proceed with your question. Omotayo Okusanya: Yes. Good morning, everyone. Wanted to talk a little bit about the changes you have been making over time to the loyalty program. Trying to understand a little bit more around how that is widening your customer base, getting younger customers, exactly how you are measuring that, and how you see that translating to better sales productivity. Stephen J. Yalof: Well, thanks for the question. So first of all, the loyalty program is an opt-in program, and we reward our loyal customers with digital discounts and initiatives to come into the center, all of which have attribution. So when we send a digital coupon to a particular customer in our loyalty program, that customer then, once they come back to the shopping center and make that purchase in the store, we know via the attribution that they came back. So it gives us an opportunity to not only know who our customer is, speak to a customer in a way that they are interested in getting or consuming their shopping center information, and rewarding them for their loyalty. Our rewards—you know, we do not have a product—but in the outlet channel, we are able to give additional discounts in partnership with the retailers so that we can reward our customers with additional discounts, and stackable discounts on top of the best deal that they can get in any particular store. Our rewards give them an opportunity to even do better. And there are different levels in our loyalty program. There is the entry level, and then there is a level where, if you have achieved a certain amount of sales in any particular year, then you are entitled to a number of different services as well as additional discounts. I just think the gamification of loyalty is really important, particularly to a younger consumer, because they are not only looking for their favorite brands, but they are looking for the best possible price. When you go to one of our shopping centers and you see a number of young consumers walking around with a bunch of bags from their favorite stores, what is as important to them as “look what I just bought at this store” is “look how much I got for the money that I spent.” I think that is a really important part of the conversation, particularly in our outlet channel. Omotayo Okusanya: Is there any data out there just about how membership in general is growing and whether it is the 18 to 25 age group growing fastest? Just anything you can give us about how that is performing? Stephen J. Yalof: Nothing I am prepared to share on the call right now, but we certainly have the data, we track the data, we communicate with these customers. It is a data-driven program. Perhaps in coming quarters, we will get some more information on loyalty. It is a great question. But I am still, unfortunately, not prepared to share anything that I have in front of me right now. Omotayo Okusanya: Fair enough. Great quarter. Ashley Curtis: The next question is from Todd Michael Thomas of KeyBanc Capital Markets. Please proceed with your question. Todd Michael Thomas: Alright, thanks. I wanted to go back to the operating results in the quarter. And sorry if I missed this, but what specifically drove the beat in the quarter versus guidance, which drove full-year results above the high end of the range? I know there is a lot of seasonality in the business in general and the fourth quarter in particular, but just curious if you could sort of highlight exactly where the beat versus your budget was. Michael Jason Bilerman: Thanks, Todd. So coming out of the third quarter, we had updated guidance of FFO of $2.28 to $2.32 and same-center NOI of 3.5% to 4.25%. We ended at $2.33 and same-center NOI of 4.3%. So the NOI came in basically at the high end, just a tick higher, and a lot of that had to do with the performance in the fourth quarter from a revenue perspective as we saw sales drive our percentage rents, the leasing activity driving our base rents as well as our recoveries. The other upside that we got relative to our expectations was just the performance of the acquisitions that were in the non-same-center pool, and so we got a little bit more FFO out of that bucket—Kansas City, Pinecrest, and Little Rock—which all contributed to that end-of-year performance. Todd Michael Thomas: Okay. And then I wanted to ask about the bankruptcies or some of the tenants that have been discussed on the call. We have seen the results of bankruptcy-related lease auctions over time, and in the last few years, we have seen a lot of stepping up at these auctions. Demand has been fairly strong in some instances. So whether Saks or otherwise, how would lease auctions—how would that process work, and the approval process work in your portfolio? Is it any different than it would be in the traditional portfolio? And would Tanger Inc. be active or aggressive in lease auctions to retain control just given, you know, sort of below-market rents in some cases? Stephen J. Yalof: Yes. I think the answer is yes. We want to control our real estate. We want to make the leasing decisions and make the merchandising decisions. I think as operators of shopping centers, we have proven that we are probably best at it when we are in control of the property that we have. A lot of the leases, particularly those Saks leases that you are talking about—sure there is value in those leases, and the leases were written in such a way that definitely give the Saks creditors some control. So, at the end of the day, if those leases get rejected, we will see that as a great opportunity for us. If they do not get rejected and they get bought at auction by retailers, then we will be looking forward to working with these new retailers and bringing them into our property. Michael Jason Bilerman: And, Todd, the other part, just thinking about bankruptcy relative to our portfolio, we have a small-tenant portfolio. We have got over 3,000 stores, 16,000,000 square feet. Our average tenant size is 5,000. So outside, we do not have a lot of big boxes. If you have shopped our centers, you know the Saks situation is unique in that regard, where most of the other bankruptcies, as you have seen over the last number of years, we are able to manage through that. Those leases generally do not have a lot of term with them, so those do not really happen, and we are able to release the space either on a temp basis or then a perm basis and continue to drive NOI. So these bankruptcies are not creating a headwind. It creates more headlines than actual impact. Todd Michael Thomas: Okay. But are there certain restrictions around the auctions process and tenants stepping up? I would assume in an outlet center, or value-oriented center, there are certain restrictions. How does that work in your portfolio? Can you just kind of run through that process a little bit and how it might differ? Stephen J. Yalof: Todd, it boils down to lease quality. It is really the acquiring retailer will stand in the shoes of the exiting retailer and will have to live with the terms of those leases with regard to the term, the rent, and the use clause. So if there is consistency in the use clause, that is one thing. If there is inconsistency between what the user wants to do with that space and the use clause, then that creates some of that conflict you are talking about. Todd Michael Thomas: Okay. Alright. Thank you. Stephen J. Yalof: There are currently no additional questions. Thank you for your participation. You may disconnect your lines and have a wonderful day.
Kevin Grant: Ladies and gentlemen, thank you for your continued patience. Your meeting will begin shortly. At any time today, please press 0, and a member of our team will be happy to help you. Welcome to Luxfer Holdings PLC's fourth quarter and full year. This morning, we will be reviewing Luxfer Holdings PLC's financial results for the fourth quarter and full year ended 12/31/2025. I am pleased to be joined today by Andrew William Butcher, our Chief Executive Officer, and Stephen M. Webster, our Chief Financial Officer. Today's webcast is accompanied by a presentation that can be accessed at www.luxfer.com. Please note any references to non-GAAP financials are reconciled in the appendix of the presentation. Before we begin, a friendly reminder that any forward-looking statements made about the company's expected financial results are subject to future risks and uncertainties. We undertake no obligation to update any forward-looking statements as a result of new information, future events, or otherwise. Please refer to the safe harbor statement on Slide 2 of today's presentation for further details. During today's call, we will be providing adjusted fourth quarter and full year 2025 financial results, excluding the recently sold graphic arts business and 2024 legal recoveries. Now let me introduce Luxfer Holdings PLC's CEO, Andrew William Butcher. Please turn to Slide 3. Andy, please go ahead. Andrew William Butcher: Thank you, Kevin. And good morning, everyone. Thank you for joining us. As we close out 2025, I am pleased to describe Luxfer Holdings PLC's performance for the year as successful, disciplined, and even better than we expected at the outset. This sustained positive earnings growth reflects the traction of the operating model we have built over the past several years. I am particularly pleased with the way the organization navigated external during the year, including exchange rate volatility, while continuing to execute at a high level. For the full year, again delivered sales growth while maintaining a consistent operating leverage and strong profitability. EBITDA totaled $51,900,000, up 4%. And adjusted earnings per share was $1.11, up 12% year over year, reflecting our ability to drive earnings through consistent execution and portfolio positioning. We also generated strong free cash flow of $26,200,000 and continue to distribute capital to shareholders. Results for the year were driven primarily by sustained momentum in the electron business, particularly across defense and aerospace applications. Demand for our UGRE and MRE platforms, magnesium aerospace alloys, and certain specialty industrial applications gained in strength as the year progressed and served as a catalyst for full year results. Indeed, the Magtech Solutions team overcame capacity constraints during the year to deliver record volume levels, including the benefit of an add-on to normal annual demand. Within gas cylinders, performance reflected variability in certain end markets, including clean energy, healthcare, and first response programs, although again specialty industrial applications showed improvements. Importantly, the team continued strengthening the underlying cost structure and improving operational efficiency. Across the business, we continued advancing our optimization initiatives, including progress on the Riverside Centre of Excellence and the Powder Saxonburg Centre of Excellence. These initiatives are designed to streamline the footprint, simplify operations, and enhance long-term efficiency. While the financial benefits are expected to begin materializing in late 2026, this year marked meaningful execution progress against these structural priorities. To summarize, 2025 demonstrated our ability to execute, manage the portfolio effectively, and enhance earnings quality and profitability amid uneven demand conditions, reinforcing again the strength of Luxfer Holdings PLC's core operations and value creation strategy. Cated and consistent with our focus on long-term shareholder value, following the completion of the accelerated strategic review the Board has continued to evaluate strategic alternatives. This evaluation remains ongoing. Before turning the call over to Steve, I would like to thank our associates across the organization, their commitment, and execution throughout the year. Their efforts were critical to delivering these results. With that, I will ask Steve to walk through the fourth quarter and full year financial results in more detail. Stephen M. Webster: Thanks, Andy, and good morning, everyone. Let us turn to Slide 4 for a review of our fourth quarter and full year 2025 consolidated financial results. Looking at the fourth quarter, adjusted sales were $90,700,000, down 5.5% year over year. As shown in the sales bridge, pricing actions contributed $1,600,000 and foreign exchange provided a $1,100,000 tailwind. These positives were more than offset by an $8,000,000 headwind with lower demand in clean energy, automotive, and countermeasure flares. For adjusted EBITDA, positive pricing was more than offset by the impact of lower volumes, resulting in the reduction from last year's quarter. Despite the lower sales level, adjusted EBITDA for the quarter was $13,000,000 ahead of our expectations, with an adjusted EBITDA margin of 14.3%. For a full breakdown, please see the detailed water in the appendix on Slide 12. Now turning to the full year, adjusted sales were $371,200,000, an increase of 2.5%. Adjusted EBITDA totaled $51,900,000, up 4.2%, with an adjusted EBITDA margin of 14%, representing an improvement of 25 basis points compared to 2024. Adjusted earnings per share were $1.11, an increase of 12.1%. Cash from operations totaled $33,900,000, supporting a $9,900,000 reduction in net debt to $31,100,000. We ended 2025 at approximately 0.6 times leverage, providing significant balance sheet strength and strategic flexibility. With that, let us turn to Slide 5 for a closer look at Electron's fourth quarter and full year 2025 results. Turning first to the fourth quarter, sales were $46,900,000, down 1.3% year over year, reflecting lower activity in certain select end markets. Despite the modest reduction in sales, we were pleased that adjusted EBITDA margin remained at a high level of 19.6%, supported by favorable mix and continued focus on higher value aerospace and defense programs. For the full year, Electron made a meaningful contribution to overall results. Sales were $196,400,000, up 11.6% versus the prior year, while adjusted EBITDA totaled $36,900,000, an increase of 16%. Adjusted EBITDA margin expanded to 18.8%, reflecting the continued weighting towards higher margin applications. Full year performance for Magnus Magnesium Aerospace Alloys remained a constant contributor to the. In addition, demand for MRE and UGREs also remained at elevated levels during the year, including the benefit of an add-on to normal annual demand, resulting in record sales volumes. Taken together, these dynamics underscore the earnings power of the electron business, and its ability to perform across varying demand environments. With that, let us turn to Slide 6 for our gas cylinders fourth quarter and full year 2025 results. Looking at the fourth quarter, sales were $43,800,000, down 9.7% year over year, driven primarily by lower SCBA and alternative fuel volumes. Despite the lower sales level, gross margin improved to 17.4%, reflecting favorable mix and operational execution. Adjusted EBITDA for the quarter was $3,800,000, with profitability holding relatively stable. For the full year, gas cylinder sales were $174,800,000, down 6.2%. Adjusted EBITDA for the year was $15,000,000, with an adjusted EBITDA margin of 8.6%. While volumes were lower, margins were supported by favorable mix, strong pricing actions, and continued operational efficiencies. Throughout the year, the business benefited from improved activity in higher margin specialty industrial applications, helped offset continued softness in clean energy and variability in healthcare. Full year comparisons were also affected by elevated U.S. Air Force deliveries in the prior year. The results for the year included higher legal and operational expenses concentrated in the period, including costs associated with one-off employment-related matters and certain customer accommodations. Overall, Gas Cylinders' 2025 performance reflects solid execution through a period of lower demand, actions taken during the year position the business to $370,000,000. Year over year revenue pressure reflects several timing dynamics, including the expected absence of an MRE add-on, temporary softness in high-end automotive applications, short-term headwinds within space programs, and some pull forward into 2025. That said, we expect continued strength in high margin core aerospace and defense markets. Adjusted earnings per share are expected to be in the range of $1.5 to $1.2 with a midpoint of approximately $1.12. Adjusted EBITDA is expected to be in the range of $50,000,000 to $55,000,000, reflecting continued margin stability and, later in the year, the benefit of action currently underway at our Riverside Centre of Excellence. Turning to cash and capital deployment. We expect cash flow of approximately $20,000,000 to $25,000,000 in 2020. Capsule expenditures are expected to be above normal levels, between $15,000,000 and $20,000,000, primarily supporting optimization initiatives, growth opportunities, and productivity improvements. We expect a tax rate of approximately 23%, interest expense of $3,000,000 to $4,000,000, and net leverage at approximately 0.7 times. As previously mentioned, approximately $2,000,000 of orders were pulled forward from 2026 into quarter four of last year, ahead of the Pomona to Riverside optimization initiative. And we note the equipment moves and commissioning during quarter one will cause inefficiencies. As a result, combined with normal seasonality, and tougher first quarter comparisons, expect quarter one earnings to be softer than the prior year. Regarding FX sensitivity, the average GBP exchange rate in 2025 was approximately 1.32. Our 2026 planning assumption is 1.35, represents an approximate $0.02 headwind to earnings on a constant currency basis. In addition, our 2026 guidance excludes non-recurring advisory costs associated with the Board's ongoing evaluation of strategic alternatives, which we expect to be reflected as one-time expenses during the year. Overall, our outlook reflects thoughtful planning and the structural actions already underway. And we believe we are well positioned to navigate 2026 while maintaining strong margins and a robust balance sheet. With that, I will turn the call back to Andy. Andrew William Butcher: Thank you, Steve. Please turn to Slide 8. Luxfer Holdings PLC remains sharply focused on sustained profitable growth. Over the past several years, we have strengthened the portfolio, streamlined our footprint, and reinforced our operating model to perform through the macroeconomic cycles while improving the long-term earnings profile of the business. Our strategy centers on specialized materials, engineering value-added niche applications, and disciplined execution, underpinned by the Luxfer Holdings PLC business system which drives innovation, commercial excellence, and operational rigor. We expect to deliver steady performance in 2026, supported by core aerospace and defense demands and the structural actions being implemented across our footprints. While temporary off-cycle demand shifts moderate short-term growth, our streamlined cost base positions us to convert any incremental volume into improved earnings. At the same time, we are advancing new product introductions within Electron, including specialized safety and defense-oriented applications, while also launching next-generation gas cylinder products into the SCBA and space arenas. Looking ahead to 2027, several dynamics are expected to become more favorable. We anticipate the beginning of a new multiyear SCBA replacement cycle, the return of high-end automotive platform activity as model cycles reset, and the potential for another MRE add-on year. Combined with the full benefit of efficiency initiatives already underway, these factors position the business to translate revenue growth into higher profitability. In short, we believe Luxfer Holdings PLC's positioned to navigate 2026 while maintaining margin strength and building toward a more favorable growth environment in 2027. With that context, I will turn to our closing side to summarize today's key messages. Please turn to Slide 9. Our value creation strategy is grounded in disciplined execution while also positioning the business to capitalize on evolving end market trends. In 2025, we delivered another year of earnings growth, margin expansion, strong cash generation, reinforcing the quality of the portfolio. Electron's defense and aerospace platforms were key drivers of performance, demonstrating the strength of our higher value applications. Gas cylinders navigated program timing and end market variability while executing pricing actions and continuing to strengthen its cost structure and competitive position. Structural actions across the footprint are beginning to enhance efficiency and position the business to perform through changing macroeconomic conditions and shifting customer demand. As we look ahead, the headwind shaping 2026 are primarily timing related, not structural. As those factors normalize, we see a clear pathway to renewed and accelerated top line growth and earnings expansion. Overall, we remain confident in Luxfer Holdings PLC's positioning, the durability of our earnings profile, and our ability to create long-term shareholder value. I will now turn the call back to the operator for questions. Nikki, please go ahead. Thank you. Operator: We will take our first question from Stephen Michael Ferazani with Sidoti. Please go ahead. Your line is open. Justin: Good morning. This is Justin on. Thanks for taking questions. Starting on fourth quarter performance, what is driving the continued strength in electron margins? Andrew William Butcher: Yes. Thank you, Justin. We are very pleased with our Q4 performance. Indeed, the 2025 result. There were good demand throughout the year through our more differentiated products. Aerospace, defense, especially magnesium alloys, magnesium heaters, specialty oil and gas, all of those supported the strong margins in Electron along with strong manufacturing output and led to that adjusted EPS that we saw for the full year up 12% above $1.1. Justin: Very helpful. And as a follow-up to that, how should we think about electron margin trajectory in 2026? Do you anticipate margins to be sustained at current levels? Or is there potential for further expansion? Stephen M. Webster: This is Steve. Good morning. I mean, if we look at Electron margins, we always talk about an EBITDA margin of around 20%. And you can see we have been approaching that in 2025, helped by some very strong mix, Andy has mentioned. I would imagine the margin to continue roundabout that percent, that 20% mark. Clearly though, the mix can be a bit variable, but I think with the combination of some of the programs we are putting in place in terms of the restructuring programs, a 20% margin remains the target. And I think we will be fairly close to that as we continue throughout the year. Andrew William Butcher: You perhaps hinted there, Justin, this is Andy about what white drive an upside scenario. So not currently modeled in our, in our guidance. But some of the upsides could come from overperformance in core defense and aerospace. Maybe a military add-on for SRH, busy hurricane season. And the costs on the cost side, of course, we are working on that restructuring project. So we saw if we saw less disruption there or a faster realization of benefits those would all be potential upsides not currently included in our guidance. So we will be very focused on maximizing the performance in both the business units. Justin: Great. Thanks for all the color there. Maybe turning to the gas cylinder segment. It is noted that benefits from the North American gas cylinder plant consolidation and the magnesium powders plant investment are expected in late 2026. Can you provide any additional color on the impact of these benefits? Stephen M. Webster: Sure. Yes, thank you. So as a reminder, we announced last summer that we would be relocating the aerospace and life support product lines in Pomona, California to our Riverside, California facility. And the savings there are up to $4,000,000 once fully executed. Right now, we have gone through the equipment moves. Those started in mid-December and will be substantially complete by the end of the quarter. We are already seeing some initial limit production underway there. The other program is our electron powder center of excellence, where currently we are operating two manufacturing locations in the U.S. for magnesium powder, and we have identified and are actioning an opportunity there to invest very significantly in our Saxonburg site, over $6,000,000 worth of CapEx. That project we also expect to complete before the 2026. And the efficiency and automation benefits there are worth around $2,000,000. That is included in our guidance. Justin: Okay, great. Thanks for the color again. Maybe looking ahead to 2026 and beyond, I know you briefly mentioned earlier about new product developments. Maybe could you elaborate on those? Andrew William Butcher: Yes. So in our electron business, let me give an example of some of our magnesium solutions. Products during the course of the year. Building on the success of our commercial late check detection products, we are already putting into the market now a detection product for organophosphates. And that is planned to be followed later in the year with some detection products around nerve agents such as Novichuck. And then on the cylinders side of the business, we have a range of next generation products. I was lucky enough to visit one of our SCBA customers recently. And they are very excited about the potential of our next generation products there. We have also got a new range being introduced for the space market later in the year. Justin: Exciting. And know, how has adoption trended with the, detection product that you have put into market? Andrew William Butcher: Yes. So let us check. So a relatively small commercial products that is sold through online and through some of the big box stores. And that is used to help people identify lead that might be present in HELP house paints before they go through a restructuring program. So this is small, low million dollars worth of volume. But it is the start of a platform, a range of new products for Magtech Solutions. Justin: Got it. Now turning to capital allocation. Given that leverage well under 1x, can you discuss 2026 capital deployment priorities? Stephen M. Webster: Yes, it is Steve again. I think you will have seen from the guidance slide that the capital expenditure projection is elevated for '26. We spent around $8,000,000 in 2025, which is a little low for us and really represents more sort of maintenance CapEx. Going into 2026, we are projecting $15,000,000 to $20,000,000. I would say a third of that is down to the restructuring, centers of excellence projects that Andy has mentioned. So that is partly the reason for elevated CapEx. We have also got some exciting growth programs that we are looking to fund as well. So number one, accelerated or increased CapEx. Otherwise, certainly in terms of dividend program, that continues at the similar level. We have a normal level of share buyback, which typically runs at around $2,500,000 annually. We would maintain that. We also have an opportunity to do additional opportunistic buybacks should the circumstances arise. We have approval from the Board for that. And we also maintain a program of looking at bolt-on type M and A, both centrally with myself and also the business units tasked with looking at opportunities. So I would say it is fairly a normal expectation in terms of what we normally do. Justin: Got it. And in terms of that M and A, how are valuations in spaces you might be looking? And maybe if you could touch on any flavor for the size of businesses you might be looking at. Andrew William Butcher: Yes. So this is Andy. So we operate an M and A framework that we call SOAR, and that is applied in all of the business units, and their task with looking at range of synergistic potential M and A activity that would support our overall strategy of profitable growth. But typically these are, stress these are bolt-on acquisitions up to $80,000,000 I might say. Thanks, Justin. Justin: Thanks for taking questions and good luck in 2026. I will turn it back. Operator: Thank you. There are no more questions in the queue. At this time, I will turn the call over to CEO, Andrew William Butcher for final remarks. Andrew William Butcher: Thank you, Nikki. Luxfer Holdings PLC is well positioned with a durable earnings profile, clear priorities for value creation. Our focus remains on disciplined execution and maximizing shareholder returns. Want to thank our associates for their performance throughout the year and thank you for your continued support. Operator: Thank you. This concludes Luxfer Holdings PLC's fourth quarter and full year 2025 earnings call. A link to a recording of this webcast will be available on the Luxfer Holdings PLC website at www.luxfer.com. Thank you for your participation. You may now disconnect.
Operator: Good morning, and thank you for standing by. My name is Tina and I will be your conference operator today. At this time, I would like to welcome everyone to the LifeStance Health Group, Inc. Fourth Quarter 2025 Earnings Call. At this time, all lines are in a listen-only mode to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Please limit questions to one and one follow-up. To withdraw your question, press star 1 on your touch tone phone. To ask a question, simply press star 1 on your touch tone phone, then press star 1 again. It is now my pleasure to turn today's call over to Monica Prokocki. Please go ahead. Monica Prokocki: Thank you, operator. Good morning, everyone, and welcome to the LifeStance Health Group, Inc. Fourth Quarter 2025 Earnings Conference Call. I am Monica Prokocki, Vice President of Finance and Investor Relations. Joining me today are David Bourdon, Chief Executive Officer, and Ryan McGroarty, Chief Financial Officer. In addition, Ken Burdick, our Executive Chairman, is also with us. We issued the earnings release and presentation before the market opened this morning. Both are available on the Investor Relations section of our website at investors.lifestance.com. In addition, a replay will be available following the call. Before turning over to management for their prepared remarks, please direct your attention to the disclaimers about forward-looking statements included in the earnings press release and SEC filings. Today's remarks contain forward-looking statements, including statements about our financial performance, outlook, business model, and strategy. Those statements involve risks, uncertainties, and other factors, as noted in our periodic filings with the SEC, that could cause actual results to differ materially. Please note that we report results using non-GAAP financial measures, which we believe provide additional information for investors to help facilitate the evaluation of current and past performance. A reconciliation to the most directly comparable GAAP measures is included in the earnings press release tables and presentation appendix. Unless otherwise noted, all results are compared to the comparable period in the prior year. I will now turn the call over to David Bourdon, CEO of LifeStance Health Group, Inc. David? David Bourdon: Thanks, Monica. And thank you all for joining us today. 2025 was an exceptional year for LifeStance Health Group, Inc. We delivered robust organic revenue and visit growth, driven by continued expansion of our clinician base as well as noteworthy improvements in productivity, all of which translated to delivering on our mission of expanding much-needed access to outpatient mental health services. As a result, our team of 8,000 clinicians delivered care to over 1,000,000 patients and conducted nearly 9,000,000 visits during 2025. It starts and ends with the quality care delivered by our LifeStance Health Group, Inc. clinicians. Patients continue to provide great feedback on their experience. In 2025, LifeStance Health Group, Inc. achieved a patient net promoter score of 84 and our over 570 centers consistently had high Google ratings averaging 4.7 stars. In terms of financial results, this was a year of outperformance, milestones, and records for LifeStance Health Group, Inc. For both the fourth quarter and the full year, we once again exceeded each of our guided metrics, capping a year of consistent outperformance. We generated mid-teens revenue growth for the full year through clinician growth of 9% as well as a remarkable 7% improvement in clinician productivity in the second half of the year. We achieved double-digit adjusted EBITDA margins for the full year for the first time as a public company, a milestone that reflects both the operating leverage in our model and the consistency of our execution over the past three years. We delivered positive net income and earnings per share for the full year, reaching this key milestone as a public company one year ahead of our expectations. Finally, 2025 was a record year for free cash flow generation, demonstrating the strength of our operating model and our ability to invest in the business while creating long-term value. Ryan will provide more color on our financial performance. Our results in 2025 bolster the confidence we have as we carry strong momentum into 2026. Turning to operational execution. We made great strides in 2025 to drive improvements in the performance of the business. Earlier in the year, we outlined several initiatives designed to better fill the time clinicians make available to see patients, and as these initiatives were implemented, their impact became increasingly evident in the back half of the year. For example, we implemented process improvements around clinician scheduling to better utilize available capacity. We also launched a cash incentive program that rewards clinicians for improving quality and productivity. In addition, we expanded patient access through shortened booking lead times, which improved show rates, and made enhancements to conversion of phone calls to booked appointments by new patients. We also strengthened patient engagement with a new platform that enhances patient acquisition and retention. Importantly, these initiatives have now delivered consistently improved results since implementation in the back half of the year, reinforcing the durability of the improvements. Turning to technology. 2025 marked an important year of progress in how we use digital tools to support patient access, clinician experience, and operational efficiency. Throughout the year, we applied digital and AI solutions in targeted, practical ways to improve the experience for both patients and clinicians. From a new patient phone booking perspective, we implemented a new AI technology solution to support our scheduling team, which facilitated stronger appointment conversion and operational efficiency. We are improving the clinician experience and enhancing the care our patients receive. An example of this is we piloted AI-assisted documentation for clinicians. The early results show reduced administrative burden, enabling clinicians to work more efficiently and spend more time on patient care, while also supporting improved satisfaction and retention. We are also using digital and AI tools that are benefiting operational excellence, including revenue cycle management. Examples of this are the digital patient check-in tool, AI, and robotic process automation that were instrumental in delivering strong cash collections. Overall, our approach to technology in 2025 was intentional and disciplined, using digital and AI for business enablement and decision support to drive engagement, productivity, and scale while improving the satisfaction for patients, clinicians, and our non-clinician teammates. Turning to 2026 and beyond, we will continue building on our progress in advancing our operational and clinical excellence by focusing on several initiatives that support our long-term growth and scalability. First, we completed our EHR discovery process and made a decision to transition to a best-in-class vendor. This is an important step in advancing our long-term operating model for continued scale and positioning the business. The new EHR will be instrumental in supporting clinicians and patients to improve both their experience and clinical outcomes. In addition, we expect the new EHR to improve interoperability, which will benefit growing health system partnerships. We will begin working through the implementation in 2026 and expect the transition to the new EHR during 2027. Second, technology will continue to be an important enabler to delivering on our commitments this year. With an emphasis on applying AI and digital tools, we expect to build on the progress we made in 2025 by expanding technology solutions that improve access, clinician productivity, and operating efficiency. We are starting the year with additional use cases in customer service and revenue cycle management along with expansion of initiatives like AI clinical documentation and workflow management. Third, we remain focused on attracting new patients and better converting those inquiries to visits. An example of this is provider and partner referrals. We are making additional investments in this channel in 2026 through increased talent resources to support that opportunity with a new operating model that improves local market support, a core differentiator of our growth model. In addition, we have seen improved online conversion of new patients with our care matching pilot and expect to implement it across all of our state practices this year. In closing, I am very proud of the progress we have made as a company this year. As we enter 2026, we do so from a position of momentum and confidence. Looking ahead, we are well positioned to meet the increasing demand for high-quality mental health services and patients moving to insurance from cash pay for affordability. We will continue to extend our leadership in outpatient mental health care by pairing continued innovation with disciplined execution. Before turning over to Ryan, I want to take a moment to acknowledge Ken Burdick. Ken has been and will remain an integral part of LifeStance Health Group, Inc.'s journey. In addition, I appreciate and value his continued mentorship. I would like to turn it over to him to share a few words regarding a change in his role at LifeStance Health Group, Inc. Ken? Ken Burdick: Thanks, Dave. I transitioned to the Executive Chair role in March 2025. During the past year, I have been incredibly impressed with the way in which Dave has stepped into the CEO role and Ryan has taken the reins as CFO. The performance of the business in 2025 speaks volumes of their leadership, and the quality and cohesion of the entire leadership team. In light of the confidence that I and the entire LifeStance Health Group, Inc. board have in the leadership and direction of the business, I will be transitioning to the role of Non-Executive Chair of the LifeStance Health Group, Inc. board next month. I could not be more proud of Dave and his team, nor could I be more confident about the future for LifeStance Health Group, Inc. The financial and operational discipline that has been incorporated into the culture of purpose and passion that has always existed at LifeStance Health Group, Inc. is a powerful combination that will drive sustained success for years to come. With that, I will turn it back to the team. Ryan will now walk you through the financial results. Ryan? Ryan McGroarty: Thanks, Ken. I am pleased with the team's operational and financial performance in the fourth quarter, which exceeded our expectations. We delivered solid growth across revenue and visit volumes, as well as a record adjusted EBITDA margin driven by operational execution. For the fourth quarter, revenue grew 17% year over year to $382,000,000. Revenue exceeded our expectations primarily due to better-than-expected total revenue per visit and, to a lesser extent, visit volumes. Visit volumes of 2,400,000 increased 18% year over year. The outperformance was primarily driven by better-than-expected clinician productivity. Our visits per average clinician increased 7% year over year. We grew our net clinicians by 44 in the fourth quarter, and 657 for the full year, bringing our total clinician base to 8,040, representing growth of 9% year over year. The level of net clinician adds in the fourth quarter was based on an intentional effort to balance the existing capacity of our clinician base and new clinician hires. This strategy was effective as demonstrated by the strong visit and revenue performance in the quarter. It increases our confidence in this approach going forward. Total revenue per visit of $160 was roughly flat year over year and modestly ahead of our expectations. For the full year, we delivered revenue of $1,424,000,000, up 14% year over year, driven entirely by visit volumes. Turning to profitability. Center margin of $126,000,000 in the quarter increased 15% year over year and was 33% as a percentage of revenue. This exceeded our expectations primarily due to the revenue beat as well as slightly lower spend. Full-year center margin of $461,000,000 grew 15%. Adjusted EBITDA of $49,000,000 in the quarter was very strong and exceeded our expectations. This 49% year-over-year increase resulted in our adjusted EBITDA as a percentage of revenue of 12.8%, the highest in our history as a public company. The outperformance in the quarter was primarily attributable to favorable center margin and slightly lower G&A spending than expected. For the full year, adjusted EBITDA was $158,000,000, increasing 32% year over year, with margins increasing 150 basis points to 11.1%. We have continued to deliver on our commitment to drive operating leverage in G&A as we maintain a disciplined approach to expanding margins while supporting sustainable growth. As Dave mentioned earlier, we finished the full year with positive net income and earnings per share. This achievement was delivered a year earlier than we expected and is a key milestone in our journey as a public company. Turning to liquidity. We generated robust free cash flow of $47,000,000 in the fourth quarter and $110,000,000 for the full year, exceeding our expectations due to better-than-expected earnings and the dedicated efforts of our collections team. We exited the quarter with a strong balance sheet, including a cash position of $249,000,000 and net long-term debt of $266,000,000. We have additional capacity from an undrawn revolver of $100,000,000. We are pleased with our leverage ratios, with net and gross leverage of 0.2x and 1.8x, respectively. We have significant financial flexibility to run the business and fully execute on our strategy. Additionally, this morning, we announced that our board of directors has authorized a share repurchase program allowing us to repurchase up to $100,000,000 worth of our outstanding shares. We will fund this program with cash on hand. With a strong balance sheet, meaningful free cash flow generation, and leverage levels that provide ample financial flexibility, we believe this share repurchase program is an attractive and highly efficient way to deploy capital and create long-term shareholder value. At the same time, M&A continues to be a priority and we have resources dedicated to exploring opportunities in a disciplined manner. In terms of our outlook for 2026, we expect full-year revenue of $1.615 billion to $1.655 billion, center margin of $526,000,000 to $550,000,000, and adjusted EBITDA of $185,000,000 to $205,000,000, with the midpoint representing an 11.9% margin, or almost a point of margin expansion. Our annual guidance assumes year-over-year revenue growth driven primarily by higher visit volumes combined with low- to mid-single-digit increases to total revenue per visit. As for phasing, our guidance contemplates a revenue split of roughly 50/50 in the first and second half of the year, with the second half slightly higher. For the first quarter, we expect revenue of $380,000,000 to $400,000,000, center margin of $118,000,000 to $132,000,000, and adjusted EBITDA of $39,000,000 to $45,000,000. In terms of earnings, the first quarter is seasonally impacted by higher payroll taxes. Additionally, we expect stock-based compensation of approximately $60,000,000 to $70,000,000 in 2026. As a reminder, we announced in May that we would be sunsetting our stock-based incentive program for clinicians and replacing it with a cash bonus incentive program. The impact of this change was expected to result in a decrease in stock-based compensation of roughly $10,000,000 per year. We are seeing this benefit for the first time beginning in 2026 and will continue to see a reduction over the next four years as the existing tranches of clinicians vest. Regarding free cash flow, we expect to once again generate meaningful positive free cash flow for the full year 2026. Additionally, we expect to open 20 to 30 new centers this year. As Dave mentioned, we recently completed our EHR discovery process, and are moving ahead with implementation this year. During 2026 and 2027, we expect this implementation to represent a use of cash of roughly $20,000,000 to $30,000,000. Much of this spend will be capitalized or adjusted in EBITDA as it is non-recurring. Any P&L impact associated with these activities has already been included in our 2026 guidance assumptions. As we look beyond 2026, we continue to expect revenue growth in the mid-teens based on low- to mid-single-digit annual rate growth combined with low double-digit volume growth. We expect to continue to expand operating leverage through the G&A line and now expect to reach mid-teens adjusted EBITDA margins by fiscal year 2028. We believe this trajectory underscores the strength of our platform combined with favorable macro mental health trends, and gives us confidence in our ability to consistently deliver growth and expanding margins over the coming years. With that, I will turn it back to Dave for his closing comments. David Bourdon: 2025 was an exceptional year for LifeStance Health Group, Inc. Our results demonstrate the dedication of each of our clinicians and team members and the resilience of our model. We enter 2026 with strong momentum to continue expanding access to high-quality, affordable mental health care. We will now open for questions. Operator: To ask a question, simply press 1 on your telephone keypad. Please limit questions to one and one follow-up. Our first question comes from the line of Craig Hettenbach with Morgan Stanley. Please go ahead. Craig Matthew Hettenbach: Yes, thanks. And just to start, Ken, echoing your comments, nice to see that the execution of the team kind of playing out and the strategy. Dave, maybe just building on that, the inflection in productivity in the back half of the year and your comments about durability, can you just talk about this year and as we play it forward, just how that is impacting the business? David Bourdon: Yes. Good morning, Craig. Thanks for the question. In regards to the productivity initiatives, we talked about a number of them last year, and what you are seeing is the durability in those, whether it is the improvements that we have made in our phone scheduling team for new patients, the new cash incentive program that we have for clinicians that are tied to quality and productivity, all those kinds of initiatives that we put in, it was not just a Q3 lift. We actually saw it build into Q4. And so we are very happy with the productivity improvements and the durability that we have seen including as we have stepped into 2026. Now having said that, just at a macro level, just a reminder is that we are guiding to about 15% revenue growth in 2026. And the growth algorithm of that is still we expect low double-digit visit growth, and that is going to come primarily from net clinician adds with some complementary benefit from productivity. And then in addition, we will see low- to mid-single-digit revenue per visit growth coming from the payer rate increases. Craig Matthew Hettenbach: Got it. Then just as a follow-up, when you think about the path to 15% EBITDA margin and you spoke a lot about some of the technology investments, as a management team, how are you looking at the ROI kind of payback and the investments you are making, translating into the model. Ryan McGroarty: Yes. Sure, Craig. This is Ryan. I will jump into that question. I appreciate you starting off highlighting what our long-term guide is overall. Again, I think we have been able to demonstrate a history of delivering on our results. As it relates to investment, we are very disciplined in our approach in other technological solutions, looking at whether it is an AI enablement solution, looking at the return profile of the investment, and making sure that it pencils out to be able to drive the leveraging we are looking for from an operating perspective. So, again, very disciplined and thoughtful process that we have in terms of looking at investments. Operator: From JPMorgan, your next question comes from the line of Lisa Gill. Please go ahead. Lisa Christine Gill: Thanks very much and good morning. I just really wanted to follow up on your comments around the visits per clinician being up 7%. You made some earlier comments around digital and AI. Can you talk about how that is playing into those visits per clinician? David Bourdon: Yes, Lisa, good morning. It is Dave. I will take that one. So there are really two aspects to this. The first was that we worked with the clinicians to get more capacity on their calendars so that they gave us more availability to be able to see patients. And that has been a multiyear journey for us. And it is really nice to see the benefits of that. Now the converse of that is then the clinicians said, okay, we are giving you more capacity, now we want you to use it. We want to see more patients. And obviously if they see more patients, they also make more income. And so they were asking for us to fill more of the time on their calendars. So we worked with them around schedule optimization, basic practice enablement, and practice management initiatives. That was one aspect of it. And then the other is then increasing the flow of new patients. We have talked about some of those things like improving the conversion of the phone calls that we get from people seeking care to booking an appointment, and some of the AI tools that we put in place there last year improved that conversion rate by 5%. We have a number of initiatives that are driving improved new patient conversion. Then as we step into this year, one of the initiatives that I mentioned in my prepared remarks is our new care matching algorithm and tool, and we really believe by improving the matching, we improve the therapeutic alliance between the clinician and the patient. What we have seen