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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.
Operator: Hello, and welcome, everyone, to the St. James's Place 2025 Full Year Results Q&A session. [Operator Instructions] I will now hand over to Mark Fitzpatrick, Chief Executive Officer, to begin. Mark FitzPatrick: Thank you, and good morning, everyone, and thank you for joining us. Unfortunately, Caroline is unable to be with us this morning due to a family bereavement. Instead, I'm joined by Charles Woodd, our Finance Director. Before we open for questions, I'd like to briefly reflect on a year of strong delivery and execution for St. James's Place. We delivered growth in new business, growth in funds under management and growth in underlying cash result, while at the same time, delivering strong returns for our clients. Drawing out some of the results, which are new today, the underlying cash result of GBP 462 million, up 3% year-on-year and 4% ahead of consensus. Underlying cash basic EPS of 87p per share, up 6% year-on-year. We're returning 50% of the underlying cash result to shareholders through ordinary dividends and buybacks and a total of GBP 313 million to be returned to shareholders for 2025. Alongside delivering a strong operational and financial performance, we made good strategic progress. Our simple comparable charging structure implementation went live smoothly in late summer. The new structure puts our investment performance on a fully comparable footing with the wider market and enabled the successful launch of Polaris Multi-Index. This has broadened client choice and grew to over GBP 1 billion of FUM at year-end, just 2 months after launch. Our review of historic ongoing service evidence continues to progress. Based on our experience in the second half of the year, we have released a further GBP 25 million from the provision today, taking total releases to GBP 109.5 million for the year. We are now deep into the operational delivery phase and are on track to complete the program in 2026. Our cost and efficiency program also made good progress. For example, we completed the transition to our new organizational design during the year, and we remain on track to remove around GBP 100 million per annum from our addressable cost base by 2027. These achievements give us the confidence in the strength of our business and our prospects, which has enabled the Board to update our shareholder returns guidance going forward a year earlier than originally anticipated. So from 2026, we intend to increase our payout ratio to 70% of the underlying cash result. We anticipate that this will comprise ordinary dividends, which will make up at least 40% of the total shareholder returns and the buybacks will make up the difference. A different way of thinking about is that dividend is expected to be at least 28% of the underlying cash result and buybacks the remaining 42%. That's how you get to 70%. Our priorities for 2026 are completing our remaining transformation programs, expanding the range of technology tools, including those which are AI-enabled and making those available to our advisers with the goal of helping them to work as efficiently as possible. This will give them more time to do what they do best, which is building trust, deepening client relationships and delivering personalized, high-quality advice. We see technology deepening the human relationships between clients and advisers, not replacing them, accelerating elements of Amplify, where we have the capacity to do so later in the year, and we will focus on refreshing our cash proposition and enhancing our high net worth proposition. We look to the future with confidence. We have already made changes to the business, and we're focused on strengthening and growing SJP over the long term. This means we are well positioned to capture the structural market opportunity ahead and deliver for all our stakeholders in 2026 and beyond. With that, I'm very happy to turn to questions. Operator: [Operator Instructions] Our first question comes from Andrew Lowe from Citi. Andrew Lowe: I wanted to ask on AI and how you see the potential threats from your business. So I'd love to hear a little bit more about what makes you comfortable about the potential threat to growth and pricing power from competitors, including D2C platforms who in time might be able to offer AI-led financial advice. As sort of corollary to that, it would be really helpful to hear a bit more color on the AI tools that are operational today, what we might expect in the next 12 months? And how much this could improve your adviser productivity going forward? And the second question was just on the adviser numbers, which fell by 0.4% in the second half of 2025. Could you please give a little bit more color on the productivity of your departing managers? And just any comments on the outlook for adviser numbers going forward would be really helpful. Mark FitzPatrick: Andy, thank you for those questions. In terms of technology and AI, I think the way that we see technology is really it's an opportunity to strengthen our face-to-face advice led model. So what we've observed over time, I think, is that while a lot has changed in and around the competitive landscape, what has been central, actually, is the [ primacy ] of the adviser client relationship and the longevity of that relationship because research tht we have done and that we talk about in the accounts and research that others have done effectively emphasize that actually people still value human engagement in making financial decisions. They seek personal advice, whether it's around retirement, tax planning and various other things, et cetera. And I think when we also think about AI, I think it's also important to bear in mind that advice in the U.K. is a highly regulated and a high trust service area. And therefore, it requires the personalization, the suitability and the accountability and human judgment is absolutely core to that where we see AI can play a very, very positive role is in enhancing adviser productivity and client experience. You'll have seen in the presentation earlier on this morning that we're really using some AI tools to give advisers back time. And I think that's where the deep vein is going to be for the next few years for our advisers, for us and for the whole profession. I think the more we can give time back to advisers to really focus with their clients is going to be absolutely key. I think by virtue of our size and scale at St. James's Place, we've got the opportunity and the connectivity, and we are talking with some of the very biggest players on their thoughts and on what we are doing and how we can simplify and how we can make what we do even better and even more efficient. And bear in mind as well that of our 5,000 advisers, the vast majority of these folks are phenomenal entrepreneurs, not just in being great advisers, but also in terms of finding solutions in their own businesses and how they make themselves more efficient. So within our 5,000 advisers, we have some of our businesses where they have actually created and built their own technology to improve some of their efficiency on how they do things. And through our oversight and through our listing of data protection and everything around that and security, we're making those and facilitating those to be available to far more partners within St. James's Place. So the great thing is the innovation isn't just happening at the corporate level. It's also happening within the adviser community, where they're eating, sleeping, drinking this 24/7. So some really, really good ideas coming from them. What we're doing is making sure we can protect the data, protect the integration and really make sure it plugs and plays properly with the rest our kit. So at the end of the day, I think AI will enable greater productivity. It will enable advisers to get back to what they really enjoy doing. And it's not the admin they enjoy doing. It's actually being in front of clients. It's finding new clients to serving clients. It's being there for clients when they truly matter. Sorry, I'm repeating on, but I'm conscious that this is a big topic. And therefore, I'm probably going a little bit fuller in the answer just to kind of give everybody a little bit of color. In terms of some of the features that we have today, et cetera, along the way, we have a number of tools that we're using, whether it's advice assistant, which kind of harnesses the data in the sales force and can produce suggestions on planned wrappers, investment amount fund selections and various other things, a rules-based engine based on our Advice framework, which has been trained on thousands of recommendations made previously by SJP clients. And we've seen a very strong take-up from advisers around that. whether it's preparing meetings or whether it's summarizing and listening into meetings with clients, summarizing, converting the meetings into notes that get sent to the client, notes that get sent to the admin actions to be done. Those are things that we have trialed extensively, and we're now in the final stages of looking to roll those out across the partnership as a whole during the course of this year. And then we have something particularly innovatively called ChatSJP, which covers a whole lot of the documents in our Advice framework and business submission guides and the like. And what that does is enables the power planners and the admin teams, et cetera, just to check in on some of the advice that might be given and some of their thinking and some of the plans just to make sure everything is aligned. And what that does is that saves huge amount of time for every query that otherwise might be done through a call center and enables the call center operators to really focus on considerably more complex matters. So we're trying to -- we're not trying. We are introducing technology throughout the organization because I do see that the technology providing us with different hands in terms of what we do, but it's not going to change the face of Advice. And then, Andy, your final question on adviser numbers, yes, adviser numbers declined modestly in the second half of this year. I said back in February last year that we'd be embarking upon an initiative. And what you saw in the second half of last year was the outworkings of some of that activity. I think it's fair to say that the advisers that have left us as a result of that, their productivity was significantly below average productivity on both gross flows and from a FUM perspective, which is why you haven't seen any real shift in productivity. If anything, productivity, and I can get to that later on, but productivity has been significantly stronger during the course of this year. But Andy, thank you for those questions. Sorry, I'll try and be brief for the next few questions. Operator: Our next question comes from Andrew Crean from Autonomous. Andrew Crean: Just a couple of 3 questions. Firstly, can you say anything about trading so far in Q1 '26? Secondly, your liquidity -- free liquidity targets. I just wanted to explore this a bit more. Do you have any targets for group liquidity? And the reason I ask is because if I looked at your doubling of profits in 2030, one is talking about somewhere retaining, if you pay out 70%, you're talking about retaining somewhere between GBP 240 million and GBP 270 million of profit, which is in line with the amount of group liquidity you currently have. I suppose that poses the question whether up the line, once the earnings really get going, whether the 70% is too low and you will just build excess liquidity over time? And then a third question is client growth. I think plant growth was about 3% this year or last year. Could you give us a sense as to what you anticipate client growth to be like over the next few years? Mark FitzPatrick: Okay. Thanks for those questions. So trading -- first off on trading, we put out our Q4 trading update less than a month ago, and I think the team provided a little bit of color about the fact that flows were normalizing. We were seeing flows normalize over that period. So I'm not minded to give necessarily a month-by-month running update. But what I would say is we've seen that continue. And the partnership is in exceptionally good health. They're all working incredibly hard at the moment. This is a very, very busy time and with tax year-end 5 weeks away. So there's a huge amount of activity on the go, which is very encouraging. From a liquidity perspective, so some new disclosure for everyone in the world of liquidity and how we think about liquidity. I think it is important for us to be able to make sure we have an appropriate degree of liquidity at the center to support the capital allocation framework. The liquidity levels that we have, we will be considering them on a regular basis, and we will be making our determinations as regards what we do with that liquidity based on facts and circumstances at the time. And if we see an inappropriate buildup, then we will -- it will get activated through the capital allocation framework along the way. The 70% payout ratio that we've effectively indicated for the time being, bring it forward a year, I think, is dripping with signaling of confidence in the business and how well the business is performing and the great progress that we have made. So we're very pleased to announce that a year really. We're very pleased to have increased the level of the payout. We think the composition, the 2 sectors of it in terms of dividend and buyback are important and are weighted appropriately. And if -- and as and when that number builds in the fullness of time, as I said, facts and circumstances will dictate. We would expect -- you should expect to see the [ GBP 271 billion ] number grow as the business grows. We are a growing business and [ GBP 271 billion ] for a business with 220 billion and 1 million clients under management feels appropriate for this size and the scale. In terms of client growth, really interesting one, Andrew, because client growth is going to become a little more complex as during the course of '27 and onwards, we have a stronger push towards high net worth because with high net worth, it's going to be less about pure client numbers, and it's going to be a real focus on getting clients with larger funds under management and our advisers doing more with them and therefore, needing to spend a bit more time with them. So that's something that we're thinking about internally. But what I can say is the vast majority of our advisers when we did a survey with them at the back end of last year indicated they are expecting client numbers to grow. And as is often the case and has been the case with us for some time, the vast majority of our new clients are word-of-mouth referrals, which I think contributes to a very, very high client retention level and very, very sticky relationships, which is a great business to be in. But thank you for those questions. Operator: Our next question comes from Nasib Ahmed from UBS. Nasib Ahmed: Three questions from me. Just firstly, following up on AI. You had the charging structure change last year. You had an opportunity to update your tech stack. I know there's different tech solutions that you're using across the piece. But I guess the question is, is your tech stack nimble enough to add on these AI LLM type models? Because, of course, you've got the scale, but with bigger companies, sometimes you've got legacy tech that can't really cope with this. So question number one, are you kind of happy with the way your tech stack can adapt to these new models? Secondly, on complaints, I saw kind of new open complaints first half '25 were still high relative to history, they're kind of stabilizing but to a high level. When do you expect them to come down? And is that putting pressure on kind of your complaints team at the moment? I know you recruited quite a lot of people recently. And then finally, on kind of regulation, D2C simplified advice. What are your thoughts around here, targeted support as well within that? And would you kind of look to acquire a business and move into D2C as a result of that? Mark FitzPatrick: Nasib, thank you for those questions. AI, the simple comparable charging out of [indiscernible] have tried to weave in all sorts of other changes to what undoubtedly was the largest tech change program that we've had in the history of St. James's Place. So on the tech stack, bear in mind that we have a tech stack that includes Salesforce, that includes Snowflake, that includes some really, really modern tech that gets updated on a regular basis. So it's through that, that we're able to kind of plug and play and interact and indeed with one of our adviser firms who's been working on some great kit and has got some great AI kit that helps facilitate and improve efficiency. We very recently plugged that in and got that working well with Salesforce. So having done that, we'll be able to roll that out to other elements. And that's given us the confidence that we can plug and play modern kit into our stack. So not particularly worried about that component. On complaints, BAU complaints, so business as usual complaint levels are down. What we're seeing is there's still some activity in terms of the historic evidence review, et cetera, from some claims management companies, but much, much lower levels, inordinately lower levels. And dare I say we are doing more checks and balances in terms of whether the complaints that come in are legitimate complaints. We have some complaints that come in when we write out to the client, they say, yes, I spoke to them, but I didn't want to complain. So it's not a legit complaint, and others kind of aren't even our clients. So we've had a -- we've got a lot of noise in the system. But on the substance, we're comfortable that BAU level complaints are coming down and are coming down to a more normalized level. On rates, the government, I think, is -- and both the government and the regulator are comfortable that there's a lot coming down the road in terms of the Mansion House reforms and really want to see how well these land. So my discussions with treasury and with the FCA is they are very focused on ensuring a successful launch of targeted support. In terms of disclosure regimes, they're trying to make things simpler, et cetera. The retail investment campaign, they're really focused on trying to get more people investing. So it seems a lot more joined up than it might have been in the past. Targeted support isn't really going to be for us by virtue of the nature of how that's going to work. I think targeted support is going to be very difficult if a human has to get involved because a human can't unhear what they've heard and a human is likely to pick up something that might throw it out of the decision tree that is effectively so key to targeted support. Simplified advice. We are expecting some consultation papers from the regulator on simplified advice later on this year. We have been in contact with them. That is likely to be a lot more relevant to us. A key component of that is ensuring that if and when simplified advice comes out, it's done in a way that is economically viable for an adviser to be able to engage with somebody without doing a full fact find. So there's still quite a lot of issues that need to be worked through. But the encouraging thing is that the regulator has demonstrated and government has demonstrated a willingness to engage with industry and listen and with trade bodies and take views on. So I'm cautiously optimistic that if this comes through, it should come through in a good guys, but there's lots to do around that particular patch. As against D2C, if you think of what our underlying purpose is, which effectively is to provide invaluable advice. Therefore, I don't think kind of a pure D2C play is something that's on the strategy. When you think that only 9% of the adults in the U.K. take advice today, the market opportunity is so big for all of us in the U.K. I truly believe it is one of the really few growth areas in financial services in the U.K., the element of wealth getting people to invest. So if government, the regulator, we, all the players in the sector, D2C or otherwise, are getting people to invest rather than save, that's going to be fantastic because there are 3 big gaps in the U.K. economy. There's an advice gap, there's effectively investing gap and there's a retirement gap. And we've got too much saved, underinvested. We have too few people taking advice. And we all know we're in a DC world rather than the DB world. And I don't think society has truly understood the risk that they are taking on themselves and their need to prepare for their retirement in a more fulsome fashion than they're doing today. So I think there's lots of opportunity for us all to actually grow very, very successful businesses. And I think we're going to stick to our knitting in terms of the advice piece. Operator: Our next question comes from Ben Bathurst from RBC Capital Markets. Benjamin Bathurst: I've got questions in 3 areas, if I may, as well. Firstly, Mark, in your prerecorded remarks, you mentioned you'll be looking to improve reporting of financial performance. I think you said before half year 2026 or half year 2026. I just wondered if you could give more details on the scope of that project and if it's going to extend to making changes to the underlying cash disclosure. Then secondly, on flows, you saw fit to comment that outflows have normalized at the end of Q4 and into Q1. Just to clarify, does that mean a return to the levels of outflows as a percentage of AUM that you saw in the first 3 quarters of FY '25? And then sort of related to that, but just on the pensions flows outlook, we're obviously edging towards the 2027 date for pensions to fall into the net for inheritance tax. I wondered if you started to see any differences in the typical advice that you're delivering to older clients around keeping funds in the pension wrapper. And we should really expect withdrawal rates from pensions to tick up over the next year or 2 in light of those changes? Mark FitzPatrick: Ben, thank you. Three really interesting questions. For the first question, I'm going to hand over to my partner in crime, Charles Woodd. Charles? Unknown Executive: Ben, very good to chat about this. Yes, this has been an exciting project that we've been doing over the course of the last year. You'll have seen some of the output emerging. So we streamlined our financial review at the half year. We've done that again at the end of the year, and we've introduced new capital and liquidity metrics, a new section on that. And hopefully, that answered a number of the questions that were rising. The implementation of the simple comparable charges, which happened in late summer, that was another important building block. And so building on that, we've been sorting out what the reporting should look like. And we are expecting to share that with you, certainly for the half year and expect to share that with you all probably later in Q2, possibly May might be the right sort of time for doing that. Mark FitzPatrick: Charles, thank you. Ben, in terms of flows, I don't think I've necessarily changed your models based on what we saw in Q3, Q4. I think I'd look at more the long-term element in terms of flows. And in terms of pensions, I think from memory, about -- historically about 4% of individuals just across the market paid inheritance tax. And I think the ONS in light of the changes the government brought about thought that, that might go up by 1.5%, maybe 2%. So call it 6%. So it's not for everyone, thankfully. But what we are seeing, I think, is that investment bonds becoming a lot more attractive now. Pensions still being an incredibly valuable vehicle for people to invest in up to a certain level and -- while they're working. And what we're seeing is people now starting to utilize their pensions rather than considering them as a pure investment vehicle that they might have had as a generational wealth transfer vehicle. So the advice is shifting. It's a very, very complex area. I know our team are deeply engaged with government and the regulators working through how those changes need to come through and making sure the changes don't cross over with one another. But we do expect actually pensions to continue to be important. But for those older clients, we expect to see them drawing down on pensions probably in a slightly stronger way than they might have originally. But then I would expect them to be leaving some of the other investments alone, and we might start to see some of those withdrawal rates start to improve along the way. So it's going to be fluid. We need to see how it pans out. My big request of government of late is when the next budget comes up, please make sure that you are proactive in saying, we're not looking to change pensions again because we cannot have a third year of further speculation. So get out of the blocks and just try and close that down early as possible, please. Operator: Our next question comes from Enrico Bolzoni from JPMorgan. Enrico Bolzoni: So sorry to go back again to the AI topic, but I have one follow-up question, if I may. So I think there is no pushback on the argument that AI can dramatically improve adviser productivity and do wonders internally in terms of reducing costs, so on and so forth. I guess my concern, which I suspect is shared by a portion of the market is more what the impact is going to be on perhaps the future cohort of clients. So maybe those that in theory would pick up advice in 10 years from now, let's make an example. In the U.K., the majority of people pick up financial advice when they are approaching their retirement age. So I suspect people that are in their 50s. So the concern I have is if these people that now are using B2C platforms, which is an area where, by the way, you don't want to go, will be gradually see the benefit of AI in their existing B2C usage. Is there not a risk that these clients when they reach the age where in theory, they should pick up and historically, they would have picked up financial adviser when they're in the late 50s, might decide not to do it because by the time that's going to happen, it's going to be in 10 years' time, they will just have like an amazing AI proposition within their B2C platform. So are you concerned by that? And would you consider be a bit more explicit in guiding your adviser to recruit or to use that additional capacity freed by AI to recruit younger clients or get them when they are very young to avoid this risk of not getting them at all? So that's my first question. And the second question is on the Polaris Index range. I was wondering if you can give us maybe an update, some color in terms of what the appetite has been if you're seeing clients perhaps switching out of their active proposition and into passive or if mainly this is appealing to clients that put fresh money into the passive range and they don't really switch from their existing investments into passive. Mark FitzPatrick: Enrico, good to chat to you again. Really interesting point in terms of your scenario in terms of AI. Just a couple of useful facts just to share with you. By -- I think by virtue of the fact that our average advisers considerably younger than the average adviser in the market. Actually, what we're finding is the average age of our new clients is actually coming down. So over 1/3 of our new clients are under 40 years old, which is fantastic. So we are effectively -- the advisers are effectively ahead of this issue and building in a fantastic pipeline of future relationships by engaging with clients at a younger age because it's not just about the -- what do I do when I retire and how do I prepare for decumulation. It's getting them to do the right things and getting the right behaviors in places my 17-year-old son said that, SJP, it sounds like you guys are financial PTs, financial physical trainers. You get people to do what they should do when left on devices, they may not do it. So I think the element of -- we're getting more and more younger clients, our advisers younger, which is helpful and also very helpful in terms of their comfort around using new tech as well. And I think we see that quite a few of our clients actually have business with D2C as well as having business with us. So share of wallet has grown a little bit over the course of the last year. On average, I think we're about 50%, 55% or thereabouts. But it's -- so it's not 100%. People have money in D2C, but they understand what they get from St. James's Place, what they get from the adviser, et cetera. And in time, what we see is actually more and more of that money coming in. The longer somebody is with St. James's Place, the more money tends to come in to St. James's Place and the share of wallet tends to grow rather than stagnate because they just see the value of what's there. And to some extent, I talked to a little bit of Polaris and Polaris Multi-index. Effectively what it is, is providing clients with a broader range of options where there is something that is a little bit different from the conventional Polaris. What we're seeing to date is we're seeing new clients, new money coming into that. We are also seeing a little bit of switching from the existing funds into Polaris Multi-index. And I think the reason a number of folks like that is they like the ongoing asset allocation, the ongoing rebalancing that happens along the way at an incredibly attractive price point for the client. So it's early days in Polaris Multi-index. It's very similar to what we saw on the main Polaris when that launched, we saw a lot of switching initially, and then we saw a lot of new money coming in as actually the investment performance kicked in and people just had more and more confidence about it. I am delighted at what the guys have done. I think it's fantastic to -- in the first 2 months, have gathered effectively GBP 1 billion worth of assets into Polaris Multi-index and really looking forward to seeing the growth of that because we can now offer clients a broader range of product across the way. But thank you for those great questions, Enrico. Operator: Our next question comes from Gregory Simpson from BNP Paribas. Gregory Simpson: Two questions on my side. Firstly, wondering if you could share any comments on how you're seeing advisers and clients behave with the new fee structure and if you're seeing any differences versus the old model in terms of inflow, gross inflows and productivity, just aware that Q4 is a bit unusual with the budget in terms of reading anything into the flows. That's the first question. Secondly, can you provide a bit more of an update on the high net worth push? What's the kind of time line? Would you have advisers that are more directly employed by SJP in this model? And what do you need to add on the product and investment proposition side? Mark FitzPatrick: Greg, thanks for those questions. In terms of the new fee structure, I think speaking to clients, they are candidly wondering what all the big fuss was about. From their side, they're seeing it very much in line with everything else that's out there in the marketplace. So they think it's -- from a client side, they think it's a lot simpler. The advisers, as I mentioned, I think, earlier on, are incredibly busy engaging with clients. So they are absolutely connecting very, very busy. Case count is very strong at the moment. So it's all looking that the fee structure is -- the old fee structure is in the history books. We're now kind of level-pegging with everyone else. In terms of the high net worth push, the high net worth push, I think, is one where I'm really, really excited and really interested for us to spend more time, more energy in. The element of the high net worth aspect is that we -- later on this year, we are looking to make even more impact on it. We've recruited some new talent. We're looking to streamline and improve the service that is available for both our advisers and clients in this area. We have, I think now as at year-end, 10% of our FUM is effectively in the high net worth segment, so a slight increase on last year. It is -- the team are working very closely with some of our advisers who specialize in the high net worth area. We've had some off-sites exploring what do we need to do about product range, what do we need to do about service, what do we need to do about our brand. So we're clear on what we need to do. We're now just getting things done. We're recruiting, as I said, additional people, and we're equipping the people in that regard. And I'm quite excited about what we might do around this space. I think there are a lot of our advisers who are very interested in being more engaged in this space. A lot of them are very engaged in the space. I think if we can provide them with greater support, they'll be able to do even more in and around this space. And they're all looking to grow their businesses. So I think that's probably the route in rather than us trying to kind of think we're going to have our own employed advisers focusing on the high net worth space. So I'm excited about it. In reality, I think it will be the second half of this year that we really start to lean into it even further. It is part of the amplify phase of the strategy, but wherever I have capacity, I'm looking to try and apply it to the high net worth opportunity because I think it is so real. So you've picked on a real topic. Operator: Our next question comes from Larissa Van Deventer from Barclays. Larissa van Deventer: Three questions from my side as well. The first one, Vanguard announced yesterday that they are launching a new model portfolio solutions product in conjunction with Wellington. How do you see St. James's Place product range as differentiated relative to the other model portfolio solutions available in the market and perhaps specifically referencing the Polaris Multi-Index that you mentioned in your presentation? Second question, on the historic ongoing service evidence review, you mentioned that you will complete that in 2026. Does that mean that we can completely put it to bed in '27? Or is there a set of limitations that needs to run before you will be able to finalize how much of the provision is needed? And then the last one, AI, a very topical sort of questions this morning. But with Polaris Multi-index being a lower cost offering and with AI potentially lowering costs, do you see future growth coming from maintaining margins? Or do you believe that margins may be compressed? And would you be looking to grow mainly from increased customer volumes? Mark FitzPatrick: Okay. All right. NPS products that are out there. There are a number of NPS products that are out there. So Polaris and Polaris Multi-Index are fund of funds, so not really the same as a model portfolio service. So rebalancing in an NPS will effectively crystallize capital gains tax, and that wouldn't happen in a fund of funds, hence, less frequent rebalancing in the NPS as against the rebalancing that we can do in the Polaris and Polaris Multi-index range. So we're more dynamic. And therefore, we believe in a world that is changing as rapidly as it is, we think that is an advantage for Polaris and PMI. It looks like the latest NPS is out there has kind of got a mixture of kind of active and passive, et cetera, along the way. And effectively, at the moment, Polaris is kind of -- we have Polaris where there is some kind of systematic activities in normal Polaris and Polaris Multi-index works through 14 index funds. So as a blend is probably at a more attractive price point. Ultimately, I think in terms of product innovation, what our team have been able to demonstrate is a great ability to innovate, come up with solutions that work well for clients. So there's a real client adviser demand and pull. It's been great to hear some advisers saying, Mark, my clients have been at me for ages to have something like Polaris Multi-index. It's great that we have it now, and it's great that I can talk to them about it. In terms of the ongoing service evidence review, you'd recall one of the reasons we put a limit on our time period of going back to 2018 was effectively linked to statute limitations. And that has stood up from challenge from all sorts. So I think at the end of 2026, we should be done now. There may be somebody who wants to take it to false and complain about XYZ, et cetera, and that might draw the process out. But for all intents and purposes, I expect us to be done. The team know my ambitions to have it done this year. And I'm certainly not on this call going to let them off the hook on that front. In terms of AI and in terms of future growth and margins and the like, candidly, when I look at margins, I think there are 3 elements to our margin. There's a margin for advice, there's a margin for the platform and there's a margin for the fund manager piece. The fund manager piece is all as you know on the phone, [indiscernible] the pressure that's under. In terms of platforms, we see the fixed -- the cost base from that tends to be a little bit more fixed. And therefore, as we grow in size and scale, and I think we've mentioned this before, we would expect to give back some of that increased profitability and share that with clients at a later stage. In terms of the advice, advice is really interesting because there are so few advisers in the U.K. The regulation is very high in the U.K. vis-a-vis advice. And therefore, we don't see there being a huge amount of downward pressure on that component. So I think our growth is going to come through growth in terms of both clients and in terms of funds under management because as I mentioned earlier, as we do more in the high net worth space, that might give rise to slightly fewer new clients but larger FUM with that more sophisticated, more challenging needs and therefore, a bigger role for the adviser to play rather than speaking to a client maybe once a year, it's speaking to the client maybe once a quarter or more regularly than that. So I think I'm looking, especially in this market where there's 9% of U.K. adults take advice. We have so few advisers in the U.K. An interesting stat I saw is that SJP contributes 52% of all new advisers in the marketplace through the academy. So it's really, really important that we have a thriving advice profession. And we need to make sure like other professionals, they are appropriately paid and rewarded for the fantastic work they do. Operator: Our next question comes from Fahad Changazi from Kepler Cheuvreux. Fahad Changazi: Only got just 2 left. Could you give an update on your target of doubling the 2023 underlying cash results by 2030? I know it's only 2 years in, but in terms of underlying assumptions on costs, AUM, et cetera, where you are standing now versus the target? And finally, just a follow-up on AI. We have controllable costs increasing by 5% in 2026. Could you remind us again what these are and if AI will help this underlying growth rate in the long term? Mark FitzPatrick: Fahad, very interesting question. So firstly, on the ambitions that we set out as part of our strategy, we remain very comfortable with the doubling of the underlying cash between 2023 and 2030. I'm not minded to rebroker that this early on because while we have had a much stronger start than I think we all thought and we all expected, I am conscious that markets are not linear, and there's quite a way to go between 2030, et cetera, along the way. From controllable costs, the controllable costs, by and large, cover people, cover property, cover tech. And in time, I would expect as we get smarter in terms of how we use some of our tech that, that may give an impact or provide an impact in terms of what happens with our controllable expenses. The key thing to remember is that our main admin provider, SS&C, that cost base is not in controllable. So a lot of the AI functionality will sit in there or sit in the advisers business. There will be some that will sit in us. But at the moment, our focus is in terms of trying to make our advisers as productive and supported them as possible, one; two, make client interactions and adviser interactions with the corporate and the admin as smooth and as simple and as standardized as possible. And then three, we'll be working out right, how do we use AI within the corporate, et cetera, along that way. But I'm being very deliberate in that sequencing because I think the biggest bang for buck is making the advisers' lives as easy as possible so they can spend more time with their clients. Second is looking after the client interaction and all the admin processing, making that standard as simple as possible. And then third will be the element of how we actually simplify what we do internally here at the corporate and the role that AI can play. I know that folks internally do use AI and AI is part and parcel of kind of what a lot of us use. But at the moment, I think we are all experimenting with it, getting more comfortable with it as against it being necessarily a major drag or reduction in our controllable costs at this stage. Thank you. Operator: Our next question comes from David McCann from Deutsche Bank. David McCann: So,,yes, 3 for me, please. So first one on the capital distributions and the new policy there. Can you just give us some color as to what the thinking was with the bias towards the buyback, the 40-60 in favor of the buyback? What was the thinking there rather than a more dividend biased amount? That's the first question. Secondly, thanks for the new disclosures on the liquidity that potentially is quite useful. Just wanted to know that where -- yes, how you're still thinking about the business in terms of the actual capital? Historically, you've sort of focused towards MSP and the surplus around that as being the preferred metric rather than Solvency II. But if we're thinking about the actual capital and the free capital in the business, how should we be thinking about that today? And kind of what is the level? Because I think that disclosure doesn't appear to be in the statement anymore. And then finally, sort of looking forward a bit more, clearly, the business is in much better shape than it was when you came into the business, Mark, and a lot steady and the ship has been done, which is great. Looking at the business going forward, do you -- your predecessors really focused entirely on organic growth in a different environment and with different levels of organic growth to what you're seeing, I guess, now. So are acquisitions still firmly sort of off the table, off the agenda? Or is it something that you might consider more now the business is in better shape again, a lot of things have been clarified and you're kind of moving forward, the cash generation that's coming through and so forth. But just curious as to how you're thinking about that. Mark FitzPatrick: David, thank you. Good to talk to you. Let's take them in order. In terms of distribution, the 40% cash, so of this kind of 28% of the return is going to be cash dividend. That's a minimum. The balance of 42% is effectively the buyback. We felt at these share prices and the value enhancement to the market to shareholders of having a stronger buyback rather than the cash dividend was important. I think if you look at consensus numbers for 2026 and you model out the new distribution, it shows a healthy uptick in both cash dividends and in the buyback. So we -- the Board was comfortable that, that would respond to people who are very interested in dividend and also people who recognize that actually a buyback has become a much more accepted tool in the U.K. market and can be very powerfully deployed, and we were keen to deploy it on an ongoing basis rather than a discrete basis. On capital, the -- there's a reference to the management capital coverage assessment, which I think is a new fancy word for what was the MSB. And I'll let Charles cover that in a moment. But I think the data is contained within the data book around the capital and where we're at. Charles? Unknown Executive: Yes, that's right, Mark. Yes. Look, David, I think you're sort of referencing the fact that we are an insurance group, and therefore, we do have reporting requirements under Solvency II and that type of thing. But I think we would suggest that the new disclosure is designed to make clear that really that's not the sort of the limiting factor in terms of how we think about capital and about shareholder distributions, but really the focus is on liquidity. That's what we focus on and what we'd like you to focus on to. As Mark noted, the management solvency buffer, the MSB, which have been replaced by the MCCA, still lives and it features in our capital and liquidity disclosures. So it is part of the bridge from our total liquidity down to the free liquidity. But capital solvency suggests that's not the key thing to focus on. We would encourage you to focus on those new liquidity disclosures. Mark FitzPatrick: And David, on your third question, you are right that I was very clear that inorganic was not something we were going to consider, especially given the share price of old. I think there is such a strong organic opportunity ahead of us. That's where all our focus and attention is. We have seen when players aggregate up other folks, it creates huge disruption and huge distraction. There's a lot of distracted and disruptive players in the market. We plan on looking at that very carefully and seeing if there's opportunities for us to lift our teams, et cetera, from some of our competition, given that they are potentially somewhat discombobulated over recent events. Operator: Our next question comes from Charles Bendit from Rothschild & Co Redburn. Charles John Bendit: One on AI and one on cash monetization, please. So I just wanted to take a different tack away from how AI might change the customer experience and focus on the adviser experience. I'm just keen to understand if you think AI might drive adviser head count to shift at an industry level between the restricted and independent channels. So my question would be, how do you assess the risk that third-party AI-driven adviser productivity tools could make it easier for independent advisers to operate outside of the SJP ecosystem? So if IFAs can now run more efficient practices and potentially capture a larger share of the value chain through higher advice fees or by offering clients lower all-in fees at the expense of platform charges, what aspects of the SJP restricted model remain most critical in retaining advisers? Is it primarily brand, the broader support and compliance infrastructure, your succession framework? Or do you just believe that AI solutions in the open market will never really be able to replicate the depth and the integration of your own tech stack? And then my second question is just wondering if there's any update on your plans to further monetize idle client cash via arrangement with Flagstone. It feels like the FCA is no longer scrutinizing retained interest. So just wondering if you see an opportunity to expand margin there. Mark FitzPatrick: Charles, thank you. Two really, really interesting questions. On the AI piece and adviser experience, et cetera, I think a few things stand out, and this is kind of what advisers who come to us and advisers have been with us a while say stands out. A is the element of the scale, capital, the resources we have to deploy. So bear in mind that we announced 18 months ago that we are deploying approximately GBP 260 million back into our business to improve our technology, use of data, broaden our client offering, focus on client segmentation, all of those kind of components. There's nobody else in the market that's putting that kind of money into the business, into any business. If anybody is putting money in it to buy businesses, it's not necessarily to improve them. And those who are buying are talking about synergies and taking costs out, not putting investment in on that side. Brand and reputation is very, very important. The technical support, just given the complexities of pensions and other things, the technical support that we have. And then also, we provide an advice guarantee for clients and for the advisers effectively saying that we guarantee the advice that they give as a part of St. James's Place. That's before you get to the element of actually the frequency with which rates change and everything else like that for IFAs is becoming incredibly difficult, which is why I think you're seeing more and more getting consolidated up and aggregated up, et cetera, and why you're seeing kind of small boutiques really struggling to kind of grow and cope with the weight. And if you're going to do technology properly, you need a checkbook. And we have a checkbook. And because of our size and scale, the big players come and talk to us. They want to know what we're doing, what we're thinking, how they can help. They're generally not coming around to the local shop. So effectively, our big offering for clients and advisers is that we give them the best of both worlds. We give a client the local long-term relationship from somebody who lives around the corner, who kids might go to the same school as your kids, but that person is backed by the power and strength and the brand and reputation of St. James's Place. And an IFA just can't do that. As for the cash piece, the -- to use your phraseology, the idle cash. The Flagstone level has continued to increase. So we have seen an uptick in terms of the number of Flagstone is GBP 5.7 billion in Flagstone. Just to remind everybody that is not included in our FUM number. We are working with Flagstone, we are pursuing other opportunities as well in terms of what we might do in terms of cash to try and get that money to be more broadly invested. We know from speaking to our advisers that while clients have money at Flagstone, there are a whole bunch of clients who have money elsewhere. So step one for us is to get some of the money elsewhere into something like a Flagstone or a company like Flagstone. And then secondly is to actually get it more easily transferred across into St. James's Place. At the moment, it's a very clunky going from a deposit account to a holding account to your own personal account to an SJP account and then to get invested. Most people give up the world to live during that journey. What we're looking to do is to streamline that so that can be a single click across from savings to investment because there I say, as we all know, I think people are over saved in the U.K. as in the U.S., and we need people to invest more and be less worried about timing the market and more focused about getting the money in the market so we can benefit from the compound effect. So there's quite a lot of time and attention focused on how do we work that better and how do we help our clients be more effective. They've worked hard to make those savings, how do we convert them into sensible investments. Thank you for those questions, Charles. Operator: We currently have no further questions. So I'll hand back over to Mark for closing remarks. Mark FitzPatrick: Thank you very much, everyone, for your questions and for your engagement. Really, really good questions today. Three key takeaways, if I could leave you from our results today. Firstly, was that 2025 was a year of strong delivery and execution for St. James's Place. We delivered strong operational and financial results while making significant strategic progress. We're delighted to have updated our shareholder returns guidance going forward a year earlier than originally anticipated, and we move forward with an increased payout ratio of 70% of the underlying cash. And thirdly, we look to the future with confidence. We've already made changes to the business. We're focused on strengthening and growing SJP and the partnership over the long term. This means that we are well positioned to capture the structural market opportunity ahead and deliver for all our stakeholders in '26 and beyond. Thank you very much, everyone, and have a great day. Thank you. Operator: This concludes today's call. Thank you all for joining. You may now disconnect your lines.