from the early results of the pilot is improved conversion both not only from phone call but also from online scheduling, and as once we get that patient in the door, they are actually stickier and we believe we will see better health outcomes on the back end of that as well. Lisa Christine Gill: That is great. Dave, just as a follow-up, in your first answer to the question, you talked about low- to mid-payer rates. I know one of the initiatives that Ken had was cleaning up some of the managed care relationships. Can you talk about where you are on that path? Is it where you want to be? And low- to mid-payer rate sounds like a positive. Do you have good line of sight to that over a multiyear period of time? David Bourdon: We do. First of all, we are pretty much complete on the journey of cleaning up the payer contracts. Over the last three years, we have probably reduced the number of contracts by 50%. It is a meaningful improvement. The genesis of that, or the reason we did that, was really around administrative efficiency. We wanted our team to focus on the relationships that mattered, and so that was really the driver of that. We have largely completed that, Lisa. As far as the payer rate increases and the durability of that low- to mid-single-digit, we primarily use an approach of annual rate discussions with the payers. We will from time to time, depending on the situation, lock in a multiyear arrangement similar to what a hospital system would do with a payer, but for the most part, we are more annual contracts with the payers, and we are having very constructive conversations with them. So, again, feel very good about that low- to mid-single digits and being able to achieve that in the coming years. Lisa Christine Gill: Great. Congrats on the great results. Operator: Next question comes from UBS from the line of Kevin Caliendo. Please go ahead. Kevin Caliendo: Thanks. Good morning, guys. Thanks for taking my question. Just want to go into the comment about moderating the net adds in the quarter and the efficiency. Does that mean that you could have added and this is a more measured approach to making sure your efficiency and onboarding was in the best shape possible? Is there a backlog? And I guess the follow-up to that is how should we think about the adds organically versus M&A versus what is exciting in this new buyback that you announced, which I think will be very well received. David Bourdon: Yes. I will take that one, Kevin. There are a few parts to that. First of all, as far as the Q4 clinician adds, I think where you were going with that is we are having an intentional balance between the adding of new clinicians versus taking advantage of the capacity that we have with our existing clinicians. Our priority is to take advantage of that capacity on the existing clinicians first, because of two reasons. The first is I actually believe by doing that, we will improve their satisfaction, and eventually, that will turn into better retention. The other is it is a win-win for both the clinician and the company. It is just a more efficient way for us to be able to run the business. So that has been an intentional balancing act. Again, what I mentioned earlier is that we still believe for our growth algorithm as we step into 2026 and in the coming years, the primary driver of visits will continue to be clinician net adds, with improvements in productivity being complementary but not the major driver. As far as M&A goes, the first thing I want to make the point on is this: there is no material M&A included in our 2026 guidance. It does continue to be a priority and we do have an active pipeline. At the same time, we are going to be very disciplined, and we are focused on opportunities that are both strategic and financially make sense. It is an interesting environment right now. We see this with the larger companies, revenue in the $75,000,000 to $250,000,000 range. They have valuation expectations that are dislocated from reality. At the same time, as we are going down market, those opportunities seem to have more appropriate valuations, and we are targeting those kinds of companies for geographic expansion. I would expect to see some of those smaller tuck-ins. But, again, that is not going to materially move the needle on the financials in 2026. What it does is it positions us well for future-year growth. Kevin Caliendo: Got it. Thank you. Operator: And from Jefferies, next question comes from the line of Jack Slevin. Please go ahead. Jack Slevin: Hey, thanks for taking the question. I wanted to ask about the 2026 guide and some of the commentary around the EHR implementation. Looking at the conservative approach and all the execution you all have been undertaking recently, how does some of the G&A stack in the initial guide—it looks like EBITDA drop-through is going to be a bit lower—so I was just curious if you could speak a little bit more to the process of implementing that EHR and if there is anything specific on the cost side we need to be thinking about there. Ryan McGroarty: Yes. Sure. Jack, appreciate the question, and good morning. I will start off with the EHR, and then I will talk a little bit in terms of G&A in totality between 2025/2026 and the growth rates. First and foremost, as I mentioned in my prepared remarks, the overall EHR implementation—we wanted to put out the representation of the cash usage, and as I mentioned, it is $20,000,000 to $30,000,000. Most of these costs will be adjusted through EBITDA or capitalized. We are in the early stages of the journey to implementation of a new EHR, which we are all really excited about. When you look at G&A in totality, in 2025 our growth rate was 7%, which is unnaturally low when you peg it against the growth rate of the business. If you recall and you go back to our original guide, our original guide was closer to 10%. When you look at our full-year guide from a G&A perspective, what it implies is we are at 13%, which stacks up well against the 15% overall growth rate. You are able to leverage your operating expenses, but at the same time, it provides us flexibility as it relates to being able to continue to make the investments in growth and capabilities where Craig went earlier, to ensure that ROI pencils out. Overall, that is the cause of the step-up year over year. Jack Slevin: Okay. Got it. Really helpful. And then maybe just as a follow-up, thinking about some of the M&A commentary, to take a step back a bit, can you maybe just level-set on any sort of KPIs or things you think about as you look at organic growth in the business versus M&A opportunities? I would think the hurdle rates are getting higher because of the broad network you have and your track record of being able to add on the organic side, but I was not sure if there is any way you can think about even return profiles or other things on growth via those two vectors, given where the portfolio stands right now. Thanks. David Bourdon: We just talked a minute ago about M&A. I think, just to pile on with a few comments, certainly from the financial perspective, we have a profile around multiples on EBITDA and things like that, with hurdle rates which we are not going to publicly disclose, but we do have financial metrics that we are very disciplined on. The down-market opportunities are the ones that are currently the most attractive to us, and it is attractive primarily for geographic expansion. We do not see doing small tuck-ins in geographies where we already have a meaningful presence. The economics are actually much more attractive for us to just grow those organically. Jack Slevin: Okay. Helpful. Appreciate the color. Operator: Your next question is from the line of Richard Collamer Close with Canaccord Genuity. Please go ahead. Richard Collamer Close: Yeah. Thanks for the question. Congratulations on a great year. Dave, in the past, you talked about differentiation and optimization phase. That included, I guess, several strategies like specialty services and expansion. I am interested in how that has progressed, and then also becoming the referral partner of choice—what you are doing there—maybe more details in terms of payer relationships and provider organizations with respect to referrals. David Bourdon: Thanks for the question, Rich. There are a number of components there, so I will try to hit them all. So first of all, to your point around specialty services, that is an important part of our future growth story. We are doing that because what we want to be able to do is holistically treat the patient, treating the patient holistically and driving to a better health outcome. And the kind of those core services, or if they need additional services so specific to specialty—just to ground you—we had previously talked about it as about $50,000,000 of revenue. We are targeting $70,000,000 of revenue for 2026, so about a 40% increase, and that is consistent with how we have talked about that business segment in the sense that it would grow at a rate larger than our core book of business. That growth is primarily coming from treatment-resistant depression services of SPRAVATO and TMS. Just a couple of things I would mention is this is low capital intensity. We are leveraging our existing centers, and we think this is a tremendous opportunity for us in the coming years, and it is going to contribute to both growth and margins. That was on the specialty. In regards to being the partner of choice, I will stick primarily to the medical providers because we addressed that a little bit in our prepared remarks. We are continuing to invest in those resources, everything from a technology perspective in how we interface with them and the unique requests we get from, for example, a health system, as well as we are investing in additional feet on the street. We have implemented a new operating model to make those resources even more local to be able to support our state practices and drive increased referrals from the medical practices. We feel really good about that. We also mentioned last year the Calm relationship, and I think that was more about the signal of a different kind of referral partner than our typical PCP or hospital system or those kinds of referral sources. I think it is just an exciting example of a different opportunity that we think we are uniquely positioned for because of our large scale, the focus on the patient experience and outcomes, as well as our hybrid model of both in-person and virtual. Those kinds of services and characteristics are very appealing to some of these national digital players. Operator: And from William Blair, your next question comes from the line of Ryan Daniels. Please go ahead. Matthew Mardula: Hello. This is Matthew Mardula on for Ryan. Thank you for taking the question. I just want to touch up on the answer to the last question. Can you provide an update on how the patient referral segments have been trending, and then how should we think about the momentum with patient referrals into 2026? I know demand outpaced supply in the industry, but I want to focus on those newer initiatives, like the partnership with Calm and then additional investments in the provider and partner referrals for 2026. The main point of my question is are you expecting to see maybe a newer or a different type of patient because of these patient referral segments? Thank you. David Bourdon: This is Dave. I will take that. In regards to the referrals, this is a primary channel for us to get new patients. It is one of the things that differentiates LifeStance Health Group, Inc. versus many of our competitors in the outpatient mental health space, and we only spend about 2% of our revenue acquiring new patients. That is a very efficient model. The way we are able to do that is through these referral programs with the medical practices. That continues to grow commensurate with the business, so I would not point to anything that is unique there from a growth rate perspective. In regards to the update on Calm, it is still early days on that relationship. I think both sides are still working together to optimize that partnership. We are getting new patient volume from the Calm relationship, but it is not at a level that is very meaningful at this point. We expect it will build in the coming months and years, but it is not something that is going to meaningfully move the needle for us in 2026. As far as the demographics go, one of the reasons that the partnerships with some of these large digital players like Calm are intriguing to us is because we do believe that will attract a younger, more digitally native type demographic than what we have historically had at LifeStance Health Group, Inc. It is a completely different demographic. Operator: Your next question comes from the line of David Michael Larsen with BTIG. Please go ahead. David Michael Larsen: Hi. Can you please talk a bit about the EMR? Who are you using now, who are you going to be switching to, and then what capabilities do you expect to get from this new EMR? For example, will the workflow be easier? Will this contribute to even more physician productivity? And then any thoughts on reporting from the new EMR? What do you hope to get from that one that you do not get from your existing one? Thank you. David Bourdon: Yes, all of the above, David. Thanks for the question. First of all, we have a practice. We do not mention other companies on our earnings call, so I am not going to talk about where we are today or where we are going from an EHR perspective. But to take it up a level, we put a lot of work in over the last year in regards to the discovery process, which we have now completed, and we have decided upon a new EHR vendor. A new one—it will be going away from our existing one. It is foundational for the future. At a high level, it is about unlocking advancements in both clinical and operational excellence. From a clinical perspective, it is going to improve workflows. I think of things like care pathways and that next best action to support our clinicians, being able to tie in new AI point solutions, as well as a much better patient experience both from an administrative as well as a care perspective. There is a lot around the EHR that is core and foundational to where we want to take the company over the next five years. We are going to begin the planning now and throughout this year, and then we expect the rollout to be next year. David Michael Larsen: Okay. That is great. That is very helpful. Thank you. And then with regards to the payer relationships, a lot of times health plans will view mental health providers as ancillary providers and will spend a lot of time with the large acute care medical centers and maybe some of the large physician groups. Based on my experience, mental health has been more of a price taker from the handful of large dominant commercial plans in each city. Can you maybe just talk about that? Are you a price taker where they are like, okay, here are the mental health rates, here is the fee schedule, that is what you get? Or is it much more of a collaborative approach? Any discussion around the quality care you are providing to the patients, fewer ER admissions, improvements in cost of care? Thanks very much. Just want to make sure you are not a price taker. Thanks. David Bourdon: As far as the payer relationships, what I said earlier is I think we are having constructive conversations with most payers. There is always going to be tension. There is tension in all providers across the entire healthcare ecosystem and payers, but that is a normal level of tension. The thing I would point you to in regards to outpatient mental health is that the payers are still getting a lot of pressure from their employer clients and their members for access to in-network outpatient mental health care. That is really the balance to the pricing conversation and what leads to those constructive dialogues. For the more thought-leading payers, the ones that are now thinking about quality and outcomes in addition to access, those are the payers that I think have really gotten their head around the mind-body connection and that there is opportunity for even increased mental health utilization leading to a total cost of care reduction. David Michael Larsen: Thanks very much. I am a big believer, obviously, in mental health and how we keep people productive and at work and improve the total health of the market. So thanks very much. Congrats on a good quarter. Operator: And from Barclays, our next question comes from the line of Peter Warndorf. Please go ahead. Peter Warndorf: Yes. Hey, thanks for the question. I just wanted to touch on the 20 to 30 new center adds that you guys are expecting this year. I know you said that the costs are accounted for in guidance, but is it right to assume that those come on with lower margins? Just trying to get a sense for the cadence of margins throughout the year. Thanks. Ryan McGroarty: Yes, Peter. This is Ryan. Appreciate the question. You got it right. Overall, 20 to 30 new centers do come on with a lower margin profile, but that is fully contemplated in the guidance and what we put out to the market. Again, we look at it as a very nice accelerator in our overall growth strategy in terms of where we decide to plant a flag for a new center. The return profile is relatively quick on them too. You get the initial period where it is lower, but then it gets up to normal at a relatively fast pace. Peter Warndorf: Got it. Thanks. Then maybe just one quick follow-up from a high level on the competitive landscape. Are you seeing anybody get more or less aggressive? Is there anything worth calling out on the competitive landscape early in the year? David Bourdon: I would not point out anything in particular that is new in the competitive landscape. First of all, it is and remains a very competitive environment for attracting and retaining clinicians. They have lots of choices. That is not new. That is the environment we have been in now for years. When I think about the competitive dynamics, because it is such a fragmented industry, it is really a very local conversation. At the local level, we have competitors, but there is not anyone across the nation that I would flag for you. Peter Warndorf: Great. Thank you. Operator: And from KeyBanc, we have a question from Steven Dechert. Please go ahead. Steven Dechert: Hey, thanks for the questions and congrats on a solid quarter. I just wanted to ask one around visits per clinician. Sequentially into 2026, how should we think about the move into 1Q from the level you were at in 4Q? Thanks. Ryan McGroarty: Yes. I appreciate the question. This is Ryan. When you look into 1Q from an overall revenue perspective, the revenue step-up from Q4 to Q1 is approximately $8,000,000, which is 17% year over year, which I went through in the prepared comments earlier. When you think about the actual step-up in visit volume, you can think of that as net clinician adds, where Dave went earlier, being the driving force between the sequential growth and then supported by rate. Those are the key components that you build from Q4 into Q1. As Dave mentioned, we have high confidence in the durability as it relates to productivity, in terms of what we are doing from a practice management perspective around productivity as an enabler. Steven Dechert: Okay. Thanks. Then I want to ask one around free cash flow. I think previously you had guided to it being down in 2025, but it was actually up. Did any of those de novos in 2025 get bumped into 2026? And then are you expecting free cash flow to be up in 2026 versus 2025? Ryan McGroarty: Yes. There is always timing and movement between new centers just in terms of being able to fully execute on the implementation. I would call that relatively minor. Think about the 20 or 30 centers as kind of consistent with what we have been doing here for a bit. About free cash flow, free cash flow did exceed our expectations in 2025 at $110,000,000 versus 2024 at $86,000,000. As we think ahead, and Dave went through this earlier, this is a super capital-efficient business. We expect to be positive again in 2026 as we continue to grow our adjusted EBITDA, consistent with the guidance that we put out there. Again, this is a relatively new phenomenon for us, being in the last two years, being free cash flow positive, and we are pleased with the progression and happy that our expectation is we will again be free cash flow positive in 2026. Operator: From BMO Capital, our final question comes from the line of Sean Dodge. Please go ahead. Sean Dodge: Dave, your comments on technology and using that to drive savings—I would imagine a big chunk of your costs are related to the clinicians and occupancy costs, but if we add up the support costs, the things you mentioned like the scheduling, credentialing, the revenue cycle, the labor-intensive stuff—what proportion of your cost base is that? So things that are addressable or impactable with technology over time. And then maybe how much of that you think you can actually drop out over the coming years? Any thoughts on what inning we are in with all this? Ryan McGroarty: Yes. Sean, this is Ryan. I appreciate the question there. I would handle this question by grounding you in our long-term growth algorithm. As it relates to mid-teens revenue growth, we expect center margin to expand out to the mid-thirties from the low-thirties where it sits today. Part of the center margin expansion is from leveraging things like your occupancy cost, plus the G&A line. In the G&A line, that is getting at the crux of your question—being able to drive efficiencies to be able to pull out costs and get the leverage. That is part of the long-term guidance that we put out today, where with the new part of our algorithm you can think of that as both expansion of center margin plus the G&A line, and overall we expect to be in mid-teens EBITDA by 2028. We feel really confident in our ability to do that. We have proven our ability to implement technology to drive a lower expense base. Sean Dodge: Okay. Understood. Thanks. Operator: With no further questions in queue, I will now turn the call over to CEO, David Bourdon, for closing remarks. David Bourdon: Thank you, operator. I would like to thank our nearly 11,000 mission-driven teammates who make sure that our patients get the quality care that they need and they deserve every day. I continue to be inspired by the passion and the resilience that you all bring. Our services are needed more than ever, and we look forward to furthering the positive impact that we can have on the millions of Americans whose lives can be improved by the high-quality mental health care services that LifeStance Health Group, Inc. provides. Thank you for joining us today. Operator, that will conclude our call. Thank you. Operator: Thank you again for joining us today. This does conclude today's conference call. You may now disconnect.
Operator: Good morning. Thank you for attending the Aspen Aerogels, Inc. Q4 2025 and full year 2025 financial results call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to turn the conference over to your host, Aspen Aerogels, Inc.’s Neal Baranosky, Senior Director, Head of Investor Relations and Corporate Strategy. Thank you. You may now proceed. Neal Baranosky: Thank you, and good morning, everyone. Joining me today are Donald R. Young, President and CEO, and Ricardo C. Rodriguez, Chief Financial Officer and Treasurer. The press release announcing Aspen Aerogels, Inc.’s financial results and business developments and the slide deck that will accompany our conversation today are available on the Investors section of Aspen Aerogels, Inc.’s website, aerogel.com. During this call, we will refer to non-GAAP financial measures, including adjusted EBITDA and adjusted net income. The reconciliations between GAAP and non-GAAP measures are included in the back of the slide presentation and earnings release. On today’s call, management will make forward-looking statements about our expectations. These statements are subject to risks and uncertainties that could cause our actual results to differ materially. These risks and uncertainties include the factors identified in our filings with the SEC. Please review the disclaimer statements on Page 1 of the slide deck as the content of our call will be governed by this language. I would also like to note that from time to time, in connection with vesting of restricted stock units and/or stock options issued under our long-term equity incentive program, we expect that our Section 16 officers will file Forms 4 to report the sale and/or withholding of shares in order to cover the payment of taxes and/or the exercise price of options. I will now turn the call over to Don. Donald R. Young: Thanks, Neal. Good morning, everyone. Thank you for joining us for our Q4 2025 earnings call. My comments will cover the evolving demand environment for electric vehicles and our related organizational adjustments, our growth outlook for the Energy Industrial segment, and our progress in developing a battery energy storage systems segment. I will also outline our strong liquidity position and the strategic review process that we are undertaking to explore opportunities to maximize shareholder value. Ricardo will amplify these points with his comments, and we look forward to your questions. Throughout 2025 and into 2026, we streamlined the organization, lowered our fixed cost base, strengthened liquidity, and positioned Aspen Aerogels, Inc. to operate effectively in a resetting EV market. As expected, U.S. EV sales in Q4 dropped significantly. GM followed suit with a ramp down of its EV production rates beginning in Q4 2025. We expect GM and other North American EV OEMs will determine the demand for EVs absent incentives and regulation during 2026 and align inventory and production rates based on the new market conditions. From this reset level, we expect EV to resume growth, though at a more measured pace than in prior years. GM has maintained its full line of EV nameplates and has stated that it remains dedicated to its long-term EV success, including in its Cadillac division where EV sales represented nearly 30% of total sales over the year 2025. In Europe, we see stronger structural drivers for our PyroThin thermal barrier segment. The key factors of market penetration, charging infrastructure, and steadier policy guidelines create a more visible multiyear adoption trajectory for OEMs. We recently secured a new award with Volvo Car, bringing our total to seven European design wins. We remain actively engaged with other European OEMs as they advance to their next-generation EV platforms, and we anticipate securing an additional award during the year. Across these European awards, we are supporting programs that incorporate battery cells from a diversified global supply base, including European, Japanese, Korean, and leading Chinese manufacturers. We are encouraged by our momentum in Europe and believe the region will be an important contributor to our thermal barrier growth in 2027 and beyond. Our Energy Industrial segment is poised to grow through the year 2026. Revenue in 2025 of $102 million was comprised largely of baseload maintenance and limited LNG work and was largely absent subsea project work, where we had record years in 2023 and 2024. We believe 2026 growth in this segment could reach 20%, supported by three primary drivers. First, we now have a robust pipeline for subsea projects and anticipate strong demand throughout the decade as more subsea developments move into deeper water and more challenging environments. Aspen Aerogels, Inc. has led this segment for two decades, and we are well placed to benefit from the current subsea cycle. We are off to a good start in 2026 with our first award win for an attractive North Sea pipe-in-pipe subsea project, which we expect to deliver in Q3. Second, LNG is an attractive growth vector for our Energy Industrial segment, and we are positioned across the activity set in 2026 to roughly double versus 2025 in both project count and revenue contribution, and we also see steady opportunities through the decade. Accelerating electricity demand keeps natural gas central for reliability and speed to power. We are positioned to convert this demand into profitable growth for our Energy Industrial segment. And the third key factor is pent-up demand for maintenance in refinery and petrochemical end users who have run their facilities hard and profitably over the past year while minimizing maintenance and turnaround. We see opportunities for strong growth in 2026 for our Energy Industrial segment with opportunities for similar growth in 2027 and 2028. In 2026, we are investing in our Energy Industrial business by adding to our customer-facing sales and technical service teams around the world. Our objective is to scale Energy Industrial into a $200 million high-margin segment without the need for incremental capital investment. As part of our long-term growth strategy, we are also developing additional commercial segments that leverage our unique technology, sales and technical service teams, and existing manufacturing assets. We believe this effort will diversify and broaden Aspen Aerogels, Inc.’s addressable market. Within energy storage, we see opportunities across LFP architectures and other high-reliability applications. With EV-proven performance, we believe our solutions can enhance fire safety and thermal performance for both large-scale and modular systems. We have structurally reduced fixed cash costs by approximately $75 million annually and expect margin expansion while requiring limited incremental capital investment. Again, we are initiating a strategic review to ensure our growth strategy and capital allocation priorities are aligned with long-term value creation. Importantly, it is being conducted from a position of financial strength and operational progress. Our objective is clear: Ensure our strategy, capital structure, and asset base are optimized to drive long-term value creation. Ricardo, over to you. Ricardo C. Rodriguez: Thank you, Don, and good morning, everyone. I will review our fourth quarter and full year 2025 results, provide our Q1 outlook, discuss the European EV market, and close with our strategic framework. 2025 was a transitional year for Aspen Aerogels, Inc. North American EV production levels fell in response to accelerated deregulation and end-market demand, while Energy Industrial results were weighted toward maintenance activity with fewer large project awards. We believe a recovery is around the corner as EV demand finds a floor and a new baseline is established, with momentum building in our Energy business. Fourth quarter revenue was $41.3 million, including $25.3 million in Energy Industrial and $16.1 million in Thermal Barrier. GAAP net loss was $72.9 million and adjusted EBITDA was negative $18 million. Gross margin was materially impacted by lower production volumes during the quarter and certain discrete items incurred. Adjusted operating expenses, excluding impairments, restructuring charges, and bad debt expense, declined from $22.6 million in Q3 to $21 million in Q4. Reflecting the impacted conversion costs and gross margin, a $3 million bad debt expense associated with a customer solvency issue, and several year-end material adjustments temporarily elevated costs to 48% of revenue in Q4, which we view as nonrecurring. Importantly, we do not believe Q4 profitability levels reflect our go-forward cost structure. Lower EV production volumes during the year reduced manufacturing absorption, particularly in Q4, and we responded by implementing structural cost actions. Turning to full year performance, revenue totaled $271.1 million, with $102.2 million from Energy Industrial and $168.9 million from Thermal Barrier. GAAP net loss was $389.6 million and adjusted EBITDA was $2.9 million. Gross profit was $46.3 million, representing a 17% margin. With P&L headwinds, we generated $6.1 million of cash in Q4 and ended the year with $158.6 million in cash and cash equivalents. This performance reflects disciplined working capital management, inventory optimization, and materially reduced capital expenditures. In December, we amended our MidCap credit agreement to enhance covenant flexibility, and we maintain a substantial liquidity cushion under the revised terms. For Q1 2026, we expect total revenue between $35 million and $40 million. This decline from Q4 reflects typical Q1 planned production, and we expect Q1 to represent the lowest revenue quarter of the year. From this base, we anticipate sequential revenue growth through 2026 supported by three primary drivers: increasing GM production as downtime subsides and EV volumes normalize through the year; the continued ramp of our European OEM programs, which we expect to contribute approximately $10 million to $15 million of revenue in 2026; and approximately 20% revenue growth in Energy Industrial, with a greater concentration of project activity in the second half of the year. As volumes increase and we continue to lower our cost structure, we expect improved operating leverage and margin expansion throughout the year. Given the mix in the revenue range, we expect adjusted EBITDA to be between negative $13 million and negative $10 million for the quarter. We expect working capital to be neutral to slightly positive and capital expenditures to remain minimal. Over the past year, we have methodically restructured Aspen Aerogels, Inc. to operate with a significantly more efficient cost base while preserving long-term revenue capacity. In 2024, adjusted EBITDA breakeven was approximately $330 million of revenue. In 2025, that level will decline to approximately $270 million, and by 2026, we will have reduced that further to approximately $200 million. Looking ahead to 2027, as further structural efficiencies are realized, we are targeting an adjusted EBITDA breakeven level of approximately $175 million of revenue. For 2026, we currently expect $10 million of capital expenditures and approximately $35 million of scheduled debt payments, including $24 million of term loan principal amortization. Factoring in scheduled debt amortization, disciplined capital spending, and improving profitability through the year, we expect to expand our net cash position to over $70 million by the end of this year. Let me highlight our positioning in Europe, which we view as a structurally attractive EV market with increasing visibility into future platform launches. EV penetration is projected to approach 40% of European production by 2030, supported by continued infrastructure expansion, OEM electrification commitments, and evolving regulatory frameworks. Importantly, Aspen Aerogels, Inc. is embedded across major European EV platforms spanning both passenger and commercial vehicles. Our European-only pipeline represents approximately $220 million tied to 2027 launches, expanding to more than $450 million in 2028. These figures reflect customer growth potential into 2027 and 2028, and several of these programs incorporate activity in North America and Asia as well. Taken together, Europe is positioned to become a meaningful revenue contributor beginning in 2027, with attractive capital efficiency as these platforms ramp. Lastly, I will frame our long-term strategy around three clear priorities. First and foremost, we have a healthy balance sheet. This provides flexibility to operate through market volatility, allocate capital deliberately, and pursue growth from a position of strength. With that foundation in place, our strategy centers on three pillars. First, continue driving structural operating leverage. We have reset our EBITDA breakeven level from $330 million in 2024 to $175 million in 2027, with additional efficiency opportunities ahead. Above that level, incremental revenue delivers 50% to 60% EBITDA margins, meaning a core market recovery translates directly into profitability. Second, strengthen and optimize our capital structure. We have transitioned to a capital-light, flexible manufacturing model that eliminates the need for new plant construction and allows us to scale using existing assets and swing capacity. This flexibility allows us to fund key growth initiatives while maintaining a strong liquidity profile. And third, accelerate growth through aerogel platform expansion and pursue transformative opportunities to unlock the full potential of the business. We are scaling our core EV and Energy Industrial platforms, including growing European EV momentum and renewed subsea and LNG activity, that could accelerate growth and enhance long-term value creation. We have engaged highly qualified advisers to rigorously test our assumptions, evaluate capital allocation options, and sharpen our strategic road map. Importantly, this review is being conducted from a position of strength, not necessity. Our objective is clear: thoughtful and disciplined execution of our strategy that maximizes value creation. Thank you. We will now open for questions. Operator: Thank you, Ricardo. We will now open for questions. When prepared to ask a question, please kindly limit yourself to one question and one follow-up. If you have additional questions, please rejoin the queue. Our first question is from Eric Stine from Craig-Hallum. Your line is now open. Please go ahead. Eric Stine: Good morning, everyone. Maybe just starting with the full value of what is being provided by your customers, or is that discounted, as I know when you have done this in the past, you have given it a pretty healthy discount? And then, curious as you think about these numbers, I know a lot of these programs are in ramp mode, but when you compare that to GM, and I know there is uncertainty as to what GM looks like as well, what do you think the mix looks like when you get out into 2027 and 2028 between your primary OEM today and a lot of these programs that are coming on in Europe, and, as we have discussed a little bit in the past, battery storage? So you mentioned, and if you can provide any clarity, you mentioned that you are actively involved in some quoting and some potential opportunities, maybe clarity there and, if you are able to, any estimate of what you think that means in terms of fitting into that 20% growth for Energy Industrial in 2026? Ricardo C. Rodriguez: Good questions, Eric. To answer your first, it is fully the full customer volumes in 2027 and 2028. So that blue-shaded portion of the chart, the $120 million and the $150 million, that is what they have provided to us. And when we look forward at 2027 and 2028, there is a lot of activity. You can see how much quoted activity we have with programs that start in 2027 and really ramp in 2028, combined with our awarded programs today. As we think about North America versus Europe and the shifts in mix in 2027 and 2028, it is probably fair to assume that GM will continue to be at least half in 2027. In 2028, we are opportunistically looking at the quote/bid pipeline and current awards that will ramp faster, and so that mix could change. It is worth noting that these are all at similar margins, so our 35% gross margin target remains intact. Donald R. Young: And on battery storage and the Energy Industrial outlook, we are focused on our core maintenance, LNG, and subsea-type work as the drivers of the approximately 20% growth we referenced for 2026. In parallel, we are deep in the qualification and bidding process for the new battery energy storage systems segment, and as I said in my remarks, we anticipate beginning revenue in this new segment in 2026. Eric Stine: Okay. Thank you. Donald R. Young: Thank you. Operator: Thank you. Our next question is from Colin William Rusch from Oppenheimer. Your line is now open. Please go ahead. Colin William Rusch: There is a lot of interest around rack-level storage and indoor applications, and I am just curious where you are seeing interest. Is it really for some of these larger systems that are outside some of the data centers looking at various duty cycles around voltage management and some of the heavy-duty recycling, or is it more tailored towards some of the larger-scale external systems? Donald R. Young: We are working on large-scale external systems, but we are also doing rack-level modular-type systems as well. Again, as you point out, fire safety is most critical, and that is what we are bringing to the party in this particular case. We are working with large companies on these projects, and again, we are deep in the qualification and bidding process. Not only are we bringing important technology to it, but we have some policy advantages as well with our domestic capacity here in the U.S., which is creating benefit for those projects. Colin William Rusch: Okay. Awesome. And then, a market where it seems like there are some applications, and we have not heard a lot about it, is in and around the military. Certainly, if you are doing things out at sea and there is a buildup of incremental EVs or EV-related devices, I am curious about any initial conversations or potential for you to enter into the defense market in a more substantial way? Donald R. Young: It is an interesting question, and we do have a team. As I have talked in the past, this idea of broadening our addressable market includes defense, and we have deep roots in the defense industry going back to our early first decade, really. We are focusing on certain applications within defense. Our first priority, though, in adding a segment is on the energy storage side most immediately, and that is where we are applying the majority of our resources. Colin William Rusch: Alright. Thanks so much, guys. Ricardo C. Rodriguez: Thank you. Operator: Thank you, Colin. Our next question is from George Gianarikas from Canaccord Genuity. Your line is now open. Please go ahead. George Gianarikas: Good morning, and thank you for taking my question. I would like to focus on the Energy Industrial side and ask if you have tried to make an assessment as to what your market share trends have been over the last several quarters, and it is good to see it getting back to growth this year, but I am curious as to what you have discerned the lack of growth was due to last year. Thank you. Donald R. Young: Thank you, George. We have, of course, spent a good amount of time analyzing this, and I think we can point pretty clearly to the lack of project work that separates our 2023 and 2024 numbers from our 2025 number. Let us just say roughly a $30 million to $35 million dollar gap between the earlier years and last year, and you can go straight to subsea, for example, and that accounts for the vast majority of that gap. Our market share in that segment is extremely high. Yes, we occasionally lose a project, but not very often, and so the fact is in 2025 there just were not many projects to be had. When we look at the pipeline for 2026, 2027, and 2028, it is much more robust. The project that we won earlier this year gets us back. More typically, a year is a number in the mid-teens, and the project that we won earlier this year that we will deliver in Q3 gets us a long way towards getting back to that average level, and we have other projects that we are trying to tie down now for the second half of this year, and that is why, George, we believe that we will grow our Energy Industrial business throughout the year. We will build on it quarter in and quarter out through the year and do believe that we have that opportunity to grow that business by 20%. George Gianarikas: Thank you. And maybe as a follow-up, Slide 5 talks a lot about this growth potential for Europe, particularly in 2027–2028. I am curious how you juxtapose that with some of the news coming out of Europe that the ACC, they are still operating, but they appear to be winding down some of their growth projects. Are there other battery manufacturers that you are working with to support some of the OEMs that are involved in that joint venture? Thank you. Donald R. Young: Yes, George. We are. In fact, I think both Ricardo and I had referenced in our comments working with battery cell manufacturers who are European, Korean, Japanese, and a couple of the leading Chinese manufacturers as well. That has given us a more robust outlook on Europe and a little less dependent on any single cell manufacturer. You mentioned ACC. We had Northvolt as well. As just an example, in the Northvolt case, those battery cells were replaced by Asia-based cell manufacturers, and we are right in the middle of those programs. So that diversity is important to us, I think, and gives us confidence about the European market. George Gianarikas: Thank you so much. Operator: Thank you, George. Our next question is from Chip Moore from Roth Capital Partners. Your line is now open. Please go ahead. Chip Moore: Good morning. Thanks for taking the question. Don, maybe on adjacent growth opportunities beyond BESS, any more you can share on what you might be looking at? Obviously, building materials in the past has been something you targeted. Any update on some of those target markets? Donald R. Young: We have a strong background on the B&C side, and we are working on a product today that we believe can be effective in a slice of that market. It is a very large market, and so a slice is additive for us and incremental for us, and as we pointed out, incremental revenue is extremely valuable to us. It is a product that we would most probably supply from our EMF supplier, and we want to make sure we have just the right product that gets certified properly. Then we renew the relationships that we had in that space, and before we became tight on capacity in the late teens, we developed that segment into a multimillion-dollar effort on our part, and we think we can rekindle that with our fire safety and thermal performance characteristics. Chip Moore: And with Europe in particular, would that be more of the target opportunity for that product? Donald R. Young: Yes. The building type and more of the thermal efficiency regulation and the style of buildings in Europe suit our retrofit-type approach to the market and increasing thermal performance in existing buildings. Chip Moore: And maybe for my follow-up question, on the strategic review, any more you can give us on the process and timeline and potential options that you might consider? Thanks. Donald R. Young: Look, for the strategic review, we have had a lot of change in our commercial markets. We have restructured the company significantly. We have strengthened our balance sheet significantly, and we feel that we are making operational progress that translates into quarter-over-quarter growth throughout this coming year. From a strategic review point of view, we just want to make sure that we have some external influences on our thinking and that we do not get too caught in our own thinking. Testing our assumptions externally, we think, is a prudent thing for us to do. We are able to do it, again, much more off of our front foot as opposed to our back foot. We are going to be very deliberate about it on the one hand, but this is important to us, and we are going to do it with urgency. We have a broad view. We are in our early stages, so we do not want to take anything off the table, but we are not prepared quite yet to say what the logical outcome would be of that effort. Ricardo C. Rodriguez: And maybe just to add to Don's comment, we are in the early stages, but right now we have plenty of cash runway. So this is not about just bolstering the balance sheet more or anything like that. What we are focused on is pouring gasoline on the fire. We want to accelerate growth, and to do that, we want to have world-class advisers and have fresh thinking and make sure that we are pursuing every strategic opportunity while maintaining optionality for the business. We are going to be very deliberate in our search and in our process, and in doing so, I think that we will, naturally over time, funnel down these opportunities to find that unicorn. Chip Moore: Thank you. Operator: Thank you, Chip. Our next question is from Ryan James Pfingst from B. Riley. Your line is now open. Please go ahead. Ryan James Pfingst: To follow up on battery storage first, can you size the revenue opportunity, maybe if not this year, perhaps later in the decade as it matures, or is it still early to do that there? Ricardo C. Rodriguez: It is still early, Ryan, to really get to exact numbers or exact projections, if you will, by the end of the decade. But what I would say is that we know it is a growing market, an important market, and we would not do it unless it could be impactful and also leverage our current technology and our current manufacturing capabilities. For us, this is a little bit of a tweener in the sense that it leverages our expertise around thermal barriers, but it is in more of an industrial setting. It is a natural extension of our existing markets and capabilities. But, again, what I would say over the course of the remaining part of this decade is we would not be doing it if it did not have impactful growth potential. Ryan James Pfingst: Got it. Appreciate that. And then maybe one on the EV side and quoting activity. Don, I think you mentioned it in your prepared remarks, but how are you thinking about potential wins this year, and how would those wins compare to some of your current OEM partners in terms of scope? Donald R. Young: We did indicate that we think we are in a strong position to add an additional opportunity in Europe and potentially here in the United States as well, and we do not exclude some of the work that we are doing in Asia as well. We think we have the opportunity to add one, two, possibly three additional awards. What I would say about the awards is that these OEMs are more experienced. Their technology has developed more significantly than even two years ago or three years ago, let alone five and six years ago when some of the platforms that are rolling off now were originally conceived. Our work is much faster and more technical and with a greater knowledge base not only for ourselves but for those OEMs as well. We see these programs proceeding much more effectively. As I said, we see the European market—just the structural aspects of that market with steadier policy and a more mature infrastructure—to be a great opportunity for us, as we showed in the opportunity base in one of our slides today. Ricardo C. Rodriguez: Great. Thanks, Ryan. Ryan James Pfingst: Thank you. Operator: We currently have no further questions, so I will hand back to Don for closing remarks. Donald R. Young: Thank you, Gabby. We appreciate your interest in Aspen Aerogels, Inc., and we look forward to reporting to you our first quarter results in May. Be well, have a good day. Thank you. Operator: Thank you. This concludes today’s Aspen Aerogels, Inc. Q4 2025 and full year 2025 financial results call. Thank you for joining. You may now disconnect your lines.
Operator: Good day, and thank you for standing by. Welcome to Taboola.com Ltd.'s fourth quarter and full year 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Adam Anwar, Head of Investor Relations. Please go ahead. Adam Anwar: Thank you, and good morning, everyone. And welcome to Taboola.com Ltd.'s fourth quarter and full year 2025 earnings conference call. I am here with Adam Singolda, Taboola.com Ltd.'s founder and CEO, and Stephen Walker, Taboola.com Ltd.'s CFO. The company issued earnings materials today before the market and they are available in the investor section of Taboola.com Ltd.'s website at investors.taboola.com. Now I will quickly cover the safe harbor. Certain statements today, including our expectations for future periods, are forward-looking statements. They are not facts and are subject to material risks and uncertainties described in our SEC filings. These statements are based on currently available information and we undertake no duty to update them, except as required by law. Today's discussion is also subject to the forward-looking statement limitations in the earnings press release. Future events could differ materially and adversely from those anticipated. During this call, we will use terms defined in the earnings release and refer to non-GAAP financial measures. For definitions and reconciliations to GAAP, please refer to the non-GAAP tables in the earnings release posted on our website. With that, I will turn the call over to Adam. Adam Singolda: Thanks, Adam. Good morning, everyone, and thank you for joining us today. We are closing up 2025 with another strong quarter, exceeding the high end of our guidance across our key metrics. The year has been defined by disciplined execution, and more importantly, we are seeing clear early signs of acceleration in the growth of the business from our new advertising platform, Realize. In 2025, we repurchased 77,000,000 shares for a total of $254,000,000, reducing our share count by roughly 18% while continuing to invest in R&D to support our long-term growth ambitions. Before getting into the details, let me remind you who we are. Taboola.com Ltd. is one of the largest performance advertising companies outside of search and social, focused on the open web. Every day, billions of consumers read, watch, and engage with trusted publishers and communities across the open web. Similar to how Google and Meta understand intent within their own platforms, Taboola.com Ltd. understands intent across the open web and turns it into measurable outcomes for advertisers. When someone reads about the Knicks, plans a vacation, or checks the latest news on their favorite local site, we transform that moment of interest into measurable results for advertisers. That scale, that proprietary intent data, and the AI-driven conversion machine we built, that is Taboola.com Ltd. Turning to our results. In 2025, ex-TAC gross profit reached $714,000,000, up 7% year over year, and adjusted EBITDA grew 7% to $260,000,000. We began the year guiding for 2% and exited the year at 7%, a clear acceleration, which I am happy about. While I believe double-digit growth is the right long-term pace for this business, we are not there yet, but our 2025 performance gives us the confidence we are going in the right direction. We also generated $163,000,000 in free cash flow, up 10% year over year, representing approximately 76% conversion from adjusted EBITDA. Looking ahead, we expect 7% ex-TAC gross profit growth and 30% adjusted EBITDA margins while continuing to invest in accelerating our growth rate and continuing our primary use of cash to aggressively repurchase shares. In 2025, Realize, our advertising platform, helped increase the number of scaled advertisers and grow the budgets we manage for them. In 2025, scaled advertisers grew 6%, with an average revenue per scaled advertiser up 2%. These results are reflected in the financial performance I shared earlier. A strong example is personal finance, one of our ideal customer profile. Advertisers such as NerdWallet, Motley Fool, and Queen Street adopted Realize and leveraged newer capabilities like predictive audiences and format diversification. As a result, they grew meaningfully beyond their historical spend levels, with some becoming top advertisers at Taboola.com Ltd. When I think about what will continue accelerating Taboola.com Ltd.'s growth, I am laser focused on improving retention rates and increasing spend over time. While many things can help, this is the most important one. Examples like these are encouraging and reinforce that our strategy is working. As we look ahead, we are concentrating on these three priorities. First, investing in our technology to continue to advance Realize as we continue to expand our strategy to become the leading performance advertising company outside of search and social. We are investing heavily in AI-driven optimization, predictive targeting, onboarding automation, and stronger measurement and attribution to make the platform even more intelligent and easier to adopt while directing budgets toward the best-performing opportunities. While I think we are making good progress, there is a lot more for us to do here, and our R&D team is hard at work rolling out capabilities that advertisers are asking us to further drive advertiser success. Second, we restructured our sales organization around ideal customer profile, where we were seeing stronger retention and spend growth over time. The advertiser outcomes we delivered in 2025 are giving us clear signals on which advertisers to prioritize, how to reach them, and what success on Realize should look like. To further support these efforts, we recently welcomed Khushan Bhatia as our new Chief Business Officer overseeing revenue and partnerships and bringing additional focus and expertise to supercharge advertiser, agency, and publisher relationships to accelerate growth. Keeping with the same example I mentioned earlier, in 2025, we generated $120,000,000 in personal finance revenue within a $15,000,000,000 US market. Today, we capture only 1% to 10% of advertisers' total spend, which underscores the significant runway ahead as we deepen those relationships. At the same time, we are prioritizing new advertisers similar to the ones already succeeding on our platform and entering those conversations with a clearer understanding of their goals and what performance they should expect from Realize. By focusing on the right advertisers, not just volume, we are strengthening partnerships, expanding wallet share, and positioning Taboola.com Ltd. as a core long-term growth channel for advertisers. Lastly, on brand and perception. Since launching Realize one year ago, we have made meaningful progress in how advertisers view Taboola.com Ltd. As advertisers see clear results and expand their budgets with us, we are building trust and steadily positioning ourselves as a platform advertisers should test and scale beyond search and social. There is still work ahead, but Realize is proving to be a strong engine, not only for performance, but also for long-term brand credibility. As we think about our partners and the open web in the context of structural advantages, anyone can download an open source Llama and get going. AI is a commodity. But that alone cannot replicate Taboola.com Ltd.'s greatest advantages. AI can replicate features. It can improve interfaces. It can even outperform some raw models we developed. It just does not matter. Without proprietary data and distribution, it is a very powerful engine with no fuel. Our data is our fuel, and it is unique to Taboola.com Ltd. Hundreds of millions of times every year, people across our network make decisions to buy or take action. That creates a very rare form of performance-driven intent data that directly determines advertisers' outcomes. Think of it as a secret language of intent that exists only because of our deep integrations across the open web and our singular focus on performance advertisers. Without these signals, advertisers cannot effectively optimize, scale, or generate strong returns on investments. We get this data by having code on page integrated across 14,000 publisher properties such as ESPN, Yahoo, USA Today, The Independent, and many others, giving us first-party access to more than 600,000,000 daily users. Those direct relationships built over many years generate real-time intent signals at massive scale. When I look at our partners, what stands out is the strength of their brand, the trust, and communities they have built over many years. Users go directly to those, whether through their websites or their dedicated apps. As a result, they have little to no reliance on search traffic, while direct traffic continues to grow. These dynamics keep our company-wide exposure to search in the single-digit percentages, with about a third of our supply coming from in-app usage. In an AI-driven world, two assets ultimately matter most: proprietary data and distribution. And we have both. In summary, 2025 was not just about beating the number, but rather a validation that our strategy is working. We executed with discipline, accelerated the business, returned significant capital to shareholders, and invested heavily in the platform shaping our future. Realize is delivering the type of results we want to see, making new and existing advertisers successful while changing how the market sees Taboola.com Ltd. We are still early, but we are operating with greater clarity and urgency than ever. Our mission remains to help performance advertisers grow, help publishers win, and build the leading performance advertising company beyond search and social. As more players compete for advertising budgets, they will all need a trusted friend, and Taboola.com Ltd. is a great friend. With that, I will hand it over to Steve. Stephen Walker: Thanks, Adam, and good morning, everyone. We are pleased to close out the year on a strong note. In the fourth quarter, we continued to build on the momentum we generated throughout the year, delivering results that exceeded the high end of our guidance across our key metrics. Revenues in the fourth quarter grew 6% to $522,300,000 and for the full year increased 8% to $1,910,000,000. One of our key priorities this year was expanding advertiser budgets, and with the rollout of Realize, our performance advertising platform, and the introduction of new embedded features, we were able to successfully execute on that objective. This momentum was reflected in our scaled advertiser metrics in the fourth quarter, with a 3% increase in the number of scaled advertisers and a 2% increase in average revenue per scaled advertiser. We also enjoyed strong growth from non-scaled advertisers during the quarter, which contributed about 1% to our year-over-year growth. This indicates that we had a large number of advertisers testing Realize for the first time, even if we have not had a chance to scale them as of yet. For the year, scaled advertisers grew 6% and the average revenue per scaled advertiser grew 2%. Realize continued to improve retention and increase ad spend among existing advertisers compared to the same period in the previous year. As I have noted in prior quarters, we are particularly encouraged by growth in the number of scaled advertisers as they continue to be an important driver of future growth. Ex-TAC gross profit in the fourth quarter was $212,800,000, representing margins of approximately 41%. The fourth quarter results were flat year over year as expected due to the lapping of a challenging comparison with a strong Q4 2024. For the full year, ex-TAC gross profit grew 7% to $713,500,000. This growth was largely driven by the scaling of Realize, which drove growth in advertiser spend as well as continued strong performance from Taboola News. Gross profit for the quarter reached $175,600,000 with full-year gross profit totaling $569,500,000. In addition to growth in ex-TAC gross profit, this performance was driven by lower depreciation expenses on our servers following a reassessment of their useful lives, as well as tax efficiencies, both of which offset higher hosting and data costs required to support the growth and scaling of our business. In the fourth quarter, net income was $50,100,000 with non-GAAP net income coming in at $79,100,000. For the full year, net income was $42,300,000 with non-GAAP net income coming in at $168,600,000. Adjusted EBITDA for the quarter was $86,100,000. For the full year, adjusted EBITDA was $215,500,000, representing a margin of 30%. This reflects continued discipline in expense management while maintaining targeted investments to support long-term growth. Foreign exchange was a meaningful headwind in the quarter. On a constant currency basis, Q4 ex-TAC gross profit saw a tailwind of approximately $4,000,000 while operating expenses saw a headwind of approximately $7,000,000, primarily reflecting the strength of the Israeli shekel where we have a significant employee and cost base. In total, FX represented roughly a $3,500,000 headwind to Q4 EBITDA and about $11,000,000 for the full year. Without this FX headwind, our full-year adjusted EBITDA would have been $226,300,000, which would have represented an EBITDA margin of 31.7%. In terms of cash generation, we had $59,700,000 in operating cash flow in the fourth quarter and free cash flow of $46,900,000. For the full year, operating cash flow amounted to $208,400,000 and free cash flow was $163,400,000, representing a 76% conversion from adjusted EBITDA. On average, our free cash flow conversion from adjusted EBITDA has remained above 70% over the last twelve consecutive quarters. As a reminder, last quarter, we indicated that we now believe we can sustainably convert free cash flow at a 60% to 70% rate over any typical four-quarter period. That is an increase from our prior expectations of 50% to 60%. Capital expenditures in 2025 included internally developed software that was capitalized during the year, and we expect these strategic investments to continue into 2026. These investments were primarily driven by three initiatives: continued development of Realize, investment in new publisher-focused product capabilities, and investments in our ecommerce platform. Turning to the balance sheet. We remain in a strong financial position. We ended the fourth quarter with a net cash balance of $18,600,000. Cash and cash equivalents totaled $120,900,000, which more than offset our long-term debt of $102,300,000. Early in 2025, we secured a $270,000,000 revolving credit facility which enabled us to fully repay our prior term loan while maintaining approximately $168,000,000 of available liquidity as of December 31. The facility also reduced interest expense by $1,100,000 in the fourth quarter and $4,800,000 for the year. We remain focused on disciplined capital allocation, prioritizing R&D investments while returning capital to shareholders via share repurchases. In the fourth quarter, we repurchased approximately 18,600,000 shares at an average price of $3.78 for a total consideration of $70,500,000. For the full year, we repurchased 76,900,000 shares at an average price of $3.30, which represented total repurchases of over $250,000,000. In 2025, we bought back about 8% of our outstanding shares net of issuances. This reduced our total shares outstanding to approximately 276,000,000 at the end of 2025 from about 337,000,000 at the end of 2024. Since the inception of our share repurchase program in 2023, we have repurchased a total of 110,400,000 shares at an average price of $3.49 for a total consideration of $383,500,000. We currently have approximately $180,000,000 remaining in our authorization and intend to continue to use a majority of our free cash flow to repurchase shares. Moving to guidance, for the first quarter of 2026, we expect revenues to be between $444,000,000 and $462,000,000, gross profit to be between $119,000,000 and $125,000,000, ex-TAC gross profit to be between $158,000,000 and $164,000,000, adjusted EBITDA to range from $20,000,000 to $26,000,000, and non-GAAP net income to be from negative $1,000,000 to positive $7,000,000. For the full year 2026, we expect revenues to be between $1,990,000,000 and $2,050,000,000, gross profit to be between $601,000,000 and $621,000,000, ex-TAC gross profit to be between $753,000,000 and $774,000,000, adjusted EBITDA to be $222,000,000 to $236,000,000, and non-GAAP net income to be $165,000,000 to $191,000,000. I would note that our adjusted EBITDA guidance reflects a forecasted headwind from foreign exchange rates of $11,000,000 in operating expenses partially offset by ex-TAC tailwinds. Without this headwind from foreign exchange, adjusted EBITDA margins would have been over 31%. In summary, Q4 results exceeded the high end of our guidance across our key metrics, reflecting strong execution and continued momentum in the business. We are building on the traction we have seen with Realize and are focused on accelerating growth as our initiatives gain more traction this year. While we remain disciplined in our approach, the progress to date reinforces our confidence in our ability to return to sustainable double-digit growth over time. With that, we will now open for questions. Operator, can you please open the line for questions? Operator: Thank you. At this time, we will conduct a question-and-answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please standby while we compile the Q&A roster. Our first question comes from Barton Crockett from Rosenblatt. The floor is yours. Barton Crockett: Okay. Thanks for taking the questions. Let me see. One thing I was curious about, you did not really address it in the commentary, and I realize maybe this means it is not a KPI, but there was a substantial variance in your revenues versus where you were guiding for the quarter. And I was just wondering if you could talk through what that variance was, why it happened, and how meaningful that is. Stephen Walker: Sure. I can take that. Hi, Barton. So I think, very simply, it was revenue mix, or mix of business. We had more business in some of our higher-margin parts of our business and a bit less revenue in some of our lower-margin areas. Ultimately, it was just mix of business. Obviously, for us, gross revenue is not the key metric. Ex-TAC is the key metric because that is what we keep after we pay publishers. You have probably heard me say a bunch of times in the past that we can grow gross revenue by doing bad business—signing up a bad publisher deal or doing something that does not drive ex-TAC—and that is not helpful. What we care about is ex-TAC. We are obviously happy that we had the beat on ex-TAC, which is really what we focus on. The rest of it was just mix of business. Barton Crockett: Okay. And then you guys gave the commentary about the growth in non-scaled advertisers suggesting some success with Realize initiatives to grow penetration and other elements of the page beyond bottom-of-page, which sounds encouraging, but your guidance suggests kind of a steady revenue trajectory versus acceleration. I was wondering if you could talk through that disconnect. How optimistic are you that this can bring enough new in to move the top line, and why is that not reflected in the guidance you give? Stephen Walker: Yeah. So I think, ultimately, our guidance philosophy as a company is always to be relatively conservative. We do not want to get ahead of ourselves. What our guide basically implies right now for 2026 is what we are seeing from Realize at this point in time. We have obviously seen good progress with Realize over the course of last year. We started last year guiding at 2%. We ended the year at 7% growth. We are now midpoint of our guide for 2026 at 7%. That is because that is basically what we are seeing from Realize today. We do have initiatives that we think will help improve that over time, and Adam can probably talk to a few of those initiatives that he thinks will drive growth this year. Those are not factored into the guide yet. For now, what we are factoring in the guide is exactly what we are seeing today. Adam Singolda: Well, hi. Good morning. I think in general, we are encouraged by seeing our investments in Realize at the center of our strategy progressing. There are three things I mentioned. The first one is focusing on our technology side, and we are seeing better retention for new advertisers, which is probably what we want to see the most, and we are seeing growth in spend over time. The second thing—and that results in scaled advertisers growing—and all those things are positive signs that we are progressing in our strategy and its results in our numbers, you can see from 2025. The second thing, I just came back from Bangkok, from Madrid, from Chicago, spending time with our 600 sellers. It is really incredible to spend time with our people and seeing that when you sell to the right clients—we call those ideal customer profile—we are seeing essentially we have what it takes. The chances for, again, example, the chances for a financial advertiser to succeed with us is not too different if they were to spend with Meta, which is incredible because it means that there is so much growth for us within our existing market that we are going after. So the second thing is just sales focus and going after the ones that we know chances for success are much higher. And the third one is continuing to invest in our brand. It is quite, for me, always encouraging to see how many advertisers do not even know Taboola.com Ltd. is out there. There are so many great advertisers that should try Taboola.com Ltd. that will succeed with us or that have a good chance to succeed with us. As part of that, I think continuing to invest in our brand perception and our brand in general will continue to help us attract new advertisers to try Taboola.com Ltd. and succeed with us. So all those three things make us encouraged. Barton Crockett: Alright. Thank you. Stephen Walker: Thanks, Barton. Thanks. Operator: Thank you for your question. Our next question comes from Matthew Dorrian Condon from Citizens Bank. The floor is yours. Matthew Dorrian Condon: Thank you so much for taking my questions. Adam, you talked about making incremental investments behind the product features in Realize. Can you dig into some of those and what we should expect from a product perspective in 2026? And then I was wondering if you could break down a little bit more as we look at Realize—how much is coming from existing advertisers and you tapping into incremental budget there versus bringing in new clients onto the Taboola.com Ltd. platform? Thank you so much. Adam Singolda: Sure. I will let Steve speak about the numbers. The biggest investment we are making, and I think the biggest opportunity for Realize—and we will share more throughout the year, so I want to let the team bring this to market in a more detailed way—but in general, where I think we have the biggest opportunity is making it more automatic and simpler for advertisers to be successful. If you look at the amount of permutation that exists when you buy from any channel—whether that is Google, Meta, Taboola.com Ltd., and others—it is complicated to succeed as a performance advertiser. Even right now with Taboola.com Ltd., with Realize, I think we made tremendous progress in terms of making advertisers successful. In my vision, I really want anyone that has a chance, that should succeed with Taboola.com Ltd., to almost automatically succeed with Taboola.com Ltd. In the world of AI, where we have so much unique intent data, we have so many thousands of advertisers that are already doing well with Taboola.com Ltd., generating $2,000,000,000 of conversions a year, I hope that Realize is a platform that if you should succeed with us, then chances are you will succeed with us, and that will be more and more automatic. Then our good people at the company can spend more of their time on strategy and being creative and going out there and helping attract more new advertisers. So, again, to me, the biggest thing that we will see from Realize later, for those who should succeed with us, will be more about automation and making it even easier to drive success. Stephen Walker: And then to the second part of your question about whether growth is going to come from bringing new advertisers to the platform versus growing our existing, I will talk about this in the context of our scaled advertiser metrics that we release. What I would say is the precise mix is always hard to predict because, as I have talked about in the past, as we bring on more advertisers and then we scale them and they get into that scaled level of performance with us, they do drag down the average. As the number grows, the average gets dragged down because usually when we initially scale an advertiser, it is at the low end, and then we grow them over time. The exact mix is hard to predict. In general, I would say we always expect to grow the number of scaled advertisers. That is the fuel for our growth. I would think that a larger portion of our growth comes from growing the number and bringing more new advertisers to the platform, but we should see some growth in the average revenue per scaled advertiser over time as well. It will come from a bit of both, generally speaking probably more from the number, and then over time, we will grow the average as well. Matthew Dorrian Condon: Thank you so much. Adam Singolda: Thanks. Operator: Thank you for that question. Our next question comes from the line of Laura Anne Martin from Needham. The floor is yours. Laura Anne Martin: Good morning. My first one is on generative AI. I am interested in whether how much your traffic was down in the fourth quarter and what the mix was and whether you think that—I think Wall Street thinks that is the first step in agents holding on to attention and not allowing people to go to the open web. Can you talk about why the open web survives generative AI? That is my first question. Then my second question is about Realize. One of your goals in Realize was to attract display budgets, which are quite a bit larger than native budgets, but I am interested in whether Realize is actually—are you seeing that happen, that you are getting new types of advertising rather than just staying in the narrowed native advertising bucket? Those are my two. Thanks. Adam Singolda: Sure. Good morning, Laura. I will pick up the first one. On the open web, we basically have a very structural advantage in where we sit in the open web. We are seeing traffic going up. We are seeing search traffic going down. But overall, through primarily direct traffic to publishers and then onboarding more publishers, traffic is overall going up. The exposure we have to search traffic, which I think is the main risk that investors are tracking, for us it is in the single digit. A lot of it is because we work with massive platforms like Microsoft and Yahoo and Apple News. A third of our traffic is in app. Overall, our exposure is low, and we are seeing direct traffic going up. In general, what is going to happen is publishers that have trust, that have good communities around them, will continue to be important. Local news, sports sites, news—they will continue to get a lot of momentum and attention from consumers. I can also tell you, AI engines—what we are seeing is what they crawl on the web, the proxy for what consumers are asking—a big chunk of what consumers are talking to AI about is the last 24 hours news. People want to know what is going on. AI really needs that content, and content in the open web is where content exists. I think that for trusted publishers, for bigger publishers, which is most of our business, there is a very bright future. The second thing is that when I imagine AI being adopted by those publishers, as you know, we have a product called Deeper Dive, essentially bringing ChatGPT-type technology to those bigger publishers so that consumers can converse and talk to publishers. If you go to USA Today, you can check it out. I think there is a significant ARPU growth, a significant revenue generation opportunity for publishers when they actually adopt AI on their own sites. The risk, I think, is more on the smaller sites, which we do not have exposure to, or for those who are very dependent on search, also not a publisher that we work with. I think there is a very bright future for the trusted publishers, especially when they adopt AI in a bigger way. Stephen Walker: And then to your second question, Laura, about are we seeing new types of advertisers coming onto the platform, I will talk about this in the context of the three growth drivers that Adam mentioned earlier. He said we are focusing on ICPs, we are investing in our brand to change perception of who we are as a company, and then we are investing in tech to make advertisers more successful. Today, that focus on ICP means we are bringing more of similar types of advertisers. What we have done is we have got our sales teams focused on finance advertisers, travel advertisers, auto advertisers, ecommerce advertisers—the ones that we know are working well on our platform today. Today, our growth in advertisers is coming more from that focus on ICPs and getting more similar types of advertisers to what we have. Over time, as we get our brand perception shifted a bit—getting out of the “we are a native company” and into the “a performance platform” type of mindset—and as our tech continues to develop and we are able to target more and more granularly on our platform, we do expect that we will expand the types of advertisers. More types of advertisers will become ICPs, and we will start focusing on selling to them. Today, more of it is more advertisers of a similar type to what we have, and over time, I expect more different types of advertisers to start coming on. Laura Anne Martin: Thank you very much. Stephen Walker: Thanks, Laura. Thanks, Laura. Operator: Thank you for your question. Our next question comes from the line of Tyler DeMatteo from BTIG. The floor is yours. Tyler DeMatteo: Great. Thanks for taking the question, guys. I wanted to start in terms of 2026, Steve. As you think about the advertising market this year and some of the one-off events, kind of FIFA, etcetera, is that baked into the guide? What level of visibility do you have into something like that today, and when would that start flowing through? And then my second question for Adam. On Realize and the developments, thinking about this in the context of the investment cycle for that, where do we stand in terms of the investments in the platform and the technology, etcetera? Are we going to see multiple iterations from here? Is everything largely ironed out? Those are my two. Thanks, guys. Adam Singolda: Sure. I can start with the second one. Good morning. We are all in. We are laser focused on Realize. Like I mentioned earlier, if you look at the market that we are selling into—the performance advertisers that we are going after—with the technology we have now, I think we have what it takes to grow. We spoke about seeing inflection point in double-digit growth, and I believe in our strategy, the market, and we have what it takes. That said, we are early in our cycle in terms of investment. There is so much more that we are going to reveal this year and in years to come. When you compare Taboola.com Ltd. Realize to Meta, when you compare it to Google, to PMX, to some of the platforms out there that are serving 10,000,000 advertisers when we serve 15,000 to 20,000, there is so much more that we want to do and intend to do to make it much easier for those who should succeed with us and become scaled advertisers to actually become ones, and that is later there. As a technology company, we are going to reveal a lot later in the year. I think we have what it takes to continue to grow and to generate 30% EBITDA within that growth rate and use most of it to repurchase shares, which we think is a great deal for the company. Most of our investment, which is significant and, like I mentioned earlier, very exciting, is can we make it so... Stephen Walker: Then to your first question about whether the big events happening this year are factored into our guidance, the quick simple answer is yes. The way they are factored in, just to get into a little bit more detail, is the big events this year are the Olympics, World Cup, midterm elections—those things are factored in. For us, interestingly, it is more of a traffic driver than it is an advertising revenue driver. World Cup and Olympics tend to be big sports traffic drivers, and we have Yahoo Sports, CBS Sports, ESPN. We have something like eight of the 10 top sports sites in the US, and we have similar coverage globally. It is a great traffic driver for us. Our advertisers tend to be always-on performance advertisers more so than event-driven advertisers. It will drive more traffic, which is more impressions and gives an opportunity to drive more revenue from our advertisers, but it is not like a display network where maybe they have got event-driven advertisers. Same thing with elections. Elections drive big ad budgets, but a lot of that is branding campaigns for the candidates. We do get some things like fundraising campaigns where it is a direct response trying to get somebody to donate. We do not get a lot of incremental revenue in terms of the advertising side, but again, it drives eyeballs and views, and that is what is factored into our guidance. Tyler DeMatteo: Great. Thanks, guys. Appreciate it. Stephen Walker: Thanks. Operator: Thank you for your question. Our next question comes from the line of Mark Zgutowicz from Benchmark. The line is yours. Mark Zgutowicz: Thanks, guys. Good morning. A couple for me. Steve, just to follow on to the question on the scaled advertiser metrics. Your scaled advertiser growth was up year over year, but down sequentially. I am curious if that was in line with your internal expectations, and what is the balance between those two metrics? Meaning, do you expect to see more of a lagging effect on the revenue side, and could that inflect at some point this year relative to that growth that you have been seeing on the actual advertisers? And then second separate question, I would appreciate if you could unpack your 1Q ex-TAC margin guidance. 1Q has guided a 100 bps of expansion year over year at the midpoint, and considering that you are lapping Yahoo tests, I think that had a positive effect on margin. Are you seeing mix shift towards higher take-rate publishers, or is that being driven by yield improvements? I will just stop there. Stephen Walker: In terms of the scaled advertiser trends, we tend to look at that year over year because there is some seasonality. Looking at it sequentially quarter over quarter can be deceptive, similar to our revenue itself. If you look at it quarter over quarter, you can see some things that may look weird, but if you look at it year over year, a lot of that normalizes. I tend to look at it year over year. I will also say the metrics bounce around a bit any given quarter, so they are tough to predict on a quarterly basis. For instance, if some of our bigger advertisers get really aggressive one quarter, they can squeeze out some smaller advertisers just because they are willing to bid more. They are hard to predict on the numbers basis. If you look at it year over year and over a longer period of time, then it tends to normalize. That is the way we tend to look at it. We tend not to look at it quarter over quarter sequentially as much. In terms of our revenue ex-TAC guide, the simple answer to your question about whether we are seeing traction in higher-margin areas is yes. We are seeing a shift in our business to higher-margin areas. Connexity, for instance, is 100% ex-TAC. If business shifts to them, that appears as higher ex-TAC margin business to us. Also, the mix between regions and specific publishers is trending in a positive ex-TAC margin direction. It is less to do with increasing yields right now, although I am hopeful that we will see that also over time. It is more mix of business today. Mark Zgutowicz: Okay. Got it. Appreciate that. And if I could just ask maybe one more, zeroing out here a bit. If you look at your rest of the world—roughly 35% of revenue—and that grew quite nicely in Q4. It was up about 10%, which looks like it is the fastest growth you have seen in fourth quarter ex Germany. Can you talk about any dynamics at play there in 2026 and how they compare to 2025 in rest of the world? Stephen Walker: We are seeing nice growth internationally. By the way, you asked about margin and mix of business. That is part of it. Some of those other geos tend to be high margin for us, so as they grow, they help with our overall ex-TAC margin picture. We are seeing nice growth internationally. If you remember, we used to be about 40% US, 60% rest of world. Once we brought on Yahoo, we got back closer to 50% US, 50% rest of world. I think this past quarter, it was 47% US, 53% rest of world. I think we are going to continue to see faster growth internationally than we will in the US. That is normal because a lot of those markets we are still newer in, so we have more growth opportunities in a lot of those markets. I think that is going to continue to be true as we go forward. What you are seeing there is basically the dynamic of less mature markets versus more mature markets and higher growth in the less mature markets. Mark Zgutowicz: Got it. Alright. Thanks, Steve. Appreciate it. Stephen Walker: Sure. Operator: Thank you for the question. Our next question comes from the line of Zachary Cummins from B. Riley Securities. The floor is yours. Zachary Cummins: Hi. Good morning, Adam and Steve. Thanks for taking my question. Two for me. The first one, I thought it was a notable callout that your non-scaled advertisers still contributed about 1% to growth here in Q4, largely due to early adoption of the Realize platform. Any incremental data you can give around how you are ramping the testing process, what tends to work best when quickly scaling up from these tests to expanding to more full budgets for some of these advertisers? And then second question, Steve, it seems like we have a greater shift of adjusted EBITDA going into 2026. Can you give some context around timing of investments or other items we should consider when modeling that out? Stephen Walker: On your first question about the non-scaled advertisers, it was an interesting effect. We saw a lot of testing budgets in Q4, and that drove 1% incremental growth, which is the first time you have seen that. In fact, if you look at the full year, non-scaled advertisers were basically down a bit year over year. Q4 was unusual in that regard. I think it is encouraging because at the end of the day, what we do want is a bunch of advertisers coming on to test our platform. Q4 is a good time for a lot of them to do that because it is where they have some of their maximum budgets, and they are looking to test new things. We found it encouraging. I am hopeful that that translates into more revenue going forward, although we are not counting on that. It was encouraging to see that. In terms of the EBITDA question that you had, the biggest impact on our EBITDA in Q1 in particular is that we have a headwind from foreign exchange rates. I mentioned that in my prepared remarks that we have about an $11,000,000 headwind on OpEx as we head into 2026 due to foreign exchange rates, mostly the Israeli shekel. That hits first quarter and second quarter much more heavily than third quarter and fourth quarter because if you look at how the shekel declined over the course of 2025, it really took a nosedive starting sometime in Q3. That is one factor. We are also intentionally putting some of our marketing expense, especially where we are marketing to advertisers upfront, in Q1 and Q2. Our guidance reflects what we expect to happen over the course of the rest of the year on OpEx. We do have some efficiency initiatives that are going on that we think can help us in the second half. It is a little bit of some upfront costs that we knew were going to happen, foreign exchange rates, and then us expecting to get more efficient as we go through the year. Zachary Cummins: Great. Thanks for taking my questions. Operator: Thanks for the question. Our next question comes from James McGee Kopelman with TD Cowen. The floor is yours. James McGee Kopelman: Hi. Good morning, and thanks for taking the questions. First one for Adam. Given some ongoing macro uncertainty and the state of the US consumer, what is your sense of conditions in the overall digital ad market and what are you hearing from your conversations with advertisers regarding their plans for budget growth this year? And then another one for Adam. I want to ask about the ARPU opportunity for publishers adopting AI on their sites. Where are we in that process, and what kind of progress are you seeing with publishers so far? And then I will finish with Steve as well. Adam Singolda: In general, there is a significant trend in the industry at large towards performance advertising. Last year, we announced two extended partnerships, one with Paramount and one with LG. These are big TV broadcasting companies that we are honored to be working with, and those partnerships are primarily around more ways for TV advertisers to get mid-to-low funnel metrics by working with Realize. That is a whole new type of demand opportunity for us. Remember, TV is a $100,000,000,000 market just in the US. If we can take a piece of that and prove, much like I think Amazon is doing such a good job with Prime, showing that you can buy TV and at the same time, through Amazon.com and the rest of their consumer journey, you can show that TV drives mid-to-low funnel metrics. The reason I am saying that is because I think for Taboola.com Ltd., there is a lot of growth opportunity because when you go beyond search and social, we truly become the monetization layer for the open web—the company that any advertiser and any company that is not Google and Facebook who needs someone that can generate conversions can work with. Taboola.com Ltd. is, to my knowledge, the biggest and best conversion machine outside of Google and Facebook. There is going to be a lot of growth for us in different trades, working with different types of companies as demand sources, and it is really nice to see companies like Paramount and LG—and you will see more throughout the year—partnering with us and spending more with Realize. I think we are on the right side of the industry. It is going to be much harder to be in the full funnel space or specifically in the top-of-the-funnel space. It is going to be much more important and critical, especially in this world with tariffs and things, to be the go-to company for anything outcomes, anything measurement, anything performance. On ARPU, I had many good conversations even yesterday with some of our bigger publishers. What we are seeing is two things. One, when consumers ask questions on a publisher site, they essentially become super—like you become a superhuman, a super engaged consumer. You are much more likely to engage with an ad. You are much more likely to engage with a piece of content. You are the best version of yourself. That is probably why I believe Google is very excited about Gemini, because if Google sees what we see with Dive on publisher sites, they know what we know, which is it is a very lucrative piece of interaction with consumers for advertisers. The second thing we are seeing—and we will share more data about that later in the year—is that when advertisers show up in LLM experiences, the opportunity for them to drive conversion and the CPMs we are seeing are something that I can tell you in fifteen years of doing this, I have never seen before. If we can scale that, if we can create a habit for consumers to talk to publishers they love—I love the Knicks. I will never spend five to ten minutes watching highlights and talk to ChatGPT about the Knicks. Never going to happen. But I do this every morning with my kid. We watch ESPN. We get the highlights. We read about it. It is something we like to do. If we can get those trusted, loved publishers to offer AI so consumers can talk to them, I think that is going to be a beautiful future for them and for us and for advertisers. The question is, can we create that habit? It is early stages for us, but I am encouraged by what I am seeing. James McGee Kopelman: Great. And then if it is quick for Steve, you reduced the share count pretty significantly over 2025. Going forward, how are you thinking about balancing investment with returns to shareholders, especially given healthy free cash flow generation? Would you expect to continue to significantly shrink the share count? And also on Connexity, any color on ecommerce growth, how that is trending relative to the rest of the business? Thanks. Stephen Walker: In terms of capital allocation and share buybacks, we continue to expect to use the majority of our free cash flow for share repurchases. We have said that we expect to convert 60% to 70% of our EBITDA into free cash flow, and then we expect to use a majority of that to buy back shares. If you look at our numbers and what we are guiding to this year and do the math, you can figure out how much we are expecting to buy back roughly. We have $180,000,000 left in our authorization, so we have plenty of capacity there, and that is where we expect to use most of our capital. I will note, and we have talked about this in the past, that there is a chance that we may do small M&A. It would not be large, but it would be something that is more of a tuck-in acquisition. Beyond that, to your second question about ecommerce and how that is doing relative to the rest of the business, they had a big Q4 for us, which was great. Generally, we expect them to grow in line with the rest of our business. It is our biggest ICP segment—ecommerce—and I think generally we expect them to have the most success out of any of our ICPs right now. It is a strong performing part of our business. Adam Singolda: Sure. Operator: Thank you for your question. James McGee Kopelman: Great. Thanks a lot, guys. Appreciate it. Operator: This does now conclude the Q&A portion of the session. I would now like to turn it back to Adam Singolda, CEO, for closing remarks. Adam Singolda: Thanks, everyone, for being with us this morning. As you can tell from our excitement, 2025 was not just about beating the numbers. It was a turning point for the company. It is a clear validation that Realize is working on our way to become the monetization layer for the open web. As Realize continues to gain traction, with our proprietary intent data and deep distribution across the open web, all of those things make us really special, and it makes us different in an AI-driven world. We believe these structural advantages position us to build and win the opportunity to become the leading performance advertising company beyond search and social. We are still early, but we are operating with a lot more clarity and more urgency than ever. Our focus remains simple: make new advertisers stay and get existing ones to spend more. Thank you all for the trust and the partnership, and we look forward to spending time over the next few weeks. Operator: Thank you. We appreciate your participation in today's conference. This does conclude the program. You may now disconnect.