Itumeleng Lepere: Good morning, all, and welcome to AECI's Results Presentation for the Year Ended 31 December 2025. My name is Itumeleng Lepere, and I'm your host. With me today to present the results to you is our Interim Group Chief Executive Officer, Mr. Dean Murray; our Group Chief Financial Officer, Mr. Ian Kramer; and our Executive Vice President of AECI Mining, Mr. Stuart Miller. I would also like to welcome our Board members who are present with us in the room today. And just getting on to the matters of the day, Dean will take you through the results highlights with Ian taking you through the financial results and both Stuart and Dean will take you through the business review with Dean wrapping up with the looking ahead. And just for those that are on the webcast, please remember to type in your questions on the text box provided and we will address all questions at the end of the presentation. So without any further delay, Dean, please come on. Dean Murray: Thank you very much, Itu. Good morning to everybody, and welcome to our results presentation for 2025. As the interim CEO, it's a privilege for me to go through the results with you. I'd also like to take the time to just acknowledge the great support we've had from the Board as well as from my colleagues in the ExCo and in the businesses as well. I think everybody has put a huge amount of effort into the back end of last year to deliver the results that we have. So let's start. We've had a very good performance, outstanding, if I think of the challenges we've had in 2025. And that was really driven on the back of good operational discipline that we put in the businesses as well as the continuation of our strategy, the strategic process. So from a business point of view, the mining business had a record EBITDA. So well done to Stuart and the team. Secondly, if we look at our Chemicals business, an excellent free cash flow generation, which I'll unpack later in the presentation as well. And really, the quality of earnings in the business has really been driven on a focus on the product mix as well as our pricing and margin management, which has really delivered the EBITDA result that we see. And then lastly, of course, from a business point of view, we've completed most of the disposals that we set out to do at the beginning of the strategy. From a financial point of view, as part of the portfolio optimization, as I said previously, we've completed the sale of most of the managed businesses, generating ZAR 2.2 billion in cash for the organization. And of course, that has really strengthened our balance sheet for us going forward, gearing down from 31% to 4%. And of course, the other highlight for the year was the improved quality of earnings, the EBITDA margin, up 2% from 9% to 11%. From a sustainability point of view, I'm very happy to say that we had no fatalities in AECI last year. Our people are key to this organization, and we do operate in some very dangerous conditions. Secondly, the TRIR also improved from 0.31 to 0.2. So well done to the safety teams. We also launched our new broad-based scheme supporting our communities in the areas that we operate in. And lastly, we also launched the employee share scheme as well that we've been working on for quite a number of years. All right, so following all the work that was done last year, I think we really positioned the business and put in a strong position for growth going forward. Really, the fundamentals that we focused on, and I think this was also communicated in past presentations as well, is our people and our culture. So we had a big drive in really focusing our people working on the culture. Secondly, the portfolio optimization. So we've created a very focused organization now as well. So just for everybody's -- just for the detail, we've really focused now on the 2 businesses, which is our mining, chemical/mining business, which is explosives and mining chemicals and then our actual chemicals business, which is a combination of our Plant Health business as well as our industrial specialty and water businesses. Those businesses remain in AECI. And even the Public Water business, we have decided to withdraw from the sale process, and it will be incorporated and run within our Chemicals business going forward. And last -- sorry, then moving on to our TMO operational and functional excellence. We have now worked quite hard on the TMO projects, really a disciplined process to look at our various work streams, delivering better commercial procurement initiatives. And now we've actually taken that TMO project, and we've embedded into the business where it will then continue to make sure that we have a close alignment with business, and we've given the business the ownership of all those projects that we've been working on. And then lastly, on the internationalization front, it is key, specifically at our mining business, but it's a focused approach when it comes to internationalization as well as a very disciplined approach when it comes to allocating capital for growth. And Stuart will talk about some of those areas that we're focused on going forward. But needless to say, SADC, Africa and the Asia Pacific region still remain key for us for our growth in mining. Okay. So what we believe we've -- in terms of our long-term value creation, as I said before, we've created a good, strong foundation for sustainable growth. We have the focused portfolio, as I mentioned. And you'll see the impact of both as we go through the individual businesses and show you the numbers. We've got this big focus on the improved quality of earnings in AECI. What's important is that we found it in the past. We've looked at some of the poorer contracts that we've had. We've had a look at some of the product lines that haven't been giving us the margins, and we've addressed that. The balance sheet, which everybody will talk about, we're sitting in a very strong position. And this puts us in a good -- this puts us in a good position for looking at investment and growth going forward. And then very important to our organization is the solid cash generation so that we can reward our stakeholders accordingly. All right. So with further ado, I'll call Ian and give us a rundown on the financials. Ian Kramer: Thank you, Dean. Good morning, everybody. I think I'd also want to start with an acknowledgment to the finance team and all the effort they've put in for us to get these results over the line. We are not able to stand here this morning and present these results if it wasn't for all of the efforts of all of them. So thank you very much to all of them. Turning to the group performance. Our performance was underpinned by disciplined pricing and structural margin management that drove our strong performance in combination with excellent free cash flow generation across both the Mining and Chemicals segments. This result was achieved notwithstanding a decrease we saw in revenue or the Modderfontein operational challenges that we reported on at half year. Our revenue was 4% lower at ZAR 32.2 billion compared to the ZAR 33.6 billion in the prior year, mainly driven by lower revenues from our Mining segment. Stuart will provide you with a little bit more color with regards to that. In terms of input cost pressures in the Mining segment, it was quite muted with the ammonia price remaining relatively stable year-on-year. The average price of ammonia only decreased by 3.4% to ZAR 9,591 per tonne in the current year compared to ZAR 9,727 per tonne in the prior year. This resulted in a revenue impact of only ZAR 42 million. If I go to EBITDA, EBITDA grew sizably by 12% on the back of improved operational performance in the Mining segment and partially offset by a slightly softer operational performance in the Chemicals segment and higher losses in the Property Services and Corporate segment. This combination of reduced revenue and growth in the EBITDA resulted in the group's EBITDA margin increasing by 2 percentage points to 11% compared to the 9% of the prior year. Depreciation and amortization, excluding our impairments was slightly lower from the prior year at just over ZAR 1 billion compared to just under ZAR 1.1 billion in the prior year. Included in the number you see on the screen is impairment charges of ZAR 821 million for the year from continuing operations, and it were mainly recognized in terms of the disposals in our managed businesses segment. That is the Schirm U.S.A., the Baar-Ebenhausen and the Food & Beverage business disposals as well as from the annual impairment assessment at Schirm Germany. The remaining goodwill that sits in our books at the end of the year at Schirm Germany has decreased to EUR 6 million at year end. In the prior year, in contrast, impairment charges from our continuing operations was ZAR 377 million and a further ZAR 732 million was recognized for the Much Asphalt disposal in the prior year, which was disclosed as part of discontinued operations. Our profit from continued operations effectively remained flat at the level that we have disclosed on the screen there. Pleasingly for us, our net financing cost has decreased by 33% from ZAR 521 million to ZAR 347 million due to the reduced debt levels and a lower effective interest rate. The taxation expense for the year ended at ZAR 853 million, and it reflects in an effective tax rate of 70% compared to 71% in the prior year from continued operations or 148% if we take continued and discontinued operations together. The ETR remains elevated due to the impairments that we've booked, unutilized assessed losses at our Schirm Germany complex, non-deductible expenses and foreign withholding taxes that we pay on dividends that gets declared from the regional entities up to the parent. If we normalize for recurring tax impacts on the ETR, that drops our ETR to 38.6%, which is in line with the guidance we gave to the market throughout the year. The group headline earnings increased by 53% from ZAR 7.16 per share in the prior year to ZAR 10.98 per share. It reflects the higher underlying profitability, and it excludes the impact of the impairments that was recognized in determining our earnings per share number. Working capital lockups for the group decreased from ZAR 5.5 billion in the prior year to ZAR 4.7 billion at the end of this year. This ZAR 800 million reduction in working capital relates to a couple of things. The disposal of our Food & Beverage business contributed to a working capital release of ZAR 350 million. Furthermore, the Schirm businesses that got disposed this year added a further working capital release of ZAR 150 million, with the final piece of working capital release coming from our Chemicals segment, approximately ZAR 360 million. That was the result of a combination of accounts receivables decreasing and an uplift in accounts payables. This reduction in working capital for the group improved the working capital ratio from 16% in 2024 to 15% in 2025. Our net debt levels has decreased substantially from a position of ZAR 3.7 billion at the prior year to ZAR 465 million at the end of 2025. This net debt reduction substantially supported the group's earnings ratio -- sorry, gearing ratio to decreasing to 4%, well below our market guidance range of 20% to 40%. If you look at it from a net debt-to-EBITDA covenant ratio perspective, the decrease gets us to 0.1x, which is substantially below our covenant threshold levels of 2.5x. Capital expenditure for the year amounted to ZAR 835 million. That was mainly made up of replacement or sustenance CapEx amounting to ZAR 688 million and expansion or growth capital amounting to ZAR 147 million. Management's focus during the year was to incur capital expenditure where most needed within the group, specifically focusing on asset integrity. After a slow start to the year in terms of capital expenditure, we did see an increase in the second half of the year, especially in the last quarter, resulting in the replacement growth capital expenditure reaching spend levels of approximately 0.7x our depreciation and amortization charge for the year. Our focus in 2026 will remain to further increase these spend levels. On the expansion and growth capital side, new growth capital spend was muted throughout the year. However, again, this is anticipated to increase in 2026 as growth capital projects in the DRC, Indonesia and Australia get into full swing. The Modderfontein optimization initiatives are expected to further contribute to increased capital expenditure over the next 3 years. The year saw outstanding free cash flow generation from both the mining and the Chemicals segments. Notably, the free cash flow conversion achieved of 133% in our Chemicals segment reinforced the importance of that segment consistently supporting the group's performance through high levels of cash generation. And then finally, our return on investment capital or ROIC reflected a satisfactory increase compared to the prior year with the Mining segment, the main contributor to this uplift. If I turn to our core business financial performance, it is clear that our robust operational performance in the core businesses drove the stronger group results. Just a reminder for everybody, our core businesses consist of our AECI Mining segment, our AECI Chemicals segment and our AECI Property Services and Corporate segment. Profit from operations at our core businesses at ZAR 2.3 billion is 125% up from the prior year and substantially higher than the group profit from operations of ZAR 1.5 billion mainly as a result of the majority of the impairment charges of ZAR 821 million recognized in the managed business segment, which falls outside core business segment. The core businesses contributed 95% to the group's EBITDA and more than 80% to the group's free cash flow. With the majority of the divestment program completed, the Managed business segment will fall away in 2026 as this segment will be reallocated to the core business segments. As a result, we will discontinue to report our core businesses as it will be the same as the group performance. This slide, the net debt, you can see here the cash generation resulted in a substantial reduction in our overall debt levels, as I've previously already indicated, reducing our debt levels from ZAR 3.7 billion to ZAR 465 million. As a result of that, our undrawn facilities has increased to be in excess of ZAR 5 billion. The balance sheet strength that we now have has set us up as a group to continue to execute on our strategic focus throughout 2026. And I will ask Dean to explain and elaborate on that later in the presentation. As has become customary, this slide provides you a waterfall of the cash in and outflows affecting our net debt levels. I think it's important to note that cash generation for 2025 came from both the operational performance of the 2 major segments as well as the proceeds from our divestment program that was successfully completed. What is really satisfying to us is that our operational cash flows at ZAR 3.55 billion has been more than adequate to cover our normal net financing costs, our taxes, our working capital lockups, our capital expenditure and our dividends. With regards to our disposals, we made announcements in July 2025 with regards to Schirm U.S.A. disposal, Baar-Ebenhausen and Food & Beverage businesses. And I can confirm that all of those transactions has been concluded and all the cash proceeds has already been received. Lastly, our strong balance sheet position of the group warrants a discussion regarding our capital allocation and dividend declaration. Maintaining our balance sheet strength and continuing to apply prudent capital management will remain a priority for us. The group will continue to reinvest within our portfolio, notably our Modderfontein optimization initiatives. The Board took the decision to declare a final dividend of ZAR 1.28 for the year, resulting in a -- sorry, a final dividend of ZAR 1.28 for the year, resulting in a total dividend of ZAR 2.28 per share for the year. The total dividends for 2025, therefore, reflects an increase of 4% compared to 2024. During the year, we converted our dividend policy from a dividend yield to a dividend cover payout. This dividend payout is in line with that new policy, and it's underpinned by our capital allocation framework, which we've highlighted for you on the slide again. This level of dividend payout continues to signal our intention that we intend to continue to declare dividends that are sustainable and affordable. At the current levels of our net debt and cash available, I think it will be remiss for me not to address an issue with regards to share buybacks as a way to return value to shareholders. In thinking about this, we have taken the following into consideration. Balance sheet optimization remains a priority for us. As a result, our disciplined approach to capital allocation remains intact. This includes that we ensure that we have sufficient growth investment cash available to secure our long-term future. Our dividend payouts occur from available free cash flow before growth capital spend. Returns to our shareholders remains a priority in the form of these sustainable dividends as well as being potentially supplemented with share buybacks. Share buybacks will be considered carefully to balance providing enhanced shareholder returns and ensuring market liquidity of our shares is not compromised. Seeing that our retail shareholding is limited since 20% -- sorry, since 20 shareholders holds approximately 80% of our shares, this is a very important consideration for us in considering share buybacks. Any future share buybacks will be in line with shareholder approvals received and disclosed together with financial results as required. With that, I'm going to hand over to Stuart. Thank you. Stuart Miller: Thanks, Ian. Good morning, everybody. I'll firstly, just like to start off by also reiterating that it was an exciting year, and all our people around the world put in a huge effort to get us to where we were today. So a big thank you from me. If we start off with the headline, the headline is AECI Mining delivered a record EBITDA of ZAR 2.7 billion in 2025. That's 19% up year-on-year despite revenue declining 18%. And that contrast matters, it signals that this was not a volume-driven year. This was a structural margin reset. Revenue was impacted by a few temporary factors, adverse weather early in the year across Southern Africa and Asia Pacific and some operational constraints at Modderfontein communicated at the half. The important point is these were temporary, and stability improved materially in the second half. Despite those challenges, profitability strengthened. Profits from operation increased 35%, free cash flow increased 34% and our ROIC increased to 24% above group guidance. This tells a clear story of where mining is heading, and it's not just higher earnings, it's better-quality earnings. Three structural shifts underpinned this performance. The first one being price and product mix. We exited underperforming contracts and increased exposure to higher-margin products, particularly electronic detonators, which increased 12% year-on-year and specialty collectors. The second was cost and operating discipline. Productivity improved, contract governance tightened, and operating costs reduced in excess of 10% year-on-year. Third was our portfolio balance. Mining chemicals maintained robust margin performance, providing the stable earnings base alongside our improving explosives business. Working capital remained well contained and controlled at 14%, supporting strong cash generation and free cash flow of ZAR 1.5 billion. On Modderfontein specifically, the disruptions experienced in the first half were largely stabilized in H2. Power resilience improved and feedstock mitigation plans were put in place. The key takeaway is, we exit 2025 with a structurally stronger and more disciplined earnings base. Looking to '26 and beyond, our strategic focus areas are centralized around our world-class leading products and technologies. And this is the lens through which we're shaping this business, how we will compete, how we will invest and how we will grow. Our first priority is the Modderfontein optimization. We are moving from a phase of stabilization to optimization. And it's important to reinforce that this is not a turnaround, and it is not a step change in capital intensity. The focus is on reliability, utilization and capital discipline, but critically, optimization is also about technology leadership. We are investing in long-term competitiveness by phasing out underperforming low-margin legacy products and reallocating capital towards higher-margin growth-orientated technologies. These technologies will strengthen our product offering, deepen our customer relationships and support structurally higher returns. Modderfontein remains a strategic anchor asset for AECI, enabling leading products and technologies to be deployed to the African continent. Second, we are embedding operational excellence enabled by technology. Digital tools, process automation and improved technical standards are enhancing supply reliability, quality, safety and cost discipline. Through better maintenance planning, stronger capital governance and tighter contract discipline, we will deliver more predictable performance, protect margins and improve cash generation. Third, we will grow in key markets through product and technology leadership. A key proof point here is Asia Pacific, where despite lower volumes year-on-year, performance strengthened materially, driven by electronic detonators, improved mix and disciplined execution. Growth will be selective and return driven, not volume for volume sake. We will deploy growth capital into markets where we see the strongest returns and technology pull-through. Those include the DRC, Australia and Indonesia, as Ian has already identified. These are markets where our leading products and technologies create clear competitive advantage and support our margin-led growth. Finally, we will continue to leverage our strong, long-standing strategic customer relationships, underpinned by technology, innovation and services. Our customers value reliability. They value predictability and performance. By partnering with them with advanced products and technologies, we will continue to deploy solutions that can be implemented day-to-day that create real value. We will continue to evaluate new jurisdictions with our partners where appropriate, expanding our share of wallet without materially increasing risk. In summary, before handing back to Dean, AECI Mining enters 2026 with a record EBITDA, stronger cash flow, higher ROIC and a portfolio increasingly anchored in leading products and technologies. Our priority is now to embed that advantage and translate it into sustainable, margin-led growth that delivers sustainable and predictable earnings. Thank you. Dean? Dean Murray: Thank you, Stuart. All right. Before I continue, again, congratulations to the mining team, fantastic year, and I look forward to this year as it sees itself out. All right. So let me talk to you about chemicals. So our Chemicals business this year had an excellent cash flow generation, conversion of 133%, ZAR 1.2 billion. And really, if you look at, we're operating in quite a flat market in South Africa because the bulk of this business is South African based. We were still able to grow the revenue by 5%, but this growth in cash generation was underpinned by a record performance in our Plant Health business. More importantly is that our Plant Health business in Malawi had a record year, delivering ZAR 100 million EBITDA, which is fantastic, well done to the teams. Then our Water business, as you'll recall, we have an industrial, mining and a public water business. We had a very strong performance in water again. But specifically, our public water business had an excellent year. And we were able to clean out a lot of the bad debt and really provide a strong service in the public water space, which our country desperately needs at the moment. Then working capital, my favorite topic. Working capital improved from 18% to 14%, and that was good vigilant working capital management by the team, which also made that contribution to our free cash flow in the business. Just the one challenge we had in the chemical business was the -- one of our biggest customers in the industrial space went into business rescue. It's still an ongoing process at the moment. I did talk about this a while ago. So we've got a provision in our numbers and expected credit loss of ZAR 64 million. So as far as the business is concerned, as we've gone into this year, I think ForEx does play a big impact in our business, but I think our teams are well equipped at managing that as well. So the strategic focus for chemicals, as we mentioned before, it remains a core part of AECI's business. We really grow this business through growing our market share, increasing our product offering to the market, new principles, new products and, of course, leveraging our customer relationships. As a chemical supplier to South Africa, we are still a leading supplier in the chemical space. And again, focusing on making sure that we sweat our assets and we actually grow our market share with our customers' baskets that we offer to them. Secondly, disciplined cost and margin management is key in this business. And I think the teams have been able to demonstrate that they have this well in control over the past couple of years. In our Water and Specialty Chemicals business, we focus a lot on innovation and technology. In the water space, there's a lot of work that's taking place on mining water treatment together with our mining business, all right? And that's not just in South Africa, that's outside of the country as well. And then our specialty chemicals product range, we have a wonderful range of products, which are green products based really on supplying also reagents in the mining flotation space as well. And then lastly, the focus, we never forget it, cash is king, and we continue to deliver the excellent cash flows in the chemical business. So looking ahead, what we have done is we updated our guidance, as you will see on the slide, really the focus around EBITDA growth, and you can see the numbers in there. Also our EBITDA margins, quality of earnings that you've heard both Ian and Stuart talk about. And then again, the importance of the free cash flow generation so that we can fund the growth for the business going forward. I think very importantly, you will see and Ian has alluded to that as well, a strong balance sheet. So really, the focus now on is where we're going to invest going forward and what are the target areas that we will focus on. So in closing from my side, the foundation was established last year. We put a strategy in place. It's an ongoing piece of work, the strategy. And really, the focus will continue to leveraging our strengths. I think what's very important is we provide integrated solutions to our customers. So they're not just buying a product, they're buying a service and know-how. Secondly, innovation is a key advantage for us, particularly in our mining business. And Stuart and the team have got a lot of new products that they've been working on, and I'm sure that we'll start seeing them over time. From prioritizing the business to make sure it's resilient, we've alluded to the fact that we will invest in the asset reliability, particularly at the Modderfontein facility. It is key for our SADC mining business. There's also some work we need to be doing in our mining chemicals business because, again, a very important part of our value creation for the customers. It's very important how we focus on increasing efficiencies on the mines in terms of the extraction chemistries that we apply. And of course, our technical expertise as well, we have been investing in. What Stuart also alluded to in terms of our growth areas, it's a focused growth approach, not a shotgun approach. We are very specific in the regions that we are active in, not just the countries, but the applications of our products, the minerals that we are targeting and very importantly, the pull that we take from our big global customers as well. So in closing, our enhancing quality of earnings I love that word. It's about the quality of the earnings that we generate for our shareholders. Disciplined capital allocation, and we have a tough vigorous process, I can tell you. We cannot waste money. When we put the money into something, it's going to give us the returns that we're looking for. Value-accretive volume growth as well. Margin, product mix and cost management, which we have done quite well over the past year. And again, the key focus on cash generation. So that is my story. Thank you very much for attending. I'll hand back to Itu, and I'm sure we'll have some questions and answers. Thank you very much. Itumeleng Lepere: Thank you very much, Dean. Okay. Thank you very much all. We'll open the floor up for question and answers. If you could kindly just mention your name and the company that you're representing before stating your question. There are roaming mics. And Rowan, I'll just get a mic over to you. Rowan Goeller: It's Rowan Goeller from Chronux Research. Just a question on market share changes, please, in the Mining division, in particular, in your different parts of the world that you operate in. Could you give a sense of how you're doing in those various regions, please? Dean Murray: Stuart? Stuart Miller: Yes, sure. We saw challenged volumes throughout the world due to the wet weather in the first quarter in particular. Full year, we did see volumes grow in Southern Africa, which was positive. But overall, we saw EBITDA and margins expand in all of our regions, those being Southern Africa, Rest of Africa, LatAm and Asia Pacific. Rowan Goeller: And market share? Stuart Miller: Market share. We won in the order of ZAR 6 billion worth of contracts through the course of the year and retained another ZAR 7 billion worth of contracts. So our market share is growing. Unknown Analyst: Yes. For me, I think it's one, congratulations on the structural margin improvement despite the lower revenue, which is particularly encouraging and suggest operational discipline, which are not just the volumes. But then the question around that will be -- with the balance sheet now significantly strengthened at the net debt-to-EBITDA is looking at 0.1x. How is AECI thinking about prioritizing capital allocation between further portfolio optimizations and also around the organic growth? And also, I mean, to what Stuart you spoke about in terms of the technology and the digital, how are you looking at that, especially achieving the 2030 integrated enterprise ambition? And then the second one is also around that ambition because there, we're looking at ambition of EBITDA at between ZAR 5.6 billion and ZAR 6.3 billion. Yet the current EBITDA is looking at about ZAR 2.4 billion. And one then would look at the structural enablers that can then be brought in, in that regard. I mean Modderfontein is one of them, the optimization there. But then one would check if what are other structural enablers that AECI is looking at as most critical to achieving that step change. Dean Murray: Okay. Maybe I can start off and then I'll hand over to my 2 colleagues. So I think if you look at the work that was done by our M&A team over the past 2 years, we've done a lot of investigative work in terms of inorganic acquisitions. We've also spent a lot of time looking at the growth that we anticipate in our mining business in the various regions because there's a capital that has to be allocated in those particular areas, together with the capital allocation at Modderfontein. We're at the process where we are doing a proper disciplined approach in terms of looking how we allocate that capital that will give us the right returns. There's work that we've been doing on the continent in Australia as well as in Papua New Guinea and in LatAm. But before we do any allocation of that capital, there's a thorough process that we take through the investment committee to make sure that we're going to get those right returns. So I think over the course of the next year, I'm sure we will give some updates in terms of where we intend to put some of that investment capital there. Ian Kramer: I think I can add to it in analyzing your question, we go to our disciplined capital allocation framework. The first thing that we have signaled is the reinvestment in our existing portfolio, our organic growth, making sure that our plants are optimized as best possible, and that includes the significant exercise we're doing in terms of Modderfontein. Subsequent to that, sufficient cash flows remaining the dividend payouts and then growth capital investments. Growth capital investments happens in the markets where we are strongest, that being Southern Africa, the Africa continent, specifically the DRC and Australia and hence, the commitment that the growth capital spend that has started in those regions will continue to go through. Once that has all been concluded, that drives and feeds into over the longer period, the uplift in EBITDA performance. And that is still -- obviously, that growth capital is one of the legs to get that uplift that is still coming through then. Stuart Miller: Yes. And just adding on that, I think as we exited 2025, we did see volume improvements in Southern Africa year-on-year. And we benefited from that operating leverage. There's still more leverage there available, and that will be a key focus and priority for us, particularly in the Southern Africa region where we do have quite a heavy asset base. Outside of Southern Africa, we are continuing to deploy a capital-light model where we're putting manufacturing assets closer to customers. We see that as a strategic advantage, particularly in countries like Australia, and we'll continue to leverage that. On the question around digital, in '25, our focus was more on the cradle to the grave of our products. So looking at how we trace our products from manufacture to destruction. And 2026 is going to be more front-end facing on the business where we will start redesigning our digital platform that our customers can interface with. We do have a strong strategy around data ownership but being quite agnostic when it comes to how we collect that data. We strongly believe that our expertise lies in how we interpret that data and how we drive the continuous improvement loop with our customers as opposed to owning and developing hardware for collection. It's a very asset-intensive process, which we think there's a lot of innovation happening around the world that we can plug into with partnerships. Itumeleng Lepere: Thank you very much. Do we have any other questions in the room? Okay. I will take a few questions from the webcast. First up is Adam Esat from MIRF. I think, Ian, this one is for you. Can we get a firm commitment from Asia as to when we can look forward to a clean results with no further write-offs and minimal difference between HEPS and EPS? Yes. Maybe let's just address that one first. Ian Kramer: So the bulk of the divestitures has now been completed. There's a couple of small entities that still remains. We will only dispose of those for value where we can find value. Otherwise, it will be reintegrated into the business. The Schirm Germany restructure has been successfully pulled through the year. So we believe we have turned that corner. The only reason why I flagged the EUR 6 million goodwill is that is potentially the only further impairments we could see come through if the Schirm turnaround doesn't create this value, which we firmly believe will happen. So I think you're going to see us getting our EPS, HEPS numbers much closer to each other going forward. Itumeleng Lepere: Thank you, Ian. And just a follow-up question from Adam and a few more people asked about it. We've spoken a lot about consulting costs to transform AECI. Was the money spent on consultants well spent? And was any of the costs capitalized? And I think just to link that up with Warren Riley's question, he is asking, can you provide guidance on what that cost is going to look like going forward? Dean Murray: Maybe let me start off talking about the -- I mean, the large part of the consulting work was done with the TMO project that we put in place. The TMO project is a project that's a long-term project. I mean we saw a lot of the benefits from the TMO project in year 1, particularly out of the procurement aspect, the procurement work stream. I think more importantly, though, is that the TMO business -- the TMO process doesn't operate independently of the business. So what we have done now is that we put the TMO process back into the business with making sure that we don't lose sight of all the good work that was done. So we do still track it from the head office, but the business ownership will drive the TMO projects going forward. And look, I think the other thing with the TMO project, part of TMO was also growth projects, which required capital investment. And we haven't seen all of that return at the moment because, again, we've got a very disciplined approach in terms of how we allocate the capital. But as we go further down the line, some of those projects will start to materialize over the next year or 2. Ian Kramer: Just in terms of capitalization of those costs, obviously, we're following the accounting standards and rules around that. The bulk of that consulting fees, if not all, has been expensed and that's gone through the P&L. Itumeleng Lepere: Yes. And then Warren just asked with regards to guidance and reducing the SG&A cost looking forward. Ian Kramer: So that is certainly going to be a continued focus for us this year that we still further drive optimization as we continue our journey on enhancing the new operating model that we are rolling out on the back of that consultancy advice. Itumeleng Lepere: Thank you, Dean and Ian. And just to move on to the next question, Paul Whitburn from Rozendal Partners. How sustainable is the net working capital as a percentage of revenue? Can you hold on to these cash flow generation gains? So that's the first question. So there are a few questions here. Could you provide some granularity on the growth in volumes of explosives across the regions? I think Stuart, you can take that one. Would growth initiatives into new regions for mining result in ROIC ahead of the strong 27% ROIC generated by the business in 2025 or dilutionary to these returns? So I think maybe Ian, you can start with the net working capital. Ian Kramer: On the net working capital, obviously, there was a significant release because of the disposed businesses. Food & Beverage always had a sizable working capital element that we've now released. In terms of the rest of the business, we have put in a lot of effort to ensure that we get to the appropriate levels of working capital. I believe we have been quite successful this year and that we are comfortable that we can maintain the current levels that we've achieved at the end of the year. Itumeleng Lepere: Volumes? Stuart Miller: Volumes, yes. So across the year, we were impacted by the weather in Q1. And as I highlighted during the presentation, we see this as temporary. Last year was quite an extreme set of weather circumstances. We saw flooding in the Amandelbult region. I get told I pronounced that incorrectly, so apologies. And also a lot around Asia Pacific and in Australia, particularly, there was a 1 in 100 year weather event that went through there. That did impact our underlying volumes. So we look at ammonium nitrate equivalents generally as an aggregate. But inside that, we do have a traded portion. I always sweep that out. Traded AN is an opportunity and it's low margin. The core, which is bulk explosives delivered to customers, that dropped by about 8% as a result of that Q1 impact and recovered strongly in H2. So I don't have any major concerns with respect to volumes, and we are winning more contracts than we are losing, as I mentioned before. Itumeleng Lepere: And Dean, I think you've got the guidance sheet there on the ROIC on whether the growth projects will deliver. Dean Murray: Exactly, Itu. And if you look at the guidance that we've given in the sheet, I mean, the ROIC improvement in mining has been very good, Stuart, which we are very happy with. And we believe we will maintain that. I mean the capital projects that we -- well, let's say, the capital projects that we're looking at, at the moment, all meet our hurdle rates. Otherwise, we will not approve those projects going forward. So if I look at the work or the capital we want to put down into the DRC, Stuart, in Australia as well... Stuart Miller: If I jump in there, Dean, I think it's important just to try and articulate that a lot of this capital that's being deployed is being deployed into modular manufacturing facilities, which lean towards higher-margin more technology-enabled products. And that's the strategy, and that's going to continue to drive our ROIC. So I feel quite comfortable that mining is setting ourselves up for success when we look at the ROIC over the next 3 to 5 years. Itumeleng Lepere: Okay. Thanks, Dean and Stuart. Maybe just defect to the room if you've got any other questions in the room. Okay. In the absence of any, I will continue -- there's quite a few on the webcast. So I'll continue on the webcast. Warren Riley from Bateleur Capital. You have previously guided to a reduction in group tax rate, Ian. What is your expectation for FY '26? And interesting one. Note 8, contingent liabilities states that the group could face substantial claim in AECI Mining as well as SENS related to the U.S. PPP program. Can you please quantify the expected claims from both these proceedings? So first is on the ETR guidance. Ian Kramer: So continue to guide that recurring ETI will be between levels of 35% to 40%. I'm quite comfortable there. We are continuing our work to deal with the more complex structural matters that could reduce that to levels between 30% and 35%. And that message remains consistent to what I've previously guided. With regards to the 2 contingencies in the financial statements, the Ultra Galaxy vessel matter, there was no further developments in that case. We actually have not received a formal claim with a value. So it remains just a possible obligation, hence being disclosed as such in the financial statements. And then the Paycheck Protection Program in the U.S. The comment I want to make there is that, that is an investigation by the DOJ, not only with regards to SANS Fibers, but across the whole of the U.S. SMEs in terms of that program. We are quite confident that we have submitted our paperwork appropriately and correctly, and we're entitled to those. So we do view it as a remote obligation. Itumeleng Lepere: Thank you very much for that, Ian. The next question is from Paul Carter from Lucas Gray. It's not a long time back when you mentioned a run rate of ZAR 6 billion on EBITDA. Dean, I think this one is for you. Was the plan for 2026, has this now been lost? Dean Murray: I think, firstly, if we have a look at the, let's say, the growth plan that we have put in place, we've had a review, obviously, of our growth projections in AECI. The strategy still remains intact. We had some delays with regards to some of our capital allocation for growth. And that was really on the back of our focus being on Modderfontein, making sure that we got that plant up -- got it up and making sure it's reliable. So the growth aspirations have not disappeared. But what we have done is that we will focus on -- I'd say that the time frame is going to be out a little bit, but the projects are still there. It's a matter of how we deliver on time, particularly with our focus on the investments outside of South Africa as well. Itumeleng Lepere: Thank you very much for that, Dean. Next question was from AJ Snyman from Peregrine Capital. AJ, I think we've addressed your question on the contingent liabilities. And Marang Morudu has asked about the corporate cost, which we've addressed. That's fine. Then Tumisho Motlanthe from Coronation Fund Managers was asking about the ETR. So we addressed that. EBITDA margins of 12% in mining and 7% in Chemicals, where to -- over the medium-term? So that's his question. So EBITDA margins of 12% in mining and 7% in Chemicals, a bit of guidance on the mid-term and mid-term view. And his next question is around the dividend cover range is wide at 1.5 to 3x. What is the FY '26 thinking? And on the free cash flow and EBITDA of conversion of 57%, very complementary saying it's good, but where to next. Quite a few questions. So Ian, let's start with the first, I guess, Stuart and Dean, EBITDA margins. Dean Murray: So maybe let's start with Mining, Stuart, and then I'll cover chemicals. Stuart Miller: Sure. So I think the most comforting thing for me over 2025 was, and I've touched on it a couple of times, is we did see our volumes expand in Southern Africa. And as a result of that, we did see our profitability and margins expand, particularly in South Africa. And that was on the back of operating leverage through Modderfontein primarily. There's more embedded opportunity there for us as there is at Sasolburg, and we plan to exploit that. We will continue to drive operational excellence and reliability across those operations and continue to drive our OEE up to push more products into the market. So that's a key priority, and that's something that's going to give meaningful support to margins over the medium-term. Outside of that and talking internationally, we are -- we have sanctioned, and we are deploying, as I previously indicated, more manufacturing capital into our strategic international markets. And these are all leaning into higher-margin products such as PowerBoost and electronic detonators. So I think the margin mix for us is a favorable outlook. So I feel quite comfortable that we'll retain that over the medium-term. Dean? Dean Murray: Yes. As far as the chemical business is concerned, we've always targeted an EBITDA percentage of around 10%. We were a little bit down in 2025, and that was largely due to the expected credit loss that we had through in the numbers. But really, when you look at this business, the parts of the Specialty Chemicals business and particularly the water business, these are generally higher-value products, value accretive, good margins on those businesses. So that's where the focus is and where the growth focus is. What we did see last year in our Specialty Chemicals business is one of our biggest customers, they were down for quite some time. They had a fatality on the plant. So for 2 or 3 months, we lost in terms of supply, but that's picked up again this year. So the target for the chemicals business is always to try and beat the 10% mark. In the Plant Health business, of course, we do operate at slightly lower margins, but what's important there is obviously the payment terms that we are able to get from our suppliers. But again, we really focus on the ROIC in our Plant Health business, but we aim for 10% and above. Itumeleng Lepere: Okay. And Ian, just on the -- question is the dividend cover range of 1.5x to 3x is... Ian Kramer: So the thinking at this stage because of the level of cash we have, and the low level of net debt is that it would always be at the lower end payout of that dividend cover, so the maximum payout in terms of that policy. That is certainly how we're thinking of it, and that's what we've done for year-end. And your last question was... Itumeleng Lepere: On the free cash flow, I think... Ian Kramer: The free cash flow, we were very happy with that free cash flow conversion. It was an exceptional year. There's a couple of underlying factors that you need to consider that drives that free cash flow conversion. That is the working capital unlock. We are now at levels where that will become more muted. And then also, it is also a function of capital spend. And as we pick up on capital spend, we will see some pressure on that level of free cash flow conversion margin. But we're still very confident that we can get within that guided ranges that we've put on the slide. Itumeleng Lepere: Okay. Thank you very much, Ian. Just going to check again. We're almost out of time, but we'll check in the room. Any questions? Kiara King: Kiara King from Absa Equity Research. Just a question on ammonia supply and security. Could you provide more color into how you're thinking about that moving forward? Dean Murray: Stuart? Stuart Miller: I'll take that one. I guess that does affect me. It's a primary feedstock. Look, we're seeing ammonia supply stabilize, but it's a risk. We're seriously evaluating how we expand our import capacity. We stood that up this year. So we imported almost 10% of our demand this year, and we're going to expand our ability to do so further into the future. So in the medium-term, based on our requirements, I'm not seeing a material risk. In fact, I'm feeling more comfortable that we can get our feedstocks, whether that be from domestic supply, which is always a preference. We want to support South African made products. We want to supply South African-made products. But we do have the capacity to supplement with imported products now. Itumeleng Lepere: Okay. Thank you very much, Stuart. Just moving on to, again, Paul Carter and Adam, you said your comment has been noted on the disciplined capital management. Paul is asking spending capital on acquisitions and it was down the spine of many long-suffering shareholders. Can you state that this is indeed not top of the agenda as it appear much still needs to be done internally? Dean? Dean Murray: Yes, we can. So I think first and foremost -- yes, we have a strong balance sheet. We're sitting on -- we are in a good position. But again, you're quite right. Any investment into acquisitions will be very closely scrutinized. We still believe a lot of our growth will come out of our expansion of mining into Africa and into Australasia, where we've got strong know-how, it's right in our sweet spot, and that's where our preference will be to put capital down first. Itumeleng Lepere: Thank you very much for that, Dean. And Marang Morudu, I think Dean did talk to the point around TMO and EBITDA synergies. Then, yes, I don't have any more questions on the webcast. If anybody in the room has questions. Okay, not. Then that brings us to the close of our day. And please kindly join us outside if you're in the room, not the webcast for some refreshments. And again, thank you very much for joining us. Dean Murray: Thank you, everyone. Ian Kramer: Thank you.