Operator: Good morning and welcome to the Unisys Corporation fourth quarter and full year 2025 financial results conference call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Michaela Pewarski, Vice President of Investor Relations. Please go ahead. Michaela Pewarski: Thank you, operator. Good morning, thank you for joining us. Yesterday afternoon, Unisys Corporation released its fourth quarter and full year 2025 financial results. Joining me to discuss those results are Michael Thomson, our CEO and President, and Debra McCann, our CFO. As a reminder, today's call contains estimates and other forward-looking statements within the meaning of the securities laws. We caution listeners that these statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed on this call. These items can be found in the forward-looking statements section of yesterday's earnings release furnished on Form 8-Ks and in our most recent Form 10-Ks and 10-Q filed with the SEC. We do not assume any obligation to review or revise any forward-looking statements in light of future events. We will also refer to certain non-GAAP financial measures, such as non-GAAP operating profit, that exclude certain unusual or non-recurring items such as post-retirement expense, cost reduction activities, and other expenses that the company believes are not indicative of its ongoing operations. While we believe these measures provide a more complete understanding of our financial performance, they are not intended to be a substitute for GAAP. Reconciliations for non-GAAP measures are provided in the slides for today's call, which are available on our investor website. With that, I would like to turn the call over to Michael. Michael Thomson: Good morning, and thank you for joining us to discuss the company's fourth quarter and full year 2025 financial results. I want to start off with three clear messages that we hope you take away today. First, we continue to execute against a consistent operating strategy, which is yielding improved profitability and free cash flow as we continue to advance our pension removal strategy. Second, the market perception of Unisys Corporation and our solution continues to advance among our clients, prospects, partners, and industry analysts. And third, which relates to a subject I know is top of mind for everyone, we believe artificial intelligence is poised to become a powerful driver of long-term demand in the solutions that are core to Unisys Corporation as a designer, orchestrator, and enabler of modern IT ecosystem. Before discussing AI, I want to discuss my first message of how consistent execution of our strategy is translating into financial results. Fourth quarter revenue grew 5% year over year, resulting in a slight improvement in our full year revenue projections coming in above our revised midpoint. Our non-GAAP operating margin was 18% in the quarter and 9.1% for the year, exceeding the top end of our upwardly revised projections and representing 30 basis points of annual improvement. We had a high degree of confidence in achieving the fourth quarter weighting of our license and support revenue, and we met those expectations. Full year L&S revenue exceeded our original expectations by nearly $40,000,000 making this the third consecutive year of substantial upside in our highest margin profit center. Our actions to streamline corporate costs reduced SG&A as a percent of revenue by nearly 300 basis points over the past three years. We generated $128,000,000 of full year pre-pension free cash flow in 2025, up 55% from the prior year and above the $110,000,000 we expected. We have strong liquidity with over $400,000,000 cash on the balance sheet at year end, up almost $40,000,000 year over year. We increased our year-end cash balance while net leverage, including pension, has improved to 2.8x compared to 3.0x at 2024. Our liquidity also improved despite using $50,000,000 of cash as part of the discretionary contribution to our U.S. pensions. Our total contributions have reduced our global pension deficit by $300,000,000 to $450,000,000 at year end and lowered future expected contributions by more than the interest on the incremental debt we raised, improving near-term cash flows. We also executed another annuity purchase, which removed approximately $320,000,000 of gross U.S.-defined benefit pension liabilities in 2025. This, coupled with our liability duration matching strategy, which has successfully removed substantially all market volatility from the total future contributions, keeps us on a fixed path for full removal of the U.S.-defined benefit pension plan. I want to shift to my second message, which is that awareness and perception of Unisys Corporation our solutions continues to advance. We are seeing this evidenced by our wins and our pipeline. 2025 was an especially large renewal year, and our team successfully signed $1,700,000,000 of renewal TCV, securing a large portion of our recurring revenue base. Over $1,000,000,000 of renewal TCV was signed in the fourth quarter alone, which included closing a three-year extension and improved economics our largest DWS client who has been with us for nearly three decades. This field services renewal spans the U.S., Canada, and Latin America and secures the necessary scale for us to provide affordable field services across our client base. Multiyear renewals can be a catalyst for expansion within client accounts by integrating new solutions that support enhanced client centricity and improved overall margin profile. We capitalized on these opportunities in the fourth quarter, which was our largest quarter of new scope signings in recent years. Almost all of our largest renewals during the quarter included new scope, evidencing improved perception within our existing client base. For example, during the quarter, we signed a five-year renewal with one of the largest public university systems in the United States for cloud transformation, migration and modernization services, and expanded scope to include centralized application management across campuses, and a center of excellence that will leverage AI agents to standardize and modernize application management, streamlining processes for both students and staff. As we discussed last quarter, we have seen some competitors price aggressively to prioritize revenue over profitability and delivery quality. While that contributed to a few significant renewal losses, and presents several hundred basis points of growth headwinds for 2026, we are confident our investments in our core areas of our portfolio will continue to drive market and wallet share gains and will both reduce client costs and extend the scope of our delivery for our clients. In our wins and pipeline, we are seeing more instances of clients placing increased value on delivery quality and viewing it as a real differentiator. For example, in the fourth quarter, we won back a public sector client in Australia with a large scope for DWS solutions after they experienced a decline in delivery quality with one of our competitors. This win sets a powerful new foundation for our business in the region and provides a global playbook for showcasing delivery differentiation. We also added several new logo opportunities to our DWS and CA&I pipeline, from Chief Information Officers who moved to new organizations and engaged us immediately to participate in their transformations because they know we are a true partner with all the necessary skills to modernize and reliably manage complex IT ecosystems post transformation. We are also achieving new heights in recognition and awareness among industry analysts that influence client decisions selecting IT solution providers. During 2025, we built upon several years of advancing awareness and recognition within the analyst community, again increasing our total report placements by over 20%, including two new leader recognitions. In the fourth quarter, we received a very significant recognition from Gartner, which elevates Unisys Corporation to a global leader position in their Outsourced Digital Workplace Services Magic Quadrant for the first time. Magic Quadrant reports are the culmination of rigorous fact-based research evaluating completeness of vision and ability to execute and provide a wide-range view of the relative position of providers. In addition, in its companion Critical Capabilities for Digital Workplace Services report, Gartner ranked Unisys Corporation as the number one overall provider for the North American market and the number one global provider for both service desks and device management capabilities. This acknowledgment is already helping us access more opportunities, giving us an edge, especially relative to three of our largest competitors that fell out of the leader quadrant. Unisys Corporation was also named to Forbes list of America's Best Midsize Employers in 2026, which comes on the heels of being named Time Magazine's World's Best Companies in 2025. Our culture is reflected in our below-average voluntary attrition, which was 11.4% for the year. As we look to the future, I want to discuss why we view AI as a powerful long-term driver of demand for our solutions and how we have invested in solution development and delivery skills to capitalize on it. As I said earlier, Unisys Corporation ultimately develops, enables, and orchestrates the IT ecosystem. In all three of our segments, we provide solutions that enable emerging technology throughout the enterprise and are agnostic to the placement of AI, software, or hardware that make up our clients' environment. As the industry heads into a major multiyear AI infrastructure build-out to supply the technology needed for broad AI adoption, there is a growing shortage of skilled technicians that will provide the design and service layer for modernization and post-modernization support. Importantly, demand for services will grow regardless of whether clients develop custom AI agents on private infrastructure, leverage standard capabilities from software providers and hyperscalers within private or public clouds, or a combination of both within hybrid environments. For us, the scale and reach of AI goes beyond the software and extends to physical AI. The scale and skills of our field service organizations present a unique market opportunity for us. We are already beginning to support private AI builds for OEM partners, requiring liquid cooling skills, complementing the work we already do in maintaining critical hybrid infrastructure such as servers and storage in data centers, or IoT devices in everything from conference rooms to restaurants. We will also continue expanding our existing use of agentic AI and expect AI agents to continue to be layered throughout our managed service offerings, orchestrating increasingly complex and automated workflows. Clearly, AI is adding complexity to managing the IT estate. Tokenization costs are high, business cases are challenging, and measuring returns on investments is difficult. We expect all these factors to increase client reliance on external providers. Unisys Corporation can reduce the cost of AI adoption for clients by developing solutions that can be leveraged across a large base of clients with standardized architectures for faster deployment. In 2025, we launched Service Experience Accelerator, an agentic AI framework for delivering next-generation service desk. SEA is now in production with some of our largest clients, and we are enhancing our solution to improve its ability to handle input ambiguity. We plan to roll this out to about one-third of our existing client base during 2026, which establishes a growing base of leverageable technology to support long-term expansion, continued delivery optimization, and enhanced quality. In CA&I, we are advancing our intelligent operations architecture with an integrated framework for rapidly developing, deploying, and orchestrating AI agents to streamline IT operations and aid in financial operation decision-making, especially as it pertains to design and compute. Our alliance partners offer a significant and relatively untapped opportunity to scale distribution and continue raising awareness in the market. Hyperscalers are eager to promote solutions that use their cloud platforms, tools, and models to drive AI adoption and development of their AI-enabled cloud ecosystem. For example, in CA&I, we are standardizing our SOC managed service delivery with Microsoft Sentinel and Defender Threat Detection as its main components. We are powering the service layer with AI agents, which helped us engage with Microsoft on development and discussions about joint promotion. Many of our key enterprise software partners are also seeking to accelerate uptake of their AI capabilities. As another example, we are a high-volume user of AgentForce internally, which we adopted to optimize our field service dispatch, and we are engaging with Salesforce to explore how we can jointly offer our internal framework as a service to some of their other clients and prospects. These examples illustrate the repeatable playbooks we developed across our portfolio that we think will help us capitalize on AI-related demand, strengthen our partnerships, and ultimately accelerate our growth in XL&S solutions. In the ECS segment, we continue to be highly confident in the enduring value of our ClearPath Forward ecosystem despite hypothetical threats posted by AI developers. AI coding capabilities do not replicate decades of development required to integrate processes, code, equipment, and environments with unmatched latency, availability, redundancy, and security. Our core platform offers an unmatched combination of speed, resilience, and most importantly, security, which is of critical importance to the financial services, government agencies, health care, and travel transportation companies we serve. Replicating these benefits would require parsing our unified platform into numerous functions and a wholesale reorganization of business processes with minimal benefit, bringing with it significant business risk. At the same time, we continue investing in our core platforms, which are already cloud compatible. We are enhancing our value-added products such as Data Exchange and ePortal, which unlock valuable data and allow it to move across environments and applications, powering AI and analytics. These solutions represent increased extensibility and ecosystem expansion that establishes ClearPath Forward as a pillar of a modern AI-enabled enterprise solution, advancing digital transformation. At the same time, we are leveraging AI to help us quickly assess work skills, identify gaps and vulnerabilities, as well as assist in cross-training and upskilling talent for the future. We are beginning to leverage our internal engineering expertise into advisory engagements with ECS clients. And while quantum computing may not be imminent in the short term, we are beginning to see tangible client engagement for quantum advisory services we introduced early in 2025. With that, now I will turn the call over to Debra to go through our financial results in more detail. Debra Winkler McCann: Thank you, Michael, and good morning, everyone. As a reminder, my discussion today will reference slides from the supplemental presentation posted on our site. I will discuss total revenue growth, both as reported and in constant currency, and segment growth in constant currency only. I will also provide information excluding license and support for XLNS to allow investors to assess the progress we are making outside the portion of ECS revenue and profit recognition is tied to license renewal timing, which can be uneven between quarters. To echo Michael's comments, our results reflect consistent execution of our business strategy and effective de-risking of our future pension contributions, making our financial performance and liquidity stronger and more predictable for investors. We have seen an ongoing positive shift in how we engage with partners, clients, and industry experts; we think much of that is related to our agility in adopting artificial intelligence within delivery and solution framework. And we expect AI to be a strong long-term driver of demand for our largest solutions. Looking at our results in more detail, you can see on Slide 6 fourth quarter revenue was $575,000,000, up 5.3% year over year as reported and 2.7% in constant currency, driven by the timing of L&S renewals. For the full year, revenue was $1,950,000,000, down 2.9% as reported and 3.3% in constant currency, slightly above the midpoint of our revised guidance range. Excluding license and support solutions, revenue was $388,000,000 in the fourth quarter, $1,520,000,000 for the full year, both of which were down 3.9% in constant currency. I will now discuss segment revenue performance in constant currency terms shown on Slide 8. Fourth quarter Digital Workplace Solutions revenue of $126,000,000 was flat sequentially to third quarter and down 3.7% year over year. For the full year, DWS revenue was $508,000,000, down 3.1%. Both fourth quarter and full year segment revenue were impacted by PC-related revenue declines, including lower third-party hardware and PC field services volumes. As we mentioned last quarter, Microsoft's extension of Windows 10 support has led to some clients delaying upgrade projects or pushing out purchases of new PCs required for compatibility with Windows 11, and recently higher PC prices due to memory chip shortages have compounded delays. However, we expect PC price increases to benefit us over time as they increase the significance of device costs within client budgets, potentially leading to incremental interest in our device subscription service, which provides intelligent forecasting and planning and a more flexible and predictable cost model. TCE-related declines were partially offset by growth in higher value infrastructure field services in areas such as enterprise storage and network infrastructure, which typically have lower volumes but higher margin and profit associated with them. As we mentioned before, we believe the PC volume declines have stabilized. Fourth quarter Cloud, Applications and Infrastructure Solutions revenue was $191,000,000, a decline of 4.1% year over year. For the full year, 4.8% to $733,000,000. Similar to what we saw in earlier quarters of 2025, the fourth quarter was impacted by a lower volume of short-term project work at U.S. public sector clients due to federal funding disruptions that have created budget uncertainty in the public sector. This remained a prominent factor in the fourth quarter, the first half of which experienced the federal government shutdown. We were pleased to still be able to secure multiyear renewals in both CA&I and DWS solutions with several of our largest U.S. public sector clients, some including new scope. Enterprise Computing Solutions revenue was $237,000,000 in the fourth quarter, up 14% year over year. Full year segment revenue was $629,000,000, relatively flat to 2024. Within this segment, L&S solutions revenue was $186,000,000 in the fourth quarter, up 19.8%, bringing full year L&S revenue to $428,000,000 in line with our increased expectations. Fourth quarter revenue for specialized services and next generation compute solutions, the XLNS solutions within ECS, was flat sequentially and down 3.7% year over year against a stronger prior year comparison. Full year SS&C revenue grew 4.9% year over year, due to increased project work and business process solutions volumes at financial services clients in Europe, Latin America, and Asia Pacific. Total company TCV was $2,200,000,000 for the full year, driven by strong growth in XLNS renewal signings and new scope bookings with existing clients. Full year new business TCV totaled $491,000,000, down 38% year over year, primarily driven by elongated sales cycles with prospective clients and hesitancy in the public sector. Full year new business TCV includes an approximate $200,000,000 adjustment to reflect a mutually agreed determination of a first quarter 2025 new logo signing in DWS where contractual terms were not aligned. We were pleased with this outcome as it averts risk of future profit dilution while preserving a positive relationship with a large prospective client that we anticipate will invite Unisys Corporation to bid should they seek new proposals for any portion of this work or for other Unisys Corporation solutions. Trailing twelve-month book-to-bill was 1.1x for the total company and 1.2x for our XLNS solutions. We ended the year with a backlog of $3,200,000,000, up 12% sequentially and 11% from prior year. Moving to Slide 9, fourth quarter gross profit was $195,000,000 and gross margin was 33.9%, up 180 basis points from the prior year due to L&S revenue growth over a relatively stable cost base. XLNS gross profit was $51,000,000 in the fourth quarter, a 13.2% margin. While this was 540 basis points lower than 18.6% in the third quarter, the majority of the margin compression was due to the aggregate impact of incremental cost reduction charges and timing of variable compensation. Full year gross profit was $549,000,000, a 28.2% gross margin compared to 29.2% in the prior year period, driven by an increased proportion of lower margin L&S hardware relative to the prior year, which we expect to be more normalized in 2026. Full year XLNS gross profit was $255,000,000, a 16.8% gross margin compared to 17.6% in the prior year period, which includes approximately 40 basis points of incremental cost reduction expenses. Overall, we were pleased with XLNS' profitability considering some of the revenue headwinds we faced this year. And we expect lower cost reduction charges and greater efficiency gains in 2026 supported by workforce and technology investments made in 2025. I will now discuss segment gross profit as shown on Slide 10. DWS segment gross margin was 10.5% in the fourth quarter, compared to 15.9% in the prior year period. Nearly 400 basis points of the year-over-year margin decline was driven by one-time items, including transition costs. Full year DWS gross margin was 14.5%, compared to 15.7% in the prior year. Over time, we expect a continued long-term shift towards these higher value infrastructure field services, which typically are at a higher margin. CA&I segment gross margin was 20.7% in the fourth quarter, up 210 basis points year over year due to workforce and labor market optimization, and increased automation and AI use in solution development and delivery, as well as an 80 basis point one-time benefit. Full year CA&I gross margin was 20.2%, relatively flat to the prior year. At a high level, strong delivery gains have been able to offset the slower pace of investment and project work at U.S. public sector clients. Looking ahead, we are pushing the pace of solution development and standardization in the CA&I segment and sustaining a focus on workforce optimization and rapid adoption of the latest AI models and tools to support additional efficiency gains. ECS segment gross margin was 65.9% in the fourth quarter, up 270 basis points year over year; full year gross margin was 55.5%, a 250 basis point decline related to increased hardware revenue mix which should normalize in 2026. Moving to Slide 11. Fourth quarter non-GAAP operating profit margin was 18%, driven by the higher concentration of L&S revenue in the fourth quarter. For the full year, non-GAAP operating profit margin was 9.1%, above the top end of our upwardly revised guidance range. The sustained strength of the trends in our L&S solutions again contributed more profit than we anticipated. Over the past two years, we have also diligently executed on a detailed plan to streamline our corporate real estate and central IT costs. We have been able to reduce SG&A by 13% or nearly $60,000,000. We expect to again lower SG&A in 2026 in absolute dollar terms by at least $10,000,000 to $20,000,000 as we receive a full-year benefit from savings, and most of the costs to achieve them are behind us. Fourth quarter net income was $19,000,000 and $63,000,000 on a non-GAAP basis, translating to diluted earnings per share of $0.25 and non-GAAP earnings per share of $0.86. For the full year, GAAP net loss was $340,000,000 or a diluted loss of $4.79 per share. This included an approximate $228,000,000 one-time noncash expense related to a pension annuity purchase occurring in the third quarter. Full year non-GAAP net income was $68,000,000; non-GAAP earnings per share was $0.93. Turning to Slide 13. Capital expenditures totaled approximately $20,000,000 in the fourth quarter and $78,000,000 for the full year, relatively flat to 2024. As a reminder, a significant portion of capital expenditure relates to our L&S software, and there is no change to our overall capital-light strategy. Pre-pension free cash flow, which is free cash flow prior to pension and post-retirement contributions, was $113,000,000 in the fourth quarter, $128,000,000 for the full year, which exceeded our expectation for $110,000,000. This is the result of a stronger profit performance and more favorable working capital relative to our assumptions. Full year free cash flow was negative $218,000,000 and includes a $250,000,000 discretionary pension contribution, and $95,000,000 of required U.S. and non-U.S. post-retirement contributions. Moving to Slide 14, our cash balance was $414,000,000 at year end, $377,000,000 at the end of 2024. Our cash balance increased by $37,000,000 year over year, which is primarily due to our strong pre-pension free cash flow, as well as some positive impacts from foreign exchange on cash balances and hedge settlements. As a reminder, our change in cash balance includes a $50,000,000 discretionary pension contribution, which was funded by approximately $100,000,000 of incremental borrowing as well as $50,000,000 of cash from the balance sheet. Our liquidity position is strong with no major $750,000,000 at 2024 or $300,000,000 improvement. $250,000,000 of improvement in our global pension deficit was driven by our discretionary contribution, with the remaining approximately $50,000,000 resulting from $95,000,000 of planned contributions to our global plan. On Slide 16, you can see a detailed projection of our expected cash contributions. We are forecasting approximately $350,000,000 of remaining cash contributions to our global pension plans in aggregate through 2029, reflecting stability from the actions we took to remove volatility in our U.S. qualified defined benefit plans. Moving to Slide 17, we have provided an updated projection of how expected future contributions and the benefits we disperse to pensioners are expected to impact our U.S. qualified defined benefit plan deficit both with and without annuity purchase assumptions, and the implied cost of full removal at 2029. At the bottom, we have also included our expected deficit reduction in all other plans. However, it is important to remember that while international contributions are negotiated every few years and very stable, the international deficit is impacted by asset returns and has more volatility. These projections are meant to provide a directional indication only of the relative conversion of contributions to leverage reduction in a given year, and will also change if contributions shift between years. Turning to Slide 18, I will now discuss our financial guidance for the full year and the additional assumptions we provide. We expect total company revenue to decline between 6.5%–4.5% in constant currency, which based on February 1 foreign exchange rates equates to a reported revenue decline of 3.8%–1.8%. Guidance assumes XLNS revenue decline of 7%–4.5% in constant currency. We also expect full year L&S revenue of $415,000,000 at a gross margin of approximately 70%. We also continue to expect 2027 and 2028 L&S revenues to average $400,000,000 per year, continue to see artificial intelligence as a driver of consumption and adoption of value-added products within the ecosystem, and have detected no change in client commitment to our platform. As a reminder, the timing and exact amount of L&S revenue can be difficult to forecast with precision and it depends on the renewal timing, term, and client consumption levels among other factors. We expect non-GAAP operating profit margin to be between 9%–11% for full year, which reflects the higher margin percentage in L&S, 100–200 basis points of improvement in ex L&S gross margin, and another modest reduction in operating expense in absolute dollar terms. Looking specifically at the first quarter, we expect approximately $415,000,000 of total company revenue on a reported basis and assume approximately $60,000,000 of license and support revenue. Based on renewal timing during the year, the first quarter is expected to be the lowest L&S revenue quarter, and we expect an approximate weighting of 30% of L&S revenue in the first half of the year, and 70% in the second half, with the third quarter likely the largest quarter of L&S revenue. Based on these assumptions, we expect first quarter non-GAAP operating margin to be slightly positive. We expect a number of noncash expenses impacting GAAP net income and earnings per share in 2026, including pension annuity purchases and streamlining certain legal entities expected in the second half, which we will guide on a quarterly basis. Also, as a reminder, in 2025, we removed hedges on our intercompany balances, which could create noncash FX gains as the U.S. dollar strengthens, or losses if the U.S. dollar weakens. These are difficult to guide due to constantly changing rates, but will impact quarterly GAAP net income. Full year free cash flow is expected to be approximately negative $25,000,000, which translates to positive $67,000,000 of pre-pension free cash flow. This assumes approximate payments of $85,000,000 in capital expenditure dollars, $70,000,000 of cash taxes, $70,000,000 of net interest payments, $30,000,000 in other payments, primarily restructuring, and $92,000,000 of post-retirement contributions, consisting of $87,000,000 of pension contributions and $5,000,000 of other post-retirement contributions. Approximately $17,000,000 of the pension and post-retirement contributions are expected in the first quarter. We are confident that we have the liquidity we need to comfortably support our pension contributions. We are focused on continuing to increase our efficiency and profitability during this period and maximize our underlying cash generation levels, investment, and capital return. Before we open the line for questions, Michael has a few additional remarks. Michael Thomson: Thank you, Debra. I wanted to take a moment to address our 2026 guidance. I am proud of what we have achieved in 2025, but disappointed that we did not overcome all of the industry headwinds impacting our XLNS revenue. For 2026, our expectations for mid-single-digit decline in XL&S solutions reflects an intentional deeper push into the adoption of emerging technology within our existing base of clients and the macro headwinds impacting discretionary spend in 2025 that we expect to linger through 2026, as we mentioned last quarter. Relative to 2024 year end, we have a more expansive book-to-bill ratio, more expected full year revenue already contracted and in backlog. And there is less embedded risk from assumptions for timing of revenue ramp on contracted new business. Similarly, for profitability, the majority of the required efficiency gains have already been actioned or identified. Achieving our 2026 guidance range keeps us on a path to potential full removal of the U.S.-defined benefit pension obligations by 2029, after which U.S. pension contributions would cease, and we expect a host of new possibilities for investments and capital return. Based on our interactions with existing and prospective clients, and the sequential growth in pipeline activity so far this year, we believe we will achieve positive XLNS revenue growth in 2027. With that, operator, you can open up the line for questions. Operator: We will now begin the question and answer session. The first question today comes from Rod Bourgeois with Deep Dive Equity Research. Please go ahead. Rod Bourgeois: Okay. Thank you. Hey, I will start with an AI question. So I want to ask, how are AI and automated code modernization tools influencing the road map that you have and the demand for ClearPath Forward? We have clearly seen some recent concerns that COBOL refactoring may affect IBM's mainframe business, so I want to ask how you are assessing the implications of that trend for the ClearPath Forward platform. Thanks. Michael Thomson: Great. Hey, Rod. Thanks for the question. Certainly very timely with the communications that we have all seen. Look, the code factoring component of the dialogue that is, I guess, the issue du jour is not really new. Maybe the tools that we are using are new, but we have been talking about code factoring for a long, long time, years in fact. And, you know, you referenced IBM here and I think they have a piece out as well kind of reacting to that. It is really only a part of the story and it really is talking about, in my opinion, the enhancement of the platform. I mean, the code modernization is kind of the easy part. That does not change the engineering challenge of running the mission critical workloads at scale and doing it securely. I mean, really, it is about the architecture redesign, the runtime replacement, transaction processing integrity, the hardware tuning and years of performance tuning that is embedded in the platform. Cofactoring does none of that. Right? It really is just about the kind of modernization of what I would consider to be above the enterprise level of the core. So from a strategic perspective, you know, internally, we talk about ClearPath Forward 2050. I mean, that is kind of the time frame that we are looking out for that ecosystem. And we think net-net it is going to be a positive to kind of drive more demand to the platform. Think of it as kind of the automation of above the enterprise level and giving our clients more and more flexibility to that. And I guess secondarily, I would say that the other area that it is really important for is the continual kind of documentation of the code base, etcetera, testing and really reverse, right? Kind of doing scripts in current languages and maybe refactoring them back to COBOL into kind of a legacy mindset. So the reality is we do not view that as any change from the strategy that we are currently on. And I think if you look at, you know, what we have encountered, you know, I mentioned in my prepared remarks, three straight years of roughly $40,000,000 of improvement against our expectations in that business. That is a byproduct of longer contracts being signed, additional consumption being signed and the tooling that we have done over the course of the last say five years in that ecosystem has really positioned it to be AI-enabled. So I do not think it has really changed our strategy at all. And we see it as a continuation of the ability to kind of automate around the enterprise platform layer. Rod Bourgeois: So, Michael, I just want to take an extra second on that. I mean, what you are saying is that the cofactoring threat—I think what you said was automation above the enterprise level—actually adds to the usage of your platform. Can you just add more color on that point? Michael Thomson: Yeah. Look, I think in general, what we have been targeting and what we have been seeing is to put tools above the enterprise platform that allows for analysis and data extract, data movement across platforms, etcetera. And so using kind of AI agents and, I will say, refactoring of code above that enterprise level really just continues to enable the use of the data. And remember, the dataset that we are talking about are standardized datasets and decades worth of data embedded in there. Right? So if you are really trying to enhance a large language model, the key is really access of that data. Not necessarily what code it is written in to get there. So the easier we can make that, the more customized or localized we can make that interface, and through the use of these particular agents, I think will be beneficial and cause more use of data, not less. Rod Bourgeois: Got it. Then just a question about the outlook for bookings in 2026. Last year had a big load of renewal activity but at the same time, over the last couple of years, you have invested to win new logos. So I am just—I want to get a perspective on your latest pipeline and sales effort and what the outlook is for your bookings activity and your bookings mix? I mean, will the mix shift toward, you know, existing client scope expansion where I think you had some positive commentary? What is the outlook for the bookings mix for 2026? Thanks. Michael Thomson: Yes. Thank you, Rod. Great question and appreciate the opportunity to expand on that a little bit. So you are right. I mean, we signed $1,700,000,000 of renewals in 2025. That clearly took a lot of the team and the clients' focus to kind of get that behind us, which was great. We have got a really strong backlog and frankly a higher backlog position going into 2026 than we had going into 2025 in relation to that. But the corollary or knock-on to that is when you are doing that renegotiation on renewals, typically, clients are not talking about new scope opportunities. Right, because you are really focused on what that renewal looks like. So on the heels of that, and we mentioned in our prepared remarks that when we have done those renewals we have actually embedded into that some new scope. So as you know, we think of new business as new scope and new logo. So I would say two things. One, our focus on new logo expansion in 2026 is enhanced because we have got a lot more, I will say, bandwidth to really get after that because the renewal cycle is a little smaller this year—probably about a third of what it was last year. So we will have some more focus there. And then secondarily, and more importantly I think is the new scope expansion opportunities in the existing base will allow us to grow that new business as well. So I think you are right in looking at kind of that new business and I bucketed that way intentionally. It is not just about new logo, it is really about the proliferation of new scope opportunities whether that is in our existing base or whether that is with new logo clients. We talk about having roughly a $31,000,000,000 TAM in our existing base for new scope opportunities. So that is, you know, a really important element to our growth trajectory of the future. Rod Bourgeois: Alright. Thank you. Operator: The next question comes from Mayank Tandon with Needham. Please go ahead. Mayank Tandon: Thank you. Good morning. Michael, you mentioned the longer sales cycles and some of the competitive pricing dynamics. So maybe if you could just provide a little bit more details around how you counter some of that competitive pricing. And of course, you cannot control the overall market discretionary spending slowdown. But how do you maybe counter that? Michael Thomson: Yes. Thank you for the question. Super important, right? Look, when we think about the sales cycles in general, I would say 2025 was really tough just because of all of the macros and kind of the adoption of new technology—people a little uncertain around how much to adopt, where to adopt it. Uncertainties around whether it was tariff-related or, again, other macro-related issues, geopolitical, etcetera, I think that weighed on the longevity of the contracting cycle a little bit more than the mechanics of, you know, what we typically see and I would say some of that is already starting to ease. We have got a pretty good jump-off point for Q1 as far as our pipeline is concerned, our discussions with clients in regards to that. In fact, just anecdotally, I had some correspondence with hopefully a future client that is talking about setting kind of record pace in their renewal cycle, really trying to expedite the use of that. So I think those were a little bit more macro than they are process-oriented from our perspective. But clearly, we have done a lot from the embedding of tools and technologies and process changes, qualifications of the pipeline, and also kind of how we are approaching opportunities to enhance and streamline the first touchpoint to contract closure. So, you know, we are very focused on trying to do everything we can to shorten that cycle, and be very prescriptive about how we approach clients and who we approach for what. So there definitely are some elements embedded in that. As far as pricing is concerned, look, it has always been a very competitive pricing environment. I think what has made it a little bit more competitive is you have got this pause, I guess, or the hesitancy to grow in some of the industry, right? We have seen our traditional industry CAGRs from, say, 4.5% or some percent CAGR growth down to flat, which means you have got a lot of folks chasing a smaller pie. Right? And so from our perspective, we rarely want to have or even start a discussion that talks about commodity pricing and race to the bottom. Right. All of our go-to-market approach is around enhanced experience and value and quality. Right? And we mentioned a couple of the renewals that we did not win. And I mentioned those in Q2 and in Q3. We need to maintain pricing discipline. We know what the value and the market-based pricing is for what we deliver, and we think we are delivering value in advance of that market pricing. So we should be able to get at least market-based pricing, and so not trying to, you know, just compete on price. If the client does not see the value we offer, obviously, that is going to be a longer-term problem anyway. Right? So our point is really to get in front of that early, make sure we can illustrate the value that we bring to our clients, and we have plenty of qualms to support that. So that is kind of how we are addressing the market on both of those fronts. Mayank Tandon: That is very helpful. And just a very quick follow-up for Debra, maybe. Debra, you know, given the guidance range, I am just curious as you entered this year, have you built in a little bit more buffer in your expectations given some of the uncertainty and macro headwinds? Or would you say you basically aligned your guidance with your historical strategy? And in that context, what dictates whether you come in at the low end of the range or the high end? Like, what are some of the factors we should be considering? Debra Winkler McCann: Right. Yes. I think, you know, we definitely, as Michael talked about some of the revenue pressure, some of the industry headwinds, is what we considered as we did the guidance. So I think the things to look for are, you know, at some of those macro factors, you know, alleviate—is what we assumed, that later in the year some of those factors alleviate. We had some—we, as Michael talked about, the mix of new logo is planned to have a lot more new logo this year as far as renewals. So as we are doing that, we think the Gartner Magic Quadrant will help. And so if we, you know, sell new logo kind of faster, that will be another element to look for that would increase, you know, what we put out there as our guidance. But we have kind of built in all these headwinds through most of 2026. Michael Thomson: Look, I would say too, like, we absolutely took in a different approach to our guidance this year. It is not last year's same exact strategy. We saw obviously the PC refresh cycle we were expecting that never came to fruition. And so we have kind of backed that off and looked at trajectory a little bit when we talk about that cycle. Clearly, we have got the hardware cost components and we think that that is going to have some opportunities for DSS. But I would say in general, there was a little bit more of a conservative approach to the way we set guidance. But I want to just be really clear. Related to top line, you know, I think from a bottom line perspective, we have been very consistent in our ability to execute bottom line improvement. We are also calling for another, say, 150-ish basis points of bottom line improvement—good line of sight to that. But we definitely took into consideration the kind of market hesitancy that we have seen. We have kind of carried that through the first half of the guidance. And I think we wanted—as you know, we kind of pride ourselves on the level of transparency that we put out on a regular basis as it pertains specifically to our guidance. And we really kind of went through element by element to say, hey, is this an area where we feel really good about and kind of how to get there. So a little bit of a different approach on top line. I would say in general, just taking out some of the things that we thought were going to happen that did not happen in 2025 and expect that as they pick up throughout the year—kind of a midyear convention on that? Mayank Tandon: Great. Thank you so much, Michael and Debra. Michael Thomson: Sure. Thank you. Appreciate it. Debra Winkler McCann: You are welcome. Thanks. Operator: The next question comes from Maggie Nolan with William Blair. Please go ahead. Maggie Nolan: Wanted to look ahead a little bit. You talked about several things that you are working on in the script that would help accelerate XLNS revenue growth. And I am just wondering what leading indicators we can watch to assess this progress, and then what is kind of a realistic timeline—especially given some of the first half pressures you just outlined—what is the realistic timeline for seeing some level of growth acceleration? Michael Thomson: Great. Thanks, Maggie, for the question. And a really good one and intuitive here too. I would say to you, clearly our new business kind of conversion rate is, I will say, the earliest indicator on top line. So I look at that question in two ways. One is really about the top-line expansion and the growth. And the other is about the deployment of our embedded technology, right, when we talk about enhancing the capabilities of our bottom line, right? So pushing that technology out to our existing client base we think will add some ability for us to grow top line through the use of, as I mentioned earlier, new scope opportunities within those accounts. Just know that that also comes with a little bit of a headwind. Right? So leaning into the adoption—and one of the examples I gave was the Service Experience Accelerator adoption that we are looking to push out to a third of our existing installed base. Well, when we push that out, there is going to be some pricing pressure on that top line because clearly it is—the agentic service desk that we are using is a lower cost of delivery and some of that we have to share with our client base. So you are pushing out this technology, which is going to put a little bit of a headwind pressure on. We think we are going to overcome that headwind with the expansion of the opportunity embedded in that client, and the addition of new logos to that base as well. So those are the things that we think are really going to support that XLNS growth rate—that is a DWS example. On the flip side, when I think about CA&I and the example there, we talked about the intelligent operations platform and really adding those agentic agents to expand our scope within the construct of the hybrid infrastructures that we and manage. Frankly, when we think about the current drivers, probably misquote this, I need to change it, but I think there was a recent McKinsey report out where we talked about a $300,000,000,000 to $400,000,000,000 TAM in what I would consider to be the above-layer automation of AI agents. Right? And we saw a lot of noise in the market around software and service implementers for software. That is not what we do. Right? Like, we are more an orchestration on that. But when we think about the application of AI agents above the SaaS-level enterprise software—that is what we do. That automation component both to help with transition and to actually orchestrate and manage post orchestration of the IT ecosystem—that actually allows us to participate a little more fully in what used to be just solution implementers of ERPs or CRMs or HCMs, where they are taking that customization layer or that integration layer and moving it above the enterprise stack—that is an area we do play in that we historically have not. Right? So I think it gives us a lot more opportunity to participate in that legacy TAM and in this future TAM on both CA&I and DWS. Maggie Nolan: That is very helpful. Thank you. For my second question, just on margins, could you maybe distill for us the main puts and takes on margins in the next year, just kind of excluding the SG&A efficiencies you have gained, assuming that there is not incremental efficiency to drive there in the near term, beyond what you have already outlined? The efficiencies that we will be annualizing? Michael Thomson: Yeah. Look, I mean, I think we have been fairly consistent from our perspective where we think those are coming from. Primarily, it is the application of emerging technology, right. The embedding of AI into our delivery platform allows us to deliver in a much more efficient manner. So clearly, there is going to be margin benefit from doing that. And as I mentioned, some of that margin benefit comes in the form of a revenue share, if you will, right, giving some of that back to the clients. But clearly, a portion of that stays embedded in our delivery platforms. And as we then add to that platform through the use of top-line growth, there is going to be obviously additional margin pull-through from that point of view. So I would say it is primarily in the application of emerging technology. There are still opportunities for us to be more efficient. There are still opportunities for us to continue to look at, I will say, upskilling or right skilling or right shoring components of what we do, and we continue to look at those opportunities as far as the delivery workforce is concerned. But again, the adoption of a digital workforce working alongside our human workforce—we are kind of working both sides of that equation. And then I would say lastly, when you think about the mix shift as we continue to push more and more into some of these newer elements of our solution. And I will just pick on field services as a very practical example. As we continue to shift the mix of what we are actually supporting with those field service technicians, whether that is liquid cooling, whether that is hybrid infrastructure, whether that is high-end storage—those are just higher margin elements of work for the same technician, moving away from some of the more traditional PC break/fix. So I think those three elements would be what I would point to as the real drivers of where we should expect to see margin improvement, which is again why I think we are really confident in the ability to execute it because a lot of the technology is obviously already embedded, and we are already moving it into production. And again, I think we have put a track record out there—almost 600 basis points improvement over the last three years in XL&S gross margin. Right? So we are looking for another 150 basis points there in 2026. Maggie Nolan: Thank you. Operator: The next question comes from Anna Goskow with Bank of America. Please go ahead. Anna Goskow: Hi, thanks very much. So first question is on the L&S revenue outlook. Do sense your kind of historical pattern of being conservative and then beating and raising. So back in October—when I think it was October—when you had the ClearPath kind of webinar for us, you had talked about a $400,000,000 CAGR for the next three years, and it looks like you are already kind of beating that with the $415,000,000 expected for this year. But then I think you did comment that you still expect about $400,000,000 2027–2028. So just wanted to understand. I understand there are license renewals in there, but it seems that the driver is AI in terms of consumption. So I wanted to understand what your thinking or expecting with regard to the impact of AI being a continued driver of consumption? Michael Thomson: Great. Thank you, Anna, for that call and that call-out. I am going to reiterate a comment I made in an earlier point. We did revisit kind of the way we were putting our guidance together. And this is another good example of that. And so you saw that we actually put out here $415,000,000 of L&S revenue, even though a little while ago we were talking about an average of $400,000,000 over that three-year period and we carried that average, you know, up. Right? I think we started that in maybe in the $360,000,000 to $370,000,000 range, moved it to $390,000,000, moved it to $400,000,000. And are still saying $400,000,000 in those out years. So—and you are exactly right also that the driver of that has been consumption and use much more so than, you know, just the license renewal schedule. And we do think that that is the AI comment that I made earlier in regards to Rod's question. Right? The more tools and techniques and processes that we can build and put on the front end of that ecosystem or that platform, the more consumption of that data and, obviously, the more value that orients to the platform and to, frankly, to our clients and to us. So we do expect that trend to continue, which is why we increased that CAGR average for those out years. And I would just note too that the $40,000,000 beat over the last three years, which you kindly pointed out as well. You see the $415,000,000 kind of take some of that now into our guidance to go, okay, you know, this has been a pattern here of continued consumption. So we wanted to bake some of that in so that we are not—sometimes it is just bad to continually overperform than it would be to underperform. So we are trying to do a better job at making sure that some of that overperformance that we have seen and expect to continue to see is baked into the numbers. Anna Goskow: Okay. So but for 2027–2028, you just have not really adjusted that yet for—I mean, any of us that are following the AI space or the AI impacts. I mean, consumption levels should continue to increase. Is that fair? Michael Thomson: Yeah. Look, I would say it is too far out for us to adjust multiple-year-out consumption estimates. But I would say if history is indicative of the future, then yes, we would expect as we go further down the road that we will revisit that estimate. But for now, we felt pretty comfortable with—it is already a $10,000,000 to $15,000,000 step-up from what we were chatting about before. So you can assume there is some consumption baked in there. Anna Goskow: Okay, great. And then Debra, so just on some of the balance sheet stuff. So I just want to make sure I am understanding on the free cash flow guide, which is a use of 25. So that is largely your expected all-in use of cash. Right? So if I just do the simple arithmetic on your current cash balance, going to be approximately $25,000,000 lower at the end of 2026. Debra Winkler McCann: That is correct. And pre-pension that translates to pre-pension of $67,000,000, you know, compared to the $128,000,000 this year. Anna Goskow: Right. And then the slides on the pension outlook are great. Thank you very much. So it is really clarifying. So then if I look at the slide on potential annuity purchases, you really gave us the estimates of what the deficit is going to be. So at the end of the day, whether you purchase an annuity or not, your pension deficit is going to be down roughly in the $50,000,000 range. Right? So net-net, like your net debt is going to be lower at the end of the year because your cash is only going down by, like, 25, but your pension deficit is going down by at least 50. Is that right way to— Debra Winkler McCann: —down by that. Yes. Anna Goskow: Yes. Okay. Yep. So it is down by about that much, but in the next three years, 2027–2029, $180,000,000, $137,000,000. It is all on that chart 17. Debra Winkler McCann: Okay. Anna Goskow: Yeah. I mean, every contribution— Debra Winkler McCann: Right. Correct. Michael Thomson: —shows that debt reduction. Deficit value. It is not dollar for dollar, but you will see continual improvement in the deficit and in net leverage. Anna Goskow: Okay. And then the annuity purchases would are noncash. Debra Winkler McCann: Right. We use the plan assets to reduce the plan liabilities. Anna Goskow: Correct? Okay. Okay. And then so yeah, I know you worked really hard last year to do the bond issuance and you know, it came at a rate that was a little higher than you probably preferred and your plan at some point is to refinance those lower? Obviously, like the market overall is pretty messy right now. So those bonds are trading below par. Have you thought about using some of your cash to buy back some of that debt at this point? Because it is a pretty attractive rate. Debra Winkler McCann: Yeah. I mean, we always look at everything. But, I mean, at this point, you know, we are always looking to conserve cash, right, given the pension obligations, given everything. But we are always looking at everything, but it is not, you know, something at this exact moment we are planning to do. Anna Goskow: Okay. So the preference is just to keep, like, a solid cash balance. It sounds like. Debra Winkler McCann: Yes. Anna Goskow: Okay. Great. Okay. Well, thank you very much. Debra Winkler McCann: You are welcome. Michael Thomson: Continued into 2026 we are hopeful by kind of midyear that we will get back to kind of our normalcy as it pertains to kind of public sector work that we are doing. In fact, we signed a big deal recently in Australia public sector that was—in one case we had a win back from a competitor and another we expanded a relationship there that was pretty significant in the region. So we are optimistic. Anna Goskow: Okay. Thank you. That was all for me. Operator: Thank you, Anna. Michaela Pewarski: This concludes our question and answer session and concludes our conference call today. Thank you for attending today's presentation. You may now disconnect.