Operator: Good day, and thank you for standing by. Welcome to the Flywire Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Masha Kahn, VP, Investor Relations. Please go ahead. Masha Kahn: Thank you, and good afternoon. With us on today's call are Mike Massaro, Chief Executive Officer; Rob Orgel, President and Chief Operating Officer; and Cosmin Pitigoi, Chief Financial Officer. Our fourth quarter 2025 earnings press release, supplemental presentation and when filed, Form 10-K can be found at ir.flywire.com. During the call, we will be discussing certain forward-looking information. Actual results could differ materially from those contemplated by these forward-looking statements. Unless otherwise mentioned, all financial measures discussed on this conference call are non-GAAP. Please refer to our press release and SEC filings for more information under regarding these forward-looking statements that could cause actual results to differ materially and the required disclosures and reconciliations related to non-GAAP financial measures. Please refer to our press release and SEC filings for more information on the risks regarding these forward-looking statements that could cause actual results to differ materially and the required disclosures in our conciliations relating to non-GAAP financial measures. This call is being webcast live and will be available for replay on our website. I would now like to turn the call over to Mike Massaro. Michael Massaro: Thank you, Masha, and thank you all for joining us here today. Before we share more details about an outstanding quarter across all our operating metrics, I want to step back and revisit the progress we've made, the structural advantages of our model and how we've positioned Flywire for continued durability and growth. Since our IPO nearly 5 years ago, we have scaled Flywire into a diversified, resilient and increasingly profitable business. We have grown across multiple verticals and geographies, expanded margins reached GAAP net income profitability and continue to generate increasing levels of free cash flow, all while navigating significant macro disruption across payments, software and global education and travel markets. That progress reflects consistent execution against a deliberate strategy designed to leverage our competitive strengths, deepen our moat and deliver long-term shareholder value. Our strategy remains just as relevant and differentiated today as it has ever been. At our core, Flywire operates across multiple industries, but we execute a single, scalable playbook we embed deeply into mission-critical financial workflows, solve complex payments end-to-end and expand over time as clients turn to us for more of their critical operations. A defining characteristic and key competitive advantage of our business is the complexity of the environments in which we operate. We specialize in large value, cross-border receivables in highly complex verticals, where payments must be processed with precision, compliance and full reconciliation. This complexity creates real barriers to entry and allows us to embed deeply within systems of record and core financial workflows of our clients. Once embedded, expansion becomes a natural motion. We process a greater share of payment volume and attach value-added software that improves client outcomes, creating a flywheel that reinforces our position and value to our clients over time. Today, approximately 90% of our education revenue and over 70% of our travel revenue come from enterprise clients, which we define as clients generating more than $100,000 in the last 12 months revenue. With more than 100 direct integrations into ERP and vertical systems, including over 70 in education alone, we are embedded into the operational fabric of our clients. As a result, revenue churn across education and travel was below 1% last year. This advantage compounds through our proprietary global payment network, which supports transactions across more than 240 countries and territories, in over 140 currencies and through more than 1,200 local payment methods, fully integrated into enterprise platforms. That infrastructure is difficult to replicate and becomes more valuable with scale. As our volumes grow, our routing intelligence, compliance capabilities and localized economics improve. Access to direct relationships with China UnionPay, leading Indian banks and in-country accounts across markets such as Vietnam, Mexico and Brazil are just a few examples of our network in action. These specialized partnerships allow us to localize payment flows and deliver outcomes that generic providers cannot. As AI adoption accelerates, we believe value will increasingly concentrate in platforms that already control trusted financial workflows and proprietary transaction data. Flywire operates at that control point where data, compliance, workflow and transactional execution intersect. We are embedding automation and AI across routing, reconciliation, compliance and our client-facing software. Enhancing productivity and lowering friction while the underlying system of record remains ours. The takeaway is simple. Flywire delivers an end-to-end embedded receivables platform, not a stand-alone payment solution or a point software tool. We are structurally integrated into mission-critical workflows of our clients, where reliability, compliance, trust and scale matter most. That structural position translates into measurable, consistent outcomes, durable client relationships expanding gross profit per client over time and increasing lifetime value. Our competitive position continues to strengthen, not because of market cycles, but because of how deeply we are embedded in enterprise systems in the industries we serve. These advantages are durable. They do not fluctuate quarter-to-quarter, they compound as we scale. With that proven foundation established, let me now shift to how we are extending our advantage, balancing revenue growth with gross profit expansion, margin progression and disciplined capital allocation. As CEO, I'm focused on 3 core metrics. First, revenue and gross profit dollar growth. Together, they reflect demand for our platform, the durability of our client relationships, expansion of payment volume over time and the incremental value created through software adoption across verticals and geographies. Second, EBITDA margin progression. Over the last 3 years, we've increased adjusted EBITDA margins from nearly 6% to 20%. This reflects the scalability of our operating model and our ability to grow profitably while driving disciplined operating leverage including continued discipline around stock-based compensation and dilution. Third, multiple year annual free cash flow growth. Free cash flow generation and capital efficiency are central to how we think about long-term shareholder value. Over the past several years, we have meaningfully inflected and scaled free cash flow from $5 million in 2021 to $62 million in 2025. Together these metrics, define how we run Flywire and how we allocate capital. As we have scaled, we have deliberately shifted from a pure revenue lens towards gross profit growth, margin expansion, GAAP profitability, free cash flow generation and capital efficiency. That shift reflects the strength and maturity of our business model. With that context, we continue to transform Flywire into a more scalable and efficient company. This transformation is structural, not cyclical. We are strengthening the core drivers of our business: pricing, routing, productivity, capital allocation, so that our performance is powered by execution, not external conditions. Our execution is anchored around 3 operating priorities that reinforce our strategy and support durable value creation. First, accelerating product and platform innovation. We are not focused on incremental features. We are focused on solving high-value problems, deeper in client workflows. We are consolidating our platforms into a unified modular architecture where core services like payments, FX, risk and compliance are shared across verticals. This build once deploy everywhere model increases development velocity, improved durability and supports margin expansion as we scale. Second, building a scalable enterprise growth engine we are increasingly focused on larger clients, higher value deals in repeatable vertical playbooks that we are successfully executing across geographies. Flywire already operates as a global platform with deep local integrations and payment infrastructure across major markets. That means we can scale efficiently within our existing footprint and capture a significant portion of our global TAM. This is driving measurable improvements in pipeline creation, sales productivity and lifetime value per client while strengthening revenue durability and expanding unit economics. As a result, our go-to-market model is becoming structurally more efficient and globally scalable, supporting durable growth and long-term margin expansion. Third, accelerating our internal transformation, scaling the company through data automation and high-performing teams. We are building a unified data architecture, automating core internal processes and deploying AI-enabled decision support across the business. Our transaction data, reconciliation data and workflow data are all strategic assets, not just reporting tools. They improve routing economics, reduce manual intervention, enhance risk management and accelerate innovation. The impact is clear in our financial results. From 2022 to 2025, revenue has compounded at approximately 31% annually, with gross profit growth only slightly below revenue, while non-GAAP operating expenses have grown just 17%. That spread reflects operating leverage driven by systems, automation and execution discipline rather than short-term cost reductions. At the same time, we are strengthening high-performing teams with clear accountability and strong pay-for-performance culture. The combination of proprietary data, automation and operational discipline enables us to scale revenue and gross profit without proportional cost growth. Together, these pillars reinforce one another. They enable faster innovation, more efficient execution and disciplined scaling, while staying aligned with the outcomes that matter most to clients and long-term shareholders. You see this reflected in financial outcomes that matter, expanding EBITDA margins, sustained GAAP profitability and growing free cash flow even amid macro headwinds. As AI adoption accelerates, we believe AI will amplify platforms that already control trusted financial workflows and proprietary data. The winners in the Agentic era, will combine innovation with end-to-end workflow ownership, embedded data, measurable ROI and disciplined capital allocation. Because we own the workflow, the reconciliation layer and the underlying transactional data across complex and highly regulated verticals, we believe Flywire is structurally positioned to be one of those winners. Together, these priorities are reinforcing Flywire structural advantages and positioning us to scale efficiently, expand margins and capture our global market opportunity. With that context, Rob will walk you through how our go-to-market execution is driving this model across our verticals. Rob Orgel: Thank you, Mike. I'll focus on how our go-to-market execution is driving durable efficient growth across the business. Our go-to-market engine is built around deep vertical expertise. We organize our teams around specific industries, develop specialized integrations and embed directly into the systems and workflows our clients rely on every day. This vertical specialization allows us to solve complex financial workflow challenges and positions Flywire as a long-term infrastructure partner rather than a transactional provider. This model continues to scale effectively. In 2025, we signed approximately 750 net new clients. This reflected strong demand across our verticals and geographies with solid new logo momentum as we exited Q4 2025. That 750 net new clients, a number of which are named in our earnings supplement exclude additional properties added through Sertifi, invoiced only software clients and upsells across our existing client base. Because Flywire is deeply embedded in mission-critical workflows, our client relationships are highly durable. Revenue churn across our core verticals remains below 1%, reflecting the strength of our integrations and the long-term value we deliver. Education remains a strong example of our expansion-led model. Growth in EDU is driven primarily by expansions within our existing client base supported by adoption of our student financial software, broader full suite deployments and deeper ERP integrations. We are seeing particularly strong momentum in the U.S., where projected ARR from signed SFS deals grew more than threefold year-over-year. This reflects accelerating demand as institutions modernized financial infrastructure and demonstrates the increasing efficiency of our sales engine. In the U.K., growth is driven by deeper integrations, including SFS deployments and expansion of coverage of domestic tuition and accommodation payments. We remain early in full platform penetration but continue to make progress with full suite wins at University of Cumbria and the University of the West of England. As previously mentioned, we are working on our SFS support for Oracle Fusion and expect to have our initial U.K. launch clients signed and live this year. We are also seeing strong growth outside our traditional Big 4 markets with more than 50% of new education clients signed in 2025, coming from outside those countries and revenue from these markets growing more than 30% year-over-year. Beyond education, our vertical expertise continues to drive strong growth across the business. In travel, Flywire purpose-built platform allows travel providers to streamline global payment workflows and improve operational efficiency. Clients such as Villa Finder, a leading villa rental platform in Asia, serving a highly international client base, selected Flywire to modernize their global payment infrastructure and fully integrate payments into their booking workflows. This win highlights the strength of our vertically specialized platform and its ability to support complex cross-border travel providers at scale. Since acquiring Sertifi, we have increased the number of properties served and payment volume has nearly doubled year-over-year, driven primarily by higher attachment within the installed base. As we continue to make progress on integrating contracting, booking workflows and Flywire Payments into a unified platform, we expect to see continued cross-sell and international expansion opportunities. In health care, we tailor our integrated solutions to the complexity of each health system, particularly those running Epic or Cerner as their core EHR platforms. Success in this market requires deep domain expertise intricate integrations across pre-service, point of service and post-service workflows, seamless patient and administrative experiences and payment excellence. During the quarter, we signed Jackson Health System, an integrated health network based in the Southeast alongside several midsized and community hospital wins. We are also progressing through the phased rollout at Cleveland Clinic. Initial payment processing components are live with additional phases, including our robust patient financial experience solution expected to roll out in Q2. In B2B, we are seeing strong adoption of our integrated Software and Payments platform as businesses modernize their invoice to cash workflows. Increasingly, new Flywire B2B clients are adopting both Software and Payments from day 1, strengthening workflow embedment and improving long-term monetization and retention. Our invoice platform already delivers enormous automation to the accounts receivable process, but will shortly be introducing new AI-powered features that amplify the power of the platform for our clients and further streamline its implementation. As Mike mentioned, enterprise clients represent the majority of our revenue and provide significant expansion opportunities due to the depth of integration and breadth of workflows we support. At the same time, our go-to-market engine is becoming structurally more efficient. Pipeline creation entering 2026 increased by approximately 35% year-over-year, reflecting strong demand and improved market positioning. Sales productivity continues to improve, and we are generating significantly more ARR per sales rep than in prior years. These productivity gains are translating into meaningful operating leverage in 2025, signed ARR grew over 35% year-over-year, and that's excluding the impact of large payment processing contracts in health care. This ARR growth reflects strong underlying sales momentum across our core verticals. From 2022 to 2025, and sales and marketing expenses declined from approximately 25% to approximately 20% of revenue, all while delivering significant yearly revenue and gross profit growth. This demonstrates the scalability and efficiency of our go-to-market model. Stepping back, our go-to-market engine is delivering durable, efficient growth driven by vertical expertise, deep workflow integration and expansion within our existing client base. This model strengthens revenue durability, increases gross profit per client and supports continued operating leverage as we scale. With that, I'll turn it over to Cosmin. Cosmin Pitigoi: Thanks, Rob. I'll cover our financial performance, margin dynamics and our outlook on profitability and capital allocation. Starting with Q4 performance. In a year that demanded agility and discipline, we finished with strength. We delivered Q4 revenue almost 8 points above the midpoint of our guidance while continuing to expand EBITDA margins, outperforming consensus expectations. Importantly, performance was broad-based across verticals and geographies, reflecting disciplined execution and the durability of our diversified model. Starting with our top line performance, revenue was $152.7 million, growing 32.6% on an FX-neutral basis. FX-neutral organic growth, excluding Sertifi, was 20%. The guidance beat was primarily driven by strength in the health care payment processing ramp, followed by travel as well as better-than-expected macro conditions across many of our education markets. On a reported basis, foreign exchange contributed a 270 basis point tailwind relative to Q4 of the prior year. Transaction revenue increased 33%, driven by 42% growth in transaction payment volume, continued contribution from education as well as travel. Quarter-to-quarter, you may see variation in blended yield due to mix. For example, higher domestic volume or greater credit card penetration, which naturally carry different economics than cross-border effects. Importantly, on a like-for-like basis, pricing remains stable and competitive behavior continues to be disciplined. Our spreads reflect the value we deliver, compliance, reconciliation, ERP integrations and enterprise-grade infrastructure rather than commodity payment processing. Platform and Other revenues grew organically with the inclusion of Sertifi and continued momentum in health care patient affordability solutions contributing to 50% year-over-year growth, platform-related volumes increased 11%. Adjusted gross profit was $93.7 million, up nearly 24% year-over-year. Adjusted gross margin was 61.3%, reflecting mix and ramp dynamics as well as roughly 2 points of FX settlement pressure versus a benefit last year. Excluding FX and payment processing ramp activity, the normalized mix-driven margin decline was within our expected roughly 200 basis points annual range. As we attach Payments with deepen monetization and expand lifetime value, even when gross margin percentage shifts with mix as evident this quarter, gross profit dollars increased and those incremental dollars carry minimal incremental operating expenses. That operating leverage drove EBITDA to scale faster than revenue. Adjusted EBITDA margin was 16.6% in Q4, expanding 190 basis points year-over-year and exceeding guidance. Our objective remains clear, operating expenses must grow more slowly than gross profit. We are simplifying and modernizing our architecture, consolidating platforms, eliminating tech debt automating workflows and optimizing routing economics. We are making a focused near-term investment to build a unified end-to-end data foundation designed for an Agentic AI future. By embedding AI directly into our existing infrastructure, we are strengthening the platform today while expanding structural operating leverage over time. For the full year, we generated $13.5 million in GAAP net income and expect to build on that profitability as we scale. Our balance sheet remains strong with a $200 million net cash position. Since launching our repurchase program, we have deployed $118 million towards share buybacks with approximately $180 million remaining authorized under the program. Diluted weighted average shares outstanding declined year-over-year as share repurchases more than offset dilution, resulting in negative net dilution for 2025. Our capital allocation priorities remain unchanged with continued focus on growth and disciplined share buybacks, especially at current dislocated valuation levels. Turning to 2026 guidance. Starting our full year revenue, we've seen the strong momentum from Q4 continued into Q1. We expect approximately 15% to 21% FX-neutral revenue growth, including roughly 2 points from B2B migrations and the Cleveland Clinic ramp and approximately 1 point from inorganic contribution as we lap the Sertifi acquisition. First, some guidance context around our margin dynamics and macro assumptions. As those payment processing programs scale, they create temporary mix pressure, particularly in gross profit margin due to early stage ramp economics. As a result, we expect adjusted gross profit margin to decline approximately 200 to 300 basis points year-over-year. Excluding the impact of these payment processing ramps, we would expect gross profit margin dynamics to be closer to the lower end of that range, roughly in line with our historical approximately 200 basis points annual mix-driven shift as Software and Payments scale together. As discussed, our focus is balanced around expanding gross profit dollars. For 2026, at spot rates, we expect gross profit dollar growth in the mid-teens. Importantly, the incremental pressure from ramp activity is temporary and largely complete by the end of 2026. As we move beyond the ramp phase and into 2027, we expect margin dynamics to normalize towards the 100 to 200 bps annual decline and reflect steady state mix and demand. From a macro perspective, our 2026 outlook reflects a prudent set of country level assumptions. We have modeled U.S. first year visas down approximately 30%, Canada down 10%. And and flat visa issuance in the U.K. and Australia. In the U.S., total education revenue is expected to grow low single digits, with cross-border modestly down under our visa assumptions more than offset by domestic strength and continued SFS penetration. In Australia, we are assuming flat visa volumes and expect modest low single-digit revenue growth driven by continued strong execution and expansion within our existing client base, while closely monitoring tighter visa requirements for Indian students. In Canada, despite the visa headwinds given new client additions and continued expansion into domestic payments expecting education revenue growth to exceed 10% year-over-year, reflecting the impact of new contracts signed last year. EMEA and U.K. Education revenue growth is expected at or above company average. Importantly, our guidance does not assume a rebound in global student mobility. Growth is driven by share gains, SFS expansion and deeper enterprise penetration. Moving to margin guidance. We have now crossed the 20% mark on a full year basis. We expect approximately 150 to 350 basis points of EBITDA margin expansion, reaching 22.5% at the midpoint of our guidance. Since 2022, we've scaled revenue while reducing operating expense intensity across every major category. Sales and marketing declined from 24.8% to 20.1% of revenue, reflecting higher annual contract value platform deals and improve productivity. Technology and development declined from 13.7% to 8.3%, driven by platform consolidation and greater engineering efficiency. Our expense leverage reflects productivity gains, not reduced ambition. We continue to fund product, engineering, data and enterprise expansion where we see strong return on investment. General and administrative declined from 24% to 15.8%, supported by automation and system simplification. As we invest behind our accelerated data strategy and digital transformation advanced analytics and AI, these investments sit within G&A, but function as enterprise infrastructure, strengthening data architecture, automation and risk management across the platform. Our guidance assumes some deceleration in revenue growth from the first half to the second half, primarily due to more difficult year-over-year comparisons in the second half of 2026 and the timing of ramp-related contributions and as we remain prudent given the dynamic macro. Margin expansion, however, is expected to be more pronounced in the second half given normal seasonality and as operating leverage flows through the model. Looking beyond this year, we continue to invest for growth while scaling gross profit dollars faster than operating expenses. That operating discipline underpins our confidence in achieving 24% to 25% adjusted EBITDA margin for 2027. For 2026, we are focused on efficiently converting every dollar of adjusted EBITDA into sustainable free cash flow. After normalizing our historical conversion rates to remove onetime items, we expect conversion in the 70% to 75% range. Importantly, our equity program is directly aligned with our pay-for-performance culture. As a result, dilution remains disciplined and performance-based and is increasingly offset by growing free cash flow and opportunistic repurchases. Equity compensation is tightly aligned with long-term shareholder value and we carefully manage both gross, equity issuance and net dilution. Our goal is to limit gross dilution and maintain net dilution at approximately 3% over time, while continuing to reduce stock-based compensation as a percent of revenue with a target of approximately 10% in 2026. Finally, as a result of this focused discipline on profitability, we expect GAAP net income to grow approximately 3 to 4x versus 2025. Our objective remains durable free cash flow growth, supported by disciplined expense management and capital allocation. For Q1 2026, at the midpoint of guidance, we expect approximately 28% FX-neutral revenue growth and a 225 basis points of margin expansion. Revenue growth includes a 7-point contribution from lapping the Sertifi acquisition as well as approximately 3 to 4 points from the payment processing ramp. At current spot rates, we expect a 4- to 5-point FX tailwind in the quarter. Q1 includes multiple tailwinds that will moderate as the year progresses, particularly as we lap the Sertifi acquisition, and payment processing ramps from health care and invoiced clients. Gross profit dollar growth is expected in the 20% to 22% range at spot rates with approximately 7 points of that growth attributable to Sertifi, consistent with its contribution to revenue. In summary, in 2026, we expect to demonstrate the durability of our diversified platform, the scalability of our operating model, and our continued commitment to disciplined capital allocation. We remain focused on driving sustainable growth and expanding profitability over time. Stepping back, I spent more than 2 decades working through major data and technology transformations and moments like this are rare. The work we've done to modernize our systems, simplify our architecture and build a unified data foundation is not just an efficiency program. It positions us to participate fully in the next wave of intelligent AI-driven software from a place of architectural strength and financial discipline. What excites me most is that we are building a company designed to compound over time. I'll now turn it back to the operator for questions. Operator: [Operator Instructions] Our first question comes from Nate Svensson with Deutsche Bank Securities. Christopher Svensson: Just on the guidance, some of the macro assumptions, I think the prudent approach as you put at Cosmin is the right 1 to take. But just kind of wanted to dig down into the assumptions in the U.S. and Australia. So I guess I'll just ask both of them. So in the U.S., you're assuming visa is down 30%. Obviously, we aren't getting F1 data anymore, but based on some recent reports that seems like a pretty material step down in '26 relative to '25. And I guess relative to that common app data you called out in the slides. So I just wanted to ask if there's anything you're seeing or hearing that makes you think things are maybe getting worse versus how much of this is prudence or conservatism? And then in Australia, you're assuming flat visas but you also called out 9% growth in places for new international students. So just, again, trying to hope you can break down the delta between the 9% increase in new places and the flat visa growth. Cosmin Pitigoi: Yes. Thanks, Nate. I would say the summary is trying to be prudent. Obviously, we've seen this very dynamic environment in both of those markets. In the U.S. look, we've seen -- we don't have external data yet, but just looking at our own data last year, looking at first year payers sort of down in the first -- in the high teens. Of course, that is offset for us, as you've heard us talk about stronger retention and some of the improved or higher tuition kind of sized payments. So there are different dynamics always that play out beyond just visas. But looking at 30% for this year is, again, trying to be prudent as we look ahead still early in the year. So not necessarily, obviously, the same as all of you don't have a lot of data, and we have to wait for the usual peak season later this year to really kind of quantify it. But so far, just trying to take a prudent approach around the U.S. in particular. And then on Australia, Again, last year, we assumed that was going to be worse. It turned out to be a lot better than we thought, not just the external environment but also kind of our performance against it. But again, starting out the year early, I want to remain prudent around it. So again, we're seeing good performance there. Otherwise, in the market, as you saw the team keeps winning deals and growing above market in both of those markets. So good performance so far, both in the U.S. and Australia. Christopher Svensson: Yes, it makes sense. And I think the proven approach is the right one. I guess for the follow-up, I wanted to ask on SFS. I think Rob had some interesting stats in his prepared remarks there. So I think ARR growing 3x, if I recall correctly. So I just wanted more color on new signings, maybe impact to '26 numbers, what the pipeline looks like. And I guess, the area in SFS I'm really interested in, like you've talked a lot about the non-Big 4 success that you're seeing. I think revenues were up 30%. And I don't think SFS is live outside of the Big 4. So I guess specifically on that opportunity, can we start to roll SFS out in these new geographies? So kind of a broad-based question on SFS, but really interested in the non-Big 4 opportunity. Rob Orgel: Yes. So let me start with the U.S. SFS part of your question, and then I'll talk non-Big 4. So look, it was a very successful year last year for SFS. We talked about the threefold increase in ARR signed. We also saw -- it was about 13 wins for full suite deals over the course of last year that helped build that 3x growth and we entered the year feeling very good about our position with the product, very good about the amount of pipeline and deals that look to be opportunities for us in the year ahead. So we've done a lot to improve the caliber of our sales team. We've got great senior leaders around that team and looking forward to a good 2026. On-- you said it about right on the outside the Big 4, you are right in saying that SFS is not what's driving the success there. Rather that is our core offering of both cross-border and domestic payment capabilities that we are taking around the world, and we do that with sort of the lighter solution than the full SFS, but those markets are very dynamic. They are seeing lots of student growth and we are very successful in penetrating those markets. I think the last part of your question was around just sort of SFS expansion. We are focused primarily on the U.S. and U.K. There are other opportunities that we'll continue to evaluate around the world, but don't expect us to be focused on those in the near term. Operator: Our next question comes from Dan Perlin with RBC Capital Markets. Daniel Perlin: The area I wanted to focus on just briefly, you're talking about winning, obviously, much bigger deals more products per kind of these transactions and then higher ARR per deal. You touched on it a little bit in the prepared remarks, but I would love to just hear more about that sales motion. And I guess, how we should be thinking about all of that rolling throughout the year as those deals continue to kind of, I guess, come in at bigger ticket sizes? Rob Orgel: Yes. I mean you -- it's Rob again here. So you correctly sort of summarized my comments there. We did see a nice growth in overall ARR, but we also saw growth in average deal size across the business, that would be true across our different verticals. So it's not just an EDU story, but you will have seen that across other verticals as well. And in all cases, it's partly a function of what we target. We are targeting more clients that would generate larger ARR. We are also targeting, especially in EDU sort of the full suite presentation of our platform. that, combined with our success in the U.S. and the U.K., all of that sort of drives the higher ARR that we've been talking about. Daniel Perlin: Yes. That's great. Just a quick follow-up. I think over 30% of the business now is kind of noneducation verticals. I'm just wondering kind of as we sit here today and we think about the diversification going forward, the balance sheet you've got, obviously, you're going to put money to work, it sounds like in buyback. But just -- how are you thinking about M&A opportunities in the context of the way the business is currently structured? Michael Massaro: Dan, this is Mike. I would say, obviously, you've heard us talk, we think our own stock is quite dislocated. So you can expect us to use capital to to buy back stock and continue to be active in the market. Clearly, the valuation environment right now is quite dynamic. You've got a huge dislocation between private and public markets. I think for us, we have a core belief that is still our core M&A strategy, which is we like to sit in critical workflows. We like that combination of software and payment monetization. And so of course, we're going to be continuing to monitor companies that fit that profile. But at the same time, we're going to be very disciplined. I mentioned kind of the dislocation of our own value an opportunity for capital deployment there. I also think we have great acquisitions that we've accomplished in the last 18 months. We've got synergies that are playing out quite well there. And so we're going to continue to kind of land those planes. And and stay focused on our organic investment plan and then those synergies. So that's probably what I'd say on that. Operator: Our next question comes from Charles Nabhan with Stephens. Charles Nabhan: Would love to drill into Canada and some of the underlying macro assumptions. It looks like there's pretty wide outperformance versus the visa, where the visas are expected to come in next year. And I was hoping to get a little color as to the drivers of that outperformance. And just to broaden that, if we think about the guide, it's about a 6% -- 6-point delta from the top to the bottom. Could you maybe talk about like the key variables overall in the model, what would lead you to come in at the top versus the bottom end of the range for the year? Cosmin Pitigoi: Two-part question. Maybe so I'll start with the first part on Canada. Look, after 2 years of Canada being down last year, over 50% visas, and you're right, we outperformed that, right? Because if you look at revenue for us last year in Canada was down just a little bit short of the down 30%. So we still have done better than the market, both years. And that's the accumulation of the work that the team has done to continue winning clients, and we've mentioned that. Now as you saw in our expectations going into this year, visas will be down around 10%. So again, a big reduction still down, though, with growth up 10%, and that is driven because of that accumulation of client wins on the domestic side and just strong execution by that team despite that market being down. So all of that kind of obviously compounds and starts to drive benefits finally seeing Canada now on a positive going into this year. And then as far as your question about overall guidance, look, at the high end of that range, I would say. You would be looking at things like macro being a little bit better, continuing some of those ramps that we talked about across a lot of large clients that we've talked about, that could also drive some of that upside. And just general strength in the execution in the overall business. So -- and similarly, kind of on the downside of some macro remains something that we're watching. But I would say we've -- as you've noticed, we've captured most of that quite well and taken a very prudent approach to the overall. So we feel the midpoint is a solid starting point. Operator: Our next question comes from James Faucette with Morgan Stanley. Michael Infante: This is Michael Infante on for James. Apologies if I missed it in the prepared remarks, but any color you can share on what's embedded in the outlook from a travel perspective, both including and excluding Sertifi and maybe how you're thinking about resource allocation to travel to sustain the growth that you guys saw in '25? Cosmin Pitigoi: Yes. No, look, at a high level, we continue to believe travel will grow at or above company average. So solid growth for the year. And again, it's a large growing, as you saw, our share of the overall business. And that's really both on the Sertifi side where we continue to see strong performance in that business. Obviously, the payment monetization side, as we talked about, seeing that performing well, but also our legacy Luxury Travel business is doing well. And so overall, I would say Travel continues to be a big growth driver for us. And look, obviously, we're excited about all the wins there, adding a lot in terms of new clients, as you saw -- we're -- in terms of investments, we're growing the sales team. That is one big area of focus for us as far as investments and then, of course, investing in the overall Sertifi global expansion. So definitely a lot of focus in terms of investment dollars around the Travel vertical. Michael Infante: That's helpful, Cosmin. And then just for my follow-up. On the stablecoin topic, you guys have obviously spoken about payment costs there, large sort of being in line with some of your lower-cost payment modalities. But what are you actually seeing from a demand perspective, if anything? And any key quarters that you would call out there to the extent you are seeing some level of demand? Michael Massaro: Yes, this is Mike. I think we talked late last year on just our initiatives around stable coin and getting into the platform and focusing on markets that were, I would say, more volatile currency markets, right, where we could see payer usage from those areas. And so happy to say that we are live, we are testing demand actively and actually processing payments. And so we'll continue to kind of talk about that in the future and maybe break out a little more details. But right now, it's a small bit of usage, but we have high hopes it's going to grow. And then I would say the second use case is really an internal one, like many companies looking at what internal processes we can use from a stablecoin perspective to either settle different currencies, quicker, more cost effectively and our teams are really pursuing both acceptance and internal use of stablecoin. Operator: Our next question comes from Darrin Peller with Wolfe Research. Darrin Peller: It looks like gross margins and the monetization rate is a little bit lower just given the progress you're making on domestic payments. And so I think if you could just first give us a little bit more color on what's going well there. Anyway it's been an initiative of the company is really since you've been public. But any further acceleration you're seeing there or something sticking more than before, but it looks like it's obviously going well and to some degree, having an impact on the numbers. And then as you continue to upsell domestic to customers, just how should we be thinking about gross margins this year where they could reasonably normalize? Cosmin Pitigoi: Yes. Thanks, Darrin. So I'll start. So look, overall, like we said, although gross margin is under some pressure, and look, it's payment processing. It's what the -- what we're calling out specifically is Cleveland Clinic ramping up and some of the B2B cross-sell from invoiced. So those are sort of unique and mostly temporary actually playing out this year. Historically, as you said, domestic has been 1 area where the domestic payments piece does create some mix. But look, stepping back, you've heard me say it, and you see it in the supplement, our spreads are quite stable over time. That's kind of what we normally look at, and that's just understanding kind of pricing, so stable spreads across, especially our transaction side. But again, as we've looked at gross margin, what we really wanted to also include, and you saw me even talk about guidance around gross profit dollars, that's really what ultimately matters in these deals, whether it's domestic deals in the U.S. or in the U.K. and B2B, as you saw in our prior disclosures, all of those add incremental gross profit dollars. And as you probably know, they actually had less -- you don't have to add a lot of OpEx to that. So then what that does actually drive incremental EBITDA dollars with it. So, look, from a gross margin perspective, again, as we said, this year, we'll be in that 200 to 300 bps decline range. But if you exclude some of those -- so the timing of those ramps, we would be back in the kind of 100 to 200 bps range, which is kind of our historic as you go into next year overall. And again, for Q4, I would say 1 last thing just on Q4. You saw FX also can have an impact. So in Q4, in particular, one of our impact was about 2 points or about $1 million of FX lapping from last year, which actually drove about 2 points of decline in Q4 last year just from FX. And another couple of points or so actually from the same payment ramp. So Cleveland Clinic doing really well along with B2B. So those created some additional pressure in Q4. Darrin Peller: All right. Guys, maybe just one quick follow-up would be your expectations around the potential success of health care in '26. Just following the wins you've seen now with Cleveland Clinic and it's more broadly. I know you've been trying to put a lot of emphasis in investing back into that segment for at least a year now. And so I'm curious where you see that going? Rob Orgel: Yes. So Rob here. And obviously, we are -- we've talked explicitly about Cleveland Clinic. And not only is that a big deal for its sort of economics and how it rolls through our numbers, but it's also a big deal in terms of signaling to the rest of the health care marketplace. Cleveland Clinic has been kind enough to talk a bit about what we're doing with them and for them, and that has also gotten out. So, if you look at the combination of deals we've already signed both in our core patient financial experience and in the payment processing. Those are very positive. But you'll also see that in that pipeline expansion that I talked about in my comments, a good piece of that is from health care, where they are also seeing on the backs of recent success, a lot of opportunity opening up for them. Operator: Our next question comes from Ken Suchoski with Autonomous Research. Kenneth Suchoski: I wanted to ask about education just outside of the Big 4. I think I heard 50% of new education clients signed came from these markets, revenue up 30%. And can you just talk a little bit more about where these share gains are coming from, how you're organizing the sales team around this effort? And just anything on the growth algorithm as to how it might differ versus some of the mature -- more mature education markets? Rob Orgel: Yes. I can jump in and start with that. So the major markets the next group, the group outside the Big 4 sort of cluster around main markets in Europe and main markets in Asia, right? So as you think about Europe, France, Germany, Switzerland and the like, spain, as you think about Asia, you start seeing places like Singapore, Malaysia and others that are being successful. And so what -- what's happening is, first of all, those markets are being opened to the international students. And what you're seeing is a lot of interest intra regionally as well as interest of people moving around. So as you see patterns evolve, you may find more students and families from Asia choosing to stay somewhere in the region for their international experience. Again, these are not the Big 4, but the next group, but you do see some of that kind of corridor dynamics that we're observing here. From a Flywire perspective, we're investing in making sure we have good coverage across those markets. So we are present in all those markets. We have strength and capacity in all the places I've named, and we're seeing good wins in these markets that are being successful. Places like Singapore and so on that are emerging are places where we're enjoying really good client additions. Kenneth Suchoski: And just I think I heard a comment on just on the payment processing programs ramping. I think you -- I think Cosmin, you might have mentioned that this is going to hurt the gross profit margin due to the early stage ramp economics, can you just give a little bit more detail as to why it takes some time for that to ramp or just what the economics look like upfront and how that changes over time? Cosmin Pitigoi: Yes. I think if you think of Cleveland Clinic, for example, but also the B2B invoiced cross-sell, which already started in Q4, you can see the dynamic kind of starting to play out. And so if you look at the materials and disclosures, that's where we talked about some of the pressures that come from. You had a larger dollar amount on the revenue side with still some incremental positive gross profit dollars that naturally puts some pressure on the gross margin. We've kind of called that out for this year. You have some of those ramps basically running through most of the first half of the year, and then it comes off in the second half. Now you've also heard Rob in his prepared remarks, talk about that you start -- we started with Cleveland Clinic in the payment processing. And now sort of in Q2, you'll see us go live with some of the other sort of higher margin components of the products there. So that's why we -- as we exit this year into next year, we expect the gross margin kind of profiles to then decline to kind of go back to normalized levels. But again, we've also provided everyone with gross profit dollar growth guidance for the year in that mid-teens with this in mind and also for Q1, obviously, strong gross profit dollar growth in the 20% to 22% range with 7 points from Sertify. So still a very strong growth when you look at it from a gross profit dollar growth for these deals. But that's the timing dynamic that kind of plays out in the first half versus second half. Operator: Our next question comes from Tien-Tsin Huang with JPMorgan. Tien-Tsin Huang: Mike, you mentioned private public market differences I'm just curious from being opportunistic on the private side, are there assets out there like Sertifi that are on your radar that you and Rob and team are considering and be opportunistic? I'm just curious sort of what the where you are there with what you've done so far with acquisitions and the appetite to do more as they become available. Michael Massaro: Yes. Tien-Tsin, I would say the strategy still holds. I mean, we think there's -- we have a proven track record of being able to do this of driving synergies post deal. And again, we really think that intersection of around the financial transaction and critical workflows and our payment network is a really, really powerful combination. Again, I think what makes it challenging is there's dislocation, a lot of private companies think their values are still very high. Public companies probably don't think that or most of them don't. And so that dynamic is a little more challenging. Our team has always got a great pipeline of targets and is always looking at the market. The good news for us is we've got great organic investments, and we've got great synergies to continue to execute on. So we'll be ready. We'll be opportunistic if we see it and no change in strategy. Just obviously some complexities around valuation, and it's really hard to bet against our own stock price right now. Tien-Tsin Huang: Yes. That's all fair. It makes a lot of sense. Then just quickly, I always like to ask about visibility around just guidance, but how you see new sales booking across all the different businesses. How would you view it today versus this time last year? I would think it's better? I know things changed in April last year, but how would you qualify it? Michael Massaro: Yes. I mean I think for us, Bob did a great job just talking about some of the sales metrics and the go-to-market metrics. The thing I'd also just encourage people to realize is that transformation we're doing, and Cosmin mentioned about systems, about data, even how we're organized, we're really focused on investing more behind that go-to-market engine. And so sometimes increased capacity. Sometimes it's the way we organize, the way we deal with contract negotiations, the way we minimize distractions for our sales team and our client-facing teams. And what gets me most excited is we're doing all of those things, right, which I think is going to continue to help us increase velocity and really benefit us across industries and across geographies. And that's what gets me excited is setting the company up for going faster and doing more. Operator: Our final question comes from Timothy Chiodo with UBS. Timothy Chiodo: I want to talk a little bit about the mechanics behind optimizing international payment flows. So, my understanding is that this relates to when there is a student going into year 2, 3, 4, they might have opened up a local banking account and all of a sudden, their payments are being made more domestic. I was wondering if you could talk a little bit about how do you entice or change the behavior to keep those payments cross-border and running through Flywire on a cross-border basis? Rob Orgel: Right. So bigger picture, as you well know, our strategy has always been around moving all the money. Now one of the reasons why we like to move all the money is you get the opportunity to monetize both domestic and international flows. Both of those are lucrative for us, and both of those help us serve the clients better. There is a particular dynamic that I had referred to in all of that, which is that there is a fair bit of payment that shows up through what looks like a domestic channel. But -- and it is, in fact, from an international payer oftentimes using an international payment instrument, but it's just been showing up on the domestic payment routing website, where we take over all of it, we can make sure that payment gets routed properly. It also means we can make sure that we present to that family the best set of choices they have. It is oftentimes beneficial for them to understand the local payment options that we would make available to them. actually quite a bit better for them than the choices that they may be making, not realizing what we could be doing for them. So it's an opportunity to better serve the payer. It's certainly an opportunity to better serve the school, and it is also beneficial for us. Operator: Thank you. This concludes the question-and-answer session and today's conference call. Thank you for participating. You may now disconnect.
Rosa Stensen: Good morning, and welcome to Huddly's Q4 results. My name is Rosa Stensen, and together with me is Abhi Banik. In Q4, we report revenue of NOK 64 million, representing a full year growth of 42% with revenue of NOK 211 million. The gross margin in Q4 was 44%, 47%, excluding one-offs. The quarter is the fifth consecutive quarter with reported growth. We continue to deliver on our strategic strategy and the partner growth momentum continued. In the quarter, we activated our partnership with Jabra and signed new strategic partnerships with Lenovo. At ISE in Barcelona, Huddly had a very strong presence this year, reflecting on the results of the company strategy. At ISE, Huddly was present in many new product launches. Lenovo and Jabra announced the new bundles together with us in Huddly, and we showcased our own Huddly C1 Crew. Today, I want to recap on our investment case and strategy, which can be summarized as 3 key items: the market, our products and our go-to-market and distribution. First, have a look at the market outlook. Huddly is part of a large and growing market, which by analyst is expected to grow approximately 16% until 2029. Huddly products are very well positioned for that growth. Secondly, our products. Huddly has built a platform based on an AI native architecture to allow for more engaging and intelligent collaboration. With network-connected devices equipped with AI on the edge, Huddly products work as a platform of devices that allow you to scale the system as a room and usage requires. This is solving a very basic, however, still the #1 issue when it comes to collaboration across teams or locations. Either you cannot get the equipment up and run. And when you finally do, you cannot either see or hear what's going on. This unfortunately is still reported as the #1 issue for hybrid collaboration. So how we solve for this problem is with our AI native architecture, allowing everyone to get a world-class experience from their video and collaboration rooms. So I imagine you would have a live video crew producing all of your meetings. And this is as simple as calling in from your own personal device or just by pressing a button. With the AI native Huddly Crew platform, Huddly has made that a reality. As the category leader of AI multi-camera solutions, we are very pleased to see that multi-camera is becoming the new standard, chosen as a recommended solution for Microsoft's latest archetype BOM standards. And we continue to deliver on our road map, working towards a complete modular platform for any room scenario. At ISE in Barcelona, we introduced Huddly C1 Crew, enabling Huddly C1 on the Huddly Crew platform. By adding Huddly C1 into the mix, the Huddly Crew platform has now been audio enabled. Our customers now have the opportunity to extend their Huddly C1 audio and video bar with additional camera devices, opening up for even more room scenarios than previously. The three key item -- the third key item in our strategy is distribution and go-to-market. Our product distribution can be split into 2 main categories: Strategic Partner and Channel Partner-driven distribution. The key focus in 2025 has been to activate and open new Strategic Partner distribution. This, in addition to continue to organically grow our own distribution channel. So let's first deep dive on the Strategic Partner distribution. Throughout '25, signing new strategic partnerships and activating existing has been key focus. And we have started to see the results reporting the strongest Strategic Partner revenue since Q1 '23. We are, of course, very pleased that our unique products, Huddly C1, Huddly Crew and Huddly L1, with them, we've been able to enter into direct distribution partnerships with Shure, Jabra and now latest Lenovo. With Barco, we are one of few partners chosen for the bundle certification for the new ClickShare Hub offering. These partnerships to significantly increase the global market reach for Huddly products, both in existing and new markets. And to Lenovo. So we are, of course, very proud to be chosen as a partner for Lenovo. Lenovo is a leading PC manufacturer and a strong player in the AV market. Lenovo's AI compute offering purposely built to run video conferencing systems could not be a better fit with the Huddly product portfolio. We believe the bundles are going to be exceptional offering for our customers and are going to be entering the market in Q2. One key part of our Channel and Strategic Partner distribution are meetings with our customers at events such as ISE in Barcelona in February. As we continue to deliver on our strategy, Huddly presence at ISE has never been stronger. In addition to our own Huddly stand where Huddly C1 Crew was showcased, we had a strong presence at all of our partner stands. In addition to our Strategic Partners, Shure, Barco, Jabra and Lenovo, Huddly was also present with a 5-camera crew at the Microsoft stand and recently Google Meet certified Huddly Crew and C1 were to be found at the Google stand. So if you are interested to learn more about Huddly at ISE, go find more material at our LinkedIn page. The second key distribution for our products is our own channel distribution. The Channel continued its organic growth in '25. The growth has been driven by continuous work with our key strategic resellers and distribution partners, increased product adoption and new product introductions. We also continue to further improve the ways of working internally by, for example, utilizing the latest and greatest in tooling. And to summarize, Huddly in 2025 continued to deliver on its strategy and business plan, and we look forward to further enable our strategic partnerships throughout 2026. And with that, I will give the word over to Abhi. Abhijit Banik: Thank you very much for that introduction, Rosa. I'll now, in this part of the presentation, summarize a bit about what we've been talking so far before I go into the financial details. The investment case that we presented so far in this announcement is mainly highlighted by 3 factors. The first one, attractive market, which is large and growing; number two, product leadership with our strong position within AI-enabled multi-camera solutions; and finally, go-to-market with key partners such as Lenovo, Jabra, Shure and Barco. All of this leads into our business case and what we are aiming as a financial outcome. In 2026, we estimate a revenue between NOK 450 million to NOK 550 million, gross margin of approximately 45%. This translates into cash flow positive from second half of 2026. In 2027, we anticipate revenue between NOK 625 million and NOK 725 million and in '28 between NOK 750 million and NOK 850 million. For those 2 years, we also expect a gross margin between 45% to 50%. You may notice that in the previous slide, there was a slight decline in gross margin in 2026. One of the contributing factors to this is the RAM price increases that we're currently observing. This is a market-wide trend that we're seeing, which is not only affecting Huddly, but also other AI-enabled products and also consumer electronics such as PC and electronics. Since Q4 2025, DRAM has increased quite sharply, and it is expected to continue into '26 and potentially also into 2027. The main driver for this shift is mainly due to a shift in production capacity from RAM over to high-bandwidth memory, which is quite often used in AI data centers. As a result, we do expect to see a headwind on gross margin in 2026. However, we are prepared to mitigate this risk, and we are looking at sourcing different -- from different vendors, streamlining operations and also evaluating pricing adjustments. In order to bridge the company to cash flow positive, yesterday, we launched a private placement. The aim is to bridge the company until cash flow positive in second half of 2026, and this is going to be used on continued investments in R&D, onboarding of Strategic Partners, expansion of Channel sales as well as repayment of a loan, which is due in June 2026. I will now move on to the financial details of the quarterly presentation. Revenue in Q4 2025 was a strong NOK 64 million, which is both a quarter-on-quarter and year-on-year growth, both in terms of Strategic Partners and Channel. In Strategic Partners, we do see a quite strong momentum, and we do expect this to continue in the next few quarters. In Channel, despite the increase in quarter-on-quarter and year-on-year, the revenue for that quarter was somewhat lower than expected, which was also communicated in the trading update in January, and this was mainly due to challenges in the North American market, which was again then connected to the shutdown of the federal. Moving into gross margin. Gross margin in Q4 was at 44%. And for full year, it was 46%, which is in line with targets that we have communicated for the year. However, if you exclude one-off items in Q4 2025, gross margin was approximately 47%. Let us summarize this into the P&L. As already been communicated, we had a strong revenue in the quarter, which then translates into a strong gross profit. Cost is under control. It is stable or declining. And hence, we do see quite a strong increase in operational efficiency, where EBITDA and EBIT is improving both in Q4 and for the full year 2025. During this presentation, we have heavily focused on our innovative position and our product leadership. This is enabled by the investments we are doing in R&D. We have a team of approximately 57 engineers, many of them with strong expertise within AI, machine learning, and this is a very important enabler for our product road map. This organization has enabled the shipment of C1, C1 with Crew, which is launching in Q1 and is also a very instrumental part of our growth journey going forward. Finally, I'd like to wrap up the presentation with the cash flow for Q4 2025. Cash flow from operations was improving and hit a plus of NOK 4 million in the quarter. And cash balance end of the year was NOK 69 million. As already explained, we have launched a private placement in order to ensure sufficient liquidity before we hit an estimated cash flow positive in the second half of 2026. And that concludes the presentation part of the quarterly announcement, and we will now move on to a Q&A session where we welcome questions from the audience. Rosa Stensen: Hello, and welcome to the Q&A part of our presentation today. Now our Chairman -- Chair of the Board, Jon Øyvind, has joined us for any questions we have. And we are actually already started to receive quite a lot of questions. So thank you for your interest. So we will just dive right into that. Thank you. The first question is, what is the current status of the private placement? And I think Jon Øyvind, that it's a great question for you to take. Jon Eriksen: Yes. And it's great to be here today. And we are very pleased to announce that Huddly yesterday has successfully executed a private placement, raising gross proceeds of NOK 75 million. The private placement was substantially oversubscribed, demonstrating solid interest from current shareholders as well as new investors. The price in the offering was NOK 20 per share, and this price represents a 2% lower price than the 30-day volume-weighted share price. So it was not a substantial discount from that. And we are grateful for the strong support from the shareholders who participated in the private placement. And we are also pleased to announce that there will be a subsequent offering of up to NOK 11 million which will be directed at the shareholders who did not have the opportunity to participate in the private placement. But again, we are grateful for the support from shareholders who strongly supported this private placement. Rosa Stensen: Thank you, Jon Øyvind. And then there are questions about our revenue ambitions in 2026 and with regards to the newly signed agreement with Lenovo and if there -- that revenue is taken into account into the revenue ambitions in 2026. And Abhi, maybe you can say something more about our forecasting into '26. Abhijit Banik: Yes. So we have included the best of knowledge that we have currently in terms of all our Strategic Partners plus Channel, including Lenovo, and that has been included in the estimates in our business case that has been shown in the quarterly presentation. Rosa Stensen: Thank you. And then we have a question about our revenue model, if we are -- with our Strategic Partners are selling hardware units or if we are selling Software as a Service. So obviously, we are not going to go into any details of any individual agreement with any partners. But what we can say overall is that the revenue model for Huddly is that we are on a unit-based revenue sales. Another question is about the margins and working capital. So how do you expect the total gross margin from Q2 to develop? And will this impact the need for increased stocking or working capital in the ramp-up phase? Abhi, this is a typical one for you. Abhijit Banik: So it's referring here to also the Lenovo agreement. So as has been stated, it's included in the estimates that we have provided to the market. We also communicated in the use of proceeds that due to the growth phase we are currently now, there is a working capital requirement because we are ramping up revenue. So that is included in the financing need, which we have just done a private placement for. Rosa Stensen: And then there is a question about our private placements and the shareholder loan. There is about, can you give us an updated view of our cash flow and liquidity? How long do we expect the current cash to last? Abhijit Banik: Yes, I can take that. So we have just provided an updated view on that in the announcement that we had yesterday and the presentation today. So we have just raised the money that we currently believe is sufficient to bridge the company to cash flow positive from second half of 2026. Rosa Stensen: And then a question for me. Huddly has made a strong progress on the product side, but you still invest heavily in R&D in a very competitive market. Do you see any risk in keeping up this pace of innovation? And how do you think about balancing long-term growth with shareholder expectations, especially if ongoing funding will be needed to support R&D? So the capitalization of R&D in Huddly has been quite stable over time, but we are actually seeing quite strong results of that. And I think ISE is maybe one example of that progress. So Huddly is a leader in the multi-camera space with Huddly Crew. That was evident at ISE. What we also see is that we are attracting Strategic Partners such as Shure, Barco, Lenovo and Jabra that are coming to Huddly to support there with their product offering. Going forward, we believe that the level of the investments we are doing are healthy to both keep up with competition. And that's what is accounted for in our future plans in the updated business case. We'll see if there are any more. Let me see. We'll give you some time to see if there are any more questions coming in. No. Then I think we just give you 30 more seconds if there is any more. Otherwise, you can always reach us at ir@huddly.com or in the chat form. So we will come back and answer any questions that you might have. Well, one last one. Then -- is the Lenovo partnership the reason why you forecast significant growth in 2026? As we have stated, we are not going to go into any specifics on any specific of our partnerships. But what we -- the significant growth in '26 is a combination of all of our partnerships and distribution agreements, both on the Channel side and Strategic Partner side. So this is our best outlook, Abhi, as we have today and not particularly one partner more than other. And with that, then I think that was the last one. So please reach out to us at ir@huddly.com in case you have any additional questions. Thank you.
Denise Garcia: [Audio Gap] Please see our filings with the SEC, including our most recently filed annual report on Form 10-K, and quarterly reports on Form 10-Q for a discussion of specific risks that may affect our business performance and financial condition. We assume no obligation to update or revise any forward-looking statements or information. As a reminder, today's call is being recorded, and a replay will also be made available on expworldholdings.com. Now for a few logistics and we'll get started. For those of you joining in Frame today, welcome to our Metaverse on the web. To zoom into a specific screen, you can click on that screen and then click zoom in. If the content on the screen disappears or if you lose audio, simply refresh the page. While in Frame, if you need help, just use the help button at the bottom right to link with tech support. [Operator Instructions] Now I'll turn the fireside chat over to our speakers before opening up the call to questions. Leo, you may begin. Leo Pareja: Thanks, Denise. We've always been focused on driving eXp across every area of our business, and 2025 has been no different. This year, we expanded into 7 countries, increasing our international revenue 67% year-over-year to $147 million as our technology-driven model continues to disrupt the real estate industry and resonate with agents around the world. We're constantly improving and iterating on our value stack, and we've launched 4 significant programs this year, starting with co-sponsorship, which has been a tremendous success, elevated agent attraction to another level. The program helps drive growth and deepen collaboration between agents, offering agents the option to have 2 sponsors. Since launching the program, we've seen co-sponsorship happen across 28 countries globally, showing great collaboration amongst our agents in countries all over the globe. In our U.S. and Canadian markets, 14% of the agents have joined eXp since we rolled out co-sponsorship joining with a cosponsor, and agents that have joined with a cosponsor are 64% more productive than those without. And agents with a cosponsor have a 19% lower attrition rate. We've also introduced a commercial division in the U.K. and 2 programs to help agents differentiate their brands in specialization markets like land and ranch and sports and entertainment in addition to luxury, which has had a tremendous success. These programs have seen a combined membership increase of 48% year-over-year in 2025. Education is one of our priorities at eXp. Given our scale, we're one of the few brokerages to be able to offer best-in-quality education and access for agents to top-rated trainers and industry leaders throughout -- through eXp University, giving us a huge competitive advantage that other brokers simply cannot replicate. In 2025, we launched an AI-accelerated series, a free comprehensive 8-week training program designed to empower our agents with the most sophisticated tools at their disposal and further drive their productivity. These series have already generated nearly 4,000 program views across its 9 training sessions, demonstrating a strong appetite for these high-impact tools. We've highlighted FastCAP earlier in the year, and it continues its momentum, with nearly 20,000 agent registrations and the agents that complete the program are reporting seeing the results in both the number of appointments and agreements executed, whether it's buyer agency or listing agreements. In 2026, we're integrating realty.com for U.S. agents and Zoocasa for Canadian agents into the FastCAP program, including seller and buyer cultivation tools and leads. We have also launched the FastATTRACT program in 2025. In the 6 months since completing the first FastATTRACT pilot program, agents have had a 24% relative lift in recruiting compared to peers who haven't taken the class yet. And we continue to take a leadership position standing up for consumer choice and transparency. Holly Mabery, who was recently promoted to Chief Brokerage Officer, has joined the earnings call for the Q&A portion and can share more details on consumer choice framework and the other actions we are taking to help agents remain focused on their business in the midst of a changing real estate landscape. And finally, our most important asset, our people. We ended 2025 with 83,060 agents worldwide, up slightly from last year and a base of agents that I believe is stronger than ever as we enter the new year. During 2025, we saw growth in agent productivity and revenue accelerate through the year. We ended Q4 with a 6% year-over-year increase in productivity and 9% year-over-year increase in revenue. We also saw a year-over-year increase in the number of ICON agents for the full year of 2025. As we've shown throughout the year, we are more likely to retain productive agents. So as productivity increases, attrition improves. Our Q4 attrition was the best it's been all year in Q4, with worldwide agent attrition improving 17% year-over-year and an impressive even larger improvement of 23% year-over-year in the United States. These stats are even more impressive when you consider that the industry is contracting. Let's talk more about this trend on the next slide. In the U.S., 4% of U.S. realtors exited their membership base in 2025 based on NAR data. And while eXp's U.S. residential did experience net attrition in '25, we outperformed NAR attrition rates by 25%. Compared to our historical rates, our attrition continues to drop year-over-year. We saw a 6% year-over-year improvement from '24 and more than triple the rate in '25 with a 23% year-over-year improvement. I'll talk more about what's driving that trend in the next slide. I presented this slide every quarter this year, and the story remains consistent. Productivity drives retention. The more productive an agent is, the less likely they are to leave. In the U.S., the majority of departing agents continue to be our lowest-producing cohort and agents in the highest-producing cohorts are multiple times less likely to churn than our low-producing agents. Of the nonproductive agents that leave eXp, 63% of them leave the industry altogether, but fewer agents are leaving and our attrition rates have improved all year with 23% year-over-year improvement for the full 2025. Part of that is due to our strategy to attract teams to eXp because agents on teams are 78% more productive than individual agents and 40% of the new agents to eXp were on teams in the fourth quarter. And speaking of teams, I would like to highlight some of the teams that joined eXp in 2025, starting on the next slide. We welcomed some amazing people over the course of 2025. We added more than 25 prominent teams in the U.S. and Canada that generate over $5.5 billion in sales in 2024, while at their respective brokerages. They joined us from coast to coast, leaving traditional brokerages and indies alike, and some were booming agents that returned to eXp after realizing our value prop is hard to replicate anywhere else. And the momentum continues with more teams joining in 2026. We intend to empower our agents and build on these results going forward. Next slide, please. 2025 was a defining year at eXp as we enhanced agent productivity and retention and made significant infrastructure investments. In 2026, we expect to translate those investments into margin through disciplined execution. We will also continue to assess opportunities that accelerate growth and expand our capabilities. I will turn it over to Jesse to expand on the strategic investments we made in 2025 and share our outlook for 2026. Jesse Hill: Thank you, Leo. And now I'll walk us through our consolidated operational and financial highlights for the fourth quarter and the full year 2025, beginning on the next slide. Starting with operational metrics on a consolidated basis, we ended the quarter and the year with just over 83,000 agents, driven by strong agent retention, which drove a 17% reduction in attrition for the year. Productivity per person, or PPP, was up for the quarter and the year at 5.3, while volume ramped up throughout the year, accelerating to 8% in Q4 and 5% for the full year. The higher PPP drove sales transactions up 6% or 110,000 transactions in the fourth quarter, and there were over 440,000 sales transactions in 2025. On the next slide, I'll walk us through our financials. Starting with revenue, we generated $4.8 billion in 2025, up 4% year-over-year despite no material change in the macroeconomic environment. Revenue growth for Q4 accelerated to 9% to $1.2 billion. During the year, we invested in programs to attract and retain agents and increase productivity with more agents reaching their cap, which resulted in a gross profit of $333.6 million in 2025. Operating loss of $21.5 million for 2025 and $12.7 million for the quarter was down year-over-year, primarily driven by gross margin compression and higher investments in computer and software, partially offset by early gains that we have seen in operational efficiencies. Adjusted EBITDA of $33.2 million for 2025 and $2.1 million for the quarter continues to be positive but down year-over-year, again, primarily driven by this margin compression and partially offset by our streamlined operations. Finally, we've increased our cash position, ending the year with a healthy $124.2 million in cash on the balance sheet. On the next slide, I'll highlight our financial results by segment for the quarter. The North America Realty segment continues to be the largest revenue and profit generator for the company with revenue of $1.1 billion for the fourth quarter and $4.6 billion for the year. International continues to be our fastest-growing segment, increasing nearly 51% in Q4 and 67% year-over-year in 2025. The team did all of this while launching 7 new markets. So kudos to Felix Bravo and the international team for all of their accomplishments in 2025. Operating expenses increased in the fourth quarter, primarily due to the continued investments in our eXpcon events and increased legal expenses in the U.S., while we reduced operating expenses in other affiliated services segment as we streamlined SUCCESS operations. SUCCESS contributed modest revenue for the year with an operating loss of $6.2 million as we focused on retooling the SUCCESS platform. On the next slide, I'll review our 2025 priorities and results. During 2025, we built a strong foundation for profitable growth through several key priorities. We focused on improving operational efficiency through back-office automation so that agents can focus more on their clients. In the fourth quarter, we saw improvements on a year-over-year basis with a 6% decrease in related costs, a 7% increase in the number of agents per staff and a 12% increase in the number of transactions per staff. We made deliberate investments in AI and technology to streamline our high-volume workflows and boost agent productivity in 2025 that we expect to result in continued efficiencies that will drive margin expansion into 2026 and beyond. We also unlock new opportunities for our agents, adding to our luxury affiliate program and introducing land and ranch and sports and entertainment. These programs are expected to contribute margin expansion as they continue to ramp, and we saw a 48% year-over-year increase in agent memberships across these programs in 2025. Finally, we are focused on driving international growth by applying a scalable proven model that we developed over several years. I already mentioned the 67% year-over-year revenue growth in 2025, but I'd also like to mention that we launched these new markets more efficiently, down 37% in our launch costs compared to our original international expansion efforts. Ultimately, we strengthened our platform, improved productivity and positioned ourselves to deliver profitable growth as the real estate industry continues to evolve that is expected to result in higher sustained margins throughout the year. Now let me walk you through our ongoing priorities and our initial outlook for 2026 on the next slide. Looking ahead, we remain focused on maintaining our financial discipline to drive sustainable, profitable growth, and we are providing our initial outlook for the first quarter and the full year 2026. Starting with the first quarter, we expect revenue in the range of $960 million to $980 million, expenses in the range of $82 million to $86 million and adjusted EBITDA in the range of $2 million to $5 million. For the year, we expect revenue in the range of $4.85 billion to $5.15 billion. Regarding expenses, we expect to continue to leverage the investments we've made in technology and infrastructure, and we see this translating into operating expenses in the range of $325 million to $345 million. Finally, we expect adjusted EBITDA in the range of $50 million to $75 million for 2026. We intend to stay financially flexible. We reserve the right to invest where we see meaningful opportunities to support our agents, strengthen our technology platform and enhance long-term shareholder value. As always, our focus remains on executing with discipline, maintaining a strong balance sheet and continuing to build a more efficient, resilient and profitable eXp. And now I'll turn over the call to Glenn to wrap it up before we open up the call to questions. Glenn? Glennn Sanford: Thanks, Jesse. In 2025, I did something most CEOs don't do. I went deep into 2 of our businesses to rebuild them from the ground up. And I want to tell you why, because it reflects exactly how we think about building this company. In 2024, I focused on replatforming eXp International. And the thesis was really simple. If we build a cleaner, more scalable technology foundation, we could expand faster and cheaper. The results showed up in 2025, 7 new country launches, international revenue up 67% to $147 million and launch costs down 37% compared to our original expansion efforts. And that's really a proof point as really this founder's approach to infrastructure producing compounding returns. I took that same playbook and applied it to SUCCESS. In mid-2025, I joined as the Managing Director with really a singular mandate, don't iterate on what exists, rebuild it. We replatformed success.com entirely, relaunched coaching certification and began architecting SUCCESS as a culture and growth layer for the entire eXp ecosystem. What I learned about community design, creator tools and AI native product architecture came back directly into the eXp and gave birth to the eXp Hub, which is really our workplace replacement when that went away. This has really been a deliberate pattern. When a segment of our platform needs to be rebuilt for the next era, we go in, we apply a founder's mindset and come out with infrastructure that compounds. Now we're bringing that same philosophy to eXp itself. We're introducing the single-threaded leader framework. It's really an AI-assisted operating model where leaders with singular focus and full accountability for specific outcomes are paired with AI-assisted engineering to deliver something this industry has never seen, a genuinely high-touch agent and consumer experience running on an entirely AI-enhanced platform. The framework isn't just about leadership structure, it's about what becomes possible when you remove competing priorities and replace them with AI native tooling, smaller, more focused teams, dramatically higher output and a level of personalization at scale that no traditional brokerage can replicate because they're carrying the weight of legacy infrastructure we simply don't have. We're already in motion. I'm working directly with some of our country leaders internationally as the first cohort to pilot this framework, people who know their markets deeply and are operating with AI-assisted tools to allow them to run leaner, faster and far greater impact than was previously possible. We have more to share as the year progresses, but early work is validating exactly what we expected. Singular focus plus AI native tooling is a multiplier. We have third-party validation of how we deploy operationally. We have AI-native leaders embedding throughout the organization, and we are running leaner teams with measurably higher output than 2 years ago. 2025 was the year we proved it works. 2026 is the year we scale across every layer of the platform. Next slide, please. Really, the eXp platform, and I want to close by describing what we're actually building because I think it's really underappreciated. eXp is a platform business, 4 connected segments working in deliberate harmony, eXp, obviously, Realty North America as the engine, International as the rapidly expanding frontier, Frame VR, where you're attending today is our virtual infrastructure and then SUCCESS as our culture and growth layer. No other brokerage on earth is built this way. Our competitors, most of which are franchise systems are anchored in physical real estate, legacy commission structures and technology stacks, they can't move fast enough to modernize. They face real consolidation pressure as AI raises the cost of falling behind. We have none of those constraints. We're built, distributed and technology forward from day 1, which means we layer AI onto a clean architecture rather than retrofitting it into a broken one. What we offer agents and what no one else can fully replicate is a complete operating system for building scalable, sustainable real estate business, full stack marketing, deep ongoing personal development through success and a fully immersive global collaboration layer through Frame. Every investment we're making right now, the eXp Hub, AI Copilots, listing intelligent platform, App Store marketplace, single-thread leaders driving focused execution is designed around one goal, helping agents build businesses that grow beyond themselves, powered by the best platform in the industry. That's the eXp platform, that's the moat, and we're just getting started. Now I'll turn it back to Denise for Q&A. Denise Garcia: Thanks, Glenn. I'll kick it off with a question for everyone on the team before we open the call to questions from the audience and the analysts. Glenn, how resistant is the larger residential brokerage industry to AI? Glennn Sanford: It was a great question. So when we think about it quite a bit, the -- there's a lot of the industry that can be impacted by AI. But one of the things that's really interesting is it's this where the wisdom of the agent comes in, which is really at the table, taking a listing, working on pricing, working on marketing strategies, working with the buyer, again, understanding the neighborhoods at the local level. Those are things that AI just can't do in a great way. They don't actually live in the neighborhood. They have to sort of absorb stuff and kind of then through probability, what is the data. So the profession definitely is not going away, but the relations, the trust, the local expertise is really something very durable. But running a business is about to get radically more efficient for platforms that are ready. And we're ready. I mean we've been building this infrastructure for now for a few years to be ready while most of our competitors aren't. And that's -- and I really -- maybe I'll just reframe the question slightly differently. It's the real question isn't whether brokerage is AI resilient, it's who is positioned to win in an AI-enabled industry. And I think that's a really critical question. So here's what I see, as mentioned, many traditional brokerages carry structural complexities, whether they be commercial leases, fixed overhead, legacy technology that's spread across offices and really an entrenched way of operating that isn't able to be centralized and managed. So they're not easy to unwind or replace. They'll face real pressure to consolidate just to build the economies of scale needed to compete. And we've seen this countless times over the years with companies who have attempted to even do what we've done here, which is to build a cloud-based real estate brokerage from a more traditional place and none of them have been able to get there. So eXp, of course, has no branches. It's one company, no leases, no legacy infrastructure and the ability to really work at scale across the entire enterprise. We're built to be distributed and technology forward, which means as we adopt more AI-assisted engineering, AI-assisted brokerage models on top of our current infrastructure, we're really in a place to continue to lead rather than follow. And I think that's the real key. Denise Garcia: Great. All right. Thanks, Glenn. Leo, one for you. Can you discuss agent count in Q4? Leo Pareja: Yes, sure, Denise. Thanks for that question. Historically, going back to 2023, 2024, we have seasonality. We have agent dip count from the third quarter going to the fourth quarter. That said, we've prioritized agent productivity over agent count. So in the 4 years I've been here, that's been my hyper focus, right? And agent is not equal to an agent. If you look at real trends every year, we tend to enjoy having some of the most productive agents in the country, and we're doubling down on that. We've seen our agent productivity per person increase. And most of that has been on teams as well. So even about an hour before the call started, I zoomed into an onboarding in Houston to a 60-person independent that we'll announce at our next earnings call. That was between us and one of our legacy competitors. And so we're continuing to add entire independent brokerages, ones rolling off franchise agreements and the ones that were fully independent. We saw in 2025 that 40% of the agents that joined were on teams. And our team members are about 78% more productive than our solo agents. So our strategy has been paying off. Our productivity grew 6% year-over-year in Q4, which, by the way, was our highest quarterly growth. So it continued to accelerate. And when you look at North America, 63% of the agents that left our company left the industry. So we see this very self-fulfilling prophecy if the agents that lean in, take advantage of our tools, not only sell homes but also stay sticky, and the ones we lose tend to be at the majority quantities the ones that are not selling homes. So we're continuing to invest in our learning platform where agents can consume the content on their own pace virtually at all times and to continue to improve productivity. So -- and the one I'm probably the most proud about is how much we improved attrition. So globally, it was 17% attrition. And I mentioned earlier in my comments, 23% year-over-year. I mean, by numbers, it's roughly 6,000 agent improvement on attrition. And that's in a year where the U.S. according to NAR membership contracted 4%. So we are substantially outperforming the market from an attrition standpoint. And we don't give guidance on agent count, but I'd say that our business is stable, durable, and we have a track record that is only going to be magnified in the headwinds of the industry. So we're in a great cash position. We're able to take advantage of opportunities as we see them, and we continue to strengthen our value proposition. Denise Garcia: All right. Thanks, Leo. One for you, Jesse. You mentioned a few metrics like PPP and staff per transaction. Which metrics should we focus on in 2026 to measure the success of your ongoing priorities? Jesse Hill: Yes. Thanks, Denise. You mentioned our North Star metric is productivity per person, or PPP, which is essentially transactions per agent over a trailing 12-month period. And that was 5.3 for the year. And as long as that's moving in the right direction, we know that we're making our agents more productive and successful as well as attracting and retaining the most productive agents. A second one would be productive agent retention. Leo spoke to the total agent attrition, which improved 17% across the company and notably 23% in the United States, which is obviously, our core market. And then a third one, SG&A per unit. This is one -- it's essentially our unit economics. We, as a leadership team, pay a lot of attention to this. And we spoke throughout 2025, we invested very heavily in AI and automation, and we expect that to translate in EBITDA margin expansion into 2026, which is one of the reasons why we wanted to begin providing that forward guidance to show what we believe we can achieve with continued efficiencies in this particular metric over time. Denise Garcia: All right. Thanks, Jesse. One for you, Holly. Can you discuss the role that you're playing as the Chief Brokerage Officer and your top priorities for 2026? Holly Mabery: Thank you, Denise. I'm really happy to be here. What we found is the industry is really loud. And eXp, we are extremely clear. Between the NAR settlement fallout, RESPA scrutiny, TCPA enforcement and state-by-state legislative change, we're finding agents across the industry are overwhelmed. We've made the deliberate strategic choice. eXp will lean in where others go silent. And so we've built a compliance infrastructure before the crisis, not in response to it. And so that consistent, timely guidance, training and support is offered through our state meetings, eXp University and on-demand content. That way, no agent is left guessing. And we've developed specialty contractual forms at the state level that are absolutely focused on the consumer. Tools like our eXp broker assistant, [ Carla ], our comprehensive advertising review logics operator. This is giving agents real-time broker support that protects their business and runs 24/7. I'm excited because this is risk management at scale. It's proactive governance, infrastructure, and it protects our company, our agents and defends our brand reputation in every market we operate. We are strategically focused on not waiting to be told what to do, but set the standard. And that posture is our competitive differentiator where regulatory complexity is only increasing. But that's just table stakes when we look at top-down support. So our agent voice, that is our edge. Through our agent advisory councils at both the national and state level, we've localized feedback, informing decisions in real time. And these committees are not symbolic. They are active feedback loops for us. They're testing programs, surfacing friction, and they help us accelerate our ability to respond faster than traditional brokerage structures can. And of course, we serve 2 distinct agent populations with eXp Realty and eXp Commercial, and we're structured accordingly. The result is we're finding a culture that doesn't just retain agents, it attracts the best. So I'm very excited when we combine the proactive regulatory navigation with agent voice and feedback, we're creating conditions for sustainable growth. The agent confidence, it's driving production, production drives revenue, and that is becoming our flywheel as we look to 2026. Denise Garcia: Thanks, Holly. And now one for you, Carrie. Can you highlight some of the technology-related improvements that eXp made in 2025, and what you're focused on in 2026? Carrie Lysenko: Thanks so much, Denise. I appreciate being here. For 2025, I really want to talk about kind of 2 key areas of development. It was all about personalization and productivity. And those are 2 themes that we've already heard Glenn and Leo and Jesse talk about today. But first is the AI Copilot integration of our Mira Business Assistant in our My eXp app for agents. And we wanted to ensure that agents had a more complete overview of their business results as well as insights. This assists both solo agents, team leaders and large attractors as they continue to measure progress and growth on a weekly and quarterly basis, all while improving along the way with the analysis that Mira can deliver. And the second is Live, which is our global portal infrastructure. And this is building on our growth internationally. We want to continue to introduce opportunities for agents to prosper at eXp while decreasing their overreliance on monolithic third-party portals, especially internationally. And Live will continue to be expanded on in 2026 as we grow the consumer audience and impact to our agents globally. And then so for the future, we're really, in 2026, going to be focused on expanding that agent ecosystem. And that includes continuing to build on the eXp Hub community platform that we introduced at eXpcon in Miami that Glenn spoke about. It's really a foundation for agent groups and organizations across the globe at eXp. And this is really built by eXp for eXp platform. And it allows us to curate a really bespoke experience for our eXp agents and staff that really incentivizes community and communication to happen within our ecosystem as opposed to a potential third-party platform. Incidentally, we already have 13% of our agent base communicating and participating in the hub in these early months since we launched it. We've also introduced a marketplace app store within the hub, and this will continue to be built upon in 2026. It provides a foundation for both staff and agents to build and distribute applications and software that further support growth, productivity, similarly to how the iOS App Store supports an increased value of the iPhone. So that idea that we have a centralized app store that agents can access that focus really on how to grow their own business. Continuing to support our agents in softer and sometimes turbulent market conditions continues with our listing intelligence platform. This brings greater access to listing leads and data in markets across the U.S. and Canada. We are developing shared repositories of knowledge that further accelerate modernization of building software across all of our levels of the organization at eXp. And in a world where the cost to build continues to decrease with widespread access to AI coding tools, we want to allow for flexible long-term storage and advanced analytics with our data. We're really investing in an increasingly performant data infrastructure. It allows for secure and reliant access to business intelligence. And ultimately, it will really provide a strong competitive advantage for eXp and our agents because both shared repos as well as greater access to data throughout the organization really will be a bedrock for our single threaded leadership framework that Glenn spoke about earlier. So we're excited to get started. Denise Garcia: Great. Thanks. Now I'll open the call to our audience and the analysts on the stage here. [Operator Instructions] So first, I'll open the mic up for Tom White from D.A. Davidson. Did you have a question for us? Thomas White: Yes. Maybe a couple, if I could. I guess just on the fourth quarter revenue versus kind of gross profit growth dynamic. I think revenues were up like 9%, but gross profit was flat. And I guess when I try and think through kind of what drove the difference in growth rates there, I imagine sort of the percent of -- or number of capped transactions is a factor. But I guess I'm trying to like suss out the extent to which that higher mix of capped transaction is just sort of normal mix in your agent pool, like the better, more productive agents are the ones doing kind of a bigger chunk of the deals? Or is it sort of the impact of just some of the agent attraction stuff you guys are doing so that you're enabling sort of more agents to cap more quickly? And maybe as an aside, like how should we think about the gross margin kind of expectations that are kind of embedded in your outlook for the year? Jesse Hill: Yes, I can take that one, Tom. Thanks for the question. It's actually both. And it's probably divided down the middle. The seasonality of Q3, Q4 does see higher capping towards the later part of the year, right, to the point that you're sussing out. But it also is that we continue to attract and retain highly productive agents and then with a specific focus on highly productive teams, and that's the phenomenon that we've been talking about for a few years now, but it is continuing to apply some pressure to our margin percentage overall. I'd say I don't have the specifics on me, but it's probably about 50-50. If you just look at historic trend, you would definitely see that margin compression that happens every year in Q3, Q4 just due to the calendar year of agents capping. And then over time, if you look at that compression that we're seeing over the last couple of years from attracting more productive agents over time. And then actually -- and let me answer your guidance question or outlook on 2026. What we're currently modeling in that guidance is very similar trend to what we've seen in 2025. So slight compression, but offset partially by increased units coming through the business. And we're focusing on the improvement in unit economic to continue to drive the margin expansion on the EBITDA side. Thomas White: Okay. Maybe one more follow-up and then I can get back in the queue. But just any update on sort of thoughts about resuming the buyback. I don't know -- I think you guys were supposed to pay the second installment of the NAR settlement. Maybe it's in the second quarter, I can't remember, but just give us an update on what you're thinking there. Jesse Hill: Sure thing. And I can take that one, too. And to your point, our reduced buyback activity in 2025 was primarily driven by the NAR litigation, which we had the first tranche this past summer. We have the second tranche coming up the summer of 2026 here. So we did want to make sure that we were being good stewards and maintaining that $100 million cash threshold that we've set internally as a leadership team on the balance sheet. And so we drove that pause. We did finish with a pretty healthy $124 million. And so buyback is something, of course, long term that we want to continue to use a strategic tool in our capital allocation toolkit. But we're still evaluating in the short term what our cash needs are going to be this year and with that upcoming second tranche of the litigation. Denise Garcia: Great. I have one from the audience here, too. Could you speak to the strategic initiatives you believe will have the most meaningful impact on improving financial performance and restoring shareholder value over the next several years? Leo Pareja: Yes. No, I think I feel like this is a common question I've asked -- I get asked by agents all the time. So I'm assuming this is coming from an agent. So one of the things I employ them to do is to actually download TradingView and actually have a full sector on your phone, right? So if you're an agent and you're following eXp, I would encourage you to follow RE/MAX Incompass and all of the other public comps. And you become very aware of when the government does something, right? You'll be mining your business that then you'll kind of see the entire segment move down or up, right? If there is a good reporting on rates and good is defined by the eye of the beholder because sometimes it feels counterintuitive as they move up and down. So historically, our sector is very much tied to total transaction count. So in years where there's 4 million, the sector as a whole tends to be depressed. And in years where you have 7 million transactions, the sector goes up. Now with that said, to Glenn's comments, I think there's going to be a separation between the companies that are able to take advantage of the opportunity that AI is presenting itself. So I do think for some companies, it is a bit of lip service. We are a company that has a service that is repeatable and scalable. And I think businesses like ours, we -- if you see our performance from quarter-by-quarter last year, I think Tom was pleasantly surprised when we reported, we moved the expenses from Q2 to Q3. That is more tightly close to the guidance we've provided. And so you will see us being able to take advantage of that. And into Glenn's comments of like the last mile effect of the real estate industry, we believe will rely on high-performing agents. And not only are we going to streamline our expenses by leveraging the tools available, but we're really focused on creating and delivering tools that leverage the agents in their daily business, right? So there's going to be the leveraging from us from expense management and really cycling off of what historically has been SaaS expenses. So we're really leaning in on that, the platform that Glenn started and our engineers took over, I mean, it's 7-figure contracts. And so as we take advantage of that, I think long term, we're going to be able to improve margin, return better returns to our shareholders while keeping our flagship concept of agent-centric and building the most agent-centric company on the planet as still our North Star, but being able to take advantage of this moment in time with the technology available to us. Denise Garcia: Great. Thanks, Leo. And we have one more from the audience, also from an agent. This is probably for you, Leo. What is eXp Realty going to do to improve their toolbox and technology to attract high-volume listing teams and help the legacy agents get more listings in 2026? Leo Pareja: That's a great question, Denise. So we have been focused on listings. And for example, we just launched a pilot program in January through our FastCAP program. So our FastCAP program has really extended in reach. So since inception, we've had 20,000 registrants take it through. But [ the January ] cohort as a pilot, we partnered with realty.com and included seller jump-all leads and something like 1,800 leads were given out with multiple agents in the first 6 weeks, reporting multiple listings taken, 1, 2 listings taken in 6 weeks, which was actually even faster of an incubation period that we found. And there are several other seller products that I've been focused on integrating into our education platform. So what we're doing is we're making sure that in addition to providing tools is actually the training that accompanies it with it as we continue to scale. And so one of the concepts that I repeat because Glenn was the one who put the sentence in my head when I first got here, but I fundamentally believe it, is that we're a platform business, and that's very different than other folks. So we have initiatives with data where we really -- for the top producing teams that are highly proficient and have tech orgs inside of their businesses, we want to be able to deliver to them API capabilities. So as they build code and platforms using Vibe coding and taking advantage of the tooling that's available to them. But then we also have beautiful simple UI experiences for our solo agents that maybe don't have the scale or size or interest in building their own tech tools. So really, the concept is being able to meet agents where they're at, and we feel that way about support. So for example, agents can walk into a broker room and frame VR. They could call a 1-800 number. They could slack us. They can message us on the hub now and meet brokers where they're at or they can pick up the phone and dial a cellphone number and call their favorite broker. So that same methodology of meeting people where they're at and being agile and being able to have agents self-serve and use the tools necessary for them. Denise Garcia: Thanks, Leo. Thanks, everyone, for joining. As always, please stay connected by visiting expworldholdings.com for the latest updates on eXp news, results and events. Additionally, you'll find a recording of this call and our latest investor presentation on the Investors section of the site. This concludes the eXp World Holdings Fourth Quarter and Full Year 2025 Earnings Fireside Chat. Thanks for joining. Jesse Hill: Thanks, everyone. Glennn Sanford: Thanks, everyone.