Operator: Good day, and welcome to the UFP Technologies, Inc. Fourth Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. These Litigation Reform Act of 1995, the accuracy of which is subject to risks and uncertainties. Wherever possible, we will try to identify those forward-looking statements by using words such as “believe,” “expect,” “anticipate,” “pursue,” “forecast,” and similar expressions. Our forward-looking statements are based on our estimates and assumptions as of today and should not be relied upon as representing our estimates or views on any subsequent date. Please refer to the cautionary statement regarding forward-looking information and the risk factors in our most recent 10-Ks and subsequent 10-Qs and 8-Ks, including disclosure of the factors that could cause results to differ materially from those expressed or implied. During this call, we will discuss non-GAAP financial measures, which include organic sales growth, adjusted gross margin, adjusted operating income, adjusted SG&A, adjusted EPS, EBITDA, and adjusted EBITDA. A reconciliation of GAAP to non-GAAP measures discussed in this call is contained in the associated press release and is available in the Investor Relations section of our website. I will now turn the call over to Jeff. R. Jeffrey Bailly: Thank you, Ron. I am pleased with our 2025 results and our progress on key strategic initiatives. Sales grew 19.5% for the full year, bringing our total revenue to $602.8 million. This is a significant revenue milestone and represents nearly a tripling of revenue since 2021. During that same four-year period, operating income grew 435% and EPS grew 419%. We also made significant progress on several key strategic initiatives related to contract extensions, program launches, facility expansions and related moves, and adding and training of new direct labor talent in St. Charles, Illinois related to our previously disclosed E-Verify attrition issues. 2025 EPS grew 15.4% despite absorbing $6.3 million in labor inefficiencies at our Illinois AJR facility. The AJR E-Verify labor inefficiency was $1.2 million in Q4, less than half of the $3.0 million Q3 impact, demonstrating the progress that is being made in onboarding and training new direct labor team members. We are continuing to make progress expanding our capabilities and capacity in the Dominican Republic. In Santiago, we launched our second major program and have recently negotiated a lease for a third building, which will allow us to further expand our safe patient handling business and transfer a third major program. Each program transfer, when complete, saves our customers money and increases our profit potential. In La Romana, Dominican Republic, three significant new programs launched. Our fifth building and related move of equipment, materials, and personnel is now complete. It houses a new expanded product development center, a newly launched external capital program, and a centralized warehouse to support Buildings One through Four. We plan to take possession of a sixth building in April, which will further expand our robotic surgery capacity to support anticipated growth. We have also expanded and extended our contract with our largest customer, materially increasing the volumes on existing programs and adding an additional program. We have also made exciting progress in other markets, funding a contract extension with our largest infection prevention customer to run through 2030. In the orthopedic sterile packaging space, we have also won new business and added new capabilities in Harlan, which adds significant value to our global offerings. On the human resources front, our new director-level talent, one level below our corporate officers, is making significant contributions in the U.S., Ireland, and the Dominican Republic. This group runs our day-to-day operations and is doing a great job. On the acquisition front, integrations of the four acquisitions completed in 2024 and the three completed in 2025 are all progressing well. We continue to search for additional strategic acquisitions that will increase our value to customers while maintaining our disciplined approach. And finally, our CEO transition planning for InterRock is essentially complete, and he is well prepared to succeed me as CEO in June. I will continue for one year as Executive Chair to support him and provide assistance in vetting new acquisition opportunities and key strategic hires. With a robust pipeline of new growth opportunities, significant progress on our strategic initiatives, including multiple successful program launches, exciting new talent in our company, and a strong balance sheet to fund future growth, we remain very bullish about our future. I will now hand it over to Ron to provide more color on our financials. Ronald J. Lataille: Thank you, Jeff. I am also pleased with our fourth quarter and year-end results as we delivered solid numbers despite working through the labor challenge referred to by Jeff. Before I provide more color on our results, I want to spend a few minutes on the cybersecurity breach disclosed in an 8-K last evening. The attack was detected on the morning of Saturday, February 14. By that evening, forensic incident response consultants were engaged, and by Sunday evening, they were on-site in Newport. This was a classic ransomware attack that appears to have impacted many, but not all, of our IT systems. Data was taken and then destroyed. Fortunately, we had credible duplicate backups and a thorough contingency plan that allowed us to operate since the date of the incident. At this point, the incident caused minimal interruptions to our operations, and we believe our primary information systems are being brought back online this week in all material respects. From a financial standpoint, we have cybersecurity insurance and cash or liquidity and do not expect a material impact to our operations, though our investigation is continuing. Moving to operations, overall sales were up nicely, largely fueled by growth in the safe patient handling, infection control, and orthopedic packaging medical submarkets. As anticipated, organic sales growth for the year was low single digits. This is largely due to abnormally high 2024 sales in robotic surgery as well as backlog in our safe patient handling business due to the labor issue at AJR. Gross profit as a percentage of sales, or gross margin, decreased in 2025 to 28.3%, largely due to the $6.3 million in extra labor costs incurred at AJR, which are all reflected in cost of sales. Absent these additional labor costs, gross margins would have increased to 29.3%. As Jeff mentioned, improved efficiency levels in the fourth quarter and we anticipate further ongoing improvement. Adjusted operating margin for the year was 17.1% of sales, within our target range of 17% to 20% despite the extra labor costs. Our effective tax rate of 17.2% for the full year of 2025 was down from a year ago, reflecting a continued shift in pre-tax income to the Dominican Republic, where we effectively pay no income taxes. 2025 was a strong year for cash generation. We had approximately $92.0 million in cash from operations, and despite $12.9 million in capital expenditures and funding three acquisitions, we paid down approximately $53.9 million in debt and ended the year with a leverage ratio of approximately 1.1x. We will now open for questions. Operator: Our first question comes from Brett Adam Fishbin with KeyBanc Capital Markets. Please go ahead. Will (for Brett Adam Fishbin): Hey, this is Will on for Brett. Good news around the contract extension. Could you provide us any directional color on how we should think about volumes with your largest customer in 2026 and 2027? And maybe how we should think about the minimum volumes for 2028 and 2029? I have one more as a follow-up. R. Jeffrey Bailly: Sure. The contract extension is great news for us. We have extended two additional years, which we knew was coming, but it makes the rest of the world settle down, and it was expanded. That additional program and the two programs in place increased materially. Our customers have asked us not to give any information that could allow the outside world to project our business and put us at any competitive disadvantage. We are not able to give any commentary on how significantly it went up, but they agreed to the words “material” because it is a material increase over where we are now. The same applies for giving guidance on 2026 and 2027. You can refer to the previous contract, and you know there are minimums that they have to hit. I think it has to be in the low sevens the last couple of years. They have consistently been higher than those minimums. Under strict instructions from many of our customers, we are not going to be able to give specifics, unfortunately. Will (for Brett Adam Fishbin): Okay. I think that makes sense. And then maybe just going over to AJR. Regarding the headwind, you indicated a $1 million impact in Q4. How are you thinking about this impact in Q1? And maybe any impact in the rest of 2026? R. Jeffrey Bailly: The team is making consistent progress, and there are a couple of different objectives. One was to bring on new people because our team was way down. We have staffed up to the level that we needed. Some are still temps; some are permanent. When they get to a certain level of skill, they switch over, and two things happen: the skill goes up and the cost goes down. We are continuing to transition from temps, but we are not bringing in people in general right now. Those two things are forward progress we will look forward to. We are running overtime now, so we can keep up with our existing team, and we are running overtime to knock down any backlog that exists. We did have backlog carry over into this year, which is good news for the revenue of this year. It is bad news that we have not completely caught up with our customer. When that backlog is worked down, we will get rid of the overtime as well. Everything going forward should be progress. We expect Q1 will have some impact. It will be less than the fourth quarter, and then it will diminish after that. There will be some carry-on, but continued progress is expected in each consecutive quarter. Operator: Our next question comes from Justin Ian Ages with CJS Securities. Please go ahead. Justin Ian Ages: Good morning. Can you give us a little more color on the puts and takes of the flat medtech growth? I know you mentioned infection prevention, but just trying to take a look into 2026 and size what is going to be the main drivers of growth there in medtech. Thank you. R. Jeffrey Bailly: We are expecting continued robust growth in the patient services market. That is expanding on its own, and we are catching up from the prior year, so I think that will be a super strong year. We have also launched three new programs of late, one in infection prevention and two in robotic surgery, which are both positive influences going forward. There are some other markets that are coming along. They represent growth in the future and are in the development stages now. Those are a little more wound care and diagnostics. I think those will hit 2026 revenue, but they hit the list of things we are excited about going forward. That is the update on what we expect to be robust growth next year. Ronald J. Lataille: And Justin, let me elaborate. If you are talking about flat medtech growth specifically for Q4, just a reminder that we had some revenue pulled into Q3. Sales in Q3 were higher, if you recall, than we had anticipated. That is part of the reason why sales for the fourth quarter were a bit softer. Justin Ian Ages: That is helpful. Thanks for that. And then second, on the cybersecurity incident, I know you mentioned systems are back online, but is there any disruption in business that will impact growth rates? Operationally, it seems things are back in order. In terms of performing for customers, is there any impact there, or is that still under investigation? R. Jeffrey Bailly: Big picture, it is not good news that somebody was able to get into our system. It was really good news how our team responded and how robust our backup systems were. We were back in action literally day one making parts. We did not have the ability day one to label everything properly and ship everything, so there will be a delay in how things get shipped. I will turn it over to Ron to give you some specifics, but the key is we were able to keep making everything we needed to make. There may be some delays in when some of these things actually ship. Ronald J. Lataille: The event happened mid-quarter, and we are back online in all of our ERP systems as we speak. Fortunately, years ago our Senior Vice President of IT, in conjunction with our operations leadership, developed a robust contingency plan to operate without systems for this exact reason. We launched that contingency plan, and albeit inefficiently, we were able to make parts and ship to customers with manual invoicing. I do not think there is going to be a material impact on Q1 in its entirety. It will be soft within the month of February within the quarter, but we will make up for it in March. Justin Ian Ages: That is super helpful. Thanks for taking the questions. Operator: Our next question comes from Maxwell Michaelis with Lake Street Capital Markets. Please go ahead. Maxwell Michaelis: A few here around the contract extension, just around the facility. That sixth facility, are you on the hook for that entire investment? Are you getting any help from your largest customer? Also, what is the timeline of completion of that facility? R. Jeffrey Bailly: With all of our major contracts, there is co-investment, really without exception. In some of them, the customers are on the hook for literally all of the capital. Under confidentiality with the customer, we have not been able to give out all those details. I can tell you our primary responsibility in this contract extension relates to leases and personnel. Capacity is ramping up, so capital will be purchased and installed, and we will be starting. I think we take possession of the sixth building in April, and we will begin—first we have to get the building fit for use, which is putting in clean rooms and getting it all set up. It will start this year. We will be adding that capacity, and as I mentioned, our primary responsibility is leases and personnel. Maxwell Michaelis: Perfect. And then you called out safe patient handling in the press release as well. Is there any way you can size that opportunity for us? It seems like it is going to be a solid opportunity. Do you expect more growth in 2026? Can you give us an idea of what the market size is there, or any way you can help us? R. Jeffrey Bailly: I think that is a large and growing market. We have partnered with the market leader, and we are experiencing double-digit growth while making up for previous backlog additions. You can look forward to robust growth in that market for multiple years. Maxwell Michaelis: Alrighty. Thanks, guys. R. Jeffrey Bailly: You are welcome. Operator: Our next question comes from Andrew Harris Cooper with Raymond James. Please go ahead. Andrew Harris Cooper: Hey, everybody. Thanks for the questions. Maybe first, I want to clarify some of the commentary around new programs. I think in the release, you mentioned you launched three new programs, and it sounded like referring to the La Romana facility. I know you had talked about two, and then you mentioned one new one in the extended contract. Are those the three, or is there an additional program that is net new that we need to think about for that facility or that line of business? R. Jeffrey Bailly: Two of the programs were the multimillion-dollar programs we referred to in the past that we were launching at the end of the year. They were both robotic surgery related. The third one was not robotic surgery. We had three different plants collaborate and come together with their materials expertise and process expertise to design an infection prevention device, start to finish, that will ship directly to the patients. It will be packaged and ready to go from our facility. That one has launched in La Romana in our new Building Number 5. That is set up and going. Launches are slow, but we are making parts. They will go through a rigorous process of vetting those parts, and they will slowly ramp up. The third program is not robotic surgery. Andrew Harris Cooper: That is helpful context. I know you are limited in what you are able to say in terms of the contract, but I think the release included noting that you added volume-based pricing matrices and some cost-sharing provisions. I want to clarify: are those net new, and is there anything to read into layering those in and how that maybe portends for the long-term nature and not needing to amend or adjust the contract as much going forward because you have these features in place in the existing language? R. Jeffrey Bailly: The key to the contract for us is when we make a long-term commitment to a customer, we want to make a long-term contract with a vendor at the same time. Part and parcel to this is if we make promises to the customer that relate to cost downs, very often they are being financed by our vendor or together with our vendor. When we come up with cost savings, they are typically shared with our customer. I think the customer wins and we win in this process. I do not think there is any negative to look forward to, other than increased volume. When they hit certain milestones, whatever those are, there are cost-sharing opportunities that are borne between the three of us—or enjoyed between the three, I should say: the vendor, ourselves, and the customer. Andrew Harris Cooper: I did not mean to imply a negative—sorry if that came across differently—but that is helpful. Lastly, on the AJR business, I think you talked about about $8 million of backlog in the last update. Did that work down all in the quarter? If not, how should we think about the pacing of that starting to happen? And then any updates, knowing you have this third program moving, on completion of and when we should expect the pacing of the shift to start flowing through the P&L more? R. Jeffrey Bailly: Ron, I will let you tackle the backlog, and then I will tackle the second question, which relates to Program Three. Ronald J. Lataille: Our customer specifically asked us not to speak of backlog. The $8 million you referred to, Andrew, was the quarter, not the full amount. I can tell you that the backlog going into 2026 is higher than that, but I cannot disclose the number. We expect to work it down gradually throughout 2026. R. Jeffrey Bailly: With respect to Program Number Three, these were all Phase One, then the next and the next. Program One was completely transferred, up and running, and running at rate. Program Two has now been transferred. It is up and running but not running at rate as we go through the process. Program Three is scheduled to transfer when Program Two is complete. We are taking possession of a new building, I believe in April, and we will get that set up. That will be a second-half-of-the-year assignment. The key is that we have full capabilities already in Illinois to do these programs. These are redundant capabilities, and when they move over, our customer enjoys some cost saves, and we enjoy the opportunity to make additional profits when we get to our run-rate levels. Andrew Harris Cooper: Okay, I will stop there. Thanks, everybody. R. Jeffrey Bailly: You are welcome. Operator: This concludes our question and answer session. I would like to turn the conference back over to R. Jeffrey Bailly for any closing remarks. R. Jeffrey Bailly: Thanks, operator, and thank you all for participating on the call. We are excited about the future. The long-term contract hopefully dispels some of the concerns some people might have had. We have positioned ourselves with our top three or four customers for the next four or five years, really understanding what our growth trajectory is, and we have the vendors aligned right beside us. I think we have done an excellent job in the transition plan for our new CEO. He is fired up. He has been with us for 25-plus years. He was integral in developing the strategy. He has been integral in executing the strategy. He had a development plan that has given him exposure to all different parts of the business, including to some of our investors of late. It has all gone well, and I think that is something for everybody to be excited about. He is well qualified and a very capable leader. We appreciate your interest. We are excited about the future, and I will end it there. Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
KC Kelleher: Welcome to the Angel Oak Mortgage, Inc. fourth quarter 2025 earnings conference call. Today’s call may include forward-looking statements that may cause actual results to differ materially from current beliefs. We disclaim any obligation to update our forward-looking statements in light of new information or future events. For a more detailed discussion of the factors that may affect the company’s results, please refer to our earnings release for this quarter and to our most recent SEC filings. During this call, we will be discussing certain non-GAAP financial measures. More information about these non-GAAP financial measures and reconciliations to the most directly comparable GAAP financial measures are contained in our earnings release and SEC filings. This morning’s conference call is hosted by Angel Oak Mortgage, Inc. Chief Executive Officer, Sreeniwas Vikram Prabhu, and Chief Financial Officer, Brandon Robert Filson. Management will make some prepared comments, after which we will open up the call to your questions. Additionally, we recommend reviewing our earnings supplement posted on our website, www.angeloakreit.com. I will now turn the call over to Sreeniwas Vikram Prabhu. Sreeniwas Vikram Prabhu: Thank you, KC, and thank you all for joining us today. Our fourth quarter and full year results were encouraging, serving as a testament to the strength of our earnings engine and our dedication to our process. We delivered our second consecutive year of double-digit net interest income percentage growth alongside our third consecutive year of operating expense reduction, emphasizing the stability of our platform and the strength of our operations. We executed our proven strategy, demonstrating its value in an evolving and constructive market environment as we navigate a shifting rate backdrop. GAAP book value per share increased year over year due to improving valuations in our legacy securitizations as rates move lower as well as high net interest income supported by our deployment of capital into high-yielding investments. Credit performance remains strong, both in aggregate and relative to the overall market, and we believe our portfolio remains well positioned to perform comparably well over a range of macroeconomic outcomes. We continue to see the benefits of our deliberate early decision to step up in credit quality and focus our balance sheet on assets that we believe are resilient across a range of economic outcomes. The broader interest rate environment in 2025 was characterized in general by decreasing rates across the curve and over the course of the year, amid shifting expectations around the pace and the path of short-term rates. While uncertainty remains, we are optimistic that short-term rates will continue to decline and we will see further steepening in the yield curve. Securitization markets were healthy throughout 2025 with tightening spreads and healthy investor demand supporting attractive term financing for our investment portfolio. We participated in four securitizations and called two of our legacy deals from 2019, enabling us to redeploy the de-levered capital into higher-yielding assets. Notably, we also completed our first HELOC securitization. We believe HELOCs are an attractive and growing asset class and we expect to continue to invest in them, though we remain focused on our core strategy of acquiring and securitizing high-quality non-QM loans. We had a new warehouse credit facility in 2025, diversifying our lender base and continuing to optimize our funding mix to support high-quality loan purchases. Additionally, we completed our second issuance of senior unsecured notes, the capital from which was quickly deployed into accretive target asset purchases that generated incremental earnings within a quarter of the debt issuance. These actions position us to sustain and further enhance our net interest income increases as we move forward while maintaining a prudent approach to leverage and liquidity. Looking ahead, our addressable market remains significant and continues to grow, driven by structural demand for non-QM solutions and ongoing need for specialized mortgage credit. Within this market, Angel Oak Mortgage, Inc. has established itself as a leading non-QM platform with differentiated sourcing, underwriting, and financing capabilities. Our consistent securitization execution, combined with strong collateral performance and a growing track record of the AOMT shelf, positions us to capture attractive risk-adjusted opportunities. We will continue to manage recourse leverage prudently, emphasize net interest margin and earnings growth, and focus on the segments of the market where we see the most compelling long-term risk-reward. We believe our results and momentum prove that Angel Oak Mortgage, Inc. is well positioned to operate through a range of economic environments, to continue strong performance within the existing rate landscape, and to deliver risk-adjusted returns and long-term value for our shareholders across cycles. I will now turn the call over to Brandon Robert Filson for the financial results. Brandon Robert Filson: Thank you, Sreeni. Fourth quarter results tracked in line with our expectations and, as Sreeni mentioned, capped the second consecutive year of expanding net interest income alongside continued operating expense reduction. Interest income increased 30%, and net interest income increased over 11% year over year versus 2024, from $110,400,000 to $143,700,000, and from $36,900,000 to $41,100,000, respectively. This growth was supported by a 15.4% reduction versus 2024 of operating expenses, including securitization costs and stock compensation, as we continue to push hard on cost rationalization and key expense savings initiatives. Valuations were supportive during 2025, and in the fourth quarter, driving increases in valuations across the portfolio. As of today, we expect that our book value moderately increased compared to the end of 2025 as the rate curve continues to steepen. For 2025, we had GAAP net income of $11,300,000, or $0.45 per diluted common share, compared to a GAAP net loss of $15,100,000, or $0.65 per common share, in 2024. For the full year, we had GAAP net income of $44,000,000, or $1.80 per fully diluted common share, representing a 53% growth, versus $28,800,000, or $1.17 per diluted common share, for the full year of 2024. Distributable earnings in Q4 2025 were $7,300,000. The primary driver of the difference between this and our GAAP net income of $11,300,000 and distributable earnings was the removal of $8,400,000 of net unrealized gains from our securitized loan portfolio, offset by $4,000,000 of unrealized losses from our residential loans and hedge portfolios. For the full year, distributable earnings were $14,600,000. The primary driver of the difference between this and our $44,000,000 of GAAP net income is the removal of $28,600,000 of unrealized net gains on our securitized loan portfolio. Interest income for the fourth quarter was $39,000,000 and net interest income was $10,900,000, marking a 22% improvement in interest income and a 10% improvement in net interest income compared to 2024. Compared sequentially to 2025, interest income increased by 6.5%, and net interest income increased by 7%. For the full year, interest income was $143,700,000 and net interest income was $41,100,000, which translates to increases of 30% and 11%, respectively, compared to the prior year. This increase in net income was driven primarily by a steady purchase of securitizations of newly originated loans, higher weighted average coupons on our overall investment portfolio, and decreases in funding costs as a percentage of borrowings associated with our residential whole loan portfolio, as well as the consistent securitization market. We expect our net interest income to continue its growth trend with earnings generated from accretive loans purchased throughout the year and ongoing securitization activity. Our $861,800,000 of loan purchases in the year carried a weighted average coupon of 7.79%, with a weighted average combined loan-to-value ratio of 65.4% and a weighted average credit score of 756. Our total residential whole loan portfolio had a weighted average coupon of 7.38% as of the end of the quarter. The non-QM portion of our whole loan portfolio carried a weighted average coupon of 7.09%, and HELOCs and closed-end seconds carried a 9.75% weighted average coupon. As of the end of the quarter, loans in securitization trust portfolio carried a weighted average coupon rate of 5.97% with a weighted average funding cost of approximately 4%. As mentioned, the securitization market remains constructive, and we intend to continue leveraging the current strength through our disciplined, methodical securitization strategy. We executed four securitizations over the course of the year, in addition to calling two of our legacy deals from 2019, keeping in line with our stated goal of four securitizations per year. In total, we securitized $704,000,000 in unpaid principal balance across these four securitizations. In the fourth quarter, we completed AOMT 2025-10 as the sole contributor, contributing a balance of $274,300,000 in loans. Additionally, we participated in AOMT 2025-HB2, Angel Oak Mortgage, Inc.’s HELOC securitization, which was a $281,400,000 securitization, of which we contributed $58,600,000 of HELOCs alongside other Angel Oak strategies. Operating expenses for the fourth quarter were $5,200,000. Excluding non-cash stock compensation and securitization costs, fourth quarter operating expenses were $3,000,000. For the full year, operating expenses were $16,400,000, representing a decrease of 15.5% compared to 2024. Excluding non-cash stock compensation expenses and securitization costs, operating expenses for the full year were $11,500,000, representing a decrease of 15.4% compared to 2024. Going forward, we expect to maintain similar operating expense levels, and we will continue to be as efficient as possible with our expense structure. Looking at our balance sheet, as of the end of the quarter, we had over $41,000,000 of cash, and our recourse debt-to-equity ratio is 1.4x. We expect to continue to prudently manage our recourse debt-to-equity ratio going forward. GAAP book value per share increased 1.3% to $10.74 as of 12/31/2025, from $10.60 as of 09/30/2025. Economic book value, which fair values all non-recourse securitization obligations, was $12.70 per share as of 12/31/2025, down 0.2% from $12.72 per share as of 09/30/2025. The growth in GAAP book value was driven by improving valuations in our legacy securitizations and higher operating income, while economic book value decreased slightly, as expected with the normalization in those legacy valuations. We ended the quarter with unsecured residential whole loans at a fair value of $294,100,000, financed with $218,800,000 of warehouse debt, $2,100,000,000 of residential mortgage loans in securitization trust, and $305,500,000 of RMBS, including $25,500,000 of investments in commingled securitization entities, which are included in other assets on our balance sheet. We finished the quarter with undrawn loan financing capacity of approximately $1,000,000,000. Now looking at credit, we ended the quarter with the total portfolio weighted average percentage of loans 90-plus days delinquent at 2.18%, inclusive of our residential loan, securitized loan, and RMBS portfolio, a decrease of 2 basis points from the third quarter 2025 and a decrease of 25 basis points compared to year-end 2024. Performance across the Angel Oak shelf has remained strong. We believe the continued outperformance of our collateral relative to the broader market further differentiates our platform. This not only serves as a competitive advantage in terms of financing stability but also strengthens confidence in our earnings profile. Our shelf’s performance divergence, combined with consistent deal execution, reinforces our view we are well positioned as a leader in the non-QM market and that our securitization program remains a reliable and repeatable tool for earnings growth. We expect our differentiated credit performance to translate into lower losses than comparable non-QM platforms across a full credit cycle. This view is supported by a proactive migration up the credit spectrum, conservative LTVs, and a disciplined underwriting approach, which we believe position the portfolio to perform consistently even in more challenging environments. Three-month prepayment speeds for the RMBS securitized loan portfolio were 11.2% to end the quarter, reflecting an increase from 9.4% in the third quarter 2025. As we have mentioned in previous quarters, prepay speeds are expected to increase as rates decrease and homeowners are incentivized to refinance. With that said, as a reminder, we model our returns based on the historical average prepayment speeds of 20% to 30%. Prepayment speeds are likely to tick upwards if newly originated coupon rates continue to decrease. However, the majority of our portfolio still has coupon rates that are well below newly originated coupon rates, and we expect that mortgage rates would need to fall meaningfully in order to produce a significant impact to the returns on our portfolio. Finally, the company declared a $0.32 per share common dividend, which will be paid on 02/27/2026 to common shareholders of record as of 02/20/2026. For additional color on our financial results, please review the earnings supplement available on our website. I will now turn it back to Sreeni for closing remarks. Sreeniwas Vikram Prabhu: Thank you, Brandon. We are optimistic about the future performance of Angel Oak Mortgage, Inc. and are excited to demonstrate the strength of our model in a steepening yield environment. The team has worked tirelessly to establish what we believe is the best non-QM loan origination, purchase, and securitization platform, which provides us the confidence for the future. We will maintain our focus on diligent trend selection, consistent securitization execution, and value-driven decision making, and we look forward to continuing to build long-term value for our shareholders in the coming quarters and years. We will now open for questions. Operator? Operator: Thank you very much. We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Matthew Erdner with Jones Trading. Please go ahead. Matthew Erdner: Hey, good morning, guys. Thanks for taking the question. Where are you guys seeing the best kind of risk-reward opportunities right now? You have mentioned kind of that whole loan portfolio purchases, or, I guess, what you currently have is it 709 basis points, call it, and then the HELOCs are about, give or take, 250 points higher. You know, where are you guys favoring your capital allocation right now for purchases? Sreeniwas Vikram Prabhu: Thanks, Matt. This is Sreeni. We think we have a healthy mix of opportunities. Obviously, there is more relative value in terms of buying HELOCs for sure because the IRRs are better. But the long-term is more focused on non-QM. They both provide healthy returns for us, and I think you should see us continue to keep that mix. HELOCs can, the more you scale, you want to be very careful of the credit you underwrite, so we are extremely careful about what we underwrite in blocks, which is growing the volumes and securitizing it. The cleaner credit has always been non-QM for us. We like the returns there, and then we are selectively using HELOCs for a little bit more alpha. Matthew Erdner: Got it. That is helpful. And then, where are you seeing the ROEs on each of those types of securitizations today? Brandon Robert Filson: On the non-QM securitization front, we are still in that mid- to high-teens level. It should bounce around a little bit with rates coming down on the mortgages, but then spreads on the securitizations have come in. The HELOCs are going to be five, six, seven points higher than that on a fully securitized basis, so, you know, low-20s ROE perspectives. Matthew Erdner: Got it. That is helpful. And then last one for me. Did you guys provide a book value update quarter to date? Brandon Robert Filson: Our book value today, we think, is modestly increased from where we were at December 31. Matthew Erdner: Got it. Thank you, guys. Thank you. Operator: Thank you. Your next question comes from Douglas Michael Harter with UBS. Please go ahead. Douglas Michael Harter: Thanks, and good morning. Can you talk about your ability to continue to recycle capital, either through calling deals or just optimizing financing? How much more capacity you have to grow with the existing capital base? Brandon Robert Filson: We have a pretty good amount of power that we could still recycle and use. We have lots of unlevered loans in our book right now that we could choose to lever to continue to buy new loans. Our recourse debt-to-equity ratio leverage is very low. Our actual total amount borrowed on repo facilities is lower than it has been over the course of time, even though our RMBS portfolio has grown dramatically through securitizations. And then as we do these securitizations, we usually are releasing $2,030,000,000 in cash off of each one. So we have enough capacity for sure to take us through a similar buying clip into 2026. Douglas Michael Harter: I appreciate that. Thank you. Operator: Thank you. Next question comes from Timothy D’Agostino with B. Riley Securities. Please go ahead. Timothy D’Agostino: Hi. Thank you. Good morning. Thanks for taking the question. My question is a little bit more general, just like to get your sense on how the market feels and the activity level, whether that be in non-QM, HELOC, as well as securitization markets, and how it feels different at the start of 2026 compared to 2025? Thank you. Sreeniwas Vikram Prabhu: It is a good question. 2025 was a solid year across the board in the mortgage market; any part of the resi market was doing well. That continued into 2026. Taking the last two weeks of volatility out, we had seen spreads tightening in the securitization market. I think we printed a deal close to 100 basis points; it was 105, 110 basis points. They have widened out since, as the volatility has gotten into the entire market. The mortgage market itself seems to be solid. The non-QM market continues to grow. I think we are going to have more issuance this year than last year, and there are more players coming in, so it is getting competitive for sure. What we try to tell people, whether it is private funds or Angel Oak Mortgage, Inc., is that we originate what we can originate. We are not looking for scale per se; we are looking for quality and the relationships we have with those brokers. We have been in the market for so many years, we are able to not have to compete on price. Right now, the market is competing extremely on price because there are more entrants. People want to get bigger in this space. The growth is good, but it is coming with competitive pressures. There are going to be balance sheets which will have lower IRRs for sure, because getting pretty much brings lower IRR if you try to reset more loans. That is the backdrop we have. The non-QM market by itself continues to grow as there are more and more people looking for loans that do not fit the guidelines. As more people get self-employed, entrepreneurs, non-permanent employees, they need non-QM loans. How do I see this unfolding in 2026? We feel that there will be pockets of volatility. 2025, except April, was a phenomenal place. You cannot expect that. That is one of the reasons why we hit the securitization market as fast as we can. Rates are continuing to drop. You have seen that mortgage rates have dropped. We think generally, the market is going to be solid with some pockets of volatility. Timothy D’Agostino: Great. Thanks so much. And then just a quick follow-up. Regarding HELOC securitizations, I believe, and correct me if I am wrong, earlier on the call, you said you are contributing to the second one. In terms of HELOC securitizations per year, would you say the pace is probably one to two? Or just any color there? Thanks. Sreeniwas Vikram Prabhu: When we said two last year, that was to our entire franchise. You will probably see more from our entire franchise. I would speculate that Angel Oak Mortgage, Inc. will be more than one to two of them. That is what I have been thinking. Brandon Robert Filson: I think that is probably right. I would tee up two for that. We just started buying HELOCs in 2025. We contributed to 2025-HB2 in December. If you follow that same pace, that puts us on the course of about two participations a year in the HELOC space. Timothy D’Agostino: Okay. Great. Thank you so much for taking the questions today. Sreeniwas Vikram Prabhu: Thank you. Operator: Again, if you have a question, please press star then one. Our next question comes from Eric J. Hagen with BTIG. Please go ahead. Eric J. Hagen: Hey. Thanks. Good morning. How are you guys thinking about this attention across the market right now on private credit, and the impact on other asset managers, and the knock-on effects that it could have on the resi and commercial mortgage markets? Do you think this raises attention on the underwriting, or could it affect the demand that we typically see from asset managers to buy whole loans or securitized products? Sreeniwas Vikram Prabhu: We see this across what we at Angel Oak Partners see. We have ETFs, mutual funds, private credit in the mortgage space. We are traveling to raise institutional money, and we have Angel Oak Mortgage, Inc. as a public REIT. We see across the board what investors are thinking. A lot of money that went into so-called private credit went into corporate credit. There was institutional money from three, four years ago and then retail followed in the last couple of years. That is where a lot of money went. That is what happens when new money comes into a space and then gets worried; you see the momentum shift. In terms of other types of private credit—asset-backed, mortgage credit—generally, institutions are underinvested, and retail definitely is underinvested. They may invest through ETFs and mutual funds in buying bonds, but in terms of private credit in the mortgage space, they are under-allocated, and retail is definitely under-allocated. From that perspective, in terms of commercial, it is a little different because there are delinquencies and defaults happening in the commercial real estate sector. You have to dissect the good, the bad, the ugly. Very different. But in terms of asset-backed and resi, that is why you are not seeing any of the private credit side—any ABS or mortgage funds—in the crosshairs right now. Can it bleed into the mortgage sector? It could. But in terms of unwinding or what had happened to a couple of funds in the private credit space, we have not seen that in the mortgage or ABS space. Eric J. Hagen: Okay. That is really helpful commentary. Good perspective there. How sensitive do you think the origination volume in the primary market non-QM could be if there is a backup in spreads in the secondary market? Which one is responding to the other? Do you think that spreads can stay this stable if we do get a steeper yield curve and higher longer-term interest rates? Sreeniwas Vikram Prabhu: We have gone through a high-rate environment. If you go back to 2023, we saw high spreads in the secondary, and we had to combine that with high rates. As long as rates are range-bound—plus or minus 50 basis points—I believe volumes will continue to grow as people need more of these loans. It would not affect that much. It is driven by IRRs, obviously. We need to make IRRs for Angel Oak Mortgage, Inc. and for private funds, so our volumes will not be affected as much by that. A steeper yield curve which brings 10-year rates much higher—two things could happen. One is you could see the origination move towards a hybrid, more of fixed-to-floating kind of mortgages that will be out there. You have seen that happen a little bit more in the prime jumbo space. We have not seen that in our space yet. The curve is not steep enough to do that, so you could see that trend. On the stability of spreads, we are not expecting spreads to be static. For example, in the last two weeks, spreads have widened out again. As long as the spreads are in the range of 25 to 40 basis points, securitization markets will be healthy, and the origination activity will be healthy, I believe. Eric J. Hagen: Great commentary. Appreciate you guys very much. Thank you. Sreeniwas Vikram Prabhu: Thank you. Operator: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Mr. Brandon Robert Filson for any closing remarks. Brandon Robert Filson: Thank you, everyone, for your time and interest in Angel Oak Mortgage, Inc. We look forward to connecting with you again next quarter. In the meantime, if you have any questions, please feel free to reach out to us. Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