Operator: Good morning, and welcome to the conference call organized by Vidrala to present its 2025 full year results. Vidrala will be represented in this meeting by Raul Gomez, CEO; Inigo Mendieta, Corporate Finance Director; and Unai Garaizabal, Investor Relations. [Operator Instructions]. In the company website, www.vidrala.com, you will find available a presentation that will be used as a supporting material to cover this call as well as a link to access the webcast. Mr. Alvarez, you now have the floor. Unai Garaizabal: Good morning, everyone, and thank you for joining today's conference call. As previously announced earlier this morning, Vidrala has released its 2025 full year results together with a presentation that will be used as a guide throughout this call. Following the structure of the presentation, we will start working through the key figures released before moving on to the Q&A session, where we will go deeper into business performance. I will now pass the floor to Inigo, who will take you through the key financial highlights. Iñigo de la Rica: Thanks, Unai, and thank you, everyone, for joining the call. We know it's -- these days are quite busy for you. So thank you very much for your time. So let's begin with a quick overview of the key financial figures. For the full year 2025, Vidrala obtained revenue of almost EUR 1.5 billion, EBITDA of EUR 441 million and a net income equivalent to an EPS of EUR 6.24. A strong cash generation of EUR 200 million enabled a substantial reduction of debt to EUR 105 million, which is equivalent to 0.2x our annual EBITDA. Please note that the right-hand column provides clarity on the variation on comparable scope basis and excluding also FX and comparable scope means excluding the impact of perimeter changes following the sale of Vidrala Italy back in 2024. In addition, and to allow comparability, EBITDA and earnings per share are shown excluding EUR 13.7 million and EUR 10.2 million, respectively, related to restructuring costs in the U.K. and Ireland. Let's have a deeper look at revenue evolution. Sales for the period reached EUR 1,465.2 million. On a like-for-like basis, excluding contribution from Italy and constant exchange rates, sales declined by 5.4%, reflecting the expected combination of soft demand and price moderation in line with cost developments. Turning now to EBITDA. We apply the same analytical framework to better understand the year-on-year variation. For the full year 2025, EBITDA stood at EUR 441 million, consolidating the profitability of our business model despite challenging market conditions. Excluding FX effect, EBITDA remained basically stable year-on-year. These results translated into a resilient EBITDA margin of 30.1%, reflecting a 1.5 percentage point expansion compared to last year. Now let's understand sales and EBITDA evolution by market based on the current perimeter. Again, that means fully excluding Italy from the 2024 figures. As aforementioned, price moderation are visible over all our operating markets. Southern Europe demand remains resilient, while trading conditions in the U.K. and Ireland continue to be challenging. And in Brazil, Q4 exhibited expected signs of recovery, and we are also constructive for 2026 as we start the year. Anyway, margins remain solid across all regions, thanks to our internal measures, cost discipline and actions to align industrial capacity with market realities. Now let's take a closer look at free cash flow generation, which is our top priority and a fundamental indicator of both our financial strength and the quality of our execution. This chart shows full year cash conversion performance. Starting from EBITDA margin of 30.1%, we deliberately allocated almost 13% of sales to investments, reinforcing our operational capabilities and driving future competitiveness. In addition, 3.6% of sales was dedicated to working capital, financial expenses and taxes. As a result, free cash flow generation reached almost 14% of sales, equivalent to EUR 200.1 million, highlighting our ability to translate operational performance into cash flow despite investing at record levels. As a consequence, net debt was reduced to EUR 105.3 million, which translates into a leverage ratio of 0.x our annual EBITDA. This solid financial position provides us with the ability to continue investing with ambition, with discipline while returning flexibility to seize growth opportunities and return capital to shareholders. Overall, we have largely met the guidance issued in April 2025. Our results underscore the resilience of our business model in a challenging market environment. And notably, our ability to convert operational performance into cash has proven strong, generating value even in an unfavorable global macroeconomic cycle. Moreover, if we adjust the performance of each of our business units in their local currency to the exchange rates assumed in the guidance, namely EUR 0.84 for the British pound and EUR 6.20 for Brazilian real, our EBITDA would have reached EUR 445 million, representing only a very limited deviation of 1% versus the guidance. And now before we move to the Q&A, I'll hand over to Raul, who will summarize the key takeaways and share additional insights. Rául Merino: Thank you, Inigo. Thank you, Unai. And thank you all for your time and attending this call today. We know it's -- and you know we know it's a busy day for you, so we will try to go ahead quick and direct. Well, our 2025 results demonstrate the strength of the business we are building. Today, Vidrala, are a larger, more diversified and also a less complex company. And this is a result of mostly our deliberate intentional strategic actions. Let me remind, in the recent years, we have entered the U.K., exited Belgium and Italy, and we have started to build a long-term platform for future growth in South America through Brazil. We are now clearly focused on 3 business divisions, operating across 3 different geographies, which create clear combinations and synergies at many levels across the business. And this structure makes us today more agile, closer to our customers and certainly better positioned to capture future opportunities. We are also more efficient industrial today. We invest more and more intentionally, always with our customer in mind. We are running ambitious projects to improve competitiveness, increase vertical integration and differentiate our service proposition. Let me say our goal is quite simple: to become a trusted, reliable partner for every one of our customers. And we are also today a more global company. At the end of the year, after a long process of analysis, we announced our entry into Chile. And this makes us even more attractive to a significant number of strategic customers that will shape our future, customers that are looking for a reliable, distinctive, challenger, long-term packaging supplier. And in the end, in 2025, we delivered despite a more difficult environment. It's evident demand remained negative. But even so, we protected our margins and we reinforced our industrial competitiveness. So the message we want to share today behind our 2025 results is quite clear. Margin resilience in a tough environment, driven by mostly internal actions, a stronger industrial platform supported by the solid execution of an ambitious investment plan and an expanded geographical diversification. And above all, we achieved our cash flow targets, something that help us to reinforce our financial position, increase shareholder remuneration and be ready, better prepared for what is ahead for us in the future. These achievements frame how we see, what lies ahead and support and reflect our confidence in our future. Even more important, the trends of the last few months confirm our firm conviction. Glass may have more future today than ever. I repeat, glass may have more future today than ever. Glass is an unparalleled packaging material, the ultimate sustainable packaging material of choice, the preferred package for customers and consumers across the world, 100% recyclable, eternally. It is, in fact, the packaging of the future, if and only if we take the actions we need to take today to protect our industry. Under this basis, under this starting point, we face 2026 with confidence, a year 2026 in which our results consolidate, evolve positively and support the transition we are making toward our future, a future that belongs to us. Thank you. Iñigo de la Rica: Thanks, Raul. So this completes our initial remarks. Let's turn to the Q&A session. Operator: [Operator Instructions] And our first question comes from the line of Paco Ruiz from BNP Paribas. Francisco Ruiz: So I have 3 questions. The first one is on volumes. I mean it has been a very pure quarter in terms of volumes for Iberia and U.K. in this Q4. How do you see the start of the year in this respect and how is your view for the full year? The second question is on the payback and the cash out of this restructuring that you have announced in the U.K. If you could give us more detail on what's the total savings for this plan and if you are thinking further actions in the near future? And last but not least, you are approaching net cash position and even with the Chilean acquisition, the leverage is very low. Should we wait until the end of the year to see some announcement on shareholder remuneration or this is something that could come earlier than expected? Iñigo de la Rica: Okay. Paco, thank you very much for your questions. Just give the figures of Q4 and full year in terms of volumes, and then we can make some comments on the start of the year, okay? Just to be very clear, Iberia in Q4, our volumes decreased by 4%. Volumes in the U.K. in Q4, the figure is minus 7.9%. And in the case of Brazil, we have seen in Q4 the expected recovery following a weak Q3. And in Q4, our volumes have increased plus 5.3%, okay. Overall, for the full year, [indiscernible] also the picture of the 12 months, Iberia is flattish in terms of volumes, minus 0.1% with the U.K. and Ireland minus 5% and Brazil due to this weak Q3 is minus 0.8% in terms of volumes. Rául Merino: Paco, we know you are expecting that we deserve some level of clarity on this side. Let me say, quite clear, we expect our sales volumes to move on the positive side in 2026. And that should be driven by some external things of stabilization, even recovery and also on internal actions to recover market share. It's only the start of the year. We understand that you need more clarity. The start of the year is seasonally different in our regions. It's more seasonally stronger in South America, seasonally weak in Europe, and we are exactly where we expected to be. We are seeing some positive signs that we reflected progressively in our sales volumes across the year. Iñigo de la Rica: Okay. Taking your second question on the U.K. restructuring. So as you know, as we have explained throughout the presentation, industry-wide market conditions remain challenging throughout the year. And despite this, I would say we have acted decisively by accelerating investments to try to optimize our industrial footprint, but also to try to further strengthen cost efficiency across the business, okay? And in this sense, we are taking steps to accelerate cost control measures, drive productivity plans, particularly in geographies more exposed to competitive pressures, such as the case of the U.K., okay? So obviously, these initiatives will have a short-term impact on our results, but we truly believe that we are fundamentally reshaping the competitive positioning -- our competitive positioning for the future. Specifically, the U.K. workforce reduction plan has been recognized in our 2025 figures through a provision for the full amount that we have clearly disclosed, the EUR 13.7 billion, although you can consider that only 1/3 of the plan has been implemented to date, with the remaining 2/3 scheduled for hopefully completed in 2026, okay? And once fully implemented, trying also to get your point on the payback, once fully implemented, the plan is expected to deliver recurring structural savings of at least EUR 12 billion per year, which should have an effect on, as I was saying before, on enhancing our competitive position. Just to clarify, this is an effort aimed at improving competitiveness and protecting market share. Rául Merino: And regarding your question on potential further actions, we know or you know us, our future -- we have a firm conviction of this. Our future will be based on our cost competitiveness. So we will keep on dynamically trying to improve our cost competitiveness and attract our customers. So for sure, in the future, we will take more actions when needed. I don't know at what magnitude. You can be sure that we will do as much as necessary to remain competitive. And we have a firm conviction of what that means in each of our regions. But we don't foresee that these cost restructuring actions, whatever happens in the future, should significantly distort the expectations you have in your mind in terms of our profits and cash flow. And your last question, Paco, regarding shareholder remuneration, you know that we do consider that our shareholder remuneration policy is more result or a consequence of our targets. Our financial targets are much more focused on financial strategic targets on diversification, right investments, margin protections and mostly, and at the end, our definite target is cash flow. Should we remain achieving our cash flow targets, we will do as much as necessary to improve our shareholder remuneration. We know what is our level of the strength of our financial position. So let me say that we agree with you that is a margin for further improvement in our shareholder remuneration. Operator: And our next question comes from the line of Enrique Yaguez from Bestinver Securities. Enrique Yáguez Avilés: I have 4 questions. The first one is the expected evolution in prices for this year. Secondly, if you could provide some details about Cristalerias Toro acquisition. Whether the acquisition is expected to be closed and the size of the restructuring plan and potential synergies. Third, about the OpEx increase coming from natural gas price increases, then CapEx guidance and where it will be allocated. And finally, I don't know if you could provide some details about the impact of the Storm Kristin in Marinha Grande. Iñigo de la Rica: Okay. Thank you, Yaguez. Thank you for your question. So regarding -- so many questions, I will try to organize them, okay? Regarding guidance outlook for 2026 in terms of prices, in terms of CapEx, first of all, as usual, you already know, we will announce our official guidance at the Annual General Meeting in April, okay? However, what we can say at this stage in terms of results, free cash flow is that we do not see current levels being at risk. But anyway, regarding prices, we remind you that approximately 50% of our sales are supported by multi-annual agreements with strategic customers that incorporate price adjustment formulas. And the outcome of these formulas points to a price moderation of around 2% at the group level. That said, it will be also important to assess potential mix effect associated from our strategy to recover selectively some market shares. Rául Merino: Let me take a little bit at this point with more detailed prices. And let me invite you to make a historical analysis, okay? We have the evidence, the strong evidence that our glass prices have been adapted significantly over the last 2 years. And this is very positive if we consider how glass was positioned 3 years ago after the inflationary shock in comparison with where we are today. I mean competition is still high. We will maintain a disciplined approach to our prices. But when we see all those numbers, when we see our cost competitiveness and we also see other materials, I have the feeling that we are going evolving in the right direction. Iñigo de la Rica: Okay. And just to complete on 2026, Yaguez, going back to CapEx. Well, first of all, just to clarify that we believe our cash profile is sustainable. Obviously, investment levels currently at almost 13% of revenues are expected to ease in the medium term, not in the short term, okay, which should be easing in this medium term CapEx over sales should further support the improvements in our cash generation profile. And for 2026, CapEx should remain close to the 2025 CapEx figure, which is EUR 189 million, probably slightly lower than that, but still ambitious ranging between EUR 170 million to EUR 180 million. Then regarding the closing of the acquisition of Chile, everything is proceeding as anticipated, okay? There is no news there, and we continue to expect the transaction to close in the first quarter of 2026. A few remaining points still need to be finalized, which we expect to resolve in the very short term. And in any case, sales, EBITDA and margin figures remain in line with what we announced in December, okay? And we will take the opportunity of the guidance that we expect to issue with occasion of the AGM to include Chile and to give more visibility in that sense. Then regarding the impact of the recent or increase in gas prices in the last -- in the start of the year, please consider that at year-end, around 80% of our NAV exposure for 2026 and around 40% for 2027 was hedged through derivative instruments. This excludes Vidroporto, where, as you know, almost all our customer contracts are dictated by price adjustment formulas. And what really hedges for 2027 are now slightly above the previously mentioned figures. And then just to finalize on the impact of the Storm Kristin. At the beginning of the year, our plants in Portugal were impacted by Storm Kristin. This severe weather event caused disruptions to electricity supply and resulted in temporary impacts on our operations and consequently affecting production at both facilities. Although we expect there to be an economic impact. However, this should be largely mitigated through the group's insurance policies as well as through the support measures made available by the Portuguese government, okay? So we are not worried in that sense. And more relevant, let me take the opportunity to sincerely thank the teams for their professionalism, commitment and outstanding effort in responding to the situation and ensuring a swift and orderly record of operations. Rául Merino: And just to add on your comments, Inigo. Okay, the limited impact we will suffer under this big climate or external issue proves again the right direction and the strength of our investment plan. And finally, Enrique, on the Chile point, let me please remind that we know that this deal, this step for us will be -- will have less impact from a financial view and from the strategic sense. And we know what we want. We will need our time to take deficit actions to deploy our industrial model and everything is going as expected, okay? What that means? That means that the results we will publish regarding Chile will be the starting point for what is ahead in the future. Operator: [Operator Instructions] And our next question comes from the line of Inigo Egusquiza from Kepler. Íñigo Egusquiza: So most of my questions have been already answered. So just 2 quick follow-ups on Chile. You mentioned that you will give us more information at the time of the guidance, if I understood well. My question would be more on further capital allocation. You mentioned, Raul, there is obviously room for increasing shareholder remuneration considering your limited leverage. But the question is more on -- on more M&A. I think that the company has a very clear strategy in my personal view of growing and continue consolidating the market and probably Latin America is the priority. If you can share with us if we can expect more M&A in the near future, 2026 and 2027. This is the first question. And the second one would be on volumes. You have mentioned that you expect some stability in Europe in 2026. The question is how do you see, I mean, the industry evolving? You sounded more positive on glass future compared to other materials. And what about all the capacity shutdowns announced by the industry, if my numbers are right, almost, I would say, close to 9%, 10% of once the Europe capacity has been shut down. So obviously, this would be a positive for the industry recovery. So if you can share with us your thoughts. Rául Merino: Thank you, Inigo. Thank you very much. Well, first, regarding capital allocation, let me remind that we are -- as Inigo can add, we are today active under our share buyback program. So this is an example that we are taking seriously our shareholder remuneration policy with some specific efforts this year. And regarding your specific question of what is next, well, let us please first finalize our entry into Chile before speaking about the next step. It's too soon. But our approach remains consistent, the same. We are and we will continuously -- remain continuously exploring potential opportunities. But this year is a year to be a focus and not distract? And at the end, whatever we see, whatever you see from us, I'm sure that you won't be surprised, okay? And regarding the second question, capacity actions across the industry, capacity rationalization, it's all a matter of cost competitiveness. And capacity rationalization by its competitor in this industry in the glass space and in other substrates will be basically a matter of cost competitiveness. And we know how clear we are in our mindset regarding cost. Cost competitiveness will drive our future. And that's the reason why we are not expecting any capacity rationalization, and we hope the industry to rationalize capacity if needed. And this will help us to recover some market share. Operator: There are no further questions by the telephone. I'll now hand it back to the Vidrala team who will address questions submitted via the webcast. Iñigo de la Rica: So we have received some additional questions through the webcast. First of all, on the Chilean acquisitions, we are asked about EBITDA margins because the question says that they are substantially lower over the rest of the assets and if this is structural or we can improve, okay? As we disclosed at the time of the acquisition, it is true that margins -- the figures that we announced back in December showed EBITDA margins in the range of 17%. And part of this is due to factors specific to the asset. We should consider that a business in Chile with the scale of Cris Toro won't have the same metrics as the one in Brazil just because of a matter of scale and because of differences between the regions. But in any case, we consider that margins should improve. So we recognize that this is a different transaction in the sense that it includes a process to improve margins, to optimize margins. And this should be through costs, won't be dependent on volumes, on sales volumes. And please remember that this is a company that we knew pretty good because we were providing them with technical assistance similar to the case of [indiscernible]. In any case, in order to give more visibility, as we have said before, we should wait at least until the guidance in April where we can give more detail. Rául Merino: Just to add on this, Inigo, you can be sure that we know what we are guiding, okay? I mean, far from a surprise, we do consider current operational margins in Chile as an opportunity, part of our business plan. Iñigo de la Rica: Good. Then there is a second question on overcapacity in Europe. As you all know, the capacity closures that have been announced in the last 2 years have been very significant. We are still seeing some announcements to further close capacity in regions that are structurally uncompetitive. And this means that considering the structural capacity closures, permanent capacity closures and also the adjustments in terms of production capacity, temporary adjustment that we are all hitting, we believe that the industry is reasonably balanced in terms of supply and demand. And then there is a final question on savings in the U.K. due to the restructuring. I could say we have already answered that question through the live questions. But just to be very clear and to avoid any misunderstanding, out of the EUR 13.7 million that we have registered in our numbers, 1/3 has been already executed and I mean, in terms of cash flow. And 2/3 of that figure of the EUR 13.7 million will be executed in 2026. It's not an additional amount on top of the EUR 13.7 million. So we have now answered all the questions received via webcast. So please remember, we are always at your disposal for any further questions. Thank you very much for connecting. Rául Merino: Thank you very much. Please keep on eating and drinking in glass and see you on April.
Operator: Greetings, and welcome to the Immunocore Holdings plc Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note that this conference is being recorded. I will now turn the conference over to Morgan Morse, Investor Relations. Thank you, Morgan. You may begin. Morgan Morse: Thank you, Daryl. Good morning, and good afternoon. Thank you for joining us on our Q4 and full year 2025 earnings call. During today's call, we will make forward-looking statements, which are qualified by our safe harbor provision under the Private Securities Litigation Reform Act of 1995. Please note that actual results can vary materially from those indicated by these forward-looking statements, including those discussed in our filings with the SEC. On today's call, I am joined by Dr. Bahija Jallal, CEO of Immunocore Holdings plc, who will share our 2025 overview and achievements; Ralph Torbay, Head of Commercial, who will review our Q4 and full-year KIMTRAK results; Mohammed M. Dar, our Chief Medical Officer, who will provide a pipeline update, including our ongoing registrational TEBE-AM in cutaneous melanoma and other highlights across our pipeline; and finally, Travis A. Coy, our CFO and Head of Corporate Development, who will provide some key highlights from our financial results reported earlier this morning. I will now turn the call to Dr. Bahija Jallal. Thank you, Morgan. Good morning and good afternoon, and thank you all for joining us. Bahija Jallal: 2025 was a year of consistent execution across every part of our business. I am pleased to share our results, and where we are headed as we continue to deliver on our mission. For the year 2025, we generated $400,000,000 in net revenue from KIMTRAK, up over 29% from the prior year. KIMTRAK is now approved in 39 countries and launched in 30 markets. Growth continues to be driven by deeper U.S. community penetration and continued global expansion. Real-world duration of therapy is now 14 months, exceeding our clinical trials experience. Before KIMTRAK, patients with uveal melanoma diagnosis were given 12 months or less to live. Now with KIMTRAK, it is not unusual to see patients living three, four, five years or more. This is why we are here and this is why we come to work every day. But we are not stopping here. To reach even more patients, we are expanding the reach of KIMTRAK through a robust life cycle management program with two Phase 3 trials. TEBE-AM in second-line cutaneous melanoma enrollment on track for the 2026 completion. ATOM in adjuvant uveal melanoma enrolling across multiple sites in Europe and planning to open sites in the U.S. in 2026. This is, to our knowledge, the only active Phase 3 in this setting. Beyond KIMTRAK, we have our third Phase 3 trial—PRISM-MEL-301 with brenetafusp in first-line cutaneous melanoma. The IDMC has selected the 160 microgram dose, which is the highest dose, in last December. We are also expanding our own oncology platform beyond melanoma into ovarian and lung, colorectal cancer, and GI cancers. Mohammed will share more details later. And then beyond oncology, we presented promising data for our HIV functional cure program at CROI, and our hepatitis B candidate showed encouraging Phase 1 results at AASLD confirming the potential of our platform in infectious disease. In autoimmune diseases, we submitted the CTA for our type 1 diabetes program and expect to dose the first patient in Phase 1 in 2026. Our balance sheet remains strong at approximately $864,000,000 in cash, providing the flexibility to advance the pipeline. I will now ask Ralph to share more about our commercial performance. Ralph? Ralph Torbay: Thank you, Bahija. Today, I will walk us through KIMTRAK’s full-year results and growth opportunities across melanoma. 2025 has been another year of strong commercial execution, marking this our fifteenth quarter of growth. KIMTRAK generated $400,000,000 in net revenues for the year, representing 29% year-on-year growth. The sustained performance reflects KIMTRAK’s position as a global standard of care in first-line metastatic uveal melanoma, with over 70% penetration across all major markets. This breadth of adoption is a testament to KIMTRAK’s transformative long-term impact, with one in four patients alive at three years, an unprecedented milestone in this disease. Mean duration of therapy remains an impressive 14 months as Bahija mentioned. Continuing the theme of KIMTRAK’s delivering exceptional, recently presented real-world data at ESMO IO from 150 patients showing a median overall survival of 28 months. We plan to build upon this data with U.S. real-world evidence to be published this year. We also expect to share the five-year overall survival from our registrational clinical trial which will further support KIMTRAK’s long-term benefit. Now as we enter our fifth year on the market, we expect moderating growth through continued commercial execution, further global expansion, and increased penetration in the U.S. community setting. Speaking of the community, KIMTRAK adoption is widespread, as evidenced by 70% of all KIMTRAK prescriptions coming from the community. Half of all patient starts happen in the community. And in 2025 alone, we activated 150 new accounts, most in the community. This broad adoption is important because it speaks to KIMTRAK’s value proposition of unprecedented survival and manageable safety. It also brings KIMTRAK closer to home for many patients who live in less dense geographic areas. Lastly, it creates a wide foundation for potential next indication: half of all patients with cutaneous melanoma are treated by physicians experienced with KIMTRAK. I am very excited by KIMTRAK’s midterm growth potential. Today, we are serving approximately 1,000 patients per year in metastatic uveal melanoma, which delivered $400,000,000 in net sales in 2025. When you look across the horizon, the opportunity is up to sixfold larger with our two Phase 3 life cycle management trials. The first one, TEBE-AM, the only randomized Phase 3 study in advanced melanoma with an overall survival endpoint, that could transform the lives of up to 4,000 patients. Second, ATOM, in adjuvant uveal melanoma that could help up to 1,000 additional patients. I am confident in our ability to execute on this growth trajectory. I am excited about what is ahead for KIMTRAK and the patients we serve. I will now hand over to Mohammed to discuss these trials in more detail, as well as our expanding pipeline. Mohammed M. Dar: Thank you, Ralph. I am delighted to join this executive team and look forward to sharing the developments across our clinical programs. At Immunocore Holdings plc, we have built a truly unique and diversified TCR pipeline that now spans three therapeutic areas, and I am pleased to walk you through our progress today. Our R&D engine has delivered a robust portfolio anchored by three ongoing Phase 3 trials in oncology, with data readouts beginning as early as 2026 with TEBE-AM. Beyond our late-stage efforts, we look forward to new insights maturing this year across our early-stage oncology and infectious disease programs. In autoimmune, 2026 marks a pivotal milestone for us as we initiate our first clinical experience. I will now begin by highlighting our three registrational melanoma trials, starting with TEBE-AM. Our first opportunity is in advanced cutaneous melanoma, where there is a high unmet need. No therapy has been proven to extend survival in the second-plus cutaneous melanoma setting following checkpoint inhibitors and targeted therapy. One-year overall survival in this setting is approximately 55%. In first line, patients receive either anti-PD-1 with or without additional checkpoints, or BRAF-targeted therapy. In second line, patients can switch between these classes where appropriate. Beyond second line, there remains a large unmet need. Chemotherapy, retreatment with prior therapies, and clinical trials remain the primary options. The only new therapy approved in this setting is TIL therapy, which was based on response rates under accelerated approval, not overall survival. TEBE-AM is the first Phase 3 trial aiming to demonstrate an overall survival benefit, the gold standard in this population. If TEBE-AM is positive, KIMTRAK would be the first new therapy with overall survival benefit in the second-line-plus cutaneous melanoma setting. As a reminder, TEBE-AM is a randomized Phase 3 trial for melanoma patients who have progressed on checkpoints and, if applicable, targeted therapy. Patients are randomized to KIMTRAK monotherapy, KIMTRAK plus pembrolizumab, or a control arm, with a primary endpoint of overall survival. Our confidence in this program is supported by promising Phase 1b data showing a 75% one-year survival rate, compared to the 55% benchmark. Beyond efficacy, KIMTRAK is an off-the-shelf therapy with a predictable and manageable safety profile that is already familiar to the melanoma community. We remain on track and project to complete enrollment in 2026, with top-line data expected as early as the second half of this year. Now turning to our second registrational trial, ATOM is the only active registrational Phase 3 trial in the adjuvant uveal melanoma setting, where there is currently no approved standard of care. High-risk patients are randomized to either KIMTRAK or observation with recurrence-free survival as the primary endpoint. The study, sponsored by the EORTC, is currently activated across multiple European countries and is expected to begin site activations in the U.S. during 2026. Our goal is to bring the benefit of KIMTRAK to patients earlier, potentially delaying or even eliminating the onset of metastatic disease. As evidence of our robust R&D engine, we now turn to our third registrational opportunity within melanoma, this time leveraging our TCR targeting PRAME, known as brenetafusp. PRISM-MEL is a randomized Phase 3 trial in first-line cutaneous melanoma, comparing brenetafusp plus nivolumab versus either nivolumab monotherapy or Opdualag, with progression-free survival as the primary endpoint. In November 2025, in line with the FDA’s Project Optimus, the IDMC completed the dose selection process, choosing the highest dose to move forward. We have successfully activated over 200 sites globally and are targeting enrollment completion in 2027. I will now outline how we are strategically applying our platform to address a broader range of high unmet need tumor types. Beyond cutaneous melanoma, we are focused on expanding the PRAME franchise into other tumors, specifically ovarian and non-small cell lung cancer. In ovarian, we are building on the monotherapy activity observed in late-line settings by moving into earlier lines of treatment. This includes evaluating brenetafusp in combination with chemotherapy in platinum-resistant ovarian cancer, and in combination with bevacizumab in the platinum-sensitive maintenance setting. For lung cancer, our efforts are focused on signal detection across various combinations, including chemotherapy and osimertinib. We expect to present data from these ovarian and lung cohorts in the second half of 2026, which will inform next steps. In parallel, we are advancing our PRAME half-life–extended candidate, which is currently in dose escalation. Our hypothesis for this molecule is twofold: first, to provide patient convenience through less frequent dosing; and second, to potentially increase the overall response rate. We expect to have a comprehensive data package by 2026 to determine the optimal path forward for the franchise. The modular nature of our platform allows us to expand our reach beyond oncology and unlock significant growth opportunities in infectious disease and autoimmune. At CROI early last year, we presented initial data from 16 patients enrolled into the multiple-ascending-dose portion of our HIV study. The data were very well received by investigators, and two important findings emerged. First, the treatment was well tolerated. And second, we observed a dose-dependent antiviral effect. At the 60 microgram target dose, you can see that when we stop both our compound and the antiretroviral regimen, viral rebound occurs rapidly. However, at the 120 and 300 microgram target doses, we observe a delay in viral rebound—note the orange line—providing preliminary clinical evidence that we are impacting the viral reservoir, which is the critical first step toward achieving a functional cure. The clinical data gathered so far confirm the potential of our platform in infectious disease. We are continuing to evaluate higher doses in this study, and we expect to have data from the ongoing dose escalation in 2026. Now turning to our third and newest therapeutic area, our vision for treating autoimmunity is unique. We aim to achieve tissue-specific down-modulation of the immune system, thereby avoiding the risks associated with systemic immune suppression, which is the current approach taken in the field. We are currently advancing two autoimmune candidates. The first is S118I, which targets the beta cells in the pancreas in patients diagnosed with type 1 diabetes. The second is U120AI, which targets CD1a on Langerhans cells, specialized antigen-presenting cells in the skin, for the treatment of atopic dermatitis. Today, I am going to focus on our type 1 diabetes program, which represents the first clinical test of our tissue-tethered PD-1 agonist approach. We chose type 1 diabetes because of the profound unmet medical need, with 50,000 patients newly diagnosed every year, and data supporting the role of T cells as one of the key mediators of the disease. Our candidate S118I binds to preproinsulin, which is expressed exclusively on the beta cells of the pancreas. We have already generated compelling in vivo proof-of-concept data using pancreatic slices from human donors. We demonstrated that S118I binds specifically to beta cells, as shown in the middle panel, and successfully rescues them from T-cell–mediated killing, as seen in the graph on the far right. Importantly, these rescued beta cells remain functional and continue to secrete insulin. Following our CTA filing in December 2025, we are now poised to move into the clinic this year. Our Phase 1 study is designed to provide early evidence of target engagement and immune modulation. So to recap, we have a robust, diversified pipeline with important readouts later this year, and our R&D teams remain focused as we continue to advance our platform across all three therapeutic areas. I will now hand the call to Travis to discuss our financial results. Travis A. Coy: Thank you, Mohammed. Good morning. Good afternoon, everyone. Earlier today, we released our financial results for the fourth quarter and year ended 2025. Please refer to the press release and our latest SEC filing on Form 10-K for our full financial results. Let me share some of our key financial highlights for 2025, and then touch upon our expectations for 2026. We are pleased to report strong performance for KIMTRAK, with full-year net sales reaching $400,000,000. This represents a 29% increase over 2024, with volume-driven growth across the U.S., Europe, and international regions. Looking ahead to 2026, as we enter KIMTRAK’s fifth year on the market with significant penetration across all major markets, we naturally expect growth to moderate. Our underlying sequential quarterly revenue growth has been in the range of 4% to 7% the last few quarters. We are seeing that growth slow down and expect that trend to continue in 2026. Moving from revenue to expenses, as we continue to maximize global access to KIMTRAK and advance our pipeline, our operating expenses increased. The increase in our R&D spend versus last year was primarily driven by ongoing investments in our three Phase 3 trials and by advancing our earlier-stage programs, including preparations to initiate clinical studies with our autoimmune candidates. In 2026, as we continue to invest in our pipeline, we expect R&D expenses to increase modestly year over year, although at a slower rate than they did in 2025. Turning to SG&A, 2025 expenses were marginally higher versus 2024, as we remain disciplined with the spending. In 2026, we expect only incremental increases to these investments, driven by commercial preparations for the potential expansion of KIMTRAK into cutaneous melanoma. Overall, we are pleased to have reduced our operating loss in 2025, as revenue grew more than our operating expenses. Our balance sheet remains exceptionally strong. As of year-end, we had $864,000,000 in cash and marketable securities, an increase of more than $40,000,000 versus last year. Our robust financial position combined with data-driven investments and expense discipline provides us with the flexibility and resources to continue advancing our mission of delivering transformative medicines to patients. I will now turn the call back to Bahija. Bahija Jallal: Thank you, Travis, and thank you, team. Four years ago, we launched the first ever approved therapy for uveal melanoma. Today, we are a commercial-stage biotech with a validated platform, three Phase 3 trials, and we are expanding into infectious disease and autoimmunity. We are not just treating cancer; we are also redefining what is possible with T-cell receptor biology. 2025 was a year of execution, and 2026 will be a year of data and continued progress. We thank you all for your support, and now we will be happy to take your questions. Thank you. Operator: Thank you. We will now open for questions. As a reminder, please ensure your handset is unmuted before pressing the star key. We ask that you please limit yourself to one question. Our first question comes from the line of Michael He with UBS. Please proceed with your question. Michael He: Hey, guys. Good morning and congrats on all the progress. I have a quick question on TEBE-AM. I think that is a really exciting opportunity and the data is coming soon. Can you remind me the general geographic breakdown of your enrollment? Is it half U.S. or Europe, etc., etc.? Because I think there are much more limited agents outside the U.S. that could impact the control arm. And secondly, you are designed to test KIMTRAK and also KIMTRAK plus PD-1. Did you go through a DSMB analysis or a look to test that KIMTRAK alone is probably doing at least as good as the combo? And what insight did you have on that? Thank you. Bahija Jallal: Great. Mohammed, do you want to take that? Mohammed M. Dar: Sure. Thanks, Michael, for the questions. With regards to enrollment on TEBE-AM, the majority of our enrollment is coming from Europe, you know, in line with other recently completed pivotal trials. We expect between 10–15% from the U.S. and then the rest from the remaining countries. With regards to your question around DSMB and whether we had them look at activity within mono versus combo, as you recall, the original TEBE design was a Phase 2/3 design. Based on enrollment metrics, we converted it all into a Phase 3 seamless single consolidated trial design. We never looked at the data, nor did the IDMC. So this is based purely on enrollment metrics, and as a result, we saved one year in terms of the conduct of the Phase 3 trial. Michael He: Got it. Thank you. Operator: Our next question comes from the line of Tyler Van Buren with TD Cowen. Please proceed with your question. Tyler Van Buren: Hey, guys, good morning. Thanks for taking the question. Just another on TEBE-AM given how important the readout is in the second half—can you just remind us what both treatment arms are powered for on overall survival and what you believe the likelihood is that the monotherapy arm, in addition to TEBE plus pembro combination, could succeed? Mohammed M. Dar: This is Mohammed. Hey. Thank you for the question, Tyler. So with regards to the, you know, the statistical assumptions, we usually do not get into the details, but it is fair to say that we have designed the study to basically meet both the statistically significant and clinically meaningful threshold difference from the control, and that, you know, in my experience, on average, that is at least a 30% difference from the control. With regards to, you know, assumptions between mono and combo, again, we typically do not get into, like, you know, our details of the statistical plan, but needless to say, our data from 02/2001 was based on combos. So, certainly, logic would support the combo may outperform the mono. But, you know, that is what I can say. Operator: Thank you. Our next question comes from the line of Eric Schmidt with Cantor Fitzgerald. Please proceed with your question. Eric Schmidt: Thanks for taking my question. Maybe to switch gears a little bit toward Ralph and Travis. It feels like we have been talking about or guiding to deceleration in KIMTRAK sales for years now, yet growth has been pretty robust as you guys called out—25-ish plus percent year on year. I hear you, Travis, that you are thinking that quarterly growth rate is going to come down from 4% to 7%. Do you have a value in mind that you think is realistic that is substantially less than 25%? Travis A. Coy: Yeah. Thanks for the question. Obviously, we are pleased that we continue to overperform, so we are excited about that. And, you know, we are now entering the fifth year on the market, so we do naturally expect that growth to begin to moderate with significant penetration across all major markets, both U.S. and Europe. You know, one thing to keep in mind, that year-on-year growth of 29%, we did have some rebate reserves in 2024 and in 2025. If you normalize for those rebate reserves, our underlying growth was around 20%. So I just offer that up as a reminder to folks so you have a little bit better understanding of where we expect growth to moderate from. Eric Schmidt: Thank you. And I see you operated around cash flow breakeven in 2025. Is that a reasonable estimate for 2026? Travis A. Coy: Yeah. We, you know, we continue to focus on investment in our three Phase 3s, and so we do expect R&D expenses to modestly increase into 2026 from 2025. And then from an SG&A perspective, we have been really pleased with how well we have managed those expenses and continue to be disciplined on that front. We have been very consistent, really, over 2024 and 2025 around that $40,000,000 mark per quarter, and only expect incremental increases into 2026 as we prepare for cutaneous melanoma. Operator: Thank you very much. Our next question comes from the line of Jack Allen with Baird. Please proceed with your question. Jack Allen: Great. Thanks for taking the questions, and congrats to the team on the updates. I wanted to ask a little bit on the commercial outlook. Pending positive results in the TEBE-AM study, I wanted to ask the team how they thought about pricing in that indication. I know you have a very meaningful price in metastatic uveal melanoma, which is a rarer space. Do you think about the larger second-line cutaneous melanoma market and any impact on price moving forward there, having a launch into that indication? Bahija Jallal: Thank you. Ralph Torbay: Thanks, Jack, for the good question. So when you consider the unmet need that exists today in advanced melanoma and the fact that we have a Phase 3 with an overall survival endpoint, and the fact that we have an established safety and this is an off-the-shelf treatment, really, if the data is positive—and this is all data-dependent—we believe that, you know, we can potentially defend that price appropriately given the OS endpoint. Of course, data-dependent. Jack Allen: Alright. Thanks for the color. Operator: Our next question comes from the line of Sean M. Laaman with Morgan Stanley. Please proceed with your question. Sean M. Laaman: Good morning, everyone. Hope everyone is well, and thank you for taking my question. I have a question on your autoimmune entry. So first candidate entering Phase 1 in 2026. How do you evaluate success in the early autoimmune studies relative to oncology benchmarks and how capital intensive could the platform become? Thank you. Bahija Jallal: So thank you for this question. I will take that. You know, we chose type 1 diabetes for the reasons that we can determine very early on two questions that we will answer right away: you know, does the drug bind the target? And we will look at that with the soluble PD-1, for instance, and other things—C-peptide that we can measure. And the second is, you know, we do have the surrogate as once we have the dose, we can measure that, and that is a surrogate for efficacy. So we can find out basically early on if this has the potential to be active or not. And that is really the reasoning before we engage into big Phase 2b’s or something like that. Sean M. Laaman: Wonderful. Thank you. Operator: Our next question comes from the line of Jonathan Chang with Leerink. Please proceed with your question. Jonathan Chang: Half— Ralph Torbay: So this is a great foundation upon which we will build. In addition to that, the team is very well trained, has executed recently in the launch, and has a track record of successful launches. So all of this together will lead into, I think, a good—data-dependent, of course—potential launch. A strong medical team. I think this is following with the science. Jonathan Chang: Got it. Thank— Operator: Thank you. Our next question comes from the line of Graig Suvannavejh with Mizuho Securities. Please proceed with your question. Graig Suvannavejh: Thanks for taking my question and congrats on the progress. I was curious about your PRAME portfolio. You have got several different programs going on there. And I am wondering, you have got a lot of combinations for lung cancer and also ovarian cancer. I am wondering what are the different scenarios that we could see coming out when we get that data update in the second half? Would you be willing to share if you would be advancing potentially two assets if you had good data, or is the view that there is going to be one asset coming out of that pipeline review? Any color there on how you are thinking about what the outcome could be of that update in the second half? Bahija Jallal: Yeah. Before I leave it to Mohammed, I will just say this is a typical, you know, Phase 1 exploration, Phase 1b that we are doing, especially when you know that the target is validated. And I think to just address a lot of questions in the early phase before engaging in a late phase, at least when it comes out of melanoma. But, Mohammed, do you want to comment? Mohammed M. Dar: Sure. Thanks, Graig, for the question. Look, I think we are in a unique position where we have been in the clinic with brenetafusp for several years, and we have now enrolled several hundred patients. So we are certainly mining that data, which will help guide next steps for the brenetafusp program. But in addition, as Bahija mentioned, we have the PRAME HLE trial that is ongoing, and so we are going to be in a good position by the end of year to look at the totality of the data to guide us with regards to next steps. It just provides us optionality, basically. Operator: Our next question comes from the line of Rajan Sharma with Goldman Sachs. Please proceed with your question. Rajan Sharma: My question—just one on the HIV program that we are expecting an update for later this year. Could you just maybe frame expectations there in terms of number of patients that we should expect that dataset to be in? And maybe if you could just talk to how high you think you can push the dose there? Thank you. Bahija Jallal: Yeah. Mohammed, do you want to take that? Mohammed M. Dar: Thanks, Rajan, for the question. Just as a reminder, obviously, the HIV trial is in the multiple-ascending-dose portion. We shared data last year that showed early dose-dependent effects. So we are continuing to escalate. It is still a Phase 1 dose escalation, so cohorts are, you know, small sizes, but we anticipate by the end of this year to be able to identify the right dose and look at the impact on the viral reservoir as well as the viral rebound. The other part of the study is that we can trigger an expansion based on the data that we see, and so that can allow us to build on any signals we see during dose escalation. Operator: Our next question comes from the line of Fesel Khorshed with Jefferies. Please proceed with your question. Fesel Khorshed: Hi, guys. Thank you for taking the question. I just wanted to ask how are you thinking about the upcoming competitor readout in frontline uveal from IDEAYA? I understand it is HLA negative, but do you think their positive uveal could be any read-through or any impact to your stronghold in frontline HLA? Thank you. Bahija Jallal: Charles, do you want to take it? Ralph Torbay: Sure. Faisal, thank you for the question. So look, we need to see some randomized Phase 3 data from the competitor. Currently, we have seen only 42 patients, with 11 of those patients being HLA-A*02:01 positive. What I will be personally looking for, in addition to response rate, of course, is the hazard ratio because standard of care has evolved since the beginning of that trial, and the safety, because small molecules can have tolerability challenges we have seen in other indications. So those are the two points that I will be looking for in the data readout. Bahija Jallal: And we are very much confident that KIMTRAK is standard of care with very robust data not only from the clinical trials, but also from the real-world evidence, and we will bring a five-year evidence basically that is extending life of patients. Fesel Khorshed: Great. Thank you. Operator: Our next question comes from the line of James John Shin with Deutsche Bank. Please proceed with your question. James John Shin: One for Mohammed. I want to follow up on the TEBE-AM question on geographic breakdown. Can you lay out the percentage mix in the control arm, as in what percent may be on TILs versus recycled PD-1s, and whether that mix may impact historic OS levels? Thank you. Mohammed M. Dar: Yeah. Thanks, James, for the question. No, it is a really important question. It is one that we have obviously been thinking about throughout the context of the study. What I can tell you is that we have looked at recent real-world data, and that confirms our original assumptions that about a third of the patients likely in the control arm will get retreated with checkpoint. Those that are BRAF mutant typically get retreated with a BRAF-based regimen, and then the remaining are treated with chemotherapy or clinical trial, reflecting the high unmet need and the lack of an accepted standard. In terms of TILs, to your question, as I mentioned in my original response to Michael, majority of the patients are being enrolled in Europe where TILs are not approved. And so, you know, I think we remain confident in the original assumptions of our trial with regards to control. Operator: Our next question comes from the line of Paul Jeng with Guggenheim Securities. Please proceed with your question. Paul Jeng: Oh, great. Thanks for taking the question. I wanted to ask about the second-line cutaneous melanoma opportunity for KIMTRAK and how you view the evolving landscape maybe two to three years down the road where there could be some other therapies on the market, including for the HLA-positive segment. What do you sort of see KIMTRAK fitting into that paradigm in the future? Are there any factors like patient baseline characteristics or sites of care that could drive more utilization for KIMTRAK versus some of those competing therapies? Thank you. Bahija Jallal: Oh, okay. Sorry. Oh, I can start. Of course, Mohammed, you can add to this. Ralph Torbay: So currently, the only approved therapy in that line of treatment is TILs, and, of course, that is highly selective of patients because of the entire process that patients have to undergo through. Similarly, you mentioned the HLA-A*02–positive TCR-T. That is also a highly selective patient population, and,of course, you know, KIMTRAK will have an OS endpoint. Right? Keep in mind TILs and the TCR-T will have response rate, potentially PFS endpoints. We will have an overall survival endpoint, which is the gold standard in that indication. And importantly, we are off the shelf, have also long-term safety—safety already in melanoma patients, obviously uveal melanoma—and, importantly, we have a great base of experience. We have half of the cutaneous melanoma patients being treated in centers that are experienced with KIMTRAK. So all this together, I think, gives us a significant leg up in this setting. Mohammed M. Dar: Yeah. The only other thing I would add is that, ultimately, it is good for patients who, you know, in a setting where there is high unmet need and no options, it is good for patients to have options. Ultimately, I think what drives physician choices is the data. And so, as Ralph mentioned, our trial is a randomized Phase 3 trial looking at OS, which is the gold standard, and so I think, you know, the data will drive ultimate practice. Operator: Our next question comes from the line of Eva Forte with Wells Fargo. Please proceed with your question. Eva Forte: Good morning. Thanks for taking our question and congrats on the progress. A quick one from us just on brenetafusp. What do you need to see in the upcoming ovarian and lung readout to move forward in development? Are you looking for anything specific in terms of efficacy? Thanks. Bahija Jallal: Well, I am—anyway. I am sure. Mohammed M. Dar: Thanks, Eva, for the question. So, you know, as I mentioned earlier, we have been in the clinic for now a number of years and treated several hundred patients. We already have seen a clear signal of activity in ovarian. We shared that data in 2024 at ESMO, but there obviously was not a clear line of sight for monotherapy accelerated approval. So we pivoted to earlier lines—the maintenance setting—which we believe plays to the strength of the platform, which is disease control and a very favorable safety profile. So the data that we are planning to share will be predominantly safety cohorts. It is smaller than the monotherapy data we shared earlier, but focused on safety and potentially early signals in this maintenance setting. Lung, we are still signal searching. This is a heterogeneous population, and so the data that we are planning to share will include a dataset that is similar to what we have shared with ovarian and melanoma, but it is across multiple heterogeneous subsets. And then, of course, we have safety cohorts looking at chemo combo and osimertinib. Ultimately, Eva, what I would say is that it is going to be the totality of the data, and then in addition, we have the PRAME HLE. So we will look at the total data to help guide our next steps. Operator: Our next question comes from the line of Romy O'Connor with Van Lanschot Kempen. Please proceed with your question. Romy O'Connor: Hi, team. Thank you for taking my question. Maybe just backing onto Eva’s here, focusing on the half-life–extended PRAME. I just want to ask if you can point us to what we need to see here to inform any major changes to the PRAME program in totality. You mentioned convenience and improved response. Should we be benchmarking this against what brenetafusp has already shown? Thank you. Bahija Jallal: Great question. Mohammed? Mohammed M. Dar: Thanks, Romy, for that question. Yeah, exactly. I mean, you know, as we said, we are in a very good position where we have our brenetafusp data and essentially PRAME HLE is brenetafusp with the Fc added on. And so we are doing the right experiment in the clinic asking those two basic questions, and based on the data, it will provide us optionality in terms of which molecule to carry forward in which setting. Bahija Jallal: Yeah. I think when we started it was really to look at convenience because, you know, we see with KIMTRAK with short half-life an amazing hazard ratio of 0.551. Now I think, you know, with other data there, if we see also an increase in ORR or something like that, then I think that is what Mohammed was talking about. He is looking at the totality of the data, and then we will determine, you know, the next steps. But we will do the experiments, and we will get the data. Romy O'Connor: Great. Thank you. Operator: Our next question comes from the line of Patrick Trucchio with H.C. Wainwright. Please proceed with your question. Patrick Trucchio: Thanks. Good morning. Just a couple of follow-ups on TEBE-AM. I am just wondering, given the OS primary endpoint, what would the assumed median OS in the control arm be, and has anything in the real-world evolution of the treatment landscape changed that assumption since trial initiation? And then just separately, just regarding the timing of the data as early as second half 2026, maybe you can give us an idea of what the event assumptions are driving that, and the probability that the data perhaps slips into 2027? Bahija Jallal: Okay. I will take the second part, and then Mohammed will take the first part. So because it is an OS endpoint, it is event-driven. So we will have a little bit better idea maybe when the trial is done, but it is going to depend on the events. That is why, you know, just doing the calculation that we did and the assumptions, we see it today as as early as the second half of 2026. So we will get a little bit better once we finish the trial and, depending on the events. But, Mohammed, do you want to take the first part? Mohammed M. Dar: Sure. Thanks for the question, Patrick. So with regards to OS assumptions for the control arm in TEBE, the assumptions we made at the start of the trial really have not changed because, ultimately, there has been no randomized trial that has actually established an improvement in survival in this setting. So those assumptions essentially were a median overall survival between— Patrick Trucchio: Great. Thanks so much. Operator: We have reached the end of our question-and-answer session. With that, I would like to turn the floor back over to Morgan Morse for any closing comments. Morgan Morse: Thank you for joining us today. We appreciate all of your support. Bahija Jallal: Thank you. Operator: Thank you, ladies and gentlemen. This does now conclude today’s teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.