Operator: Welcome to this Ageas conference call. I am pleased to present Mr. Hans de Cuyper, Chief Executive Officer; and Mr. Wim Guilliams, Chief Financial Officer. [Operator Instructions]. Please note that the conference is being recorded. I would now like to hand over to Mr. Hans de Cuyper and Mr. Wim Guilliams. Gentlemen, please go ahead. Hans J. De Cuyper: Good morning, ladies and gentlemen. Thank you all for dialing into this conference call and for joining the presentation of Ageas full year 2025 results. I'm extremely proud to report that we successfully completed the first year of our Elevate27 strategy, a remarkable year where we delivered a continued strong performance and raised our financial targets twice. 2025 was, to say the least, a transformational year for Ageas, giving us many achievements to be proud of. Thanks to the Saga partnership and esure acquisition, Ageas steadily strengthened its position in the U.K. market becoming one of the top 3 U.K. personal lines insurers. By acquiring the remaining stake in AG, we have full ownership of -- we will have full ownership of our core home market, further strengthening our leading position in Belgium. Both transactions fully aligned with our Elevate27 strategy of focusing on cash generative entities. In 2025, Ageas delivered outstanding growth across the group, with inflows up more than 9% at constant FX, driven by both Life and Non-Life with Ageas Re adding momentum. This remarkable performance was boosted by a strong growth in Non-Life with inflows up 16%, up in all segments and product lines. The uplift in Belgium resulted from both portfolio expansion and tariff adjustments while Asia benefited from an upward trend in all countries. Europe inflows increased with continued focus on profitability over volume and the U.K. positively contributed despite a softer market supported by esure and Saga business. The Reinsurance segment delivered an exceptional performance, mainly driven by third-party business, thanks to strong profitable growth in all business lines and aided by the inflows from partnerships. In Life, Europe inflows experienced a significant increase of plus 21%, driven by continued excellent performance in Türkiye and a remarkable growth in savings products in Portugal. Also, Belgium showed a strong performance of plus 6%, driven by excellent unit-linked sales to the bank channel, while Asia growth was realized with strong persistency rates, building on the new business that was sold in previous year in China. Our continued strong growth in Life translated in the growth of our Life liabilities of more than 6%. Regarding the net operating result, we achieved an outstanding result of more than EUR 1.655 billion above the latest guidance announced last month. This strong result was driven by a remarkable Non-Life performance reflected in the excellent combined ratio of 92.5%, partially supported by benign weather in Belgium. Life performance improved across the group with high margins in Belgium and Europe further supported by a one-off tax benefit in China. Regarding the recurring cash upstream, we received over 2025 EUR 949 million, and this is notably above guided range of EUR 850 million to EUR 900 million and up 18% compared to last year. And for 2026, we expect a significantly higher cash upstream of EUR 1.2 billion. Following the excellent results, a solid Pillar 2 solvency ratio of 211% and a robust cash position, the Board of Directors has decided to propose a total gross cash dividend of EUR 3.75 per share, a growth above 7% over 2025 and this is fully in line with our commitment. The interim dividend of EUR 1.5 per share was already paid out in December last year, and the payment of the remaining EUR 2.25 per share will be done in the course of June. Year 2025 demonstrated how quickly economic conditions such as inflation and interest rates can change and how macroeconomic events can influence the business environment. In this dynamic landscape, having diversified operations across regions and products are particularly important. During this transformational first year of Elevate27, Ageas achieved a more balanced geographical and segment distribution increasing the weight on European cash generative entities. The balance between Life and Non-Life businesses across the world is a defining feature of Ageas as a well diversified group, which keeps a steady growth in performance and a strong solvency even in volatile times. Before handing over things to Wim, let me share a quick update of our 2025 M&A journey. We closed Saga in July and esure in September, adding the missing pieces to our U.K puzzle. For esure, the integration started already at the end of 2025 ahead of plan, and we are well on track to achieve the announced annual synergies of more than GBP 100 million as of 2028. With the AG acquisition on track to close in the second quarter of 2026, another milestone approaches, further reshaping our group and accelerating our journey towards delivering on our Elevate27 ambitions. This allowed us to elevate our financial targets twice in the first year of our strategic cycle, upgrading our holding free cash flow to more than EUR 2.6 billion and the shareholder remuneration to more than EUR 2.2 billion while reiterating our average earnings per share growth between 6% to 8%. With this positive update, I now give the floor to Wim, who will walk you through the segment performance in more detail. Wim Guilliams: Thank you, Hans. Good morning, ladies and gentlemen, and thank you for joining us. As mentioned by Hans, the strong net operating result was mainly driven by an excellent insurance result in Non-Life and a solid performance in Life, further supported by a low tax rate in China. This translated into a strong combined ratio at 92.5% and a high Life net operating result of EUR 1.259 billion. Life net operating result rose sharply by 39% compared to last year. As communicated end of January '26, following a tax regime change in China, a Chinese joint venture, Taiping Life, recognized a positive one-off benefit of EUR 300 million in deferred taxes. We also delivered an excellent Life operating insurance service result, up 4% compared to last year, illustrating the quality of the business in all segments. In Belgium, the Life net operating result was up plus 5% compared to last year, supported by a solid insurance result, as shown by the strong guaranteed margin, of 102 basis points. In Europe, the Life net operating result was up plus 20% compared to last year, driven by an excellent performance in Türkiye. Asia recorded a solid increase in the Life operating insurance service results, up more than 7%, driven by a higher CSM release and a positive development in expense variance. CSM roll forward showed a positive operating CSM movement of EUR 170 million. This positive evolution corresponding to a 1.8% growth was supported by a significant contribution of new business. Looking at the drivers of the Life value new business, the present value of new business premiums in '25 was driven by the strategic shift in product mix in China. Belgium showed a significant improvement in the Life business new margin compared to last year, up 110 basis points, reaching a new business margin of 6.8%. In Europe, the present value of new business premiums showed a strong growth compared to last year of plus 17%, driven by Türkiye. Group Life new business margin stood at 7.9%, a performance influenced by the liability transformation in China to participating products. Participating products are more capital efficient and less sensitive to interest rate movements, but they typically carry lower margins than traditional products. The resulting shift in the business mix impacts the overall margin. Moving now to Non-Life. The combined ratio reached an excellent 92.5%, leading to a 21% increase in the net operating result to EUR 548 million. The strong performance was driven by all segments. In Belgium, the Non-Life net operating result rose by plus 9%, reflecting both business growth and an improved combined ratio supported by benign weather conditions. In Europe, the combined ratio improved versus last year, driven by the continued positive trajectory in health profitability in Portugal and better household performance across all countries. In Asia, the Non-Life net operating result increased across all markets, supported by an improved combined ratio. Lastly, the reinsurance combined ratio for the third-party business stood at a strong 76.5% benefiting from favorable claims development and a stable expense ratio. Regarding the balance sheet evolution. Our comprehensive equity grew strongly compared to full year '24, reaching EUR 17.5 billion. This growth was driven by strong net operating result and the capital increase for the esure acquisitions, which more than offset the impact of foreign exchange volatility and dividend payments. Our current cash position stands at a very solid EUR 1.45 billion, firmly supported by the EUR 949 million of dividend upstreams during full year '25, a strong 18% rise compared to last year. Our cash position was further reinforced by the RT1 issue completed in mid-December. To conclude, I would like to add a word on solvency and operational capital generation. As mentioned by Hans, the solvency ratio of the Solvency II scope stood at a comfortable 211%, while the solvency of the non-Solvency II scope stood at 244%. The operational capital generation over the period amounted to EUR 1.9 billion. This included EUR 1.2 billion generated by the Solvency II entities, representing a 7% year-on-year increase, while the general account consumed EUR 187 million. Non-Solvency II entities contributed EUR 892 million, a decrease compared to last year, reflecting the interest rate environment and the lower new business contribution from China, following the strategic shift toward participating [indiscernible] products. Operational free capital generation amounted to EUR 793 million. Within the Solvency II scope, operational free capital generation increased, supported by higher operational capital generation, the operational free capital generation in the non-Solvency II scope was impacted by higher consumption, capital consumption, mainly driven by the increased equity allocation in China. I've now reached the end of my presentation, and we are ready to answer any questions you may have. Operator: [Operator Instructions] Our first question is coming from David Barma with Bank of America. David Barma: Firstly, on Asia, can you update us on where the mix of business is towards your target in terms of participating products and whether the margins in the second half of the year should be fully reflecting this change of mix or whether we should see a bit more pressure in '26? That's my first question. And then secondly, on cash, with Ageas being full owner of AG, you've talked about the potential for cash pooling that could reduce some of the conservatism in local buffers. Can you give some color on what that means in practice and whether you'd be looking to run with less excess capital in Belgium going forward? Hans J. De Cuyper: Thank you, David. I think I'll give both questions to Wim, who can give you the technical details. Wim Guilliams: On the business mix, we've done a substantial change to the participating products. If you look at from a annual premium equivalent perspective, we're at 70% to 80%. But you should know that in that remaining, there's also a sizable part, which is nonparticipating, but they are very short term. They're more than protection business. You can say that we've done a major shift towards these participating products. I can understand your questions on the margins and how we have to look at them going forward? Now there has been a bit of volatility of these margins over the years. So don't take the second half as a reference. I would more look at the full year, what you see there as margins going forward as a good reference because there's a bit of a mix in the duration of the products they will be looking at. Why do I say look at the full year? You've seen that over the last couple of months, the rates in China are a bit more stable. So that has, of course, an impact on the margins you will see going forward. If they would go up or if they would go down, you know that we have now that automatic interest rate mechanism in China, but that always works with a bit of delay, so that you have to take into account going forward. Now your second question on cash fungibility, cash pooling has less to do with the excess capital from a solvency perspective. This is more a liquidity management tool, where we can say we can look at the free liquidity from a group perspective and start pulling that together. So that was also the reason why we said you can have a different view on our local -- on our GA liquid asset, total liquid assets. So we don't need to be as stringent as we are as before. Now your follow-up question will be then, what is the new level you would take into account? As in the past, allow me not to give a clear number on that because it depends a lot on the market circumstances and that is driving what we have. But we will continue having a cash guardrail. But thanks to this cash pooling, we have additional tools at group level now to take them into account to manage that cash liquidity going forward. Operator: Our next question is coming from Farooq Hanif from JPMorgan. Farooq Hanif: I've actually got 2 questions and one clarification following the answer to David's question. So just to be -- just a clarification first. What you just said, Wim, was that we should continue to forecast cash remittances as normal, but the amount of cash that you need at the holding is no longer as big a constraint. Is that the right way to think about it? So that's a clarification number one. And then on the questions, on Asia tax, I believe there are still some ongoing effects, if you could just talk about the difference between deferred tax asset, deferred tax liability, what's been recognized and what could be recognized going forward and how we should think about the tax rate for China and Asia generally going forward in the Life business? And then my last question is on the reinsurance profits. Obviously, throughout the group, you've had very good result because of weather. But in Reinsurance, the third-party profit has grown a lot as you stated in your presentation is ahead of target. So can you just explain how much of that is sustainable? How much of that might disappear with the Prima quota share? Just want to get a sense of what you think of the Re profit going forward? Wim Guilliams: Farooq, on the first one, I can be very clear, yes, your understanding is correct. So it's about cash fungibility. And in the past, we looked at the total liquid assets. This has nothing to do with the cash remittance as such. That will follow the normal evolution that you had in the past. Your second question on Asia tax. I can understand this is, of course, the major update that you've seen with that one-off deferred tax benefit. As you could read end of January, this has, of course, to do with the fact that you know we have been more conservative in the past on these DTAs, which we didn't recognize as the average of the market is. And now it has been clarified with the transition to IFRS 17/9 that that's the tax base and also the transition effect you can take into account in how you calculate the taxes. So basically, this one-off tax benefit is a bit adjusting the more conservative tax rate that we had in '23 and '24, but it has all to do with deferred tax. From now onwards, we are for tax accounting in an IFRS 17/9 world in Mainland China, that means we take the IFRS 17/9 results and that's the tax base going forward. There's always a bit of an adjustment for fair value to P&L movements on instruments, but that's less relevant for us because we exclude them from our net operating results, so you can put that a bit aside. Now on that tax base, what is creating the big deductibility is that if you invest in long-term government bonds and in some of the provisional bonds, the coupon you get on these bonds, you can deduct from the tax base. So that means that if you now look at the situation, we will be looking to a tax rate between 0% to 10%. If you ask us to give a number in that range, it will be more than 5% because that's the midrange we have. And that depends on the deductibility that we have on that IFRS 79 tax base. How will that evolve going forward? That will depend on the evolution of the portfolio, the growth of the portfolio, and of course, to what extent we will have that part of deductibility of long-term government bonds. On the Reinsurance profits and the weather, and then I will give it back also to Hans. Please remember, of course, that the Reinsurance team has done a tremendous job also to work on the diversification of the portfolio. We're no longer fully dependent on weather. Weather will stay an element in Reinsurance, but we have diversified to other types of business lines and that means that the profit signature going forward will not be only dependent on cuts and that part of the business. Hans J. De Cuyper: I can add, Farooq, 2 things. First is your question on Prima. You're right, we had EUR 7 million impact result in '25. As you know, we expect that to go on in '26, probably around another EUR 8 million. In the long run, AXA has communicated that it is their intention to take over that business. How that phasing out will happen is not fully clear yet. But I think by the end of the strategic cycle '27, you can assume that, that business will not be there anymore. On the other hand, we have now an organization that is capable to insure and reinsure these type of partnerships. And we have already, I think, signed a new similar type of partnership for not the same volume, but EUR 130 million. So that is a business that we will continue developing going forward. Last comment I want to add on Wim is, indeed the diversification. As you know, we started with predominantly property risk. We have diversified, first of all, in casualty. And now the team has done a great job in underwriting expertise for specialty lines. Eventually, the intention is to bring it to roughly to 1/3, 1/3, 1/3 in the 3 segments. So that will, first of all, stabilize results; and secondly, reduce the dependency on weather as such for Reinsurance. Farooq Hanif: Just one follow-up, if I may. I believe, and I might be wrong, that there's also a deferred tax liability benefit that you could get in Asia, am I correct? So when you give the 5% guidance, that's taking that into account? Wim Guilliams: Let's take into the -- yes, Farooq, that's taken into account. It will, of course, depend -- that's all based on the projections of results going forward. If that would be a difference, then you could have still a difference in the tax rate also at this point. That's taken into account in the assumption of the 5%. Operator: The next question is coming from Andrew Baker from Goldman Sachs. Andrew Baker: First, there's been some headlines around China government potentially planning capital injection into some of the larger insurers, including Taiping Life. If this was to happen, would you anticipate any impact on the dividend capacity from this business? And then secondly, are you able to just give an overview of the rate and claim inflation dynamics that you're seeing in the U.K. right now? Hans J. De Cuyper: Okay. On your first question, indeed, there has been some rumors about this China government capital injections. Of course, we cannot comment and we cannot act on rumors. What you will see is that actually, our solvency in China remains quite strong despite the fact that we had, I would say, a double impact from the VIR over '25 because, of course, you have the further absorption of the VIR impact, but you also had the impact on the asset valuation because of interest rates that stabilized slightly up. So that being said, I can say that a big chunk of the VIR impact has been absorbed. We have seen that the gap between the spot rate and the VIR rate as approximately halved over 2025. There is more effect to come, but the solvency is still comfortably about -- above 200%. So for us at this moment, a capital injection is -- in Taiping Life is not on the radar. U.K. claims inflation, it remains high. So in my view, there is, I would say, no room for further softening of the market. We have seen the market softening in '25. We have not fully followed that. We have put bottom line profitability above top line growth, although, of course, we do see a nice performance in top line, but that's also from absorbing the Saga and the esure business in the portfolio. Our price adjustments have been limited to approximately 2%, both in motor and property, while you have seen the market softening between 10% and 12%. Towards the end of the year, December, and that's also what we see in the pattern beginning of this year, we've seen it could be that the motor market is bottoming out a little bit, and that [indiscernible] become reasonable. But all this, of course, is subject to further monitoring and how it will go. What we do see now in the strategy of the U.K. team is we have, I would say, more dynamics to play in this pricing market because we have now access to the full, I would say, potential customer base via different brands and different distribution channels from partnership over brokerage, where our pricing used to be a lot more stable because this was about the good relationship with the brokers versus PCW and direct where the pricing often is a lot more dynamic where you immediately act on your positioning in the rankings. But I can assure you that the team is very diligent on focusing protection of the portfolio on the one hand, but definitely also on achieving bottom line performance. Operator: The next question is coming from Michael Huttner from Berenberg. Michael Huttner: Fantastic. I have so many questions, but I'll ask 2 and come back. The first one is just a bit more on China. I was really interested by your comment that the gap between the spot interest rates and the VIR is halved and solvency is above. But can you give us a little bit more granularity? It's just -- I'm sure -- just in terms of the gap on the VIR and if it were to fully close, what would it mean in terms of solvency? I mean any help -- and within that, if I may include that as a question, I saw the China cash went up from EUR 80 million to EUR 110 million. And I'm just wondering what you kind of feel for what it might be in your plan for the EUR 1.2 billion in 2026? And the second question is on Reinsurance. Excluding -- so you have this 300% rise in Prima, I'm assuming that's Prima and Triglav. Can you give us a feel for what the kind of the more normal business, what the growth is there? And in light to that, just a feel for whether at some stage, you'll be considering putting more capital in there? Hans J. De Cuyper: Okay. Thank you, Michael. There are 2 detailed business questions, so I will give them to the responsible heads of those business, Filip and Manu in a minute. But maybe first, your question on VIR and solvency, which I give to Christophe, the CRO. Christophe Ghislain Vandeweghe: Yes, perhaps to explain the solvency, you can see it a bit in the evolution on the slides that we have shared. If you see our solvency evolution on Page 22, you see that you have a big market movement in there. And obviously, the biggest impact of that market movement is exactly linked to what Hans was mentioning also the VIR impact. Now in terms of amounts, there is an FX impact in that. So you first need to deduct that. That's about EUR 900 million on the own funds and the whole capital movement that you see there, there's about EUR 300 million is basically a fix related, if you simplify it. So the fix doesn't move that much. The solvency ratio is quite neutral. But it does, of course, impact the own funds and the capital requirements. I would say most of the rest is actually linked to interest rate movements. We have different things. Hans already mentioned the rates went up during the year. So you have 1/3 of a double hit there. But of course, the equity markets also increased, so that offsets a bit. So we can expect that, given the figures that Hans already mentioned, I think the delta between, let's say, the spot rate of the Valuation Interest Rate and that average Valuation Interest Rate was about 90 basis points at the end of last year and is about 40 basis points today. So we did absorb a large part of that delta during the year. And of course, that means that we expect still a material impact to come in 2026, but by then, it will start to go down a lot. Hans J. De Cuyper: Upstreaming China... Filip Coremans: Yes. Thank you, Michael. On the dividend development that you saw over the last year, of course, it's just not entirely come from China, but China indeed increased the dividend, very much in line with the statements that they themselves made on their dividend policy. So to demystify a little bit the effect of dividend on the solvency is only around 3%, 4%, let's keep that in mind. That is not a determining factor. CTIH made a commitment and also in their public statement that they are looking at a steadily increasing EPS over time and that is the line they stick to. They also mentioned that they may relook at that as increasing the payout looking forward. But so we expect stable increasing dividend per share coming out of CTIH and Taiping Life being the main feeder of that, you can draw your own conclusion. Hans J. De Cuyper: So before I go to Manu for reinsurers on upstreaming, you mentioned the EUR 1.2 billion, Michael. Important there is that in the agreement we have with BNP on the stake in AG, we will receive the full '25 -- over '25 dividend of AG already at the level of Ageas. So that should give a lot more comfort on that EUR 1.2 billion that we have stated as upstreaming for 2026. Now Reinsurance, Manu? Emmanuel Van Grimbergen: Thank you, Hans, and good morning, Michael. So on Slide 37, you have an overview of the inflow of reinsurance and you see that by the end of 2025, the inflow for the third party is at a level of EUR 905 million, which is including the Triglav Prima deal, and that amount for EUR 630 million. So excluding that EUR 630 million, the inflow end of '25 would have been EUR 275 million compared to EUR 213 million end of '24, which is an increase of 29%. So I can give you already a quick update on the renewal of 1/1/26 and there, we -- on the business that had to be renewed on January '26, we have an increase of more than 20% of business. And your question on your capital, you know that over the strategic cycle, we decided to allocate EUR 280 million solvency capital requirement to the Reinsurance third-party business. The EUR 280 million solvency capital requirement was excluding a deal like Prima. Where are we today? Today, we are at a level of capital allocation, Solvency capital requirement allocation to reinsurance of a bit more than EUR 200 million, and it is including the Triglav deal. Michael Huttner: And other EUR 200 million, that includes your renewals, right, the 20% rise in January? Emmanuel Van Grimbergen: Yes, yes. Operator: The next question is coming from Farquhar Murray from Autonomous. Farquhar Murray: Two questions, if I may. Firstly, on the guidance for net operating profit of over EUR 1.5 billion full year '26 million, can we just walk through the bridge of the kind of full year '25, so I want that EUR 655 million? I'd have the Asia Life's tax steps, it's probably minus EUR 300 million to get to the 25% tax rate and then probably a positive of EUR 137 million to get the 0 to 10% and then a material step up from the AG minority. But I just wondered if you could give a sense of those right steps and what else are you assuming in there? And then secondly, you commented on the competitive environment in U.K. Non-Life. I just wondered if you could extend your thinking on to the Belgium business and in particular where you might expect any softness to emerge in that business or relatively stable this year? Hans J. De Cuyper: Thanks, Farquhar. Indeed, we gave a guidance of 1.5 -- well above, I would say, EUR 1.5 billion for this year. First of all, in that guidance, we do assume a tax rate for Asia between 0 and 10% somewhere, let's take approximately 5%. You are right that the starting base, of course, is the EUR 1,350 million, which is the right reference to look at. For AG and the deal with BNP, we assume here closing towards the end of the first half of the year. So we do include half a year of the impact of AG in this guidance. As usual, we also assume a normal cat nat event. So that means the promise to give guidance on combined ratio which is below 93% considering a normal cat nat here. So that means worse it could go above, better like we had last year. Last year cat nat was plus 1% impact on combined ratio, it might be even a little bit lower, but also be aware, of course, that there is already some weather events in January, mainly in Portugal. But at this moment, we are comfortable to go above the NOK 1.5 billion for the year. And as you know, in these volatile times, it is hard to give this full 12 months in advance. So we will definitely bring an update by midyear. Then the Non-Life business from Belgium. Well, I think Belgium is, I would say, today in a very attractive situation for profitability, the market as a whole, but definitely Ageas is outperforming that market on the positive side. You have seen that the results were very good, but the impact of weather in Belgium was very low, 0.4, I think, in the combined ratio, that was a very positive cat nat here. So please assume a more normalized cat nat that we always assume for the year. At this moment, no events, I think, in Belgium or no material events yet in Belgium, but the market is profitable, is very competitive, but it is also excellently positioned to compete in that market. So the sensitivity for the softening in the Belgian market, you cannot compare, for instance, with the U.K. market where your business is immediately impacted in Belgium. The persistency of your businesses are a lot stronger compared to the U.K. market. Farquhar Murray: What kind of tariffs you bring through at present, just as a follow-on? Hans J. De Cuyper: Sorry, I didn't -- I missed that question. Farquhar Murray: Just as a follow-on, what kind of tariffs expectations have you for the year? Are you going to be [indiscernible] still increasing in line with inflation probably or maybe a bit softer than that? Hans J. De Cuyper: Well, you know that in Belgium, approximately 60% of our business is immediately inflation linked. So there, I think the normal index 2% to 2.3% was inflation? . Unknown Executive: Yes, depending on the... Hans J. De Cuyper: yes, depending on the product that is already absorbed in the tariffication. The rest remains to be seen. For cat nat, I do not expect an increase because it was a very good year last year and the rest remains to be same. Operator: The next question is coming from Michele Ballatore from KBW. Michele Ballatore: Yes. So 2 questions from me. So the first one is on the Asian business about your comment on the higher exposure to equity. I'm sorry, I thought in the past, you reduced this exposure, probably I missed that, but if you can clarify this point. And the second question is about the overall pricing environment in your European business, I'm talking about Non-life, so what are you observing in, let's say, since the start of the year? Unknown Executive: Yes, the first point on the exposure in equity, maybe a few points of clarification. First and foremost, in 2024, indeed, we reduced that exposure gradually and in the course of 2025 that has been rebuilt up to the levels that we had, let's say, beginning '24, plus obviously, you had a sharp market increase. So the equity exposure certainly has gone up. Also to note that this, in combination with the shift to participating products mostly happened, obviously, in the par portfolio, where the loss absorption capacity for that type of instrument is better. That's the only clarification I can give on that. But that indeed led to a slightly higher risk charge, obviously, on these equities in the solvency ratio. Hans J. De Cuyper: Okay. If I look at the European continent, well, Belgium, we just spoke about on tariffs in Non-Life. So I don't think I should go a lot deeper there. U.K., we already spoke about as well. I see market analysts being relatively negative on motor in the U.K. I see predictions of combined ratios to 100% to 110% for the market, but be aware that the last few years, we have been outperforming that market and doing way better. But as I just said in the first question, we have seen maybe that motor business bottoming out a little bit, but that is definitely on watch for the rest of the year. As for the team, it is very clear that it is all about sustaining the bottom line. We have said that esure, we should not expect contributing to that bottom line because the esure brings over '27 will go into integration costs to put the businesses together. But we assume that we can sustain profitability in the U.K. despite the cycles we will see in tariff. Portugal, very strong recovery last year. There were 2 attention points the year before, the years before, that was healthcare on the one hand and motor on the other hand. Health care, I think we can comfortably say that profitability has been fully restored while keeping a very good persistency in the portfolio. And I think that has all to do with a very strong customer proposition that we have with Medis in the Portuguese market. Motor situation is improving. I would say we are not yet at the end. We have seen in motor, some negative impact on top line from our pricing discipline. But there, I think the market is still on the path to full profitability. The work is not fully done yet. But again, in summary, Portugal over '25, significant improvement compared to the years before, and we expect that to continue in '26. And then the last one is Türkiye. Well, you know the situation in Türkiye in Non-Life. It is very difficult with inflation. I think the solvency of that company is stable. We hang in there with that business. But overall, I would say, the profit from AKSigorta is not material in the overall European Non-Life business. And as you know, that is more than compensated by the excellent performance that we have on Ageas Life in the Turkish market. Operator: Ladies and gentlemen, I would like to return the conference call back to the speakers for any closing remarks. Hans J. De Cuyper: Thank you. Before moving to the conclusions, I want to take a moment to express my sincere appreciation to Filip Coremans for his 20 years of exceptional service at Ageas. Filip has been instrumental in shaping the group's journey and closing the Fortis settlements, which marked a historic milestone for the group. This leadership has been central to our growth story in Asia and to building the strong and valued partnerships that underpin our presence in the region. I would also like to extend my warm congratulations to Karolien Gielen on her expanded responsibilities, bringing together the Managing Director Asia activities with the business development and her leadership will create new opportunities for Ageas. To end this call, let me summarize the main conclusions. Next to our continued top line growth, our operations delivered an improved underwriting profitability, a clear reflection of the strength of our underlying business. The net operating result for 2025 was driven by an excellent performance in Non-Life and a solid Life result, further supported by a one-off tax benefit in China. The strong 2025 results lead to a total dividend per share of EUR 3.75, representing more than 7% growth over 2025 and we anticipate receiving significantly higher cash upstream of EUR 1.2 billion in 2026. The successful first year of the Elevate27 strategic cycle, upgrading our financial targets twice, increasing holding free cash flow targets to over EUR 2.6 billion and our shareholder renovation target to more than EUR 2.2 billion. And to conclude, 2025 was a transformational year for Ageas, and we are well on track with the integration of esure and the closing of the AG acquisition. With these closing remarks, I would like to bring this call to an end. If you should have outstanding questions, don't hesitate to contact our IR team. Thank you for your time, and I wish you a very nice day. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you very much for attending. You may now disconnect your lines.
Therese Skurdal: We are back here at Arctic Securities in Oslo, and we are here together with our President and CEO, Trond Fiskum; and CFO, Erik Magelssen. We are joined by participants joining us on the webcast as well as physically here in Oslo. On the screen, you see today's agenda. And as always, we will conclude today's presentation with a Q&A session. If you're joining us here physically, you can raise your hand and we will be walking around with a microphone. And if you're joining us through the webcast, you can use that tool to raise your question. So with that, I will hand the word over to our President and CEO, Trond Fiskum. Trond Fiskum: Thank you, Therese, and good morning to everyone. We start with the Q4 highlights. Overall, we had a good quarter with strong earnings improvements and solid cash generation in a market that is stabilizing. Our Q4 revenues reached EUR 167 million compared with EUR 185 million in Q4 last year. This is 9.6% down from Q4 2024. However, it's up 2.8% compared with Q3. So this reflects that the market conditions are stabilizing, which is positive. Regarding profitability, we delivered a strong EBIT improvement. When we compare with Q4 last year, we have a Q4 EBIT of EUR 9.4 million and an EBIT margin of 5.6% and this is compared with EUR 1.1 million and an EBIT margin of 0.6% in the same quarter last year. It is an improvement that is primarily driven by structural cost reductions. We have some reduced warranty accruals. And we also -- it is also supported by onetime positive effects of EUR 4.9 million, that we'll come back to. Cash flow development was also solid and on an improving trend. Operating cash flow improved to EUR 11.5 million, up from EUR 4.2 million in the same quarter last year. The risk of certain warranty liabilities, they remain. They are well identified and being very actively managed with also mitigation actions in place to avoid reoccurrence. We held a Capital Markets Day in December last year, where we presented our revised EBIT margin target, the long-term EBIT margin target of 6.5% and also together with how to achieve that. Finally, the market outlook has slightly improved from the second half of '26. This is something that provides a more supportive environment for us to continue improving our financial performance. So overall, we see a stabilizing trend in revenues. We see a step change in profitability, a solid cash flow generation for the quarter and a more supportive outlook as we close '25 and move into '26. On some more details on the Q4 financials, Erik will, of course, go into even more details afterwards. Starting with the revenues, we ended up with, as I mentioned, EUR 167.5 million in Q4. It's EUR 17.7 million less than Q4 last year, 9.6%. A meaningful part of this reduction is related to a weaker dollar, EUR 6.7 million, while the remaining impact reflects basically a weaker market compared to Q4 last year, but in -- particularly in North America. As mentioned on the previous slide, we do, however, see that the market is stabilizing, which is encouraging with the increase from Q3 to Q4 of 2.8%. Moving to profitability and EBIT. In spite of the lower revenue levels, EBIT improved to EUR 9.4 million. It is a strong improvement from Q4 last year and as mentioned, a result of structural cost savings, the lower warranty accruals. And it's also important to note that this onetime effect of EUR 4.9 million is a reversal of accruals that we made. These are related to some customer contracts and operating costs and is a result of a year-end evaluation of accruals that we made across all legal entities in the group. Finally, on cash flow. Our free cash flow reached EUR 11.5 million, which is EUR 7.3 million improvement compared to Q4 last year. Again, it's a reflection of several elements, cost saving programs, net working capital reductions and generally an improved financial discipline. The cash flow development is now positive over several quarters. And we do also see that this has a positive effect on very important financial ratios for the company, that Erik will show later in the -- our presentation. Overall, a good quarter in terms of progress. There are still a lot of work that we need to do in order to get to the levels that we want on a longer term view, but it's strong indications that we are on the right track. As we reported in Q3, we did a comprehensive review of our warranty liabilities during 2025, and we did identify some additional risks. The identified cases are related to certain legacy contracts combined with management practice, or warranty management practices that were far from optimal. At this stage, the potential financial impact is uncertain. The cases are complex and the variability of potential outcomes is significant. And we have taken proactive measures to reduce future risks and to prevent a reoccurrence. It includes a significant strengthening of our warranty management practice and also an improved process to ensure that we have more robust customer contracts in place. We will provide further details on these cases once there is greater clarity. And due to ongoing discussions and negotiations with customers, we cannot go into more details at this point. We are working constructively with our customers on this and also other stakeholders to resolve this. And it's -- handling these cases is a top priority for the management, and I'm personally involved in handling some of these cases. Regarding business wins, we secured in Q4 new contracts with an estimated lifetime revenue of EUR 77.6 million. The majority of the contracts came from the business area Flow Control Systems with EUR 56 million. Drive Control Systems contributed with EUR 21 million. By customer segment, the largest segment is Commercial Vehicles, which you see on the truck, trailer and bus, which also reflects that this is our biggest customer segment overall in the company. For the full year, we secured contracts representing EUR 339 million in estimated lifetime revenues. While the business wins are lower in '25 than previous years, we have not lost any major new opportunities during the year. We do continue to have a very strong portfolio of business opportunities, and we are optimistic and confident about our future growth prospects. And also, as we communicated in Q3, we have revised our Investor Relations policy. And we will now only announce strategically important business wins for KA between the earnings calls. What we mean by strategically important business wins are those that are considered basically to be inside information, meaning business wins that are likely to have significant impact on the share price. And this is an issue that has been thoroughly discussed in the Board of Directors. It's also a policy that is in line with the Oslo Stock Exchange disclosure guidelines. And I think in particular, we want to avoid, let's say, frequent announcement of smaller contracts that are not strategic and should not have any significant effect on the share price. And this is in order to avoid unnecessary market volatility and speculations. But again, very much in line with the Oslo Stock Exchange disclosure guidelines. We want to take a look at one of the interesting contracts that we secured during the quarter. The contract itself, it's not deemed to be strategic, but it's a very good example of how we work in KA. And it's a good demonstration of our ability to innovate and to develop unique and high value-add solutions to leading global OEMs. This is a contract with a leading global OEM. It's one of the world's largest, and this is for our Twistlock coupling solution. It's a contract that in itself represents EUR 22 million in estimated lifetime revenues. And it's something that we would call a next evolutionary step of our proven and market-leading Raufoss ABC coupling system. The Twistlock system itself connects the air brake valves directly to the chassis brake chambers on the axles, and that ensures a leak-tight air supply, while still allowing continuous axle movements. It's a solution that is built on the same principles as the Raufoss ABC air coupling system and provides many of the same benefits to customers and the end users of the vehicles. A special feature of the solution is that it's a quick-connect and it saves significant time on the OEM assembly line. This is a very important part of the value proposition. And also have excellent serviceability once the truck is out in the field. Easy to replace. It also improves safety, increase overall vehicle uptime and reduce overall complexity risk and cost in the commercial vehicle air brake system. And very importantly, it's a patented solution. So it offers a unique and differentiated product that is only available from Kongsberg Automotive. So overall, it's an extension of the Raufoss air coupling system. It increases the overall revenue potential for this very important product segment. And it's also expected to be a wear and tear part that can contribute over time with attractive aftermarket sales for us. During the quarter, we had a Capital Markets Day that we held at our headquarters and tech center in Kongsberg on December 16th. We had quite a few participants, more than 50, including investors and analysts. And during the event, we presented our revised long-term EBIT margin target of 6.5% and also how we're planning to achieve that. We provided some deep dives into some of the key product segments or product areas where we believe that we are well positioned and are able to create value also in the longer term. We organized a tour of the tech center. So those that participated had an opportunity to gain some insights about our engineering capabilities and innovations. We also had a live demonstration of Kongsberg Automotive's Steer-by-Wire technology. This was installed in a demo car that was available and -- in the tech center. So participants were able to test it a little bit. I will share some of the key slides from that presentation for those that did not have the possibility to participate and to repeat some of the important messages from that event. First, we have made very important changes in the leadership in the company. Significant changes in Kongsberg Automotive was absolutely necessary. And changes in the organization like KA needs to start from the top. And this is what has been done. And we have a new Board of Directors and a new executive leadership team that brings experience, that brings determination and a clear vision for the KA's future. We have Olav Volldal, who is the Chair of the Board since December '24. He has previous experience from the company as CEO for more than 2 decades. We have Bard Klungseth, who is the Deputy Chair of the Board. He has also more than a decade of experience from KA, being a previous COO of the company. The Board has also been strengthened with several other new and very highly competent directors. And on the management side, I came in as a CEO in April. I have previous background from the company, being in several leadership positions. Erik Magelssen came in as a CFO in June, coming back to KA and coming in with a deep financial expertise and experience. And finally, in October, we had Thomas Danbolt coming in as Executive Vice President for the business area, Flow Control System, and he also had previous experience from the company, from the operations in our very important, the Raufoss facility. So this is a team that has a deep industry knowledge. It has a proven execution capability and a personal commitment to create long-term value. And most importantly, it's a team that knows what it makes -- what it takes to make KA successful. Second is a slide that is also very important for us. It's our business concept. It's very central to our vision and how to make KA successful. It is a concept that is several decades old, originally developed by Olav Volldal. There has been some minor adjustments over the last decades, but it remains -- main principles are -- remains, and it's just as relevant today as it was some decades ago. It's basically built on 4 different ingredients. One, it's a performance-oriented culture with the right people, with the right mindset, with the right values, the right competence, that can collaborate and do extraordinary things. Second, it is about unique products and solutions that clearly differentiate us from competition and that offers significant customer value. Third, it's to focus on the right market segments, attractive market segments, preferably those that are growing and where KA can be a recognized leader. And fourth, cost efficiency, which is essential in order to be competitive in this industry. When all these elements come together, that's where we find value creation potential. And the example I showed earlier, the Twistlock solution, is a good example of how these 4 ingredients come together and we're able to create value. Another important message in the Capital Markets Day was that we believe that KA is now at an inflection point, moving towards an improved trajectory. We see the indications of that in the Q4 results. We have a new leadership that is driving change. We have a turnaround program led by a new management team and a more streamlined organization. We are very much focused on execution and performance with disciplined cost management and operational excellence to deliver the better and stronger financial results. And at the same time, we're investing in growth and innovation with strategic initiatives that strengthen core technologies and accelerate our market opportunities. And we are rebuilding a high performance-oriented KA that is leaner, more agile, more customer-centric and with a culture of speed, flexibility and a customer focus that creates sustainable value for both customers, the company and shareholders. And importantly, we presented the revised long-term EBIT target of 6.5%. It is a target that is based on current EBIT level and revenue levels and also a very thorough assessment of the improvement initiatives that we have identified in the strategic plan and that we are working on. The reference level here you see is the previous 4 quarters before the Capital Markets Day, which was Q4 '24 to Q3 '25. All the different elements here are initiatives that we have identified and are -- some of them are in progress. Some of them are being assessed and being worked on, but they are all, let's say, very -- we have specific action items for all the elements. So this EBIT bridge illustrates how we're going to achieve our long-term target. The final outcome might vary a little bit, but it's a clear illustration of how we will get there. So behind all this, we have a lot of details. We're not going into that today. But it's -- I think the message here is that we have a very thorough assessment of this, and we have a good and detailed plan to deliver on this. It is something that will require a lot of systematic and hard work. And yes, I can assure you that we are very determined to succeed on this. Yes. Just a comment on the growth. You see on the right side, we have indicated that with an improved market, there is a upside potential on the EBIT margin. We have decided not to communicate any revenue targets. And the reason for that is this we can control. We can control our costs. The market development we cannot control. So -- but of course, we will make our best efforts to make sure that we can capture as much value as possible with improved market conditions. Finally, we also looked at our key priorities for 2026 and not so surprisingly, they are not so different that -- from the ones we had in '25. First, we will continue to drive cost efficiency and operational improvements. For -- we have now established very detailed plans for how to deliver improved financial results for '26. We have more than 500 different action items across the organization. Each action item has a quantified target, has an owner and a deadline, and we're following up very tightly. This is a systematic approach to a relentless continuous improvement that is key to our success. Second, we are focusing on improving -- continue to improve our cash flow. Cash generation remains a top priority. So in addition to the improved earnings, we have improvement initiatives to reduce working -- net working capital. And we are taking a very disciplined approach to investments, making sure we spend our resources wisely and where they give the best return. Third, we continue to strengthen our leadership teams and the culture. We continue to build stronger leadership capability across the whole organization on all levels and to build a stronger and a more performance-oriented KA culture. And finally, we continue to work on innovation and accelerate that and -- to make sure we have a profitable growth. This means prioritizing technologies and product areas where KA can have a competitive advantage and that with unique solutions that matches our business concept that I presented earlier. So we continue to take very, I would say, decisive actions to deliver on these priorities. We do recognize that it is a marathon. It's not a sprint. There's no silver bullets here. It's a long-term systematic effort that gives results. But I would say we are firmly underway. We have quite a few initiatives that are ongoing. We believe we have a good momentum, and we expect more tangible results ahead. Good. I will move -- We will move over to the financials. I hand the word over to Erik. Erik Magelssen: Thank you, Trond. So just first on Drive Control Systems. The revenue level was lower than in Q4 '24. And as communicated earlier, we were expecting a weaker market in the second half of '25 compared to the second half of '24. And EUR 6.4 million of the negative variance is related to currency translation effects. But as Trond commented, we do see indications of a stabilized market, but the fact that we see Q4 revenue higher than Q3. And even though we have lower sales, we record a higher EBIT in Q4 compared to the same quarter last year. This is driven by lower operating costs, lower warranty costs and reversal of prior period accruals. And this offsets the lower contribution from reduced sales volume, more than offset. So the majority of the reversal of prior period accruals that Trond mentioned was done here within DCS, Drive Control Systems. So you see in Flow Control Systems, we also have a lower revenue in Q4 compared to the same quarter last year, but the levels are closer than for DCS. We don't see that big a variance. Both for Drive Control Systems and Flow Control Systems, part of the reason of lower sales is the weak commercial market in North America. And also in Flow Control Systems, we have a higher quarter-over-quarter revenue than in Q3, so also indications of a stabilizing market. And similar to Drive Control Systems, Flow Control Systems also recorded a higher EBIT in Q4 '25 compared to '24. And this is driven by lower operating costs and improved efficient -- more efficient operations, which is good. So we do see improvements. And as Trond said, this is a continual process working on every day. I think in this EBIT bridge, you see the effect of the lower operating costs compared to the same period in '24 in the EUR 3.3 million and EUR 14.2 million. And this effectively mitigates the lost EBIT from lower sales volume. So then -- also then, when and if the market comes back, we are positioned to get uplift in margins and leverage. And as we have communicated earlier, there is a delay between when the tariff costs occur and when we get the reimbursement process with the customers, but achieving close to full compensation has been and is one of our top priorities. And you see for the fourth quarter isolated, the warranty costs were lower than in -- were lower in '25 than in '24. But for the full year, the warranty costs were around the same level. And that is one -- as one of our EBIT -- long-term EBIT targets to reduce the level of warranty costs going forward. The key reason here why there's a higher net impairment cost in '25 compared to '24 is that 2024 included a reversal of prior period impairments. So then there was an income effect in '24. And then on net income. So coming from a negative net income of minus EUR 13 million in Q4 '24 with the key effects you see in the bridge, we report a positive net income of EUR 2.8 million in Q4 '25. The higher EBIT and the lower tax expense in 2025 are the key drivers for this increase. And for the full year 2025, we report a positive net income, although small, but at EUR 0.2 million. It is also good that we don't just look at EBITDA and EBIT, but also at the bottom line. So we are coming out of this challenging year with, we can say, a positive net result, although I admit it's quite small. But of course, the priority is going -- building that further. And we also see lower interest expense. We have kind of other kind of initiatives all around the P&L. So I'm happy to report a slight positive net result for the year 2025. And we look at this bridge the same time next year, we will -- of course, ambition is to show the same trend here. So the positive result in the period and the net working capital effects, that contributes to the strong net positive cash flow of EUR 11.5 million in Q4 '25. And I think compared to the same quarter in '24, it's high cash flow from operations, lower investment level and lower cash outflow related to financing, which gives a significant and positive increase in the 12-month trend. And as we have communicated earlier, one of our key priorities is to generate positive net cash flow over time. And at the end of the day, that's more important than the results themselves. And I think you see here that also the improved cash flow and profitability also materializes in a significant reduction in net interest-bearing debt and reduction in the leverage ratio. And this leverage ratio per bond term definition is key in relation to our EUR 110 million bond where the covenant is maximum 4. And we have -- I think we have our bankers here today. So happy to announce this graph as well. I think it's a very important development for Kongsberg Automotive. And this gives us increased financial flexibility going forward. And I think this is the last before we go into the kind of summary and outlook and Q&A, that we do have reported now some improvements in return on capital employed, the ROCE. But this is, of course, far from satisfactory, also a key priority to improve. The equity ratio has increased from 30.7% at the end of Q2 to 31.3% at Q3 and now 32%. And as our improvement programs continue getting increased profitability, this will also continue to increase. And as Trond mentioned also, so it is continual work for us to achieve reductions in capital employed. And this is also an integral part of the operations in the business areas. So although we have improvements in working capital, this is -- I think, we have much more work to do in this area. Trond Fiskum: Okay. Thank you, Erik. To summarize our presentation here today, let me conclude on the summary and outlook. As a summary, we do see a strong momentum. It's positive development in terms of both earnings and cash generation, and we do see that the market is stabilizing, which is positive for us. And you see the revenue development that reflects this market stabilization, which is -- well, it creates a good environment for 2026 results. Our cost reduction programs are moving according to schedule. We are done through most of the big programs that we have announced earlier. Of course, we are working now on the continuous improvements, which also have big and major and important impacts for us. And as mentioned, the warranty liabilities, they remain, and we will provide information when we have information that we can provide. And we reaffirmed our long-term value creation ambition with the long-term EBIT goal of 6.5%. But again, we have as a top priority to restore value creation for this company. And we do believe in the future, we are very determined to make the changes that are required to realize KA's full potential. Finally, on the outlook. The margin for '26 is expected to continue an overall positive trend from '25 levels. The market outlook has improved for the second half of '26. We still want to be cautiously optimistic as just the last week's event shows that there are uncertainties and they persist. Yes. So this concludes our presentation here today, and we will open up for the Q&A session. Therese Skurdal: Thank you, Trond. Let's get started with the first question. It's for you Erik, and you have already touched upon it, but let's go ahead with this one. The U.S. dollar have weakened compared to other currencies. How does this affect the financial result of KA? Erik Magelssen: Yes, that's a good question. I think for KA, it's primarily the relationship between U.S. dollar and euro, which is important. And that -- the U.S. dollar has weakened around 16% over a 12-month period compared to the euro. So how we see that for our results, you mainly see it on the revenue level where I think we had a currency translation effect of EUR 6.7 million in Q4 and then reducing revenue. And then for the full year '25, I think it's around EUR 17 million. And that is mainly, predominantly the U.S. -- weakening U.S. dollar since we have this quite a large part of our operations in the U.S. But we also have quite a good natural hedge in the sense that we have significant cost base also in dollars. So when we look at both EBITDA and EBIT, that the currency translation is not an explaining factor. So we have quite a good balance. The other way it impacts us is that it also impacts our balance sheet. So when the U.S. dollar devalue, reduces, it will also reduce the balance sheet and then it reduces the equity we have in the U.S. when it converted to euro. And there you see a negative effect in year-end. But that will go up and down and you still -- we still have a increase in the equity ratio. So it's not in a way -- the weakening dollar has not been significant to us in a large sense on the equity. So I think we're fairly balanced on that. Therese Skurdal: How does the recent development in the U.S. tariff situation impact KA? Trond Fiskum: Yes. First of all, the tariff situation until now, we have been very -- taking a very firm position on that with our customers. And that is basically we are not in a position to absorb those costs. And ultimately, this has to be passed on to the end customer and the end consumer, which is ultimately the U.S. consumer. And as we have shown both in Q3 and Q4, we have been able to neutralize those effects, so that is also what we will work on and we're very determined to achieve that also on any new tariffs that are now coming. But the last week's events has -- the consequence of that is that we will have to again sit down with our customers, suppliers to go through the agreements and how we handle this. We are going to take the same position. And we are very confident that we will achieve and be able to neutralize the direct cost impacts of this. In Q1, it might be because of the changes that there might be some delays in getting that compensation. We have to also understand how this impacts us. We had a meeting with the broker a couple of days ago and -- the customs broker and they didn't know how to apply the taxes. So there's all kind of uncertainties around this that we have to figure out. But we will get compensation for the direct cost. So that is not our biggest concern. It's almost like business as usual in a sense because we're dealing with these kind of issues when it comes to supplier cost increases, raw material cost increases, et cetera. So we're dealing with that and handling that. And yes, sometimes there are some delays in the effect, but over time, we will get it recovered. That is part of our job. And this we can influence. Our bigger concern here, as we also flagged on the previous tariff situation, is what we cannot control, which is the market uncertainty. And this is problematic. So we're flagging that there are uncertainties, and they persist, and this is a very good example of that. So this is what we closely monitor. We have not received any feedback from our customers that this is negative, but obviously, uncertainty is not good for the market. So that is our biggest concern, and that remains our biggest concern when it comes to all the tariff discussions. Therese Skurdal: Before we go ahead with questions here from the room, let's have one more from the webcast. Do you see potential for strategic collaboration or project opportunities with Kongsberg Gruppen going forward given the overlapping technologies end market? And can this be a meaningful growth catalyst for KA? Trond Fiskum: I cannot comment on specific, let's say, customer initiatives. We are located in the same city. We have a dialogue with them and are exploring opportunities to collaborate. And it's a part of our agenda. It's nothing that has materialized into any things that we are able to announce. And then the question is, does it fit into our business concept and our vision for this company? So it's not something that is high on our agenda. But we are, of course, evaluating opportunities that could be interesting that -- where we could create value for the company. But it's most likely not the type of opportunity that would fit best with our business concept and how we are -- the direction that we're taking the company. Therese Skurdal: Is there a question here in the audience? Trond Fiskum: I can repeat the question. So the question was regarding the warranty liabilities and when we will have more clarity on that? It's very hard to say because this process can take a lot of time. And that said, we are not in a rush to conclude it. We need time to do the proper investigations, the proper negotiations. And we want to solve this in the best possible outcome for the company. Very hard to say how long time it's going to take. Some of these process can drag on for a long time, and then I mean years, potentially. It could also solve quicker. So it's very hard to see. So this is a part of the, let's say, all the variability of the outcome. It's also in terms of time. We don't know. But it's very strong focus, and we want to solve it as soon as we can, but we're not going to make any, let's say -- if we need more time in order to get to the best possible outcome for the company, we are going to take more time. Are we good? Then... Therese Skurdal: I think there's... Trond Fiskum: There's one more question. Unknown Analyst: My English isn't good enough, so I have to take the question in Norwegian. Okay? Trond Fiskum: Sure. Unknown Analyst: [Foreign Language] Trond Fiskum: Okay. The question was if the warranty accruals have been made, if the weakening U.S. dollar has any impact -- positive impact on the warranty accruals? What I can say is that if the warranty costs are in dollars, they, of course, in euro will have a lower impact. But the accruals have been made and they were made in the past. So maybe, Erik, you can comment on how the accruals itself will impact... Erik Magelssen: Yes, I'll do that. The accruals are made in each entity. So for instance, the U.S. part is made in dollars and then it's converted to euro. But it's a good question. I think that when and if any payments are made in the future, if they are made, of course, a weak dollar will kind of -- we will use the value of the euro to pay that. So it's -- that in -- just isolated in that sense, the weakening dollar is good. And the majority of the accruals are related to the U.S. side. Unknown Analyst: [Foreign Language] Erik Magelssen: I think just for, let's say, competitive reasons and the customer negotiations, I don't think we want to go into details on the specific -- yes, but it's -- yes. Therese Skurdal: Any further questions? If not, we can conclude. Trond Fiskum: Yes. Then thank you for participating on this earnings call. And also thank you to Arctic for having us here. Thank you.
Gerard Ryan: Good morning, everybody, and welcome to our results presentation for 2025. Now this morning, Gary Thompson, our CFO, and I will be very happy to talk you through what has been another successful year for our business. I do want to acknowledge, however, that this is an unusual set of results in that we have in the background, the BasePoint bid for IPF. However, today's presentation is all about those results, not about the bid. So what we're going to do is we're going to go through the results as normal, and then we're going to follow on from there. And if we're allowed to answer questions at the end, we will, but we'll have to take advice on that. So with that, let's get started. Now as usual, I'm going to deal with the results at a very high level, and then I'm going to talk about our strategy and how that is delivering for us really, really well and consistently. I'm then going to talk a little bit about regulation, something we haven't done for a while. And I'll also touch on the security situation in Mexico. After that, I'm going to hand off to Gary, and Gary is going to take us through the divisional results in a detailed way and talk about how each of our divisions has performed over the past 12 months. He'll also deal with the balance sheet, look at how the portfolio is performing and how we finance the balance sheet and also dealing with the capital side of things. I'll then pick up at the end, and I'm going to do some closing remarks. Now as always, we have plenty of time at the end for Q&A. And just on Q&A, somewhere on your screen, there should be a dialogue box that at any stage during this discussion, you can type in your questions, and at the end, Rachel is going to pick all of those up and put those to Gary and myself to answer for you. Overall, I think this should take probably around 40 to 45 minutes. So with that, let's get started. Now hopefully, you had a chance to look at the RNS that we released this morning. And if you did, you'll see those we delivered a profit of GBP 88.6 million pretax and pre-exceptional items. And Gary is going to talk about the exceptional items later on. Now that's up 4% year-on-year. And it's delivered on the back of constant demand from our customer segment with excellent execution by our colleagues throughout the organization. In terms of top line, we improved our lending by just under 12% year-on-year, and our net receivables are up by just under 14%. So you can see it's fast approaching GBP 1.1 billion. Credit quality continues to be very good as our collections, and our Next Gen strategy really is delivering for us. So with all of those things taken together and with a really good strong balance sheet, the Board are pleased to propose a final dividend of 9p per share, and that's up 12.5% year-on-year. Now those are the very summary highlights. As I said, Gary is going to take us into a lot more detail on that. So what I'd like to do now is touch on our strategy. And I know for many people watching today, you've seen this quite a few times, but given the circumstances, I'm expecting that there are a lot of viewers out there who don't know us that well. So please bear with me as I take those people through what our strategy is and how we're executing against it. So it will seem familiar to a lot of you. This is our 3-pillar strategy. First of all, it's important to understand that we have a purpose in this business, and that is to build financial inclusion. So for people who are less fortunate than most of us and have less access to financial services products, we are there to help them. And we do that through this 3-pillar strategy that you see on the screen now. And what I'm going to do is walk through each of those pillars and tell you some highlights about what's happening under each of those. So the first pillar is Next Gen financial inclusion. And this is all about where we're trying to build the products and services that are appropriate for our customers today, but will also be attractive to them down the line. Then we have Next Gen org, which is all about trying to become a smarter and more efficient organization and deliver better services for our customers. And then finally, we have Next Gen tech and data. And this is just about becoming a technology-enabled business and using data in the right way to deliver services efficiently. Now all of this is done within our guiding financial model, and Gary is going to touch on that. But underpinning everything here are our values, which are responsible, respectful and straightforward. And in the 14 years that I've been in the business, those have never changed and they shouldn't either. So let's go and have a look at how we're doing under each of these pillars in turn, starting with Next Gen financial inclusion. Now I'm sure many of you will know that we launched our first-ever credit card in Poland some 2 years ago. So in effect, we created a new market segment where one didn't they exist. And I'm delighted to say that credit card is proving to be a big hit, and we currently have over 200,000 users of the card in Poland. In addition, it's now not just being delivered by our customer representatives or agents, but it's also being delivered fully digitally depending on customer preference and credit standing. As well as being in Poland now, we are currently testing the card in Romania. This is something we talked about at the interim results. It is very much a test phase, but I'm quite hopeful that it's going to prove to be a success there as well. And how else then do we interact with customers? Well, we have what we call our partnership model, and you might know it as point-of-sale finance. So we want to be where our customers need finance, so when they're out there shopping. And we're now interacting or have our services offered through 2,700 retailers. What I can confirm is that there is no shortage of demand, and this is now in Romania and in Mexico. There are lots of customers in our segment who want this type of credit. What we are having to do is figure out how to calibrate the credit quality, because ordinarily, when you do your marketing and it's broad-based marketing, you get a good picture of the whole segment. When you then change your channel and you bring it down to an individual retailer, you automatically skew the nature of the customer that's coming to you, and so you have to change your score card. And so we're currently in that evolution phase where we're getting plenty of demand, but we need to get the credit quality right. So that's going to take us a bit of time. In Mexico, we continue to extend our reach. We've opened a further 2 branches, one in Monterrey and one in Ensenada. And I can confirm that in 2026, we'll open a further one in Monterrey, and a new one in Chihuahua as well. So essentially, it's just that the geography is so big, we need to continue extending our reach through the physical infrastructure. Short-term products. Now short-term loans are something that we steered away for quite some time because of the negative association with payday lending, but we came up with a construct of a short-term loan that met the customers' needs, but at the same time, tried not to penalize them if they got into difficulty. And by that, I mean if they got into difficulty on the short-term lending repayments, we would offer them the opportunity to switch over to a slightly longer loan with a lower repayment and a lower interest rate. And I have to say that, again, is proving very popular. But once again, it's a completely new product for us, and it's all about the credit quality, and we're working our way through that at the moment. Brand in Australia. Now when we spoke about the interim results back in July, August time, we talked about the fact that we've taken a decision to invest more money in the brand in Australia, up to GBP 3 million per annum. We're currently executing on that plan. Brands haven't built overnight. So I would say this is somewhere -- one where we need to have a 3- to 5-year view. We're pleased with what's happening so far, but in terms of the payback, that's going to come a little further down the line. And then finally, at the bottom of the page here, you see a reference to a further GBP 5 million investment on our new growth initiatives. Essentially, what we're saying here is that we feel very positively about the growth that we're generating. And then to concrete that into the business, we believe we should spend a further GBP 5 million per annum for the next 2 to 3 years. So it will be a bit of a drag, but we believe it's really worth it in terms of expanding the business over that period of time. And I think Gary is going to refer to this when he gets up shortly. So those are all the things that we're doing to generate financial inclusion and bring current customers in but also ensure that we're attractive to future customers. So let's look now to our second pillar, and that is Next Gen organization. So trying to be a smarter and more efficient organization in order to deliver more effectively for our customers. And here, a lot of what we're doing is using technology to be better at what we do. So a few examples for you here. In terms of delivering change in the organization, we have a huge amount of change going on, whether it's new products, new channels or changing regulation that we need to adapt to. But even though we are one group, we have 2 very distinct ways of delivering strategic change. In our digital business, it's done under the product operating model, which I'm sure will be familiar to a lot of people. Essentially, there, product teams are formed and they own a product from birth through to maturity. They design it, they get the technology set up, they tweak it, they implement it and then they monitor it. Whereas in our home credit business, it's done the more legacy way, which is to say that for each product, when we want to do something, we start to pull people out of individual functions and we get them to work on it for a short period of time, and then they go back to doing something else. The second way is far less efficient and far less, I suppose, speedy in terms of getting impact in the organization. So what we've decided to do is to switch to product operating model across the whole organization. It is a really large undertaking. It will take us probably 18 months, 2 years, but we've started and we're really pleased with what we see so far, much better engagement internally in delivering new products and delivering strategic change, but also much faster impact across the business. Multiyear project delivery. What I'm referring to here is the fact that we've embarked on delivering a new finance and HR platform, a global platform. It's going to be SAP. It's going to cost us approximately GBP 12 million, and I think it's going to take us about 2 years. So it will give us a new platform for all of our finance and HR communities across our 10 countries. That will allow us then to standardize processes around that, and out of that, we will drive significant efficiencies. So it's a big undertaking, but we've contracted with a lot of professionals internally. We have over 250 people working on this at the moment. So it's something that we really need to nail, but I feel good about where we're at on that just now. ISO 45003. Now this might be new for some people, but it's all about psychological well-being at work. We want to be a great place to work. We employ about 5,500 colleagues, and we have about 16,000 customer representatives around the globe. We want them to feel valued and to feel safe working here. We want them to believe that they have opportunities and that their careers can develop. And so our team worked incredibly hard to achieve ISO 45003 for all of our home credit businesses and our digital business in Poland. It's a huge achievement and my thanks to them for that. And then finally, our reputation. We deal in a very specialist area of the consumer finance market, one where we have to be incredibly careful making sure that our customers can afford the money that they borrow from us that we treat them well all the time, but particularly when they get into difficulty. In order to make sure that, that works for our business and for our customers, we need good regulation, but to influence good regulation, you need to have a good reputation so that you get a seat at the table. And so we spend a huge amount of time working with external stakeholders to get them to understand what we do and why we feel we do it so responsibly. And so reputation for us is a key driver of our success and something that we'll continue to invest on in the years ahead. That's what we're doing on Next Gen org and turning then to the third pillar, Next Gen tech and data. The very first line you see here is what we spent in 2025. So GBP 35 million. And for an organization our size, GBP 35 million on CapEx is a big number. I can tell you, in 2024, we spent GBP 24 million. And if you look at the bottom of the page, you can see that we estimate that this year, it's going to go to GBP 45 million and possibly GBP 50 million thereafter for a year or so before it drops back down. Why? Well, there are a number of reasons. One is we have over -- I think the number is 450 or 460 individual systems or platforms across this organization. We need to simplify, standardize and secure our systems. But to do that, we need new technology and new technology cost money. So that's one thing that we're doing. And the SAP thing, the finance and HR platform is just one example of that. But let me give you some other examples of what we're doing here. So omnichannel platforms. In many other businesses, particularly banks, you would probably take this for granted, but for us, it's been quite a challenge to ensure that when our customers, this is particularly home credit, talk to their agents and then subsequently ring a call center or try to contact us by e-mail. In the past, they've had 3 different routes to get to us, but none of those conversations really joined up in our back office. This omnichannel experience through our Xenia project is to ensure that all of the conversations with the customers join up. So whether they call an agent in a call center, whether they contact us through webchat or WhatsApp, which is now integrated, all of those conversations form part of a whole and the customer gets a much better service, a seamless service, I would almost say. But it's a big investment, and I think we're closer to the end of that journey than the beginning, and it feels really good. Another example would be digital self-service through a customer app. Now we talked about this before. We have a very good one in Mexico that our Mexican team designed. We have a good one in Poland designed by our team there, and we're rolling it out now in Hungary, Czech and Romania. So within 6 to 8 months, it should be across all of our Provident businesses. The great thing about that app is that customers will self-serve because we see it in Mexico, and we see it in Poland. It dramatically reduces the call volume, the inbound call volume with simple queries because the customer gets on the app and they do it for themselves. But not alone that, actual problem resolution back through the app educates the customer further on how to get the best out of it, and then that has a positive impact on their relationship with us. So it's taking a bit of time and a bit of money, but the customer experience is vastly improved as a result. Digital payment flexibility. Here, I just want to mention Mexico. So Mexico is a huge geographic area to cover. And we do it in home credit through our agent network. But clearly, they can't cover everywhere. And what we've been finding over a number of years is that customers complained quite a bit that they weren't getting a consistent enough service when it came to collections. And so what we did over the past 3 years -- well, actually, it's probably more than 4 years now since the pandemic is we've tried to give customers in Mexico home credit, more and more options through which they could pay their loan back to us. And so we just signed up to a new platform now, and I think that was just in the last couple of months, it's added 30,000 payment points. So through retailers, 30,000 additional payment points in addition to the 12,000 bank branches that we deal with and in addition to the 23,000 OXXO stores that we deal with. So what we're really trying to do is to say to a customer, if you can't see the agent or they can't see you, you have -- you literally have tens of thousands of other areas that you could pay your loan back for or back through. Digital capabilities with AI, I wanted to mention AI specifically because in our previous discussions on AI, I said that people shouldn't expect a silver bullet solution for AI in our organization. It would most likely be incremental benefits accumulating from lots of different projects. That is proving to be the case. But actually, it's proving to be more beneficial than I had expected. And so, one example is here in terms of our own technology team, where they are developers. And they're using -- I think it's called Amazon Q developer or something like that. I think that's the name of it. What they found by using this AI assisted development is that the productivity gains are enormous. So actual development time is reduced by 20%, testing time is reduced by 25% and error detection in code is improved by 33%. And those are quite dramatic numbers. And those are just in our own developer colleagues internally. And so now what we're doing, we're going to our external contracts, people who develop for us. And we're saying, if we can do this, and we're not a technology house, you must be able to do even better, and we'd like to see some of that benefit coming back to us in reduced prices. Then another example in Mexico on AI, completely different. Our HR team in Mexico have started using an AI assistant to interview people who are coming for jobs. And I know this now has a very bad rep in the U.K. because it's been all over the media, the prospective job hunters can't get to see a real person, they see an avatar or something like that. And I do worry about that. But the experience in Mexico has been amazing. So using this AI-assisted, let's call it, an avatar in Mexico, what they found is that the quality of the candidates who eventually get through to the final application is increased. And of those candidates who actually get the job, they stay for longer. And so I went back with David and his team as to why that was the case because I wanted to understand it. And what it would seem is this that human behavior is, if I'm pitching to you for a job, I'm going to sell the