Operator: Hello, and welcome to the Geron Corporation Fourth Quarter 2025 Earnings 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 turn the call over to Dawn Schottlandt, Senior Vice President, Investor Relations and Corporate Affairs. You may begin. Good morning, everyone. Welcome to the Geron Corporation Fourth Quarter 2025 Earnings Conference Call. Before we begin, Dawn Schottlandt: Please note that during the course of this presentation and question and answer session, we will be making forward-looking statements regarding future events, performance, plans, expectations, and other projections including those relating to our 2026 financial guidance, the expected benefits and other impacts of our strategic restructuring plan, our current Rytelo commercialization strategy and related opportunities, the therapeutic potential of Rytelo, other anticipated clinical and commercial events and related timelines, the sufficiency of our financial resources, our ability to access additional debt financing, and other statements that are not historical fact which, of course, include risks and uncertainties that cause actual events, performance, and results to differ materially from those contained in these forward-looking statements. Therefore, I refer you to the risks and uncertainties described in today's earnings release, under the heading Risk Factors in Geron Corporation’s most recent periodic report filed with the SEC which identify important factors that could cause actual results to differ materially from those contained in these forward-looking statements, and future updates to Geron Corporation’s risks and uncertainties including in its upcoming annual report on Form 10-Ks. Geron Corporation undertakes no duty or obligation to update its forward-looking statements. Joining me on today's call are several members of Geron Corporation’s management team, Harout Semerjian, Chief Executive Officer; Ahmed ElNawawi, our Chief Commercial Officer; Doctor Joseph Eid, Executive Vice President of Research and Development and Chief Medical Officer; and Michelle Robertson, our Chief Financial Officer. With that, I will turn the call over to Harout to review Geron Corporation’s progress and strategy. Harout Semerjian: Thank you, Dawn, and good morning, everyone. The strategic alignment work we completed in 2025 positions Geron Corporation for growth in 2026 and places us on a path to becoming the hematology powerhouse in the long term. In 2025, we made deliberate choices to evolve the company into a more commercially minded organization. We strengthened our leadership team, developed a more focused commercial strategy, and improved financial discipline by aligning our financial resources and people to our growth priorities. Rytelo's growth strategy is built on three initiatives—two commercially driven and one medical affairs driven. From a commercial side, we are continuing to increase awareness and education for Rytelo amongst U.S. health care professionals with a refined engagement plan to help identify appropriate second-line patients faster, and complementing our field force efforts by increasing our in-person and digital presence in hematology forums through accelerated investment in our surround sound approach. From a medical affairs perspective, we are expanding our research partnerships and IST programs with the U.S. hematology community to grow our knowledge and real-world experience with Rytelo. Ahmed and Joe will discuss these initiatives in more detail. As for our Q4 2025 and full-year results, Rytelo's fourth quarter net revenue was $48,000,000 in line with our expectations. For the full year 2025, we delivered Rytelo net revenue of $184,000,000, a meaningful number for a hematology drug in its first full commercial year. Total operating expenses for the full year 2025 were approximately $255,000,000 in line with our previous guidance of $250,000,000 to $260,000,000. Looking ahead, we are laser focused on operational execution and delivering for patients. Our Rytelo net revenue expectations for 2026 is $220,000,000 to $240,000,000 with the underlying assumption of driving consistent quarter-over-quarter demand growth. Our 2026 total operating expenses are projected to be between $230,000,000 and $240,000,000, roughly a $20,000,000 year-over-year reduction at the midpoint. This guidance reflects a streamlined company aligned to create near and long term growth and value. The market opportunity for Rytelo is clear, and it is validated by the IMerge data, Rytelo's FDA label, and the NCCN guideline. We are confident in our Rytelo revenue growth strategy and our ability to execute. With that, I will turn it over to Ahmed to provide more details on Rytelo's commercial performance and execution. Ahmed ElNawawi: Thank you, Harout. Rytelo’s performance in 2025 establishes a solid base for us to execute our commercial strategy and further grow demand in 2026. In the fourth quarter, we achieved 9% demand growth for Rytelo compared to the third quarter, and a 13% increase in prescribing accounts, expanding our footprint to approximately 1,300 accounts. First- and second-line patient starts on a rolling twelve-month basis were approximately 30%. Based on our analysis, we believe market conditions for Rytelo in second-line lower-risk MDS are favorable. The movement of luspatercept into the first-line setting has further clarified the second-line opportunity for Rytelo in appropriate patients, which is well positioned based on the IMerge data, NCCN guidelines, FDA label, and the growing real-world experience. Our commercial strategy is designed to ensure that Rytelo reaches more eligible patients at the right point in their treatment journey and when they are most likely to benefit from Rytelo. Our commercial execution is focused on three core initiatives. First, targeted engagement with high-volume community accounts. We are prioritizing centers that treat earlier line and second-line patients with our field force engagements, as we continue to engage with lower-volume accounts, or those primarily treating salvage patients, through digital tactics. Second, we are increasingly investing in the most effective marketing channels. This includes a strong emphasis on digital, non-personal promotion, and third-party educational platforms to create what we describe as a 3D surround sound for Rytelo, ensuring consistent high-quality messaging across multiple touch points. And third, we are executing cross-functionally through effective account management, leveraging data presented at ASH 2025 to proactively address cytopenias and highlighting the potential association with response while positioning Rytelo as the standard of care in appropriate second-line patients regardless of their RS status. In terms of patient opportunity, our primary commercial focus in 2026 is on eligible second-line lower-risk MDS patients, which we currently estimate to be approximately 8,000 patients in the U.S. Rytelo's broad label supports treatment of earlier and later lines of therapy, but second line is where we believe Rytelo has the potential to make the biggest impact on patients’ lives. For us, this patient segment aligns with Rytelo's therapeutic profile and NCCN guidelines, and represents a meaningful market opportunity for Rytelo. We believe our commercial investments are well aligned to drive impact, and we remain disciplined in deploying resources where we believe they can generate the greatest return. I now turn it over to Joe to discuss our medical and scientific engagement. Joseph Eid: Thank you, Ahmed. Our medical and scientific efforts in 2025 played a critical role in increasing Rytelo's share of voice within the hematology community, and we plan to continue to engage closely with the community throughout 2026. Educational activities at meetings such as SOHO and ASH translated into increased awareness, with more healthcare providers sharing positive feedback as they gain experience treating appropriate patients and observing meaningful clinical benefit. This growing confidence is reinforcing Rytelo's role in the treatment landscape. IMerge is a data-rich trial with analyses beyond the primary endpoint continuing to inform the field. Data presented at ASH 2025 highlighted insights suggesting treatment-emergent cytopenias are consistent with on-target activity, helping to deepen understanding of treatment effects, inform clinical practice, and further strengthen engagement across the hematology community. We also expanded our engagement with academic centers to support the high interest in imetelstat to initiate more ISTs, and we are also seeing increased interest in community centers wanting to contribute to preclinical, clinical, and real-world evidence data generation. We have aligned to support over 10 ISTs and real-world evidence efforts spanning mechanistic studies, combinations and sequencing, early-line use, and new settings. We are seeing increasing interest from both academic and community centers to participate in evidence generation, and we expect initial real-world evidence data to be available in 2026. In addition to large scientific congresses, as we move into 2026, we are placing increased emphasis on smaller, peer-to-peer medical meetings such as the Aplastic Anemia MDS International Foundation, SLASCO meetings, and other similar forums. These settings allow for more detailed clinical dialogue and practical discussion among health care professionals, which we believe is particularly important for a therapy like Rytelo, as physicians and other health care providers refine patient selection and treatment sequence. Our presence at these meetings supports more meaningful education, facilitates experience sharing among peers, and further amplifies Rytelo's visibility and credibility in the hematology community. We view this targeted engagement as a valuable complement to larger meetings and an important driver of sustained awareness and adoption. Finally, our fully enrolled IMPACT MF trial in relapsed/refractory myelofibrosis is projected at this time to reach the interim analysis death event trigger in the second half of this year. Overall survival is the primary endpoint and our confidence in this endpoint is supported by encouraging survival outcomes observed in the phase 2 IMbark trial which informed the design of the IMPACT MF trial. While our base case from a planning perspective remains progression to the final analysis in 2028, reaching the interim analysis represents an important milestone as we continue to advance imetelstat's potential beyond lower-risk MDS. An earlier positive outcome would represent an upside scenario to our planning. I will now hand it over to Michelle to walk through the financials. Michelle Robertson: Thank you, Joe, and good morning, everyone. For more detailed results from the fourth quarter and full year, please refer to the press release we issued this morning, which is available on our website. Q4 and full year 2025 reflect both the progress we made with Rytelo and the financial discipline we exercised to manage operating expenses and provide the flexibility to make the best investments that have the potential to drive near and long term value. In the fourth quarter, total net revenue for the three months ended 12/31/2025 was $48,000,000 compared to $47,000,000 in 2024. For the full year 2025, total net revenue was $184,000,000 compared to $76,000,000 for the full year 2024, reflecting a full year of Rytelo commercial availability. Gross-to-net deductions increased to 17.7% for the twelve months ending 12/31/2025, compared to 14.5% for the same period last year. As volume increased, there was wider 340B utilization and expanded GPO contracting, which we foresee going forward as the business matures. For 2026, we expect gross-to-net to be in the high teens to low 20s. Research and development expenses for the three and twelve months ended 12/31/2025 were $16,000,000 and $74,000,000 respectively, compared to $23,000,000 and $104,000,000 for the same period in 2024. The year-over-year change was due to lower clinical trial costs and manufacturing expenses as we began to capitalize inventory after the approval of Rytelo. We expect our research and development expenses to decrease slightly in 2026, primarily due to lower labor costs driven by a decrease in headcount as a result of the workforce reduction in December 2025, partially offset by higher clinical trial costs related to our potential ISTs. Selling, general and administrative expenses for the three and twelve months ended 12/31/2025 were $42,000,000 and $159,000,000 compared to $43,000,000 and $146,000,000 for the same period in 2024. The full year 2025 increase was primarily due to an increase in sales and marketing full-time employees and additional investment in marketing programs. We expect our selling, general and administrative expenses to decrease in 2026 primarily due to lower G&A labor costs driven by a decrease in headcount as a result of the workforce reduction in December 2025, partially offset by higher marketing costs due to continued investment in our Rytelo commercialization strategy. Total operating expenses for the full year 2025 were $255,000,000 in line with our previous guidance of $250,000,000 to $260,000,000. The strategic restructuring announced in December 2025 has been completed, and we accounted for substantially all the expenses associated with the reorganization in Q4 2025. As of 12/31/2025, we had approximately $400,000,000 in cash, cash equivalents, restricted cash and marketable securities, compared to $503,000,000 as of 12/31/2024. Our balance sheet remains strong and was further strengthened in the recent amendment to our Pharmakon loan agreement, extending potential access to an additional $125,000,000 in capital through 07/30/2026. Also, as a matter of corporate housekeeping, we plan to file a new shelf registration and ATM with our 10-K on February 27. The strategic actions we took in 2025 positioned Geron Corporation for a year of growth in 2026. We are reiterating our 2026 financial guidance. We expect Rytelo net revenue of $220,000,000 to $240,000,000 with a greater portion of growth anticipated in the back half of the year. Our total operating expense guidance of $230,000,000 to $240,000,000 reflects strong financial discipline and investment to support our commercial strategy. With that, I will turn the call back to Harout for closing remarks. Harout Semerjian: Thank you, Michelle. Building on a year of strategic alignment across the organization, and energized engagement with the hematology community, we enter 2026 with a clear opportunity in second-line lower-risk MDS, a commercial strategy designed to reach the right patients at the right time, a European approval that gives us the ability to engage ex U.S., and a strong balance sheet that gives us flexibility to opportunistically innovate. Our priorities for 2026 are clear: drive U.S. commercial growth, pursue pathways to bring Rytelo to patients outside the U.S., and remain financially disciplined to evaluate opportunistic innovation as we build Geron Corporation into a leading sustainable hematology company. Thank you again for your time and interest in Geron Corporation. Operator, we are now ready to start the Q&A session. Operator: Star 11 on your touch tone phone and wait for your name to be announced. Our first question comes from Tara Bancroft with TD Cowen. Tara Bancroft: Hi, good morning. I know you have emphasized the growth inflection that you expect in the second half of the year to meet guidance. Could you go into more specifics on the commercial or physician behavioral milestones that we should watch for in the first half of the year to gain confidence that the inflection is on track? And which of these factors most underscore your confidence in guidance? Thanks so much. Harout Semerjian: Thank you, Tara. Great point. As we enter 2026, we are very focused on our executional plans. A lot of the difficult decisions and realignments we had to take in the back half of last year are behind us, and we are starting the year with a very energized team. I would say the Q4 demand growth of 9% is an important metric for us because it is forward-looking. We are not going to comment on Q1, but what we have seen from IQVIA and others is in line with our expectation. That is why we are reiterating guidance of top-line growth between $220,000,000 and $240,000,000 versus the $184,000,000 we delivered in 2025. That is meaningful growth, and we are excited about it. We are seeing certain green shoots, but at this point, let us leave it at that. The team is focused on execution with refined messaging and refined targeting on high-volume accounts, making the second-line opportunity more of a reality. Operator: Our next question comes from Gil Blum with Needham and Company. Gil Blum: Good morning, everyone. Thanks for the update, and thanks for taking our questions. You mentioned a focus on the second line. Do you have any insight as to how many second-line patients you currently have? What is the proportion to the third-line patients? Is there any information you can share there, even qualitatively? Harout Semerjian: Good morning, Gil. We have shared a few things that can help with your question. We estimate about 8,000 patients in the second-line setting that we are targeting. In lower-risk MDS the total pool is much bigger, but our focus is on patients who move from frontline—more and more with luspatercept—and then into second line. Unfortunately, those patients are not getting cured; they are going to move into a second line. With the recent update to the NCCN guidelines, with Rytelo becoming a preferred second-line agent ahead of HMAs—which pushes HMAs into later lines—that really opens the opportunity in second line. So approximately 8,000 patients we believe can benefit from Rytelo in the second-line setting. We have also shared on this call that, now that we have mature twelve-month data, around one third of our patients are coming from first and second line. These data points indicate why we are focused there and where we stand on first/second line versus later lines. There will always be later-line patients, but our focus, efforts, energy, and funding are squarely on second line. That is the secret sauce for our growth strategy. Gil Blum: Thank you. Very helpful. And you mentioned 9% demand growth and about a 13% increase in prescribing accounts in the fourth quarter. What do you think the cadence is to see that translate into the revenue side? Harout Semerjian: These go hand in hand with different timings. You have gross-to-net, and there are catch-ups and true-ups we have to do. Demand growth is really the key for us—getting more patients on therapy and getting more accounts that have not ordered before to start ordering, which is another 150 accounts we added in Q4. With the refined strategy of focusing on high-volume community accounts, in addition to the academic medical centers we have always focused on, we believe this will drive consistent quarter-over-quarter demand growth as we progress in 2026. Operator: Our next question comes from Emily Bodnar with H.C. Wainwright. Emily Bodnar: Hi, good morning. Thanks for taking the questions. On ordering accounts, you have been increasing the cadence pretty consistently quarter over quarter. How many accounts do you think there potentially could be at peak? How many are there in total for these approximately 8,000 second-line patients? And then on the expense side, your guidance suggests potential to breakeven later this year. Is that something you are reaching for? And could you discuss profitability in general? Thank you. Harout Semerjian: Sorry, Emily. Can you repeat the second question? I was having a hard time hearing it. Emily Bodnar: No problem. Just on the expense side—with your guidance for revenue and expenses—it looks like you could potentially break even in the second half of the year. Maybe comment on your thoughts on profitability. Harout Semerjian: Got it. Michelle, maybe you can take the second half of the question, and I will take the first. Michelle Robertson: Sure. Thanks, Emily. We definitely see a path to profitability, but that is not our focus in 2026. We reduced our operating expenses in the fourth quarter and reduced our operating guidance for 2026. But we also want to invest in the commercial strategy as well as additional investments in ISTs. So we do see a path to profitability, but for 2026, with our strong balance sheet, we are focusing on making the right investments to have the biggest impact short term and long term. Harout Semerjian: Thanks, Michelle. And for your first question, Emily, there is a long way to go. If you look at those 8,000 patients clearly in second line—the bull’s-eye of our focus in lower-risk MDS—this is a community disease more than an academic medical center disease. Typically, about 20% are in AMCs and 80% in the community. We want to make sure we are making inroads in the community, especially high-volume accounts. Part of what Ahmed and his team have done is retool our marketing mix to complement what the field is doing with our 3D surround sound efforts so we can reach more prescribers—deeper with high volume, and broader through digital and non-personal promotion—in a cost-effective and meaningful manner. Operator: Our next question comes from Corinne Johnson with Goldman Sachs. Corinne Johnson: Good morning. You mentioned that you have approximately 30% of patients in the first- and second-line setting currently on therapy. Could you help us think through what that needs to be to reach your guidance for the year? And you also mentioned a 13% increase in prescribers quarter over quarter. Could you speak to any patterns with respect to converting a new prescriber to a repeat prescriber, and what you are seeing there with respect to depth metrics? Harout Semerjian: Thank you, Corinne. Our guidance assumes we need more centers to use Rytelo for the first time and more repeat use within existing accounts. Adding 150 accounts is good for breadth, and our focused efforts to support high-volume accounts drive depth per prescriber. We actually need both—breadth and depth—not one or the other. Our efforts are tailored accordingly and customized to customer needs, and we are focused on both. Operator: Our next question comes from Stephen Willey with Stifel. Stephen Willey: Good morning. Thanks for taking the questions. To what extent are you seeing ESAs as a second-line competitor? There is a lot of discussion around Rytelo being placed ahead of HMAs, but do you have any insight as to the portion of patients who are failing frontline luspatercept and then getting treated with an ESA? Joseph Eid: We are seeing a shift in the treatment paradigm. Where it was a sequence of ESA then luspatercept in the past, now luspatercept is becoming more dominant in the first line. Biologically, ESAs do not work as well post luspatercept, and that is why, from physician feedback and KOLs, we are seeing a move from luspatercept to imetelstat as a preferred second-line drug—not ESA. That is a very important shift in the market as far as we are concerned. Not only are we focusing on the patients we can help the most, but market shifts are also to our advantage. It is no longer about competing with luspatercept on the same patient; it is about making sure patients get the right treatment in the front line. If you are using luspatercept in the frontline, you are not going to use the same mechanism again in the second line, and ESAs after luspatercept are not showing compelling data, at least the ones we have seen. With HMAs moving further out with the recent NCCN guidelines, that really opens the door for the second-line patient population. That is why we have streamlined our messages—regardless of RS status—and are focused on those patients, because we believe FDA approval and NCCN guidelines are very helpful for the patients we are focusing on. Stephen Willey: That is helpful. And then just curious if there is anything you can say about what the plans with the European approval might be going forward. There is a lot of discussion around MFN pricing. Have you crystallized that ex U.S. strategy at all? Harout Semerjian: Great question. We do have a European approval, which is derisked and great, but approval without funding is more limited. We need to understand the HTA piece and, increasingly, the impact of MFN. That means we need to be careful and thoughtful about how we move forward. One thing that has not changed is that it is about the number of patients we can help and at what price for innovation we can negotiate in large countries such as Germany and France. Our current focus is on making inroads into understanding and synthesizing the HTA processes and the ability to command the premium we believe Rytelo deserves, and in parallel having conversations with like-minded partners. We are assessing between doing some of that work ourselves—which is increasingly pressured for U.S. biotechs—and engaging with partners who see the opportunity as we do and are not afraid of negotiating for innovation with large payers. That work is ongoing and takes months. Regardless of who commercializes the asset, you need a good HTA understanding. That is why we say we will be opportunistic about Europe while remaining super focused on our U.S. growth as we have those conversations. Operator: That concludes today's question and answer session. I would like to turn the call back to Harout Semerjian for closing remarks. Harout Semerjian: Thank you, everyone, for joining our call. We look forward to updating you on our progress over the next several quarters. Thank you very much for joining today. Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
Operator: Welcome to APi Group Corporation’s 2025 Earnings Conference Call. Joining me on the call today are Russell A. Becker, our President and Chief Executive Officer, and Glenn David Jackola, our Executive Vice President and Chief Financial Officer. Before we begin, I would like to remind you that certain statements made on this call, including those regarding our future performance, anticipated events or trends, and other matters that are not historical facts, are forward-looking statements. These statements are not a guarantee of future performance, and actual results may differ materially from those expressed or implied by such forward-looking statements. In our press release and filings with the SEC, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, February 25, 2026, and we undertake no obligation to update any forward-looking statements we may make except as required by law. As a reminder, we have posted a presentation detailing our fourth quarter financial performance on the Investor Relations page of our website. Comments today will also include non-GAAP financial measures and other key reporting metrics. The reconciliations of and other information regarding these items can be found in our press release and our presentation. It is now my pleasure to turn the call over to Russell A. Becker. Russell A. Becker: Thank you, Adam. Good morning, everyone. Thank you for taking the time to join our call this morning. I want to start by thanking Adam Fee for his leadership of our Investor Relations function over the last three years. Adam has done an excellent job building trust with the investment community and we are excited to announce his transition into a finance leadership role within our elevator business. With this transition, Adam Walters, who previously served on our corporate development team, will take over leadership responsibilities of investor relations. We remain grateful for the hard work of our 29,000 leaders and their dedication to APi Group Corporation. The safety, health, and well-being of each of our leaders is our number one value. We continue to prioritize investing in the men and the women in the field as human beings and aim to provide each of them with training, advancement opportunities, and leadership development. Once again, I am proud to announce that APi Group Corporation has been recognized as a Military Friendly Employer for 2026. We remain committed to providing opportunities for veterans and their spouses to build careers and develop as leaders. Back in 2021, we introduced our long-term 13-60-80 shareholder value creation framework. Since then, 13-60-80 has been our North Star, and I am proud of our team’s relentless focus and dedication to delivering on these commitments. Over the last several years, our journey has been marked by meaningful progress. We grew revenues from $3.9 billion in 2021 to $7.9 billion in 2025. We increased our percentage of revenue coming from inspections, service, and monitoring from 40% in 2021 to 54% in 2025. We established a new adjacent vertical in the highly attractive elevator and escalator service market with the acquisition of Elevated. And we accelerated our bolt-on M&A strategy by deploying approximately $580 million across 33 bolt-on acquisitions from 2023 through 2025. Notably, as it relates to our 13-60-80 targets, we ended the year with adjusted EBITDA margins at 13.2%, above our 13% target and significantly above our 2021 adjusted EBITDA margin of 10.3%. Additionally, we ended 2025 with adjusted free cash flow conversion of 80%, right in line with our stated target of 80% and well above our 2021 adjusted free cash flow conversion of 55%. Thank you to all of our teammates for helping us win for their focus, discipline, and commitment that made these results possible. In 2021, we set ambitious financial targets, and through our collective teamwork and belief we achieved these targets. This allowed us to set our new ambitious but achievable three-year long-term financial targets of $10-16-60+. I am grateful. Now I will dive into our record 2025 full-year results. The business continues to build momentum, delivering robust top-line growth while expanding margins. We continue to have strong growth in inspection, service, and monitoring revenues. We capitalized on a robust project environment. And finally, we continue to execute accretive bolt-on M&A at attractive multiples. For the year, net revenues increased by 13%, approximately 8% organically, with strong growth across both segments. Our Safety Services segment revenues grew organically by approximately 7%, led by growth in inspection, service, and monitoring revenues. As expected, Specialty Services maintained the momentum and closed the year with strong growth, delivering 10% organic growth for the year. In line with our strategic initiatives, we continue to drive improvements in adjusted gross margin, which expanded 50 basis points for the year. The strong performance in gross margin led to our record full-year 2025 adjusted EBITDA margin, representing margin expansion of 50 basis points. We expect to see continued margin expansion in 2026 and beyond, largely driven by the same initiatives that we have been executing for the past several years, which include the following. Consistent organic growth improved inspection, service, and monitoring revenue mix. Disciplined customer and project selection, pricing, branch and field optimization, procurement, systems and scale, accretive M&A, and a strong free cash flow with record adjusted free cash flow of $836 million, representing 80% conversion on adjusted EBITDA. Our consistent free cash flow growth and the strength of our balance sheet provides flexibility to pursue value-enhancing capital deployment alternatives including accretive M&A and opportunistic share repurchases. In 2025, we continue to execute our M&A plan, completing 14 acquisitions and building on our long track record of integrating businesses and supplementing growth through M&A at attractive multiples. In addition, on February 2, 2026, we closed on the previously announced acquisition of CertiCyte, an inspection-first provider of comprehensive fire and life safety services in the Midwest. We are already pursuing the additional opportunities created by this acquisition and welcome our new CertiCyte team members to the APi Group Corporation family. Electronic security, elevator and escalator, and niche specialty services. Our team remains hard at work prioritizing the most attractive opportunities. We will continue to focus I want to take a moment to recognize a significant milestone for our company. In 2026, APi Group Corporation will celebrate its 100-year anniversary, marking a century of commitment to our customers. We have much to be grateful for. A central part of our 100-year anniversary will be gratitude and giving back to the communities that have supported us along the way and entering 2026, we remain laser-focused ‘28 supported by consistent, mid financial results achieved in 2025. As we begin 2026, I have great confidence in on a daily basis. I would now like to hand the call over to David to discuss our fourth quarter financial results and 2026 guidance in more detail. Glenn David Jackola: Thanks, Russ, and good morning, everyone. Reported net revenues for the three months ended December 31, 2025 were $2.12 billion, a 13.8% increase compared to $1.86 billion in the prior-year period. Organic growth of 11.1% was driven by continued growth in inspection, service, and monitoring revenues, strong growth in project revenues, and pricing improvements. Adjusted gross margin for the three months ended December 31 was 32.2%, representing a 110 basis point increase compared to the prior-year period, driven by disciplined customer and project selection and pricing improvements, partially offset by project revenue mix. Adjusted EBITDA increased by 21.9% for the three months ended December 31, with adjusted EBITDA margin coming in at 13.9%, representing a 90 basis point increase compared to the prior-year period. Growth in adjusted EBITDA was driven by strong revenue growth and adjusted gross margin expansion. Adjusted diluted earnings per share for the three months ended December 31 was $0.44, representing a $0.10 or 29.4% increase compared to the prior-year period. The increase was driven by strong revenue growth, adjusted gross margin expansion, and a decrease in interest expense, partially offset by an increase in the share count. I will now discuss our results in more detail for the Safety Services segment. Revenues, sending a 110 basis point increase compared to the prior-year period, driven by disciplined customer and project as well as pricing improvements leading to margin expansion in inspection, service, and monitoring revenues as well as project 17.5%, representing a 110 basis point increase compared to the prior-year period primarily due to adjusted gross margin expansion. I will now discuss our results in more detail for the Specialty Services segment. Specialty Services reported net revenues for the three months ended December 31 were $695 million, an increase of 20.7% compared to $576 million in the prior-year period, driven by strong growth in project revenues. Adjusted gross margin for the three months ended December 31 was 20.7%, representing a 190 basis point increase compared to the prior-year period, driven by an increase in project opportunities that align with our disciplined customer and project selection criteria and improved leverage of fixed overhead costs. Segment earnings increased 40.7% primarily due to adjusted gross margin expansion. Turning to cash flow. We to focus on driving strong free cash flow conversion. Adjusted free cash flow conversion of 136%. The strong free cash flow in the fourth quarter drove adjusted free cash flow of $836 million for the full year 2025, up $168 million versus last year, and representing a conversion rate of 80%. I want to reiterate what Russ said earlier and express my gratitude to all our leaders and teammates for their role in helping us execute and achieve our 80% free cash flow conversion target in 2025. Our teams understand the importance of free cash flow generation, and our performance and progress reflect that focus. At the end of the fourth quarter, our net debt to adjusted EBITDA was approximately 1.6x, significantly below our long-term target six. And as a reminder, our long-term capital deployment upper priorities are maintaining net leverage at stated long-term targets, strategic M&A at attractive multiples, and opportunistic share repurchases. To $8.66 billion, representing organic growth of 5% at the midpoint. We expect our organic revenue growth for the year algorithm, which as a reminder is mid- to high-single-digit growth in inspection, service, and monitoring revenues, and low- to mid-single-digit growth in project revenues. We expect full-year adjusted EBITDA of $1.14 billion to $1.20 billion, which represents adjusted EBITDA growth of approximately 8% to 13% on a fixed currency basis and adjusted EBITDA six adjusted free cash flow conversion expected to be at or above 10011515% of adjusted adjusted order for free cash flow conversion to seasonality. Turning to the first quarter, we expect reported net revenues of $1.875 billion to $1.975 billion, representing organic revenue growth of 4% to 10%. We expect first quarter adjusted EBITDA EBITDA of two and it is adjusted EBITDA margin of a 11 expense to be approximately $130 million, depreciation to be approximately $90 million, capital expenditures to be approximately $105 million, and our adjusted effective tax rate to be approximately 23%. We expect corporate expenses to be approximately $35 million per quarter, with some timing variability throughout the year, and our adjusted diluted weighted average share count to be approximately 441 for the year. Lastly, we anticipate systems and business enablement expense for 20 begin 2026 with positive momentum and strong demand for our services across our global platform. Service, and monitoring revenues. We remain relentlessly focused on growing inspections, that, combined with the accelerating growth in our backlog, and robust M&A pipeline provides a solid foundation for strong organic and inorganic growth in 2026 while continuing to expand our margins. We remain focused on creating sustainable shareholder value by delivering on our 10-16-60+ targets. With that, I would now like to turn the call back over to the operator and open the call up for Q&A. Operator: We will now begin the question and answer session. Please limit yourself to one question. If you would like to ask a question, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Please stand by while we compile the Q&A roster. Your first question comes from the line of Timothy Mulrooney with William Blair. Your line is open. Please go ahead. Timothy Mulrooney: Russ, David, good morning. Doing well. Thanks. I just wanted to say congrats to Adam too on moving on to the next chapter. That was great to hear. Well deserved. My question is just a really high-level one. Your revenue guidance is calling for 6% growth at the low end of the range and 9% growth at the high end. Can you just talk about what kind of market condition assumptions that you are embedding in that low end versus that high end, or various swing factors that you are embedding to achieving the different ends of that range, please? Thank you. Russell A. Becker: Yeah. So I can start, and David can add any color if he would like to, Tim. So, you know, we continue the message to our businesses that we want to see high single-digit growth in inspection, service, and monitoring component of their business, and low single-digit growth in the project piece of their business. We do happen to have a tailwind of certain end markets that are providing excellent project opportunities, which is evidenced by our backlog, which is north of $4 billion and continues to be very strong, robust, and healthy. Probably the most important aspect of it and we are reaping some of the benefits of the robust data center market, both on the inspection and service side, but also on the project side. Advanced manufacturing continues to be robust. Semiconductors providing some opportunities. Health care, critical infrastructure. So we are seeing some strong tailwinds in certain end markets on the project side of our business that we are taking advantage of. Glenn David Jackola: The only thing I would add to that, Tim, and I will reiterate a point that maybe I made during my comments was the 54% of our revenue that comes from recurring inspection and monitoring and monitoring that we expect to grow in our long-term organic growth algorithm of mid- to mid-upper single digits. And then it is going to be the project environment that could be from the low end to the high end of the range. Timothy Mulrooney: Okay. Thank you. Operator: Your next question comes from the line of Jonathan E. Tanwanteng with CJS Securities. Your line is open. Please go ahead. Jonathan E. Tanwanteng: Hi. Thank you for taking my questions, and congrats to Adam also. I was wondering if you could expand on the data center opportunity. Growth in 2026. Russell A. Becker: And can you— Glenn David Jackola: —at the end, so data centers are an area that is contributing to our growth in 2025 and 2026. About 10% of our overall revenue. When we ended 2025, it was approximately 8% of our overall revenue. And we would expect data centers to comprise about 10% of our total revenue in 2026. So it is contributing a couple percentage points of growth in both 2025 and 2026, but we still have plenty of really good growth momentum in other parts of the business as