job to you. And then when you arrive, the job might not be quite as spectacular as you thought it was when I described it. And so you're initially disappointed and you may stay for less time. But the avatar or the AI assistant, tells you exactly as it is. And so when you arrive and you get through all of that process, the job you get is exactly the job that we have. And therefore, your satisfaction levels are higher, and you're more committed to staying. It was a complete revelation to me, but it's one of the multiple, I think, benefits we're going to get out of AI going forward. I think that's all I want to say on tech for now. So those are our 3 pillars in terms of our strategy. And now I'm going to move on to regulation. And before I do, I just want to say that probably for the past 18 months or 2 years, Gary and I haven't talked about regulation that much. We've referred to the fact that CCD II is coming up, and there's probably going to be a rate cap in the Czech Republic, things like that. But today, I'm going to give you a more detailed update, and I'll explain why. And it's all about CCD II. Now CCD II was required because the way financial services are provided to consumers in the EU has changed dramatically over the last dozen or so years. So CCD I needed to be updated, and that is what this is all about. Now the way it was structured was that CCD II transposition into local regulation was meant to be achieved by November '25 and be effective from November '26. In fact, only one country in the EU as far as I'm aware, achieved that, and that was Hungary. All of the other countries have missed the deadline. And so the commission came out and said, unless you get on with it and get this thing done, we will be looking at finding people. And so what we have seen over the last 2.5 or 3 months is a huge uptick in activity around the transposition of the EU regulation into local regulation or law. Now what needs to be said is that the EU directive needs to be transposed into local regulation, but it doesn't prevent. In fact, in some cases, it seems to encourage local regulators to look at the whole of their regulation in this space and rethink a lot of it. And as a result, we're getting what you see on the page today, a whole menu of items that are currently in discussion across either one or multiple countries. And they're not even necessarily connected to CCD II, they're connected to the idea that the regulation in this space is being reviewed. And I want to talk about a number of them because they're potentially quite big. So the first one is introduction on caps on lending-related fees. Now as you know, we already have caps but they're mostly interest rate caps or total cost of credit cap. So we have them essentially in most countries with the exception of Czech and Australia, I think there is a cap there, but Czech in the European Union. What this talks about is that as well as that, there would then be individual caps on individual fee items for things related to a loan. So that could get quite complex and difficult to manage. And so we're looking at that very closely. The rate cap in Czech we've talked about, and we think that's absolutely coming, affordability assessments. Now at the heart of every loan that we provide, our ultimate aim is to make sure that the loan is appropriate for our customer. And in particular, that it is affordable. And affordability regulations are there in practically all countries. But the discussions that are going on at the moment in some countries talk about enhancing those regulations significantly. And you could get to a point where, in effect, the regulations would stop you lending to some of these customers. We hope that's not the case. We're looking at it. Changes to rebates is straightforward, increasing restrictions on advertising. There have even been discussions about a complete ban on television of any consumer financial products in some places, value-added services, more restrictions, I think, to come in terms of how value-added services can or cannot be tied to a financial services agreement. And then finally, introduction of free credit sanctions. Now this one is particularly significant. The concept here is if you as a consumer have a consumer finance agreement alone and you're either happily repaying it or you're having difficulty. It actually doesn't matter. If you go through your agreement and you find an error in the agreement, and it could be a tiny error, so not a critical error. It could be any error. But if you find an error, you can go back to the finance company and effectively repudiate the contract and get free credit. And my understanding is it would involve having to repay all of the interest already paid to the customer or by the customer. So you can see that one could be particularly difficult. Now what I would say is we have a great track record in terms of dealing with regulatory change. We really have a very good track record. In some instances, we had to make really difficult decisions about coming out of countries like Finland or Slovakia because we do manage our capital very effectively. But our track record in adapting to reasonable regulation is very good. My concern here is there are so many items on the agenda being discussed across multiple countries at the same time and under a stopwatch scenario, I can't commit to you that we will convince everybody of what reasonable looks like across all of these. I'm hopeful we will get there on most of them. And we will keep updated. But it's just to say that because the countries are behind in terms of the time line, there's now a big rush on to get this done very, very quickly. So we'll come back to you on this. And then the final thing I wanted to talk about is the evolving security landscape in Mexico. This is a very late entry slide in our deck today, and it's obviously because of the death of the head of the Jalisco, Cartel that I'm sure all of you have either read about or seen videos of on the news. What's fair to say is that Mexico, at the moment, as a result, is reasonably unstable from a security point of view. It's not the whole of Mexico, but there are particular states that are being badly impacted. Our #1 concern is always for the safety and security of our colleague and our customer representatives. So [ Australiers ], as we call them in Mexico. And so we've taken the decision in 3 particular states to close our branch network, tell our colleagues not to come to work and to also advise our colleagues and our Australiers not to use the highways because the highways are particularly vulnerable. Now it's very hard to say how this pans out from here. It could all die down or quite in the next day or 2. It could escalate. We can't say. But I want to repeat our primary concern is for the health and safety of our team, and so we've taken that decision. It impacts about 10% of our customer base in Mexico. I am very hopeful that the situation calms down very quickly and that the impact in our January -- or sorry, February results will be de minimis. But I'm not in a position to say that just yet. We need to see how this plays out. So a difficult situation for our colleagues there, and we empathize with them and everything that they're going through. So with that now, I'm going to hand you over to Gary and Gary is going to take us through the trading results in a lot more detail. So Gary, over to you. Gary Thompson: Thank you, Gerard, and hello, everybody. As you heard in our introduction today, we have delivered another good set of results in 2025 with profit before tax increasing by 4% to GBP 88.6 million. This result was delivered through disciplined execution of our Next Gen strategy and continuing robust credit quality across the group, which actually offset the short-term impact of increased growth. Now you can see on this slide here that second half profits were GBP 38.7 million in 2025, broadly in line with the GBP 37.9 million in the second half of last year despite a much larger receivables book. Now this is entirely consistent with the guidance we provided at the interim results in July and reflects the impact from the IFRS 9 impairment drag on increased receivables growth as well as additional sales focused costs relating to our new growth initiatives such as credit cards, short-term loans and partnerships. As Gerard mentioned earlier, we are stepping up our expenditure as we support the additional growth initiatives, enhance the foundations of the business and drive improved efficiency. Firstly, given the success and momentum we are seeing from our new products and distribution channels, we now plan to invest a further GBP 5 million per annum through the P&L account over the next 2 to 3 years. This additional expenditure will be through additional marketing and brand building costs, enhancing our colleague capability and also the upfront IFRS 9 impairment charges we will incur as we refine our credit scorecards. We expect market expectations to adjust for this additional investment. And secondly, having stepped up our investment in capital expenditure by GBP 10 million to GBP 35 million in 2025, we are increasing it by a further GBP 15 million in both '26 and '27 as we look to accelerate the transformation of the business. We then expect capital expenditure to reduce to a more normalized annual run rate of between GBP 25 million and GBP 30 million from 2028 onwards. And then finally, on this slide, we incurred exceptional one-off costs of GBP 3.3 million in 2025 relating to the potential acquisition by BasePoint. Now on to customer growth. It was very pleasing to see that 2025 saw the group return to meaningful customer number growth for the first time in over 10 years. And there is really good demand for both our core product set as well as our new products and distribution channels. Overall, we delivered a 4.7% increase in customer numbers to 1.729 million with all 3 divisions delivering growth. Now particular highlights in the year include Poland returning to growth with 10,000 new customers added in the second half of the year. And Romania, with an expanded product set also adding 10,000 customers over the same period. And then in Mexico, we added 46,000 customers in the second half, 24,000 of which came from our digital businesses, which continues to grow strongly and 22,000 coming from Provident Mexico, which is now firmly back in growth mode following the disruption from the IT upgrade in the latter part of 2024 and early part of 2025. So now let's look at lending growth. We delivered really good group lending growth of 12% at constant exchange rates in 2025. Provident Europe delivered 13% overall lending growth. In Poland, whilst we had a slower start to the year than we expected, lending grew by 20%, with the credit card offering continued to gain really good momentum as the year progressed. And Romania, delivered equally strong growth of 18%, supported by the continued expansion of partnership and hybrid digital channels, both of which are delivering encouraging results. And then Hungary and Czech delivered solid growth of just over 4% combined backing up the strong lending performances they achieved last year. Provident Mexico delivered 7% lending growth in the year. Now as expected, the growth rate accelerated in the second half of the year to 13% of the business recovered from the IT upgrade I just mentioned, as well as continuing with the geographic expansion with the opening of 2 new branches. IPF Digital continues to deliver very good growth in both customer numbers and lending as demand for our fully remote credit solutions continues to rise. Year-on-year customer and lending growth were 16% and 13%, respectively. Now Mexico and Australia were again the best performers, delivering lending growth of 32% and 19%, respectively. And Mexico is now actually serving 130,000 customers, and that's up 40% from last year. We remain very excited about the growth prospects, both in Mexico and Australia, and we're continuing to invest in both the brand and product proposition to maintain the growth momentum and capture the strong growth opportunities that we have in both of these markets. Now on to receivables. Our receivables have now surpassed GBP 1 billion and are at a level actually last seen in 2017. The improving momentum in lending growth is flowing nicely through to receivables growth, and we delivered 14% or GBP 130 million year-on-year growth on a constant currency basis. Now actually, the growth rate is a little lower than the ambitious target of GBP 150 million of receivables growth we set ourselves right at the start of the year, with the shortfall being shared between Provident Poland, Provident Mexico and Mexico Digital. However, whilst we didn't achieve our target, it's really important to note that all 3 businesses have very good momentum and have still delivered good year-on-year growth. In Provident Europe, we delivered receivables growth of 16% to GBP 575 million. All 4 countries delivered good growth, with Romania being a standout performer with 22% growth. Poland's receivable book now stands at GBP 195 million, with growth of GBP 25 million in the second half and higher-yielding credit card now represents approximately 50% of the overall receivables book. Czech Re also delivered good receivables growth of 16%, and Hungary, which, as I'm sure you're aware, is our most highly penetrated market also delivered really solid growth of 9%. In Provident Mexico, receivables showed good growth of 11% to GBP 191 million, with nearly GBP 25 million of that receivables growth added in the second half of the year. In IPF Digital, we delivered receivables growth of 12%, which reflects that consistent delivery of our digital strategy across all our markets. Now it won't surprise you that Mexico and Australia led the way with strong receivable growth of 16% and 23%, respectively. Whilst our other markets in the Baltics, Poland and the Czech Republic delivered combined growth of 7%. Turning now to the progress we're making against the core KPIs of revenue yield, impairment rate and cost-income ratio. Now before I go into the individual metrics, consistent with the approach at the interims, we have set out our KPIs, both on a fully consolidated group basis as well as on a group basis, excluding Poland. Now this is due to the major impact, which the ongoing transition in Poland has had on our KPIs and their comparison to our medium-term targets. Now the trend I'm going to talk you through are in line with our guidance and expectations. And therefore, from our perspective, the key to achieving our medium-term targets is to continue to rescale our Polish business through an increase in the distribution of the higher-yielding credit card proposition. So starting with revenue yield. In Provident Europe, the yield reduced by 1.7 percentage points to 44.8%. This was due to 3 factors. Firstly, the flow-through of lower rate caps in Poland, albeit we expect the Polish yield to begin to recover as we continue to expand the credit card offering that I just mentioned. Secondly, we saw a slight moderation in yield in Hungary due to the reduction in the base rate linked interest cap. Then thirdly, we also saw a reduction in the yield in Romania due to the introduction of the new total cost of credit cap in the fourth quarter of last year, which is now fully embedded into the receivables book. In Provident Mexico, we saw a reduction in the yield from 85.9% to 83.5%. Now this is wholly due to the flow-through of the reduction in new customers we saw through September last year to March this year as we focused on serving good quality existing customers rather than new customers during the IT upgrade. And as I'm sure you're aware, new customers tend to be served with shorter duration, higher-yielding products compared with our existing customers. In IPF Digital, the revenue yield was broadly stable at 42.8%, with the impact of reductions in base rate linked interest rate caps in the Baltics and Australia, being offset by the growth in the receivables book in Mexico, which carries a higher yield. Now overall, the group's revenue yield has reduced from 54.7% to 52.5% over the last 12 months. However, if we exclude Poland, the revenue yield was 56%, which is at the bottom end of the group's target range of 56% to 58%. And improving the revenue yield remains a key focus for the whole business. We expect the ongoing shift to high-yielding products through our credit cards in Poland and the growth in our Mexican businesses to help improve the revenue yield over the coming years. Despite some volatility in macroeconomic conditions in all of our markets, customer repayment behavior has remained really good, and the quality of our loan portfolio continues to be robust. Together with a strong debt sale market and a further GBP 8 million reduction in the group's cost of living provision, this has resulted a 0.6 percentage points improvement in the impairment rate to 9%. This result was achieved despite the impact of increased growth and the associated higher upfront IFRS 9 impairment charges. Now excluding Poland, again, which until the second half of this year, have seen a significant contraction in receivables and therefore, a very favorable impairment position, the group's impairment rate was 13.3% in 2025, and that's just below the group's target range of 14% to 16%. We expect the overall group impairment rate to trend back up toward the target level over the next 2 years as we regrow Poland and continue to grow our receivables in Mexico, which carry a higher impairment rate, but also carry a higher revenue yield. The strong repayment performance and further reduction in the cost of living provision has resulted in the impairment coverage provision reducing from 32.9% last year to 31.1% at the end of December. Now the cost of living provision stands at just GBP 1 million and is not expected to be a feature of the group's results going forward. We continue to maintain a focus on efficiency and cost control, which resulted in cost growth of only 3.3% in the year compared with receivables growth of nearly 14%. The group's cost-income ratio of 61.1% is actually a little changed from last year, mainly due to the reduction in revenue in Poland. If we exclude the Polish businesses, the group's cost-income ratio was 56.2% and that's modestly up from 55.7% last year with the increase due to the reduction in revenue yield as well as the investment we've made in our growth initiatives. We remain heavily focused on growing the lending portfolio whilst maintaining tight discipline over the investments made in building scale and expanding our capabilities in order to improve the group's cost-income ratio to our target range, 49% to 51% in the medium term. Now moving on to the shareholder returns that we are delivering. Our pre-exceptional return on required equity was 14.9% in 2025 just below our target level of between 15% and 20%. The reduction from 15.7% in 2024 is due to the investment in growth, both in respect of receivables, and new growth initiatives and is consistent with our guidance at last year-end and the interim results. We expect our returns to moderate further in 2026 as we continue to invest more heavily in growth before seeing returns begin to improve in 2027. The group's return on equity based on statutory earnings and actual equity was 10.7% in 2025, down from 12.6% last year. This is mainly due to the exceptional tax credit of GBP 17.4 million, which we took in 2024. Our pre-exceptional EPS increased by 5.6% to 26.3p which is slightly higher rate of growth than the 4% growth in PBT, and that's due to fewer shares in issue following the completion of the share buyback in the second half of last year. The effective tax rate in 2025 is 35%, which is consistent with the rate achieved in 2024. It's actually lower than the 38% we used in the first half of the year due to a reduction in U.K. losses. And then finally, on EPS, our reported EPS reduced by 9.2% to 24.8p in the year, and this is again mainly due to the exceptional tax credit in 2024 that I just mentioned. The Board has proposed a final dividend of 9p per share, which represents 12.5% growth on last year. Together with the interim dividend of 3.8p per share, this brings the full year dividend to 12.8p per share, an increase of 12.3% compared with 2024. The dividend payout ratio of 49% is above our target of 40%, but it is consistent with our stated desire to maintain a progressive dividend policy as we rescale the business and deliver consistent returns in our target range of between 15% and 20%. Before I hand you back to Gerard, I'd like you to talk through our strong funding and capital position, which underpins our growth ambitions. At the end of December, we had total debt facilities of GBP 750 million, comprising GBP 483 million in bonds and GBP 267 million in bank funding included GBP 55 million of new bank facilities raised in the year. Net borrowings at the end of the year totaled GBP 621 million, resulted in the group having funding headroom of GBP 129 million. Now in respect to debt capital markets, our credit ratings remain unchanged with both Fitch and Moody's, and they both continue to maintain a stable outlook for the group. Our strong funding position enabled us to repay the residual 2020 Eurobonds early in first half of the year, and in the second half of the year, we took the opportunity to successfully secure SEK 1 billion of unsecured senior floating rate notes due in 2028. Now that's the equivalent of around GBP 80 million. These notes carry a floating interest rate of 3 months STIBOR plus a margin of 5.75%. And really encouragingly, our blending cost of funding has reduced from 13.3% to 12.2% in the year, benefiting from both lower interest rates but also reduced hedging costs. On to capital and our equity to receivables ratio stands at 51% at the end of the year. That's down from 54% last year. The reduction in the ratio reflects the acceleration in receivables growth during 2025, partly offset by a foreign exchange gain of GBP 47 million taken to reserves as the majority of our currencies have strengthened against sterling. Our year-end capital position supports the group's growth plans and our progressive dividend policy through to the point at which we are delivering our target returns and operating closer to our 40% equity to receivables target. We now expect this to be in 2028 following the additional GBP 5 million of investment we're making in the P&L each year. So to sum up, we have delivered another great set of results in 2025. Credit quality remains robust. There's good growth momentum through the group, and we have a strong funding and capital position to support our plans. And on that note, I'll hand you back to Gerard to take you through the outlook. Thanks, Gerard. Gerard Ryan: Thank you, Gary. Okay. So Gary has just given us a really detailed run through the performance of the business over the past year. And as you heard, things are good, very, very solid. So in terms of a wrap-up and outlook, so what are we pleased with? Well, first of all, we see consistent demand across our markets from our customer segment. And we believe that we're gearing ourselves up in terms of products, distribution channels, price points to serve those customers effectively as we go forward. We've got good momentum as we come to 2026. The balance sheet, as you've just heard, is in a strong position and credit quality is very good. And we continue to see that as we put more money into Mexico and Australia, in particular, we're looking to grow those businesses over the next few years. So that all feels very good. One of the things that maybe we're not concerned, but yes, thinking about. Well, first of all, it has to be CCD II for all the reasons I outlined earlier. There's simply just a lot going on, and it's all going on at the same time. And we're not going to know for a number of weeks or possibly months, exactly how this plays out. But we've got a good track record. We just have to figure out how many conversations we can be engaged in at one time. And the second thing is simply the cost of running the business. I think we've done a fantastic job of managing inflation in our costs. But it's clear from the numbers that we talked about earlier that the cost of technology for us has increased quite significantly. So give or take, GBP 25 million in '24, GBP 35 million in '25, moving up to GBP 45 million and then possibly GBP 50 million, all of that with very good reason. It just means that whilst the balance sheet can cope with it, we have the funding, we have the strength in the balance sheet, there is a drag on earnings as all of that gets amortized over time. But what we need to do then is make sure that we bring that cost back down and that the investment we've made delivers in terms of better service for customers and a bigger business. So in total, we're in a good position. We have a solid business, but most important of all, we are fulfilling our purpose, and that is to build financial inclusion for those who are less well off than we are. So that's it for now. I think we've gone further than the 40, 45 minutes I promised you at the start, but hopefully, it was worthwhile for those of you who are new to the business. And with that now, we'll go to Rachel, who is going to, I think, hit Gary and myself, hopefully, with quite a lot of questions. So guys. Welcome, guys. Have we got some questions? Rachel Moran: We do. Yes, I'll start with the first one. We've got a question from one of our investors, [ Freddie ], highlighting the strong receivables performance. He wants to know, will this turn into a higher PBT in 2026? And can you give some guidance on this, please? Gary Thompson: Obviously, I can't give specific guidance. I guess there's probably 3 things to note there. In terms of receivables growth, yes, it was really good. Actually, as you probably just heard, we were a little bit below 1 actually. We set out to deliver GBP 150 million receivables growth in the year. We delivered about GBP 130 million. Now -- so that was a little bit down. I guess in the year, the offset to that was better impairment performance that probably mitigated the fact that we had a little bit less receivables, so that's just on receivables specifically. I guess in terms of what is consensus at the moment. If you looked into 2026 consensus before today, and that's before today, with GBP 97 million PBT. And then I think it was about GBP 115 million PBT for 2027. Now how that will change? I can't say. But clearly, what we've guided to today, is extra investment in GBP 50 million -- sorry, not GBP 50 million, GBP 5 million per year in each of those years. So that's probably as far as I can go in terms of guidance or expectations. Rachel Moran: Now we've got another investor, Doug. Given how much of your share register is now held by the [ ARB ] community? Are you worried about what might happen if they dump the shares in the event that the vote fails on the potential offer? Gerard Ryan: Okay. Well, the first thing to say is that we, as a Board, are strongly supporting the offer. So that's out there in the public domain. We are cognizant of the change in the makeup of the share register. We do recognize that, I think, over 30% are now with ARBs. But I don't think it's for us to speculate as to what they would do. Our view is, shareholders should probably support this offer at the new level. We think it's a really good offer and good value. Rachel Moran: Moving on to a question here on regulation. Is the financial effects of CCD II already reflected in your outlook? Gerard Ryan: No, because, I guess, as you saw just a few minutes ago, what I put up was a whole menu of items, none of which are fixed. And as I said, I'm hopeful that we will get sensible answers or regulation on all of those points, but we can't determine what the outcome is. So we can't put anything in there is the short answer. Rachel Moran: This one moves on to the fact that we mentioned the GBP 5 million of additional investments in growth impacting market expectations. However, given that you won't see the benefit of the cost of living provision release going forward, are you significantly increasing CapEx which you say will come through as much higher depreciation -- sorry, I got that quite a little bit wrong. Are you expecting consensus to revise down for these... Gary Thompson: Okay. Okay. Yes. Again, as I mentioned just shortly ago, clearly, a feature of '24 and '25, the profit before tax was the cost of living provision, which in 2024, we reduced it by GBP 7 million. And in 2025, it was GBP 8 million. So look, if you want to strip those out, PBT was around GBP 78 million in '24, and it was around GBP 80 million, excluding that in 2025. I guess those movements have always been built into what the market expects. In terms of the extra investment in CapEx, and it's right, I mean, we're putting through GBP 60 million more CapEx over '24 to -- sorry, '25, '26 and '27, GBP 60 million that will lead to 10-plus more amortization per annum going forward. Now clearly, what we are looking at doing is scaling up the business. That's the GBP 5 million P&L impact that we've talked about for the next 2 to 3 years, increasing receivables growth so we can absorb obviously, the extra amortization that will come through. Now clearly as well as that, the CapEx investment isn't just about growth. It's about a lot of foundational change, efficiency, et cetera, that we are looking to deliver over the next few years. So there's lots of hard work to do, a lot of hard work, and there's a lot of change going on in the business, but we wouldn't expect or we'd look to be mitigating or getting benefit from those -- that capital expenditure when you look out in the longer term. Gerard Ryan: So certainly a drag on the P&L. And our job is to offset as much of that as we possibly can. I mean the investments are very sensible for all the reasons we've talked about over the past hour. And our role now is to make sure that those investments pay us back. Rachel Moran: Okay. We've got a question here from one investor [ Lucy ]. The number of customers has been stable in the last 3 changes, small ups and downs. What is a number of customers you'd like to see and consider as achievable in the next 3 years or so? Gerard Ryan: Well, we have a more medium- to long-term target of 2.5 million customers out there. And if you think about it, we're currently at 1.7 million, which is a good customer base for our infrastructure. So 2.5 million is quite a sizable increase. But the investments we're making are designed to deliver that, but it's over quite a long period of time. But the short answer 2.5 million would be our long-term target. Rachel Moran: Great. That's all the questions that we've had so far this morning. Gerard Ryan: Okay. Thank you, Rachel. Thank you, Gary. Well, just to wrap up then, you've heard us over the last hour, I talk about the business. We performed well in 2025. We have a very strong balance sheet. We have good prospects in '26. We do have some headwinds. I think the regulatory one is a particular concern, but we're just going to have to deal with that. I am concerned about Mexico. We just have to see how that plays out. But the portfolio quality is good. The drag from the investments is quite serious. But as I said, it's for Gary and me and the team to figure out how we effectively pay for all those things that doesn't drain the P&L. But all in all, I think a good set of results. I'd like to finish just by saying a huge thank you to all of my colleagues because this is a big business. It can get reasonably complex, and we are making it more complicated by adding new channels and new products and new services because we think that's what our customers want and need, but that takes a fantastic amount of effort on the part of 5,500 colleagues and 16,000 customer representatives who work for us every day of the year, trying to deliver good results for our customers. So a huge thank you to every one of you right there. Thank you, guys. Gary Thompson: Thank you. Gerard Ryan: So with that, I'll close the webcast for now. Thank you very much. Rachel Moran: Thank you.
Nina Grieg: Good morning, and welcome to Grieg Seafood's Fourth Quarter Presentation. My name is Nina Willumsen Grieg, and I'm the CEO of Grieg Seafood. Together with me today is also our CFO, Magnus Johannesen. Today's agenda will cover a current status on our strategic turnaround and updates on our operational and market performance. As always, Magnus will walk us through our financial review and also share some information on the dividend after the transaction. Starting with the highlights of the quarter. This is our final presentation covering discontinued operations, and I'm pleased that the closing occurred as scheduled in Q4. It has required quite some resources and focus from our organization, and we look forward to focusing solely on Rogaland going forward. Q4 represents a solid quarter, harvesting just below 7,400 tonnes and delivering a farming EBIT of NOK 20.7 per kilo, a result we are very pleased with. I will get back to details on this in our operational review. A high priority for the management team continues to be restructuring of the company. We are continuously doing changes and improvements in our balance sheet, structure and operating model. As a result of the closing of the transaction, we have used the proceeds to repay debt, taking up a new syndicate with Nordea and SEB, and the Board has taken the principal decision to advise the general assembly to pay NOK 4 billion in distribution to shareholders. I will continue to repeat this slide and our new focused strategy. We will go from global growth to regional profitability. This shift requires disciplined execution, and we have maintained momentum also in Q4. A key operational focus for us continues to be how to best utilize the strong position we have on post-smolt and land-based. During the quarter, we announced the planned expansion at Tytlandsvik of 2 new buildings, and we are also planning to build an in-house smolt facility at Ardal. This project has been in development for a long time and will support improved performance and fish welfare throughout our value chain. We will give you more details on this in our Q1 presentation. Capital discipline is key to our new direction and investment in Grieg Seafood is kept at a minimum level during Q4 and until new strategic plans are reviewed and implemented. Having completed downsizing, we have turned our focus to absolute cost and reducing complexity. As part of that, we have defined additional cost reduction of a conservative estimate of NOK 50 million for 2026 as we target below NOK 3 in overhead cost on average. These actions are all key for us to achieve our targets. Deep diving into operations and quarterly performance in Rogaland. All our freshwater facilities, including joint ventures, delivered solid production with an average smolt weight of 1.2 kilo. Following a challenging Q3 for us, we have to say, we had a slow start for production at sea with elevated mortality into this quarter as well. However, the performance improved as lice and gill challenges eased and production was strong in the quarter overall. This allowed us to recover the lost growth and enter into 2026 with high average weights in sea and maximum MAB, actually 98% for the year on total on MAB utilization. Harvest volumes increased from Q3, resulting in all-time high harvest volume of almost 30.5 tonnes for Rogaland. Our guidance for 2026 is 31,000 tonnes for the full year and 6,600 tonnes for Q1, slightly skewed towards the end of the quarter. The farming cost for the quarter was NOK 63.6, still higher than we like, but lower than Q3. And we still have our long-term target of NOK 60. Summing up the key figures for Q4, it has been a strong quarter with an operational EBIT of NOK 152.8 million. The post-smolt we put to sea is now significantly higher than any of our peers. The distribution of smolt size has shifted dramatically over the last few years, as you can see in this chart, with more than 50% being above 1 kilo. As noted in Q3, our main objective going from '24 to '25 was to minimize the lower sized groups and only our broodstock smolt, 7% of our smolt was below 500 grams in 2025. Finding the right-sized smolt for each site is a key part of our production planning. The smolt put to sea in Q4 was 900 grams from Tytlandsvik and 1.4 kilo from Ardal on average. In 2026, we also plan to harvest 500 tonnes of fully grown fish from Ardal. This is a pilot. The fish is performing well, and it is providing valuable insights into the potential of full cycle land-based production. Turning to some comments on sales and processing. We were very happy with our achievements in this quarter. Our achieved sales price was NOK 84.3, a solid beat on the index, driven by high harvest weights, 55% contract share and strong sales performance on spot. The price experienced an upward trend during the quarter as illustrated in the middle chart. Looking at the details of the chart, it reveals that we benefited from optimal harvest timing, both for the entire quarter and on a weekly basis. We believe we are able to achieve this over time through close collaboration between production and sales. At Gardermoen, Oslo Salmon processing, it's called, construction was finalized in December, and we successfully started production in January. Initial ramp-up shows high demand for filets and access to external raw material is expected to be sufficient to maintain high production utilization in 2026, but we expect Q1 to be a ramp-up period. We are guiding a volume of 8,500 tonnes of raw material for value-added products in 2026. To ensure high utilization of this facility, we are currently seeking partners to supply external fish and also exploring partnership models for the facility itself. And with that, I leave the floor to Magnus. Magnus Johannesen: Thank you, Nina, and good morning, everyone. So I think as you might have seen already, this quarter is presented with implications from several of the processes that we have completed, but also initiated in Q4. This includes the closing of the transaction, which causes a significant inflow of cash. It's also about the hybrid bond, which has been temporarily reclassified to debt and also discontinued operations, which are still included in both our NIBD structure as well as our cash flow that we present today. We're also happy to report that we have completed what we promised in Q3, both in terms of dividend, but also in terms of closing the negotiations with Nordea and SEB, which we are very pleased to have entered into a new financial syndicate with very few days ago. And with that, I will go into the profit and loss statement. Starting on the top, we see that our sales revenue have increased 10% year-over-year. This is mainly due to higher price achievements, both from our composition of higher average weight, but also our financial contracts and physical contracts. However, it's drawn slightly below -- slightly down again from lower superior share and lower volume compared to Q4 last year. Moving then to EBIT. We see that our costs have increased slightly from what we have guided -- from what we have achieved earlier, and this is due to we have continued harvesting from a site in Q3 and had a higher capitalized cost to that inventory. This results in a higher farming cost that will also continue in Q1 as we will continue harvesting from this specific site. But we do see this as temporarily until this site is fully harvested out. But despite this, solid price performance ensures the group EBIT of NOK 142.9 million, corresponding to a NOK 19.4 EBIT per kilo. Moving then my attention to some special items in the profit and loss statement, which includes the reversal of a previous write-down on one of our licenses in Rogaland. And this is done due to the demerger of our group company that kept the licenses of Grieg Seafood Norway, where we now reversed that write-down in this quarter. Moving then my attention to the net profit for the period from discontinued operations. And this number includes a gain of approximately NOK 900 million on the sale of Grieg Seafood Canada operations and our Finmark operations. And many might wonder why this is so much further below than NOK 10.2 billion equity value, and that is simply that the assets we sold also had an outgoing value from our balance sheet, but we still have -- we still have received the cash as stated in our cash flow statement. So this is basically the sold price or the price of what we have sold minus the asset value of what we have sold. Moving on to cash flow. And as you might see, we don't have the catch function as things will have in our reporting formats. But overall, our net cash flow from operations came in at NOK 173 million for all 4 regions. This is positively impacted by operational EBITDA of NOK 408 million, but negatively impacted by changes in net working -- sorry, changes in working capital of slightly above NOK 400 million, which includes a biomass buildup of NOK 220 million across all 4 regions. And that also represents that both the regions that we have sold and Rogaland regions that we are maintaining have had good quarters in sea. Looking then at the net cash flow from investment activities. This is also significantly impacted by the transaction. And not surprisingly, this is mainly due to the net proceeds related to the sale of around NOK 9.1 billion. But if we isolate the net CapEx investments, this came in around NOK 170 million. Out of this, NOK 140 million is related to the discontinued operations, which is, of course, mainly driven by continued construction of the Adamselv facility in Finmark. But this also shows that the Rogaland region have a very well-invested value chain and has no need for significant CapEx lifts in the year to come. And for 2026, we are doing the share issue in Ardal Aqua to build the on-site smolt facility of around NOK 45 million, which is NOK 15 million lower than what we guided on previous quarter. If we then look at -- our eyes on 2027, we see that there's no significant CapEx plans except replacement and maintenance CapEx, which included here on the slide, which are conservative estimates. Going then down to net cash flow from financing, which is also heavily impacted by the inflow of cash from the transaction. All in all, when we received the settlement -- the proceeds in Q4, we distributed significant portions of this to repaying all our debt and credit lines in the previous bank syndicate. And this is quite obvious from this slide, but what is important to also note is that this does not include the bridge loan that we took on early Q4 to plug the CapEx needed for Adamselv facility in this quarter. Residual items include lease liabilities, interest costs and also the hybrid dividend. Moving then to the net interest-bearing debt. So it's -- I think it's the first time that Grieg Seafood presents a negative net interest-bearing debt position. But what this can be translated to is that we have a cash positive position that go out of Q4. So starting on the net interest-bearing debt going out of our third quarter. We see that this has been positively impacted by the operational EBITDA across all 4 regions, negatively impacted by biomass buildup and gross investments as well as the hybrid dividend. But then there's a significant increase due to the reclassification of our hybrid bond. And just to pause there for one second is that this reclassification is due to the bondholders having a right to exercise their put until 28th of January, which means that going out of Q4, this had to be classified as short-term debt. Now that we have exited this put option period, it will be once again reclassified as equity. And then it's also important to note that when we reclassified it to debt, it had to be reclassified at 105% and not 100%, but it will go back to equity as 100%. That's the technicalities that's important to note. And then you see that we have done the down payments of approximately NOK 4 billion, and we have other changes of around NOK 5 billion, which except some timing differences is purely with the NIBD going out of Q4 of negative NOK 2.4 billion, NOK 2.5 billion or alternatively a net cash positive position of NOK 2.5 billion. Also moving to one -- I just want to highlight one thing is that in Q4, the Gardermoen facility entered our balance sheet with their leasing debt that we have entered into in terms of the construction of that facility. Moving then to a topic I received quite a lot of questions about in the past months. So overall, the Board will propose to an extraordinary general assembly that the company will distribute approximately -- or not approximately anymore, actually NOK 4 billion in shareholders meeting to shareholders. And the reason why we can't share all the details of ex-date and payment date, et cetera, is that we are still awaiting the finalization of the interim balance sheet and the audit of this balance sheet, which is formality criterias in order to pay out a dividend. We do not expect this to be any issues, but it is a formality that we need to follow. However, we will say that you can expect the call for an extraordinary general assembly to be sent out by end of March, where all the details will be listed and hence, payment will be done shortly after the general assembly has been completed -- the extraordinary general assembly has been completed. And with that, I will hand over to Nina, who will take us through the future building blocks. Nina Grieg: Thank you, Magnus. As we wrap up the last quarter and under the previous Grieg Seafood structure of 4 regions, I want to highlight our key strategic building blocks going forward, strengthening, prioritizing and future-proofing our operations. Our focus in 2026 is strengthening the company and driving profitability, building the fundament for the future. Biological KPIs and performance remains the core benchmark of our success as fish farmers. Rogaland has in 2025, delivered high harvest weights, record volumes, optimal MAB utilization and an average operational EBIT of NOK 21 per kilo, if you look at the last 5 years, confirming our position as a top operator. Our goal is to further fine-tune and stabilize this. Next, we will prioritize key initiatives for growth, both on land and at sea. Our progress towards 10,000 tonnes of land-based production demonstrates our ability to execute on our strategic choices. Through 2026, we will be evaluating the next phase of our land-based production. The ongoing expansion at Tytlandsvik and the pilot at Ardal for harvest sized fish are central to this part of our strategy. Looking ahead, future-proofing means preparing for opportunities with new technology and adapting to regulatory changes that we believe will come. Our partnership since 2019 with FishGlobe has provided valuable insights on closed containment and new technology, which we will leverage in the next steps. So this fourth quarter represents a solid foundation for the future Grieg Seafood that we envision. We delivered good biological results, robust sales performance, made decisive decisions and ultimately achieved strong financial results. And with that, I welcome Magnus back to the stage, and we open for questions. Stein Aukner: Alexander Aukner, DNB Carnegie. So could you give an indication of how much of the hybrid bond has been recalled? Magnus Johannesen: Yes. So it is obvious to us that many of the bondholders still believe that the bond should remain in our balance sheet given the financial position. So it was only one bondholder that exercised the right to put -- the put on 105, and we are in dialogue with many others. But we do expect -- we are keeping all options open when it comes to both redeeming the hybrid bond through replacement capital or tender offer. But as you can also see, it has been reclassified to debt this quarter. So we need to go into the dialogue with shareholders to the bondholders and find a solution with them how we can redeem this bond. But our intention is to redeem it indeed. Stein Aukner: Okay. And the CapEx and the working capital buildup for the discontinued operations, is that already netted out in the net proceeds? Or will that be adjusted in Q1? Magnus Johannesen: That's already netted out in the -- it should already be netted out in the proceeds, yes. Unknown Analyst: [ Martin Kardal ] ABG Sundal Collier. Will the sites with the higher capitalized costs be emptied out -- fully emptied out in Q1? And how does it look on performance, cost performance on the sites from Q2 and onwards? Nina Grieg: Yes. The most challenging site will be harvested out in Q1. And we had a challenging Q3 and it -- but it was mainly this and a part of a few other sites, but it is mainly this that -- so it will be out during Q1. Unknown Analyst: And then you reiterate your long-term target of NOK 60 per kilo in Rogaland. Would that be within reach during 2026 or for the full year, given that the level will likely be a little bit high in Q1? Magnus Johannesen: I think we have shown that the biological incident or biological challenging conditions in 2025 still gave us a cost EBIT per kilo of NOK 61.7. And for 2025, we don't expect to be achieving the NOK 60 long-term target, but we are working on a positive trajectory towards that over time. Christian Nordby: Christian Nordby, Arctic Securities. You have increased the smolt weight substantially in '25 versus '24. Do we see full impact of that on your harvest guidance for '26? Or should we think that there will be more growth to come in '27 based on that? Nina Grieg: There will come some more growth in '27 based on that. Magnus Johannesen: And maybe important to mention also when a smolt size increases, we have higher costs going to biomass from land. Hence, you will see higher cost in our biomass numbers as well. All right. Anything on the web. Unknown Executive: There's one question on the web regarding if you can say anything about the total amount presented in the claim from the minority shareholder in Grieg Seafood Newfoundland AS and if there will be any legal proceedings regarding that? Magnus Johannesen: So this is a Canadian former minority. And our assessment is that this is a claim which is not substantial in amount or probability. And this specific owner had an ownership of 0.5% of the Newfoundland shares. And we do not see this as something that are -- we are not provisioned for anything of this, but we mentioned it due to the fact that it has been made a letter, but not any formal legal claim. Thank you. All right. Based on that, thanks a lot. Nina Grieg: Thank you. Have a nice day.