well. It is a contributor, but it is not the primary driver of our growth in 2025 and 2026. And I would say the margin profile of the data center work is really, really strong. There are not many players in the market that can do the work that we are doing in data centers. And that is allowing us to leverage our relationships, propose its on gross margin and and execute against that. I do not know if there is anything else you would like to add, Russ. Russell A. Becker: No. I think you— Jonathan E. Tanwanteng: Going forward, from a tuck-in perspective and then also the opportunity for larger deals. Well, you— Russell A. Becker: —beat the you may be under. We are wondering who is going to be the first person to ask more than one question, John. So, but, anyways, the M&A pipeline remains opportunities, robust, and we continue to see a lot of really good in the space, especially in North America, in fire, life safety, security space. We have really got some nice opportunities in the elevator and escalator space that we plan to execute on here in the second quarter. The good part is that we really have opened up the aperture to the international business and have some fantastic businesses that we are doing work on right now with the idea that we are going to be able to get these businesses closed in the second and third quarter and bring some of those folks into the APi Group Corporation family. So there is just a tremendous amount of opportunities, and in my remarks, I talked about the idea of APi Group Corporation being a forever home for the sellers of this business. It continues to resonate with people, and it allows us to buy these businesses at the right price, which is a really good thing. So, but, yeah, we are really excited about our pipeline for 2026 and beyond. Jonathan E. Tanwanteng: Got it. Thanks, Russ. Operator: Your next question comes from the line of Julian C.H. Mitchell with Barclays. Your line is open. Please go ahead. Julian C.H. Mitchell: Hi. Good morning. Just to circle back on the top line, if there was any color you could give us on how remaining performance obligations or backlog growth, how has that been developing? And I suppose allied to that, looking at the Q1 guide, there is a very, very wide range on the organic sales growth. Maybe help us understand how you see the two segments’ growth in the first quarter, please? Glenn David Jackola: Sure. So I think you snuck in a two-part question as well, maybe. On the backlog, I would say the backlog as we 2025 and into 2026 is healthy. It is up across both segments, across a variety of end markets. And as Russ said in his comments, it is healthy, which means it is at a good margin and work that we feel really good about. In terms of Q1 and how that plays out across the segments, I would say the Safety segment is going to be a lot of the same, and so I will refer back to our organic growth algorithm. On the service side, we target mid- to upper-single-digit growth in that segment in service, and our Q1 outlook reflects that. On the project side, we reflect low to mid; our outlook reflects that as well, but it is probably closer to the mid. And in the Specialty Services segment, we are comparing against a down 2025, so I would expect growth to be in the double-digit revenue growth in 2026. Does that help? Julian C.H. Mitchell: That is perfect. Thanks a lot, David. Operator: Your next question comes from the line of Curtis Nagle with BofA Securities. Your line is open. Please go ahead. Curtis Nagle: Great. Thanks so much for taking the question. Maybe if we just quickly go back to some of the trends in data center services revenue, how much of a pickup are you hopefully starting to see from project work converting to service and, hopefully, that turning into a long-standing durable base of high-margin press. Russell A. Becker: Well, it for sure will. I mean, really, the reality of it is the project-related work that we are doing in the data center space is because of the relationships that have been established on the existing campuses of a lot of these hyperscalers, where we are already doing the inspection, service, and monitoring. The data center, the project side of it, the size of these projects is significantly higher than what we have seen in the past. And you are not going to see—we are going to win the inspection, service, and monitoring. There is no—I do not have any question about that, as we continue to move forward on some of this project work. But the size of the inspection, service, and monitoring account is significantly lower than the size of the project-related work. And so you just need to continue to chip away and build your inspection, service, and monitoring business, which we continue to do. We continue to see really, really good growth on the inspection side of our business. If you recall, we generate someplace between $3 and $4 worth of service work for every dollar of inspection revenue that we generate. And that continues to grow at that high-single-digit clip. So the playbook is working, and we continue to execute on it, and we continue to see really good results. And that is no different in the data center space as the rest of our business. Curtis Nagle: Okay. Thank you. Operator: Your next question comes from the line of Andrew Alec Kaplowitz with Citi. Your line is open. Please go ahead. Andrew Alec Kaplowitz: Hey, Russ. Hey, guys. How are you doing, Adam? Congratulations. Adam Fee: Thank you. Russell A. Becker: This is a going-away party for Adam. It is— Adam Fee: There you go. Andrew Alec Kaplowitz: Anyway, so good morning, Andy. This might be a bit nitpicky, but maybe you already said it. So, like, on inspection, I think you, last quarter, had over 20 quarters in a row of double digits. Did it still grow double digits this quarter? And if not, is it just kind of the law of large numbers starting to get to that segment still getting real high single digits plus? How is corn— Russell A. Becker: Yeah. So we knew somebody was going to pick on that. But so it did grow double digit. But we are moving to the point where it will be the law of large numbers, and it will be tougher and tougher to comp against that. But we continue to see really good growth in our inspection business. So yes, it did grow double digits. You are just going to hear us—we are not going to talk about it as prevalently. Andrew Alec Kaplowitz: Sounds good. Thank you. Operator: Your next question comes from the line of Tomohiko Sano with JPMorgan. Your line is open. Please go ahead. Tomohiko Sano: Hi, everyone. First of all, congratulations on your 100th anniversary. Thanks, Tomo. Good morning. Thank you. And so your 2026 guidance implies about 60 bps improvement in adjusted EBITDA margin at the midpoint. So what are the major drivers behind this margin expansion as you walk towards the 16%+ margin target for 2028, which initiatives do you plan to further strengthen or newly implement, please? Glenn David Jackola: Hey. Good question, Tomo. Thanks for being on this morning. So, yeah, you are right, about 60 basis points at the midpoint. And really, the initiatives that are going to get us to 16% by 2028 are the initiatives that got us to 13% by 2025. And I would say as we get deeper into the 2028 period, we are going to start to see increased benefits from our investments that we are making as an organization in procurement, as well as some of the benefits from the system and technology investment that we are currently undergoing in our North America business. And accretive M&A will play a part in that as well. Tomohiko Sano: Thank you. Operator: Your next question comes from the line of Jasper James Bibb with Truist Securities. Your line is open. Please go ahead. Jasper James Bibb: Hey. Good morning, guys. Just wanted to ask about the assumption for project demand in your guidance. I think you are projecting low- to mid-singles growth for the year, but there is a lot of strength in projects pipeline, data center, etcetera. I guess just how would you frame the assumption of low- to mid-single digit versus a strong pipeline there? Is that conservatism because it is earlier in the year? Is it harder comps? Just any detail there would be thanks. Glenn David Jackola: I think you nailed all three of the reasons around that as a midpoint of our guide. I mean, we guide a range for a reason, and those are three very good reasons to start where we did for the year. Jasper James Bibb: Fair enough. Thank you very much. Glenn David Jackola: Thanks, Jasper. Operator: Your next question comes from the line of Andrew John Wittmann with Baird. Your line is open. Please go ahead. Andrew John Wittmann: Yeah. Thanks. A lot of my questions have been asked and answered, but I guess maybe, Russ, if you had to use the crystal ball a little bit with the balance sheet here, you are pretty significantly below your ranges. So, like, if you think about capital deployment in 2026, if you had to split up how it is going to go out and get invested, do you think that M&A is bigger than buyback? Or how much you think you can get done this year given that you got a lot of capital here. And do you think that the other way around? I guess I would want to just try to understand maybe as a sub question to that one-part question, is there something is there something chunkier in here? I mean, you guys have had the history of doing some larger deals. You know, you have not had a gigantic one for a year, but is this the year that comes back? Thank you. Russell A. Becker: So, I mean, we will, I guess—good morning, and thanks, Andy. I appreciate the thoughtfulness of your questions. We are always looking from an M&A perspective and doing work on what I guess you classified as chunkier transactions. We see some opportunity for sure in the life safety and security space, as well as the elevator and escalator space. And so we are doing work all the time. So I would say yes, you could expect to see us do something chunkier. What would be Chubb-esque? I do not know. We really have not found anything that necessarily fits exactly what we are looking for that would be of that size and scale. But when you describe chunky, if you are thinking about things like the size of, say, Elevated or even CertiCyte, yeah, I think you are going to see us be active in that space. And I would suggest that the priority would be M&A in front of share repurchases, especially with the performance of our stock over the last period of time. And we for sure see in the M&A space that we are going to continue to dig in on and do some work. Andrew John Wittmann: Okay. Thank you very much. Operator: Your next question comes from the line of Joshua K. Chan with UBS. Your line is open. Please go ahead. Joshua K. Chan: Hi. Good morning, Russ, David, and congratulations, Adam. Just wanted to ask about how firm do you see the project environment currently? Because I think the low end of your guide may assume somewhat of a changing environment as you go through the year. So I just want to make sure that that is not what you are signaling or seeing and just ask about the performance of the environment. Thank you. Russell A. Becker: Yeah. Well, I saw your prints that hit earlier this morning, Josh, and talking about organic growth in our Safety business. It is really good—both on the inspection and service side and on the project side. And we expect it to remain positive and strong as we work our way through the year. We do not see anything that suggests that it is not going to continue to be strong and robust. Joshua K. Chan: Okay. That is great to hear, and thanks for the color. Operator: Your next question comes from the line of Stephanie Moore with Jefferies. Your line is open. Please go ahead. Greg (Jefferies): Great. This is Greg. Good morning. Thanks, everybody. So I wanted to ask maybe a bigger-picture question here. Especially based on what I think were very strong 2025 results across the board, but especially on the top line. So I wanted to ask maybe this question in a different way. I think given that the underlying industrial economy, based on most macro indicators, suggested 2025 was not a very great industrial year, but we are seeing some green shoots possibly to start 2026, notably given the PMI print for January and the like. So I wanted you to maybe touch a little bit on how much exposure you think you have to the near-term macro within the industrial economy? And then maybe asked another way, how insulated are you to that as well? So kind of a big-picture question and trying to get a sense of if the industrial economy does ultimately improve, how are you guys positioned? Thanks. Russell A. Becker: Well, I think—you know what? I am not an economist by any stretch of the mean, Stephanie. I think we have hopefully demonstrated to the investment community the resilience in our business. Fifty-four percent of our revenue comes from inspection, service, and monitoring. That is going to be there regardless of what is going on in the macro. And I feel like we have done a nice job of leading the business through what you could argue is kind of a herky-jerky economic environment over the last period of time. So I guess I am maybe using too many words to get to the point where I feel like we are very well insulated from any noise that may come in the macros. And I also think that this is a business that, if things do improve, this business should see the benefits of that and be able to take advantage of that. And I think about—I was joking around with a handful of our board members about this maybe three or four, maybe even six months ago. I do not remember. But the reality of it is that since the company has gone public, we really have not been in an economic environment where we have just had tailwinds behind us. It seems like it was—we go public and we get hammered with COVID. And then as soon as COVID, so to speak, goes away, we get hammered with inflationary times, and then it is tariffs. And it seems like there has always been some headwind that has been in front of this business. And yet we have continued to show really good resilience as we have grown the top line both inorganically and organically and expanded our margins through those headwinds. So I feel like this is just a really strong, resilient business that has that 54% of our revenue kind of backbone from inspection, service, and monitoring that creates that protective moat around the company. So I feel really good about how we are positioned and how, if we do see tailwinds in the economy, we should be able to take advantage of that. Adam Fee: We did not lose you, did we, Stephanie? Operator: Your next question comes from the line of Kathryn Ingram Thompson with Thompson Research Group. Your line is open. Please go ahead. Kathryn Ingram Thompson: Hi. Thank you for taking my question today. And I promise I will ask just one. And once again, it is stepping back and looking at the forest for the trees. So the cat is out of the bag with AI broadly in the U.S. market and the global market. But put more simply with the reinvest of the U.S. market, which is a bigger trend that includes AI, but it is a bigger trend. When you look at your APi Group Corporation end market of, say, light non-res versus more of that heavy or industrial—another slide I would put, like, the Boston field trip we did a few years ago to a commercial building versus the heavier, which would be a data center build-out or energy-supporting data build-out—where do you see that end market breakout today versus that light kind of heavy? And where do you see it five years from now based on what you are seeing in your crystal ball? And what does that mean for your margin goal? Thanks so much. Russell A. Becker: Well, you did a great job of adding three questions in one question, Kathryn. So— Adam Fee: Oh, you know, it was just heavy versus light. Kathryn Ingram Thompson: You know? Let us see. How about you just ponder on that a little bit? Adam Fee: Yeah. Well— Russell A. Becker: —you know, it is a thought-provoking question. If you look at Specialty Services, a significant component of their revenue mix, a very significant component of their revenue mix, comes in what you would consider that heavy industrial based on your description of what is considered heavy industrial, including data centers and things like that. And you can see where that is going to continue to have good, strong organic growth, and that is evidenced right now in our backlog. I do not know that any one of us can sit here and tell you that we are going to have 60-40 heavy versus light in five years. What I can tell you is that our company is better situated for the more complex types of end markets. So whether that is advanced manufacturing, data centers, semiconductors, utility—those are complicated facilities that require a different level of expertise, not only on the inspection, service, and monitoring side, but also on the project side. And we have always done well in there. If you go back and look at some of our end-market data that is included in either Adam or the other Adam—the spreadsheets that they have on our investor site—when you look at how much of our business comes from commercial, I would tell you that most of that is on the inspection and service side and not necessarily on the project side. And so we will continue to build our inspection and service business more so on the light side. Now I do not know that—I mean, you would put office space in the light side. We will continue to do that. As it relates to artificial intelligence, we are embracing it. We actually think that artificial intelligence is going to be an enabler for our business and not a job displacement tool, if you will. We actually have stood up an AI team that is being led by a very smart individual in our company. The mandate that they have been given is to really focus our early efforts on enabling our field leaders and making the work of our field leaders more enjoyable, more efficient, hopefully freeing up more time so that they can spend more time on our customer sites. That is what they like to do, and that is the mandate that that team has been given. And we think that as we continue to adopt artificial intelligence in our business, it is going to free up people from doing—I will just say—more mundane tasks, and we can redeploy them into activities that are going to ultimately help us grow our inspection, service, and monitoring business. And you have heard us talk about that piece of our business. It takes more infrastructure to run that part of our business than, say, the project side of our business. And we see artificial intelligence really enabling that aspect of our business, which is going to free up more people to help it grow. So it is a really good thing. But you had a very thought-provoking question, Kathryn. Kathryn Ingram Thompson: Great. Thanks so much, and best of luck. Unknown Analyst: Thank you. Operator: There are no further questions at this time. I will now turn the call back to Russell A. Becker, President and CEO, for closing remarks. Russell A. Becker: Thank you. In closing, I would like to thank all of our teammates for their continued support and dedication to our business. We believe our people are the foundation on which everything else is built. Without them, we do not exist. I would also like to thank our long-term shareholders as well as those that have recently joined us for their support. We appreciate your ownership of APi Group Corporation and look forward to updating you on our progress throughout the remainder of the year. Thank you again. And, Adam, thank you for everything that you have done for us. I am very grateful. Thank you.
Operator: Good morning or good afternoon, and welcome to the Hippo Holdings Inc. fourth quarter 2025 earnings call. My name is Adam, and I will be your operator today. I will now hand the floor to Charles Sebaski to begin. Charles, please go ahead when you are ready. Charles Sebaski: Good morning, and thank you for joining Hippo Holdings Inc.'s fourth quarter 2025 earnings call. Earlier today, Hippo Holdings Inc. issued an earnings release announcing its fourth quarter and full year 2025 results and a financial results presentation which will be webcast during today's call, both of which are available at investors.hippo.com. Leading today's discussion will be Hippo Holdings Inc. President and Chief Executive Officer Richard McCathron and Chief Financial Officer Guy Zeltser. Following management's prepared remarks, we will open the call for questions. Before we begin, we would like to remind you that our discussion will contain predictions, expectations, forward-looking statements, and other information about our business that are based on management's current expectations as of the date of this presentation. Forward-looking statements include, but are not limited to, Hippo Holdings Inc.'s expectations or predictions of financial and business performance, conditions, and competitive and industry outlook. Forward-looking statements are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from historical results and/or from our forecast, including those set forth in Hippo Holdings Inc.'s Form 10-K. For more information, please refer to the risks, uncertainties, and other factors discussed in Hippo Holdings Inc.'s SEC filings, in particular in the section entitled Risk Factors in our Forms 10-Q and 10-K. All cautionary statements are applicable to any forward-looking statements we make whenever they appear. You should carefully consider the risks, uncertainties, and other factors discussed in Hippo Holdings Inc.'s SEC filings and not place undue reliance on forward-looking statements, as Hippo Holdings Inc. is under no obligation and expressly disclaims any responsibility for updating, offering, or otherwise revising any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. During this conference call, we will also refer to non-GAAP financial measures such as adjusted net income. Our GAAP results and a description of our non-GAAP financial measures with full reconciliation to GAAP can be found in our fourth quarter 2025 earnings release, which has been furnished to the SEC and is available on our website. I will now turn the call over to Richard McCathron, our President and CEO. Richard McCathron: Thank you, Chuck, and good morning, everyone. Thank you for joining us. Once again, I am pleased to report that Hippo Holdings Inc. delivered a very strong performance in 2025, continuing to advance and strengthen our business, building on our technology-native insurance platform. For the year, we generated over $1.1 billion of gross written premium for the first time, an increase of 24%, and we are just getting started. Net written premium for the year of $422 million was up 13%. This growth was achieved while improving our combined ratio by 25 percentage points, helping deliver net income of $58 million for the year. These results underscore the strength of our model and our ability to drive consistent improvements across the core drivers of our business. Guy will discuss more details when he reviews the financials later. We entered 2026 with positive momentum and increased confidence in achieving and exceeding our 2028 targets of over $2 billion in gross written premium, $125 million of adjusted net income, and an 18% adjusted return on equity by 2028. Our continued evolution aligns squarely with the three strategic pillars that guide our business and position Hippo Holdings Inc. for long-term profitable growth. Strategic diversification. We continue to broaden our premium base across both personal and commercial lines, building a more balanced and profitable portfolio. Unlocking market growth. Our programs deliver a differentiated technology-driven customer experience that sets Hippo Holdings Inc. apart and expands our reach into attractive markets. Optimize for risk management. We are leveraging our diversified portfolio and deep risk management capabilities to continuously optimize performance across market cycles. Now I would like to provide updates on our main lines of business. First, in homeowners, our largest and original line of business. In 2025, we wrote $379 million of gross written premium, down approximately 10% from the prior year, as we prioritized profitability over growth given the heightened competition in E&S. However, we believe the line performed well, having achieved an average renewal premium increase of approximately 15% in our HHIP business, which we now view as rate adequate. Consequently, we have turned the corner in homeowners and expect this business to return to growth again in 2026, driven by two key developments. First, through our Baldwin partnership, we are now actively quoting business with more than 50 homebuilders nationwide, up from six prior to the sale of our homebuilder distribution network. Second, following the completion of improvements to our homeowners product outside the builder channel, which included an advanced rate filing process, revised terms and conditions, and improved claims handling, I am pleased to report that we have relaunched writing traditional new policies with selected partners. Turning to our renters business, which produced $175 million of gross written premium for the year, a 19% increase year over year. As one of Hippo Holdings Inc.'s most seasoned programs, it continues to grow while maintaining attractive profitability. We are pleased to support this program and its continued innovation in the renters market. Now turning to our most diversified portfolio of risk, our commercial lines business. Commercial multi-peril delivered a very strong year of growth, increasing 75% over 2024 to $265 million of gross written premium, making it our second largest line of business after homeowners. Fundamental to our program strategy is supporting programs we know well or have had a long track record of performance, and this is exactly where this year's growth originated, specifically programs with five years operating histories and consistently attractive underwriting results. Our casualty business experienced even faster growth, increasing 92% to end the year with $264 million of gross written premium, just slightly behind commercial multi-peril. Importantly, this growth came from a well-diversified group of programs with relatively modest limits profiles. Consistent with our strategy of supporting long-tenured programs, our risk retention levels in casualty was only 3% for 2025. However, as these programs were well supported by the reinsurance market and as we continue to deepen those partnerships, we expect to increase our retention levels over time. Given the growth in our partner program business, we wanted to provide additional insight into how we manage this platform, which is likely a bit more engaged than some may realize. When launching new lines of business with program partners, we follow a rigorous diligence process. Together, we establish the underwriting guidelines the program will operate under, an approach we believe is critical to our long-term success. For instance, over 70% of our liability policies have limits under $300,000, and our portfolio has an average liability duration of approximately two years, which is generally considered short-tail exposure. We remain highly engaged with our program partners through the underwriting and claims once new programs are operational. For example, if a program wants to write a policy that falls out of its established underwriting guidelines, it must request an exception. Today, we are well under 1% of quotes requiring such an exception. Claims management is also critical to underwriting outcomes, and we are actively involved in that process as well. We set claims authority limits on third-party administrators and proactively review claims that approach those thresholds. Today, our claims team reviews more than 800 files per month. While we currently have 38 programs in operation, not all have performed as initially expected. In those cases, we will place a program into runoff to protect the overall underwriting performance. I am very pleased with how our team has managed the program business, driving growth, maintaining oversight, and exiting when necessary. This disciplined approach is clearly evidenced by our 54% gross loss ratio in 2025, which includes the impact of severe California wildfires in early 2025. Overall, I am very pleased with Hippo Holdings Inc.'s position today and confident in our prospects for 2026 and beyond. Now I would like to turn the call over to our Chief Financial Officer, Guy Zeltser, to walk through the highlights of our fourth quarter and 2025 financial results and our expectations for 2026. Guy Zeltser: Thanks, Rick, and good morning, everyone. In the fourth quarter, we once again delivered strong top-line premium growth, improved underwriting, and increased profitability. Gross written premium in Q4 grew 40% year over year to $288 million and, for the full year, grew 24% year over year to over $1.1 billion. Growth in both the fourth quarter and for the full year was driven primarily by strong performance in casualty and commercial multi-peril lines and slightly offset by modest contraction in homeowners, as we continue to prioritize underwriting discipline over premium growth in that line of business. I will now highlight a few additional details of this gross written premium growth. Casualty grew 169% compared to Q4 of last year, grew 92% over full year 2024, and accounted for 24% of 2025 gross written premium. Commercial multi-peril grew 58% compared to Q4 of last year, grew 75% over full year 2024, and also accounted for 24% of 2025 gross written premium. And homeowners declined 5% compared to Q4 of last year and 10% versus full year 2024. For 2025, homeowners accounted for 34% of gross written premium compared to 47% in 2024, demonstrating our ongoing portfolio diversification. Net written premium in Q4 grew 23% year over year to $97 million and, for the full year, 13% to $422 million while also getting more diversified. Renters grew 227% compared to Q4 of last year and grew 311% over full year 2024. Commercial multi-peril grew 36% compared to Q4 of last year and grew 127% over full year 2024. And homeowners declined 3% in the quarter and was down 17% for the year. Homeowners accounted for 65% of net written premium in the quarter and 60% for the full year, both down from approximately 82% in each of the prior year periods. In Q4, net loss ratio improved 12 percentage points year over year to 46%, driven by favorable trends in both cat and non-cat loss experience. Cat loss ratio improved seven percentage points to negative 1%, driven primarily by a very low level of cat losses during the quarter and by positive development from earlier quarters in accident year 2025. Non-cat loss ratio improved five percentage points year over year to 47%, reflecting continued rate actions, refined policy terms and conditions, enhanced underwriting processes, and stronger claims operations. In Q4, net expense ratio increased four percentage points year over year to 53.5%. This was fully driven by the sale of our homebuilder distribution network in 2025, as our expense ratio in Q4 of last year benefited from five percentage points of profit from these agencies in that period. Together in Q4, net combined ratio improved eight percentage points to 99.4% compared to Q4 of last year. For full year 2025, our net loss ratio improved 17 percentage points to 60%, driven by improvements in both cat and non-cat loss experience. Non-cat loss ratio improved 11 percentage points year over year to 45%, reflecting the same previously mentioned actions. Cat loss ratio improved six percentage points to 15% compared to 2024. Our net expense ratio for 2025 improved eight percentage points year over year to 53%. This was driven by the scalability of our platform, which enabled us to grow top line significantly faster than our fixed expenses. Together, the improvements in our loss and expense ratios resulted in a combined ratio of 113%, a 25 percentage point improvement compared to 2024. Q4 net income attributable to Hippo Holdings Inc. was $6 million or $0.23 per diluted share, compared to $44 million or $1.71 per diluted share in the prior year quarter. The year-over-year decline was primarily due to the $46 million gain from the sale of a majority stake at First Connect in the prior year period, which more than offset the improvement in underwriting performance over the same period. Q4 adjusted net income grew 20% year over year to $18 million or $0.67 per diluted share. For full year 2025, net income attributable to Hippo Holdings Inc. was $58 million or $2.22 per diluted share, representing a $98 million improvement year over year. This improvement was driven by continued top-line growth, materially stronger underwriting performance, and an incremental $45 million in net gain from asset sales in 2025 versus 2024. Full year 2025 adjusted net income was $18 million or $0.68 per diluted share, a $38 million improvement year over year. This was driven by the same underlying factors that drove the net income improvement, with the exception of the net gain on the sale which is excluded from adjusted net income. Total Hippo Holdings Inc. shareholders' equity at the end of the quarter was $436 million or $16.97 per share, up 17% from $362 million or $14.56 per share at year-end 2024. The increase was driven primarily by the gain on the sale of the homebuilder distribution network and better underwriting performance, which more than offset first quarter operating losses from the California wildfires and a share repurchase executed in the third quarter. Looking ahead to 2026, we expect gross written premium to grow between 27%–36% to a range of $1.4 billion to $1.5 billion. This reflects our expectation that growth in our newer lines of business will continue and, as Rick mentioned, our homeowners business will return to growth in 2026. We expect net written premium to grow between 19%–28% to a range of $500 million to $540 million. We expect net combined ratio to improve between eight and ten percentage points to a range of 103% to 105%, driven mostly by the operating leverage and scalability of our platform. This outlook assumes a 13% cat loss ratio, a slight reduction versus 15% actual cat loss ratio in 2025, which includes the Los Angeles wildfires. This reduction is supported by our continued diversification into less cat-exposed lines of business. And finally, we expect adjusted net income of between $45 million and $55 million, compared to the $18 million in 2025. While we are no longer providing net income guidance, we are now guiding to stock-based compensation and depreciation and amortization expense and expect these line items to total approximately $41 million in 2026, down from $50 million in 2025. And with that, operator, I would now like to open the floor to questions. Operator: Of course. As a reminder, if you would like to ask a question on today's call, please press star one. The first question today comes from Thomas McJoynt-Griffith from KBW. Thomas, please go ahead. Your line is open. Thomas McJoynt-Griffith: Hey, guys. Good morning. Thanks for taking our questions. Yes, my first question is just about the relaunch of the homeowners book outside of builders. Could you talk a little bit about your go-to-market strategy and maybe comment on what the competitive environment looks like there as you are looking to increase the distribution? Richard McCathron: Yes. Good morning, Tommy. This is Rick. Happy to answer that question. As you and the listeners know, it has been quite a while since we wrote traditional homeowners business. We have spent the last two years retooling that product line, a combination of reducing some of the volatility in a more geographically area. We have taken considerable rate on that product line over the last few years. We have improved our terms and conditions. We have changed some of the coverage languages as it relates to deductibles and roof schedules. And we have gotten the product that we believe is extremely rate adequate and one that we are very bullish on its profitability. As we have opened that product line, we have done it in a thoughtful way, in a number of states with very few strategic partners in order to ensure both competitiveness and profitability. We are accelerating that throughout the year. We will continue to open in other states as well as expand the partnership roster, inclusive of some direct-to-consumer play. But we are very excited about it, and we are excited to share the results as we start to develop them quarter. Thomas McJoynt-Griffith: Got it. Thanks for that. And then looking at another line of business here, the casualty side, you have seen some nice growth there, both on a gross basis and retaining a bit more through a net basis. Can you unpack a little bit as to what sort of business actually underlies that casualty business? What is the tail risk there? And then can you talk about your maybe timeline to continue to increase retention there? I understand gross is growing, but there is obviously room for the retention side to increase as well. Richard McCathron: Yes, Tommy, I appreciate the question given this is a newer endeavor for us. Predominantly, it is combined as some cyber insurance, some commercial GL, predominantly for small business. Construction projects, some commercial auto. It is a fairly diverse portfolio of commercial exposure. We take a very small percentage in aggregate; think for 2025, we took about 3% of the exposure on that portfolio. And our average exposure per account is $300,000, so nothing that is extremely large. We also think the time to settle claims is two years or less, which is still fairly short-tail in nature. As we have said previously, we typically only take risk participation with partners that we develop a longer-term relationship with and have great conviction that they understand what they are doing, that we have proper controls in place, both from a pricing perspective, a claims handling perspective. We would expect that to increase over 2026 and beyond, but we are doing it in a very partner-by-partner selective way. We find ourselves wanting to participate, but we are still concerned a bit about tail exposure or larger limits exposure. There are ways to protect that with third-party reinsurance over our share. So we are taking risk, we are increasing the risk participation, but we are doing it in a very thoughtful, slow way. Operator: Thanks, Rick. Thanks, Tommy. The next question comes from Andrew Andersen from Jefferies. Andrew, please go ahead. Your line is open. Sid (for Andrew Andersen): Hi. Thanks. Good morning. This is Sid on for Andrew. Just curious if you could discuss what drove the reserve development in the quarter? Guy Zeltser: Hi, Sid. Good morning. This is Guy. I will take the question. So to answer your question directly, it was mostly driven by one large loss. Actually, in our homeowners business, it was a liability claim. First of all, if you just look at the prior accident year, we tend to look at it on a full-year basis. On a full-year basis, we did release about $10 million. So the view for the full year has been positive for us. And then also, specifically, when you look at only Q4, you arrive that from the prior accident year, there was one point of adverse development. But we did see about three points of positive development from earlier quarters in accident year 2025. So even if we just focus on Q4, it was a positive quarter, and this is why we are, generally speaking, feeling pretty good about where we stand from a reserve perspective entering 2026. Sid (for Andrew Andersen): Okay. Thanks. And then maybe you could just discuss how you are expecting the premium increases in homeowners to trend moving forward relative to the 15% in 2025? Guy Zeltser: Yes, absolutely. So as we mentioned, we achieved about 15% in 2025. Obviously, that was way above the loss cost trends in 2025. Given what we just said, that we feel very good about the rate adequacy for the book, we do not expect another year of 15%, but it will still go up, given that in addition to some rate, we have the annual—essentially, we are automatically catching up with inflation. So we do expect premium change increase in 2026 to continue. And we also expect it to still come ahead of loss cost, which is another reason why we are very, very bullish about the new partnership that we launched and growing outside the builder channel, given that, again, we are not only rate adequate, but we do expect the average premium change next year to trend faster or slightly faster than loss costs. Richard McCathron: Listen. If I can, this is Rick. I just want to add one very important component. As we accelerate and grow in our own HHIP homeowners program, we are only writing business where we expect the loss ratio to be profitable. So our partners will not even see quotes for business that we are not excited to write. Operator: Final call for questions, star one. You have no further questions, so I will hand the call back to the management team for any closing. Richard McCathron: Great. Well, thank you so much for joining us this morning. We are excited about the year and quarter we just posted and very excited to be sharing additional progress in the coming quarters. Thank you very much. Have a great day. Operator: This concludes today's call. Thank you very much for your attendance today.
Operator: Good day, and thank you for standing by. Welcome to the Q4 and full year 2025 Steven Madden, Ltd. earnings conference call. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. To ask a question during this 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, Danielle McCoy, VP of Corporate Development and Investor Relations. Please go ahead. Danielle McCoy: Thanks, Antoine, and good morning, everyone. Thank you for joining our fourth quarter and full year 2025 earnings call and webcast. Before we begin, I would like to remind you that our remarks that follow, including answers to your questions, contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause results to materially differ from those expressed or implied by such forward-looking statements. These risks include, among others, matters that we have described in our press release issued earlier today and filings we make with the SEC. We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. The financial results discussed on today’s call are on an adjusted basis unless otherwise noted. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release. Joining me on the call today is Edward R. Rosenfeld, Chairman and Chief Executive Officer, and Zine Mazouzi, Chief Financial Officer and Executive Vice President of Operations. With that, I will now turn the call over to Edward R. Rosenfeld. Edward? Edward R. Rosenfeld: Alright. Thank you, Danielle, and good morning, everyone. And thank you for joining us to review Steven Madden, Ltd.’s fourth quarter and full year 2025 results. We are pleased to have delivered above-guidance earnings results for the fourth quarter, driven by improved performance in our core Steve Madden footwear business, as well as a strong contribution from the newly acquired Kurt Geiger. Overall, 2025 was a challenging year, driven largely by the disruption and negative impacts resulting from new tariffs on goods imported into the United States. I am proud of how our team responded, acting quickly to mitigate the near-term impacts while staying focused on executing our strategy for long-term growth. At the center of that strategy is deepening connections with consumers through the combination of compelling product and effective marketing. And despite the difficult environment, our team made meaningful progress on those initiatives across our brand portfolio. In our flagship brand, Steve Madden, Steve and his design team created outstanding product assortments that resonated with consumers and led to a significant acceleration in demand in the back half, particularly in our core category of women’s footwear, momentum that has continued into early 2026. We are encouraged by the breadth of this strength, with robust demand across various silhouettes, materials, and trends. We have also elevated quality and materials, enabling higher average unit retails, while maintaining a strong price-value proposition. Our marketing team is amplifying these assortments with richer brand and product storytelling and an integrated, always-on, full-funnel strategy designed to deepen emotional connection with our key Gen Z and millennial consumers. Our marketing investments, combined with our trend-right product, are driving measurable brand heat. Online searches for Steve Madden increased 10% year over year in Q4 and have accelerated further early 2026. After revenue declines in Q2 and Q3, the Steve Madden brand returned to growth in Q4, and we expect to build on that momentum in 2026 with mid- to high-single-digit revenue growth. A highlight in 2025 was our acquisition of Kurt Geiger, which closed on May 6. In Kurt Geiger London, we added a brand with a unique brand image, distinctive design aesthetic, and compelling value proposition that have driven success across multiple categories, led by handbags. Its differentiated and elevated positioning, and its alignment with our strategic initiatives of expanding in international markets, accessories categories, and direct-to-consumer channels, make it a highly attractive and complementary addition to our portfolio. Integration is progressing as planned, and we are more confident than ever in Kurt Geiger’s potential to be a significant growth driver in the years ahead. Importantly, the Kurt Geiger London brand continues to have strong momentum. On a pro forma basis, revenue in the Kurt Geiger London brand grew 11% in 2025, and we expect similar growth in 2026. We also continue to make meaningful progress with our fastest growing brand since the pandemic, Dolce Vita. In 2025, we built on the outstanding success we have had over the last several years in our U.S. footwear business by expanding in international markets and gaining traction in adjacent categories like handbags. Turning to 2026, consumers are responding favorably to our new spring products, and we expect high single-digit revenue growth in Dolce Vita for the year. In summary, all three of our lead brands are poised for growth, and as we look ahead to 2026, we are particularly encouraged by the momentum building in Steve Madden and the opportunity for growth in Kurt Geiger London. On the other hand, we anticipate significant pressure in our private label, which is primarily conducted in the mass channel. We believe the negative impact of tariffs on revenue has been most severe here, where price sensitivity is highest and we do not have the benefit of brand leverage for pricing actions. Private label revenue decreased 15% in 2025, and we expect a further decline of nearly 20% in 2026. We also expect higher SG&A driven by the normalization of incentive compensation and the restoration of senior executive salaries. But overall, while we continue to face pressure and uncertainty related to tariffs, we are heartened that the fundamentals of our business are strong. Our product assortments and marketing campaigns are resonating with consumers, our brands are powerful and gaining relevance, and our strategy provides multiple levers for growth and long-term value creation. I will now turn it over to Zine Mazouzi to review our fourth quarter and full year 2025 financial results in more detail and provide our initial revenue outlook for 2026. Zine Mazouzi: Thanks, Ed, and good morning, everyone. In the fourth quarter, our consolidated revenue was $753.7 million, a 29.4% increase compared to 2024. Excluding the newly acquired Kurt Geiger, consolidated revenue decreased 1.4%. Our wholesale revenue was $433.3 million, up 7.5% compared to 2024. Excluding Kurt Geiger, our wholesale revenue decreased 2.6%. Wholesale footwear revenue was $252.4 million, an 11% increase from the comparable period in 2024, or up 5.5% excluding Kurt Geiger, driven by double-digit increases in Steve Madden and Dolce Vita, partially offset by a double-digit decline in our private label business. Wholesale accessories and apparel revenue was $180.9 million, up 3.1% compared to the fourth quarter in the prior year, or down 13% excluding Kurt Geiger due primarily to declines in Steve Madden handbags and private label. In our direct-to-consumer segment, revenue was $316.6 million, a 79.9% increase compared to 2024. Excluding Kurt Geiger, our direct-to-consumer revenue increased 1.6%, with modest increases in both our brick-and-mortar and e-commerce businesses. Demand in U.S. DTC returned to comp growth in Q4; a strong performance in our full-price channels offset continued weakness in our outlets. We ended the year with 399 company-operated brick-and-mortar retail stores, including 98 outlets, as well as seven e-commerce websites and 133 company-operated concessions in international markets. Our license and royalty income was $3.9 million in the quarter, compared to $3.5 million in 2024. Consolidated gross margin was 43.8% in the quarter, compared to 40.4% in the comparable period of 2024. Wholesale gross margin was 31.5%, compared to 30.5% in 2024, driven by the addition of Kurt Geiger business, partially offset by the impact of new tariffs on goods imported into the United States. Direct-to-consumer gross margin was 59.8%, compared to 62% in the comparable period in 2024, as a result of the addition of the relatively lower-margin Kurt Geiger concession business and the impact of new tariffs on goods imported into the United States. Operating expenses were $278.9 million, or 37% of revenue in the quarter, compared to $182.9 million, or 31.4% of revenue in 2024. Operating income for the quarter totaled $50.9 million, or 6.8% of revenue, compared to $52.6 million, or 9% of revenue in the comparable period in the prior year. The effective tax rate for the quarter was 23.1%, compared to 21.4% in 2024. Finally, net income attributable to Steven Madden, Ltd. for the quarter was $34.3 million, or $0.48 per diluted share, compared to $39.3 million, or $0.55 per diluted share in 2024. Now I would like to touch briefly on our full year results. Total revenue for 2025 increased 11% to $2.5 billion, compared to $2.3 billion in 2024. Excluding Kurt Geiger, revenue declined 6.6% compared to 2024. Net income attributable to Steven Madden, Ltd. was $120.9 million, or $1.70 per diluted share for the full year of 2025, compared to $192.4 million, or $2.67 per diluted share for 2024. Moving to the balance sheet, our financial foundation remains strong, and as of 12/31/2025, we had $234.2 million of outstanding debt and $112.4 million in cash, cash equivalents, and short-term investments for net debt of $121.7 million. Inventory at 12/31/2025 was $417.0 million, compared to $257.6 million at 2024. Excluding Kurt Geiger, inventory was $261.9 million, a 1.6% increase compared to the same time last year. Our CapEx in the fourth quarter was $10.3 million and for the year was $42.6 million. The company did not repurchase any shares of its common stock in the open market in 2025. During the fourth quarter and full year 2025, the company spent $5.2 million and $13.5 million, respectively, on shares acquired through the net settlement of vesting stock awards. The company’s board of directors approved a quarterly cash dividend of $0.21 per share. The dividend will be payable on 03/20/2026 to stockholders of record as of the close of business on 03/11/2026. Turning to our outlook, we expect revenue for the full year 2026 to increase 9% to 11% compared to 2025. For Q1 2026, we expect revenue to increase 15% to 17%. Due to the uncertainty related to recent developments with respect to tariff policy in the United States, the company is not providing earnings guidance at this time. I would like to turn the call over to the operator for questions. Antoine? Operator: Thank you. At this time, we will conduct a question-and-answer session. As a reminder, to ask a question, you need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from Paul Lejuez from Citi. Please go ahead. Paul Lejuez: Hey. Thanks, guys. Curious if you were prepared to give guidance as of a week ago and the Supreme Court decision and actions of the administration caused too much uncertainty that made you take this approach of not giving EPS guidance? Or was there already uncertainty? Was it still too high already where you did not plan on giving guidance? Let me just start there. Edward R. Rosenfeld: Yeah. No. We did plan prior to Friday. We were planning on giving guidance for the year, based on the policy that was in effect as of that time. But, obviously, over the last few days, there has been an enormous amount that has changed, and a number of important questions remain unanswered. And there is genuine uncertainty about where things go from here, and obviously, we are talking about tariffs, which are a factor that have a significant impact on our earnings. So given that level of uncertainty, we just do not think it would be responsible to put out earnings guidance right now. And, ultimately, we view guidance as a commitment to the investment community, and we only want to provide it when we have the information clarity necessary to stand behind it, and at this moment, we just do not have that. Paul Lejuez: Yeah. Got it. And then, I guess, was it just the tariff uncertainty? Obviously, there is an impact on your cost of goods, maybe where you source. Or is it also a function of already hearing something from your retail partners since Friday that has resulted in higher uncertainty? Edward R. Rosenfeld: No. It is really the impact of tariffs and how that affects our cost structure and our earnings. That is why we did provide revenue guidance because we still feel that we have nice visibility into demand trends. Paul Lejuez: Got it. And then just last one for me, if you could just give us an update on your sourcing dates, like how you ended the year in terms of country of origin, and if at this point, you are planning any changes for ’26. In the fall, we most typically have talked about this with China versus other. Edward R. Rosenfeld: As you know, China back in 2024 was over 70% of our sourcing footprint, and we got that into the high thirties in 2025. Now year to date, that has got a four in front of it. We are back in the forties. Towards the tail end of the year, China came essentially into parity with many of the other countries that we are sourcing from in terms of the tariff, and that continues to be how we are thinking about it at least for the near term, but, obviously, we are going to remain flexible. Paul Lejuez: Any other countries you can talk about? Zine Mazouzi: Sure. The first one that we diversified to is Cambodia, and Vietnam comes right after it. And, obviously, Mexico, as we always emphasize Mexico for the Steve Madden brand, and given that Brazil now went from 50% to 10%, that really opens up the door for more production in Brazil as well for Steve Madden and Dolce Vita. Paul Lejuez: Okay. Thanks a lot, guys. Good luck. Edward R. Rosenfeld: Thanks, Paul. Operator: Thank you. Our next question comes from Anna Andreeva from Piper Sandler. Please go ahead. Anna Andreeva: Great. Thanks so much for taking my questions. The first one we have just on the Q1 revenue guide. You said 15% to 17%. It is lower than the growth you guys guided for holiday, and obviously, you talked about strength in the core continuing here into ’26. So is the difference there private label or anything else going on, maybe something with concessions at KG? Just wanted to follow up on that. And just as we think about the margin recapture back to low double digits achieved previously for the core business, can you talk about that? Kurt Geiger was the 9% margin business pre-tariff. I am not sure if you mentioned what were margins in ’25. And you talked about getting to high teens there over time. Can you maybe remind us on what revenue base that would be? Edward R. Rosenfeld: Sure. In terms of the Q1 revenue, I think you are comparing it to what we just delivered in Q4. I think one important factor to understand is that Kurt Geiger, because it is primarily a DTC business, is much more Q4-weighted. So the impact of Kurt Geiger on the consolidated revenue growth rate is much more significant in Q4. So that is a big part of that. The other thing is, we are expecting the business excluding Kurt Geiger to be down about mid-singles in Q1. We expect it to grow each quarter thereafter. And the headwinds there, you hit the nail on the head. The biggest one is private label. About 95% of that decline is coming from private label, which we expect to be down about 30% in the quarter, or maybe even a little bit more. And then, obviously, still pressure on Steve Madden handbags, which we have called out previously, and, again, that is a business that we expect to turn positive in terms of growth in Q2. In terms of KG operating margins, we came in at about 6.8% for the period that we owned them in 2025. Obviously, we are not giving guidance for ’26 on an earnings basis, so we are not going to provide an estimate of what that looks like in the near term. But as you pointed out, we have committed to getting that into, initially, the low double digits, and we certainly think that brand’s business has the potential to be a mid-teens operating margin business over time. Anna Andreeva: Okay. That is very, very helpful. And just follow-up on the core business. Do you think getting back to low double digits, which you were just two years ago, is pretty realistic over time, or can you even do better? Edward R. Rosenfeld: Yeah. I think getting back to where we were is realistic. Obviously, the timing on that is in flux with all the uncertainty that we are facing right now. Anna Andreeva: Thank you so much. Best of luck. Edward R. Rosenfeld: Thank you. Operator: Thank you. Our next question comes from Jay Sole from UBS. Please go ahead. Jay Sole: Super. Thank you so much. Ed, maybe if we talk about the fiscal ’26 guidance, can you just help us understand the private label business, kind of like, can you size it for us, like where it finished in 2025, and kinda where you see it trending for 2026? Edward R. Rosenfeld: Yeah. That is clearly the biggest challenge that we are facing right now. So private label, to take you back, was about $415 million in 2024. We had a pretty significant decline in ’25, down to about $355 million, so around about a $60 million decline. Where we sit today, we see an even bigger decline in 2026. I think that could approach a $70 million decline. So that is why we articulated it approaching a 20% decline in 2026. And, again, that is very different from what we are seeing in the branded business, where we are seeing a very nice recovery from the hit that we took in 2025. And as we mentioned in the prepared remarks, this is a business that has really been affected much more severely by tariffs because this is primarily done in those value channels, as you know, where our customers are most price sensitive, and where, because it is private label and we do not have the benefit of our brands and the brand leverage, we do not have that power when looking to employ pricing actions. And so we have seen some of those customers pull back from us on a temporary basis. We are confident that we will be able to build that back over time. We still have good relationships with those customers. We still feel that we bring something very compelling to them in terms of our styling, our fashion, and the information that we have about what is working in other channels. But it is clearly a headwind for 2026. Jay Sole: Okay. That is clear and super helpful. Maybe if I can just ask a couple more. Can you also talk about the off-price business and kinda how you are viewing that for fiscal ’26? And maybe, Zine, one for you, just on SG&A. You called it out in the press release, some higher incentive comp, but also maybe can you just talk about maybe some other executive salaries, with the impact of lower private label sales or some of the other costs in the business? Like can you give us an idea of how you expect SG&A dollar growth to be in fiscal ’26 would be helpful. Thank you. Edward R. Rosenfeld: I will start with the off-price and then I will turn it over to Zine. So the off-price business is recovering. We took a significant hit there in ’25 as well with all the tariff disruption, and we should see nice growth in that channel in ’26. I do not expect to get in that channel all the way back to where we were in ’24, which is in contrast to our first-tier retailers, our department stores, pure-play e-commerce retailers, specialty stores, etcetera, where we expect the growth in 2026 to recapture everything we lost in ’25 and then some. So, essentially, first tier, we are going to be above ’24/’25. Off-price will be below ’24 but above ’25. And mass will be below ’24 and ’25. Zine Mazouzi: So, Jay, from an OpEx perspective, obviously, in addition to the inclusion of Kurt Geiger for a full year versus just having them for eight months the prior year, we will also see some pressure in our SG&A. I think we talked about the headwind from resetting the incentive compensation and restoring the salaries. That is about 14 to 15 pennies right there. And as you may recall, that was reduced for a good portion of fiscal 2025, the salary base. We are also expecting the warehouse fulfillment cost pressures to continue into 2026. That is both from occupancy from renewing two leases in two of our major warehouses, and labor costs, where we are still seeing inefficiencies in labor and labor shortages that we have to react to on a daily basis in California. We also expect warehouse fulfillment costs to be high as our business increases and our DTC increases. And our plan is to maintain our investment in marketing to capitalize on the good trends we are seeing on the product side and further support our international expansion. And, also, we will continue to invest in our IT system and store fleet, which has an impact on depreciation. Jay Sole: Got it. Alright. Super helpful. Thank you so much. Zine Mazouzi: Thank you. Operator: Our next question comes from Marni Shapiro from The Retail Tracker. Please go ahead. Marni Shapiro: Hey, guys. Thanks for taking my call. And I have to say congrats because the product in your stores looks absolutely outstanding. So I am curious if we could just run through the tariff numbers. Based on forgetting the Supreme Court changes, but based on where we were, were the hardest hits of tariffs, that product coming through during the holiday season through ’26? Is that what it looked like prior to this? And then if you could just also talk a little bit about the sales trends, what percentage or what did it look like, how much were you able to pass through either to the consumer or mitigate with what you were doing internally? Edward R. Rosenfeld: Yeah. First of all, thank you for your comments on the product. That is ultimately the most important thing. The greatest driver of our financial performance is the strength of our product, so we appreciate that. I guess I could start on the tariff question, then Zine can jump in. We did not have a lot of pressure last year in Q1. What was the last part of the question? Marni Shapiro: The sales trends. Zine Mazouzi: The how much we were able to mitigate? Edward R. Rosenfeld: Oh, and then in terms of mitigation, yeah. As you know, we have put through some price in Steve Madden in particular. It is about, I would say, 10% on like categories, and we felt we have been successful in getting that through and maintaining nice full-price selling. That is because we have the fashion right, I think, most importantly, and also because of what I mentioned earlier, which is that we have elevated quality and materials so that there is more perceived value in the product. Obviously, that was not enough to offset the full amount of the tariffs. Zine Mazouzi: Right. So from a flow of tariffs, Marni, Q1 was definitely the highest. Q2, we started seeing that we are comping some of the from the prior year, and Q3 and Q4 had minimal impact. Marni Shapiro: Great. That is what I figured. Just wanted to confirm. And then could you just, I know it is a smaller part of the business, but just curious how the apparel business has been going. You know, it looks very good, particularly in Macy’s and some of the other stores. I am curious, have the results there been good? Is the customer excited about the brand? Edward R. Rosenfeld: Yeah. Thank you for asking about that because I am really excited about what we are seeing in apparel. You know, we continue to do really well in that. Our largest category has been sweaters, and we continue to perform well there. We had a lot of success there, and anything with fur was really phenomenal for us. But I am excited about some of the traction that we are seeing in outerwear, too, in Q4. And even now, we are seeing some nice early reads on more lighter-weight outerwear pieces. So that is exciting. We are getting additional doors with some of our key department store customers like Dillard’s and Macy’s, and that is not only the contemporary sportswear departments but also dress departments. And we are investing there. You know, we brought on some high-level, very experienced talent last year into the organization, and really feel good about that and about the path that we are on. So that should be a growth vehicle for us in the coming years. Marni Shapiro: Great. Thanks, guys. I will leave it for someone else. Zine Mazouzi: Thank you. Operator: Thank you. Our next question comes from Sam Poser from Williams Trading. Please go ahead. Sam Poser: Thanks for taking my questions. You talked about the factors that—the tariff factors. Can you walk through, sort of, specifically what is concerning you? Because, theoretically, especially with, you know, you are a few basis points better in a lot of countries, and you are a lot better in Brazil than you anticipated for the time being. Can you talk about, in any detail as you can, about the factors that have precluded you from giving guidance? Maybe what may happen with 301 tariffs and things like that? And then I have one more. Edward R. Rosenfeld: I mean, Sam, we can talk about this all day, but I think the headline is there is just a tremendous amount of uncertainty. We do not have clarity on, or any stability in terms of, the policy environment here. And so we do not know what it is going to look like from day to day. There have been multiple changes within the last five days. I think even yesterday, we got some new information that we have not yet confirmed about where we are. So, obviously, we have a responsibility to give investors information that is accurate and reliable. And until there is more clarity around tariffs, I do not think earnings guidance would meet that standard. Sam Poser: No. I understand that. So let me ask it another way. If we take today versus Thursday, just in that factor, that could make it better than you thought it would be. But there are other factors possibly coming soon that could make it the same or worse than it was on Thursday. Is that a fair way to think about the overall— Zine Mazouzi: Yes. Edward R. Rosenfeld: I think that is accurate. Yeah. Sam Poser: And then with the weakness or with the planned down private label business that is going to be down, that structurally sends your gross margin up, other factors you have already talked about with SG&A, but your SG&A in dollars goes up as well as a percent of sales because it does not use very much SG&A. So, conceptually, your gross margin is going up and SG&A is going up a little bit more because of the incentive comp and the other factors that Zine just walked through. Is that a fair—like, in dollars, it goes up because of those factors. As a percent, it would go up anyway because there is virtually no SG&A attached to the private label. Edward R. Rosenfeld: Yeah. There was a lot there. But it is true that as private label shrinks, that is a mixed benefit to our gross margin. It is also true that there is not a lot of SG&A that goes away when that business comes down. Sam Poser: And what is the time frame between the orders written, let us say, by the mass—by Walmart, Target—versus everything else? So what is your visibility right now on orders from them, and when do theirs—you mentioned at one of the meetings that some of these guys are going to go direct. When do you think that product that they do themselves starts hitting their shelves so they can see how well it did or does compared to what you have delivered over the years? Edward R. Rosenfeld: Well, we are seeing declines throughout this year. So there are, we assume, products coming from other places that they are filling in in spring and then some more in fall. So I think that is the answer. In terms of the timing, in terms of the visibility, it is not that different from what we see in the balance of the business. They do work a little farther out. But because of the first-cost nature of the business, that means that where we are delivering the product earlier to them, because they are picking it up to get it through the warehouse into their overseas, and then they are responsible to bring it to the United States and to their floors, the time between when we take the order and when we ship it is very similar to the branded business. Sam Poser: Thanks very much. Good luck. Zine Mazouzi: Thank you. Operator: Thank you. Our next question comes from Tom Nikic from Needham. Please go ahead. Tom Nikic: Hey. Thanks for taking my question. Ed, I think you made a comment before about the decline in private label, and you characterized it as temporary. Is that based on, you know, kind of conversations you have had with partners who have kinda told you that in a more normal environment, you would get that business back? Or is there any risk there that that chunk of the revenue base has, you know, kind of been structurally reduced? Edward R. Rosenfeld: Yeah. No. Hopefully, what I said is that I hope it is temporary. We believe it will be temporary because we believe that we offer these customers something that they cannot get from other folks. And that is why we have been able to build very successful business with them over decades. And, frankly, we have seen this movie before. There are periods where they get new management or whatever, and somebody comes in and says, hey, there is maybe a lower-cost provider, or we could go direct, or whatever, and we have seen our business contract. But, typically, after a season or two, when perhaps they do not get the fashion as right as we have done it for them in the past, we have seen them come back to us, and that business has come back. And certainly, that is what we will be working very hard to make happen here. Tom Nikic: Understood. Very helpful. And a quick follow-up on SG&A. I know there are a bunch of headwinds this year. I think you mentioned something like $0.15 from, when you layer it all together—like, what order of magnitude should we think about from incentive comp, and I know that there is a wraparound of the Geiger acquisition. High single-digit revenue growth for the year. Should we think, like, teens for SG&A growth this year? Zine Mazouzi: Yeah. I will step in there. I think we are not going to guide all the line items down the P&L. Given that we are not providing earnings guidance, we had to postpone that one until we put out the earnings guidance. Tom Nikic: Fair enough. Alright. Thanks very much, and best of luck this year. Zine Mazouzi: Thank you. Operator: Our next question comes from Dana Telsey from Telsey Advisory Group. Please go ahead. Dana Telsey: Good morning, everyone. As you think about the DTC business, any unpacking of how e-commerce did relative to stores, what you are seeing full-price and outlet, and plans for opening stores this year and remodels and refreshes? And then also just touching on how that did for the Kurt Geiger brand, and how did it do for the Steve Madden brand? Thank you. Edward R. Rosenfeld: Sure. Yeah. So in terms of stores, we saw a nice acceleration in our DTC overall, nice acceleration in Steve Madden in Q4. That was driven by full-price channels. We still had a double-digit decline in outlets. But we had a nice increase in our full-price stores and an even stronger increase in our e-commerce business. And all of those businesses have actually improved further going into Q1. So I feel good about the momentum there. Outlet is still running negative, although we have gotten that into the single digits quarter to date, and we actually even are positive for the month, which we have not seen for a little while. So that is a positive story. Kurt Geiger had a very strong comp performance of high teens in Q4 in the Kurt Geiger brand, driven primarily by digital, but also a healthy performance in stores. And as we look ahead, we will have some store growth in Geiger. As we have talked about, one of the initiatives is to open more stores in the United States. We view that as a revenue and profit opportunity, but also as a vehicle for us to build brand awareness and really tell the Kurt story because, as we have said, we think the stores are the best expression of the brand. So right now, I think we are looking at about five stores opening this year in the United States, and we are excited about those. One of those will be an outlet; the balance will be full-price. In terms of Steve Madden, I think we will probably open maybe 18 stores around the world, but we will close a similar amount, maybe even a little bit more. So I think the store base there is not going to grow. And then we have a handful of remodels as well. I do not know the number. Zine, I do not know if you have that at the top of your head. Zine Mazouzi: For major remodels, we are probably over 10. Dana Telsey: Got it. And then marketing spend this year, how are you thinking about it? Edward R. Rosenfeld: I think you will see we are going to continue to invest in marketing. Obviously, we are growing the top line. Over the past several years, we have seen a really significant increase in the percentage of revenue. This year, I think we are planning that more flat as a percentage of revenue. So up in dollars on the growing sales, but really pretty similar in terms of percentage of revenue. Zine Mazouzi: Thank you. Operator: Thank you. As a reminder, to ask a question, please press 11 and wait for your name to be announced. Our next question comes from Aubrey Leland Tianello from BNP. Please go ahead. Aubrey Leland Tianello: Good morning. Thanks for taking the questions. I wanted to go back to the annual revenue guidance of 9% to 11%. Could you maybe break that down in terms of what you are expecting from the core business in wholesale footwear, accessories, apparel, DTC, and then also what you expect Kurt Geiger to contribute in terms of revenues? Zine Mazouzi: Sure. Edward R. Rosenfeld: Yeah. So I guess I will start off by saying that the business excluding Kurt Geiger we are looking to be up low singles. And, again, just to point out, that includes that private label pullback. So if you exclude private label, we are looking to be up around 6% to 7% at the midpoint of the guidance. Kurt Geiger, on a reported basis, will be up, you know, 50%. And then if you are looking at that on a pro forma basis, just so you can understand the underlying growth there, that is up really high singles, with the brands growing in the low double digits and then concessions pulling down the overall consolidated number there. In terms of the segments, branded wholesale footwear and wholesale accessories, excluding Kurt Geiger, should show nice growth, kind of mid- to high-singles—positives there—with, again, private label down significantly in each of wholesale footwear and wholesale accessories. And then DTC, I think we have got that, excluding Kurt Geiger, growing around 7.5% at the midpoint. Aubrey Leland Tianello: Perfect. Thank you. And then, Ed, I think you mentioned on the last call that for Q4, there would be something like mid-teens AUR increases with about 10% of that coming from like-for-like and the rest from product mix. How should we be thinking about AURs going into 2026 and particularly on the product mix side of things? Edward R. Rosenfeld: Yeah. We continue to see nice benefit there. I think in the Steve Madden DTC business, in the U.S., we were up about 18%, actually, where we ended for Q4, and we are trending pretty similar to that in Q1. And, again, it is really three factors: it is roughly 10% price increases, and then you have got the mix and then a little bit of reduced promo activity as well. As we move throughout the year, I do expect that to moderate somewhat. I do not think we are going to provide specific guidance around AUR, but I still think it should be a tailwind in the coming quarters. Aubrey Leland Tianello: Very helpful. Thank you. Thank you. Operator: Our last question comes from Janine Stichter from BTIG. Please go ahead. Janine Stichter: Hey. Good morning. Can you talk a little bit more about your wholesale footwear business outside of the private label? It came in a bit better than expectations. Maybe just speak to what you are seeing in terms of initial orders and reorders, and given where your supply chain is positioned right now, are you in a position to chase additional demand if it comes through? Edward R. Rosenfeld: Yeah. We are really excited about the momentum that we have there, and, again, specifically in that core Steve Madden women’s business, it feels better than it has in quite some time, frankly. You know, we saw a really significant acceleration in our sell-throughs in the back half of the year. They were actually negative in the first part of ’25, turned positive in Q3. We were up mid-teens—this is our sell-throughs to the end consumer—in Q4 and so far in 2026. And our wholesale customers are really reacting, and so we are seeing better initial orders. We are seeing chase activity. As we look at plans going forward, obviously, those are getting better based on the momentum. I will say, most of our big customers seem to want to really position themselves to chase, though. I think they are trying to leave a little bit of room in the way that they plan to chase hot items. And, obviously, we continue to have a speed advantage over our competitors. We have the right product right now, and so we feel like we should be well positioned to win in that environment. Janine Stichter: Great. And then just quickly, you mentioned Dolce Vita in the beginning of the call, signing up high single digits for the year. Maybe just remind us how big that business is and anything else you can speak to around the growth opportunity there. Edward R. Rosenfeld: Yeah. I mean, Dolce Vita has been a really great story for us over the last five years or so. And as we said, it has been the strongest growing business for us in the company as a brand since the pandemic and most consistent. It has now finished the year over $240 million in revenue. And we feel like we just continue to build that brand. As we said, it was primarily all footwear in the U.S., it was historically primarily a wholesale business, then we built this very successful dolcevita.com business. Now we have opened a handful of stores, which are performing well. And we have started to now extend the brand into other categories. We are getting some nice traction in handbags, and we are also seeing some growth in international markets. So it is a good story, one we want to keep fueling. Janine Stichter: Great. Thanks so much. Operator: I am showing no further questions at this time. I will now turn it over to Mr. Rosenfeld for closing remarks. Edward R. Rosenfeld: Great. Thank you so much for joining us on the call today. We hope you have a great day. We look forward to speaking with you on the Q1 call. Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.
Operator: Greetings. Welcome to Alcon Inc. Fourth Quarter 2025 Earnings Call. At this time, we will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to Daniel Cravens, Vice President and Head of Investor Relations. Thank you. You may begin. Daniel Cravens: Welcome to Alcon Inc.'s fourth quarter 2025 earnings conference call. Yesterday, we issued our press release, interim financial report, and earnings presentation. We also published our Annual Report on Form 20-F. All these documents are available on our website at investors.alcon.com. Joining me on today's call are David Endicott, our Chief Executive Officer, and Timothy C. Stonesifer, our Chief Financial Officer. Before we begin, please note that our press release, presentation, and remarks today will include forward-looking statements, including statements regarding our future outlook. We undertake no obligation to update these statements as a result of new information or future events, except as required by law. Actual results may differ materially from those expressed or implied in these forward-looking statements. Please do not place undue reliance on them. Important factors that could cause actual results to differ materially are included in our Form 20-F, earnings press release, and interim financial report, each of which is on file with the SEC and available on their website at sec.gov. We will also discuss certain non-IFRS financial measures. These measures may be calculated differently from, and may not be comparable to, similar measures used by other companies. They should be considered in addition to, and not as a substitute for, IFRS-prescribed performance measures. Reconciliations between our non-IFRS measures and the most directly comparable IFRS measures can be found in our earnings press release. For discussion purposes, our comments on growth rates are expressed in constant currency. In a moment, David will begin with highlights from the fourth quarter. After his remarks, Tim will walk through our financial performance and outlook for 2026. Dave will then return with closing comments before we open the line for Q&A. With that, I would like to turn the call over to our CEO, David Endicott. Good morning, everyone, and thank you for joining us. David Endicott: Before we begin, I want to express my appreciation to our more than 25,000 associates. Your commitment to customers, your passion for innovation, and your resilience continue to fuel our performance. Each advancement we will discuss this morning begins with the work that you do every day. And while our full year results reflect softer markets, 2025, and especially the fourth quarter, demonstrated the strength and momentum of our business. Let's start my remarks today with innovation, which is the engine behind our growth. Over the past 18 months, Alcon Inc. has entered one of the most productive launch cycles in our history, and today I will highlight a few of the most impactful advances. First, we are excited about the progress we are making with our Unity VCS and CS platforms. Unity VCS, our next-generation vitreoretinal and cataract combination system, was recognized recently by the Business Intelligence Group for outstanding technology achievements. This prestigious award recognizes companies, products, and leaders that are transforming industries through applied innovation, intelligent platforms, and measurable real-world impact. We are honored that Unity was selected as this year's overall winner. Surgeons have responded enthusiastically to Unity, highlighting its enhanced control, improved efficiency, and integrated user experience. Since launching in mid-2025, Unity VCS has been introduced across most major markets worldwide and continues to build momentum. And Unity CS, our standalone cataract system, was designed to increase throughput while maintaining precision and safety. Surgeon feedback has been encouraging, particularly regarding its seamless workflow and next-generation energy delivery, which helps optimize case efficiency without compromising outcomes. We launched CS late last year, and we will continue expanding its global availability throughout 2026. The Unity platform represents one of the largest upgrade opportunities in our surgical portfolio in more than a decade, and with its large installed base and compelling value proposition, we continue to expect this platform to be a steady contributor to growth through the coming decade. Now let me move to IOLs. In the coming years, we expect to launch a wave of new lenses that will expand our portfolio and strengthen our competitive position. I will start with PanOptix Pro. PanOptix Pro is off to an excellent start and has meaningfully stabilized trifocal share in the U.S. Building on the proven performance of PanOptix, Pro reduces light scatter, a feature surgeons associate with an improved visual disturbance profile, and delivers even greater quality of vision. Adoption in the U.S. has exceeded our expectations, and we are now rolling out the lens in Japan and Australia with more markets to follow, pending regulatory approvals. Adding to the strong momentum of PanOptix Pro, we are expanding our portfolio with TruPlus, which recently received PMA approval from the FDA and is on track to launch at ASCRS in April. Importantly, TruPlus strengthens our position in the Monofocal Plus segment, enabling us to more effectively convert competitive offerings while also defending and extending our Clareon base among surgeons seeking an enhanced monofocal option. TruPlus is engineered to deliver enhanced intermediate vision compared to existing offers in this category, without compromising the distance performance surgeons expect from a monofocal. TruPlus will also launch with a toric option. Toric’s availability is a meaningful lever to increase our ability to compete in the toric segment and grow AT-IOL share. And next, later this year, we also expect to receive regulatory approval on an upgraded version of Vivity. Vivity is already the most implanted EDOF lens in the world, and this advancement builds upon its success. This improvement is designed to enhance near vision while preserving the visual disturbance profile that surgeons expect from Vivity. We are excited to launch this innovation in most major markets in early 2027. Finally, we continue to advance our accommodating lens program. Last year, we extended the clinical program after seeing some refractive changes in a portion of patients in our early clinical work. As part of this extension, we amended the protocol to include changes in intraoperative and postoperative medications. Given these changes, we now expect to read out the complete data towards the middle part of 2026. Switching now to retina, Valeda, our photobiomodulator device, is showing encouraging adoption trends and is helping deepen our engagement in the dry AMD space. Valeda uses three distinct wavelengths of light to improve mitochondrial activity and retinal health, giving clinicians a noninvasive treatment option they have not had before. This is the first and only treatment clinically shown to maintain visual improvement in dry AMD patients. We are excited about its long-term potential, as treatment is now being reimbursed by six of the seven MACs. Our team is continuing to build awareness and adoption within ophthalmology to complement our strong OR-based retina portfolio. Moving to Vision Care, reusable contact lenses continue to be a strategically important part of our portfolio, where we are under-indexed versus the market. More than half of new wearers start in a reusable lens, and this category offers long-term patient loyalty with attractive margins. Our growing reusable portfolio is anchored by Total30, the industry's first and only monthly lens with water gradient technology. The Total30 family already includes sphere, toric, and multifocal lenses, and this month, we expanded the family with the introduction of Total30 Multifocal for Astigmatism. This is Alcon Inc.'s first multifocal toric lens, a key step in expanding our innovative monthly portfolio. It positions us to compete strongly in the multifocal category, the fastest-growing segment in contact lenses, by addressing presbyopic patients with astigmatism, a group that historically has had limited options. Alongside the Total30 family, Precision1 provides an accessible, high-quality weekly option that broadens our reach within the reusable segment. Launched early last year, Precision1 was designed to meet the needs of both eye care professionals and cost-conscious patients by delivering week-long comfort and consistent vision in spherical and toric modalities. Combined, these innovations helped drive significant share gains in the reusable category in 2025. And finally, in Ocular Health, we continue to develop products that meet the needs of the expanding dry eye category. Dry eye remains one of the most prevalent and persistent ocular conditions worldwide, and our innovation continues to strengthen Alcon Inc.'s leadership. I will start with the over-the-counter Systane family, where we saw a strong quarter of double-digit growth. This performance was supported by new formulations such as Systane Complete and our newest launch, Systane PRO. In the fourth quarter, we also launched a direct-to-consumer advertising campaign on Systane PRO to help broaden awareness and drive trial. Systane PRO is our most advanced artificial tear. It is designed to hydrate, restore, and protect the ocular surface and deliver long-lasting relief. This multidose preservative-free formulation fills an important need in the U.S. market by offering a premium artificial tear without preservatives, a feature that clinicians and patients increasingly value. In the pharmaceutical space, Truqtra continues to perform exceptionally well. By year-end, it had surpassed approximately 84,000 total prescriptions and achieved 3% share of the U.S. market, which is a great result for a product only five months into its life cycle. Physicians appreciate its unique mechanism of action, which stimulates natural tear production as early as day one. Refill rates are high, signaling meaningful patient benefit and acceptance as well as strong engagement from eye care professionals. We also made great progress with reimbursement from commercial carriers like Express Scripts, Kaiser Permanente, and Highmark, and now have more than one-third of commercial lives covered. In 2026, our focus will be expanding the prescriber base and improving coverage. We continue to expect to expand Medicare coverage in the next 18 months. Systane PRO and Truqtra represent significant innovation in the dry eye space, broadening our reach across the full spectrum of dry eye patients and reinforcing Alcon Inc.'s leadership in this growing category. And to bring this all together, Alcon Inc. is delivering sustained, high-quality innovation across the company. We are advancing a portfolio of products across both of our segments, each with multi-year commercial potential. I will close with a few observations on the market during the fourth quarter. In cataract, we estimate that global procedural volumes grew approximately 3%. Additionally, AT-IOL penetration globally was up 90 basis points. In contact lenses, global market growth was approximately 4%, which was primarily driven by the strength within the U.S. With that, I will turn it over to Tim, who will walk us through the financials. Daniel Cravens: Thanks, David. Timothy C. Stonesifer: Our fourth quarter sales of $2.7 billion were up 7% versus prior year. In our Surgical franchise, revenue was up 6% year over year to $1.5 billion. Implantable sales were $474 million in the quarter, up 2% versus the prior year period. As David mentioned, PanOptix Pro continued to perform well in the U.S., and we are in the early stages of launching it in select international markets. Even so, during the quarter, we continued to see an increasingly competitive IOL market. In Consumables, fourth quarter sales of $794 million were up 5%, which reflects growth in cataract and vitreoretinal procedures as well as price increases. In Equipment, we saw another quarter of acceleration with sales of $77 million and growth of 18%, driven by the launch of Unity. Turning to Vision Care, fourth quarter sales of $1.2 billion were up 7%. Contact Lens sales were up 4% to $683 million in the quarter, primarily driven by price increases and product innovation, partially offset by declines in legacy products where we have limited our promotional activity. Please recall that this quarter we faced particularly tough comparisons with double-digit sales growth in 2024. In Ocular Health, fourth quarter sales of $474 million were up 12%, led by continued strength of our dry eye portfolio, including Truqtra and Systane. As David mentioned, Truqtra’s launch is tracking ahead of expectations with strong early refill rates and broad prescriber enthusiasm. As access expands and awareness builds, we expect Truqtra to be a meaningful growth driver in 2026. Systane also had a great quarter with mid-teens revenue growth. Now moving down the income statement. Fourth quarter core gross margin was 62.5%, down 50 basis points year over year, mainly driven by incremental tariffs, partially offset by price increases. Core operating margin was 19%, down 160 basis points, driven by lower gross margin, increased sales and marketing investments behind new product launches, and increased R&D investment. This was partially offset by favorability from lower annual incentive compensation compared to prior year. Fourth quarter interest expense was $53 million, and other financial income and expense was a net benefit of $6 million. The average core tax rate in 2025 was 17.5%, down from 19% in the prior year due to discrete tax benefits. Finally, diluted earnings were $0.78 per share in the quarter. Turning to cash, we generated $1.7 billion of free cash flow in 2025, compared to $1.6 billion in 2024. In addition, in 2025, our free cash flow as a percentage of core net income was 114%, well ahead of our long-range goal. Our robust cash generation has enabled us to return $848 million to shareholders in 2025, comprised of $682 million in share repurchases and $166 million in dividend payments. Moreover, I am pleased to report that in January, we completed the repurchase program and returned the full $750 million to shareholders, more than two years ahead of schedule. Regarding tariffs, we incurred $91 million of tariff-related charges in 2025, of which $67 million was recognized in cost of sales. Now moving to our outlook. As I am sure you have noticed, starting this year, we are updating the way we present guidance to more closely align with the framework we outlined at our last Capital Markets Day. Our outlook assumes that aggregate eye care markets grow 3% to 4% for the year, that exchange rates as of January hold through year-end, and regarding tariffs, this outlook assumes an average tariff rate of approximately 15% for imports into the U.S. for the remainder of the year. Additionally, we have assumed that retaliatory tariffs remain unchanged. Starting with sales, we expect top-line growth of between 5% and 7%. We believe this outlook reflects a balanced view of market conditions, complemented by the steady progress of recent product launches. Although we had a strong fourth quarter exit rate, we feel this guidance is prudent given the soft market conditions in 2025. Importantly, given our innovation pipeline and new product launches over the coming years, we remain committed to our long-range Capital Markets Day targets. In terms of phasing, we expect sales growth to be relatively level-loaded throughout the year given the cadence of new product launches. Turning to gross margin, while we are not providing formal guidance, we currently expect 2026 to look broadly similar to 2025. Efficiency gains and the launch of Truqtra should continue to support margins, while headwinds from tariffs and the ramp of equipment launches largely offset those benefits. Moving to operating expenses, we expect SG&A leverage to be the primary driver of operating margin expansion. R&D expense is expected to be approximately 9% of sales. Additionally, as we have discussed previously, over the past several years, we made significant investments in operational improvements and system enhancements to drive efficiencies. Building on this progress, as outlined in our earnings release, we have announced new efficiency measures to further optimize our cost and support long-term margin expansion. We expect approximately $100 million in annualized run-rate savings, with about $50 million realized in 2026. This initiative is expected to cost approximately $150 million and be completed by year-end. So in aggregate, we expect full-year core operating margin to improve by approximately 70 to 170 basis points. Moving to the bottom line, we expect core diluted EPS to grow between 9% and 12%. And in terms of phasing, given the cadence of product launches and the run-rate savings, we expect the second half of the year to benefit from higher profitability than the first half. Before I wrap up, I am pleased to report that our Board has proposed a dividend of $0.28 per share. This is in line with our payout policy of approximately 10% of the previous year's core net income. Shareholders will vote on this proposal at the upcoming Annual General Meeting in April. And lastly, I too would like to extend my thanks to our more than 25,000 associates across the organization for their dedication and hard work. And with that, I will turn it back to David. David Endicott: Thanks, Tim. Before we open the line for questions, I want to briefly step back and summarize what we believe is most important. First, our fundamentals remain strong. We delivered solid fourth quarter performance, exited the year with momentum, and continued to invest behind innovation that supports sustainable, long-term growth. Our portfolio is broader, deeper, and more differentiated than at any point in our history. Second, our innovation engine is working. Across Surgical and Vision Care, including Ocular Health, we are advancing multiple platforms with multi-year commercial potential. This breadth matters. It gives us a broad portfolio of potential revenue opportunities that reinforces our confidence in consistently creating value for shareholders. Third, we remain disciplined. As Tim just outlined, our 2026 outlook reflects a balanced view of market conditions, while preserving our commitment to margin expansion, strong cash generation, and shareholder returns, investing where returns are highest while continuing to optimize our cost structure to support long-term performance. And finally, none of this happens without our people, and I want to thank our more than 25,000 associates again around the world for their dedication, resilience, and focus on serving eye care professionals and their patients every day. With that, operator, please open the line for questions. Operator: Thank you. We will now be conducting a question and answer session. You may press 2 if you would like to remove your question from the queue. Our first question is from Graham Doyle with UBS. Please proceed. Graham Doyle: Thanks, guys. The line is a little bit choppy, so I am assuming you can hear me. Just a question on the guidance. So obviously, last year, we had a couple of missteps really around the market. Could you give us a sense as to how comfortable you are today in terms of visibility? Because when I look at some of the equipment and Truqtra, it feels to me like you get halfway towards the midpoint of your guide already. And then to Tim’s comments on phasing, it strikes me that you should, you have got some relatively soft comps Q1, Q2. You have obviously exited quite a strong rate. So should you be kind of in the middle or the upper end of the revenue guidance range, we think, for the half? Thanks a lot. David Endicott: Graham, thanks for the question. Let me just, on the markets, the markets improved in the fourth quarter. They were improving most of the year, as we kind of indicated. But they are not quite back to normal yet. So I think, you know, the balanced view that we have right now is that we should call it about where, you know, it finished. And so when you look at this year, you know, the way we see the market broadly is the Surgical market finished about 3%. That is probably where we will call it for next year. Vision Care was 4% and change. You know, that is probably where we will call it. So in aggregate, you know, being in the 3% to 4% range for now makes a lot of sense to us. And I, you know, maybe that is discipline, but I think that is the right answer. So that is how we are thinking about the market for the year. And on the front and back half, I mean, I would— Timothy C. Stonesifer: Say on the phasing, Graham, you know, I think Surgical, to your point, is going to be driving that first half growth if you think about PanOptix Pro, equipment continuing to do well. And then as you get in the back half, I think Vision Care is really going to be driving that. Truqtra is really going to be building a lot of momentum. We are also going to see some nice growth in P1 and Total30. So it should be relatively balanced for the year. Graham Doyle: Awesome. Okay. Thanks a lot, guys. Appreciate it. Operator: Our next question is from Lawrence H. Biegelsen with Wells Fargo. Please proceed. Lawrence H. Biegelsen: Good morning. Thanks for taking the question. I wanted to start with Equipment, really strong growth, 18% in Q4. So any color on how much Unity contributed to Equipment growth in Q4? If we look at year-over-year growth of about $48 million, was that mostly due to Unity? And how should we think about Equipment growth in 2026? You know, David, you have talked about, you know, 3,000 placements per year, just on average. How should we think about that in 2026? And I had one follow-up. David Endicott: Yes, Larry, a great quarter on Equipment. Obviously, we have got CS out in the quarter as well. So, but if you look at year on year example, Unity for Retina, our VCS, you know, our revenue doubled in that category. Now, it is not what you should think about the going-forward number, but I would just say that we had really strong demand. We filled that demand pretty well in the fourth quarter, and we really did not get CS out. So I would say, you know, we have got really good visibility to a funnel of contracts that, you know, are ready to go. We have visibility to the install rates. We feel really good about the number that we have given in the past, so I think if you are referring to the number we gave mid-year last year, certainly with, you know, on our, exactly, no change to that, I would just say. And I think the kind of the important part of it is the feedback we are getting on the product itself is positive and a little bit that I commented on relative to the award we won from the BIG thing. The customer really appreciates, at this moment in time in particular, being able to do more surgeries in a day in a very safe way, and that is kind of the core of the proposition. So we feel good about Unity right now, and it was a big part of the Equipment growth. Lawrence H. Biegelsen: It is helpful. And David, it looks like Truqtra sales are actually tracking better than the IQVIA prescription data. I guess my question is, was there any stocking in Q4, how should we think about Truqtra in 2026? Is $80 million to $100 million the right range? And still comfortable with that $250 million to $400 million peak sales? Thank you. David Endicott: Yeah. Look, Truqtra really has taken off nicely for us, and we are, you know, we are excited about the enthusiasm that I think the patients are describing, which is this kind of rapid onset and tolerance that we are kind of expected to see, but I think it is pleasing to see. I think ophthalmologists and optometrists around the world, I think, are looking forward to this product. But I think in the U.S., where we see it now, it is exciting to watch. You cannot track it in IQVIA because it is obviously flowing through a third party right now to kind of make sure that we handle reimbursement best, but we are very comfortable with peak sales right now. In fact, I would say we probably are edging towards the higher end of the range we have given, which is that $250 million to $400 million range. Lawrence H. Biegelsen: All right. Thanks so much. Operator: Our next question is from Veronika Dubajova with Citi. Please proceed. Veronika Dubajova: Hey guys, thank you so much for taking my questions. Congrats on a strong finish to 2025. Two things please, if I can. One, just David, do want to circle back to your comments around the Unity order book? So I do not know if you can just describe how much visibility you have at this point in time. And I guess, sort of the demand CS versus VCS and how you kind of characterize your confidence in sustaining a healthy double-digit growth rate in Equipment as we enter 2026. And then my second question is for Tim, please. I noticed that the guidance assumes 498 million of shares. Obviously, we finished the year at 488 million. Any kind of reasons for that and then sort of indications, desire to do more buybacks as we move through this year, given that maybe there is a bit less M&A in the pipeline than there might have been before? Thank you, guys. David Endicott: Veronika, thanks for the question. I would just say the key is, we do have a very detailed view of our funnel, you know, the order book, as you will. Everything from prospects through to installations. So, you know, we track contracts, we track shipped products, and all the way through to installation and follow-up. So we are very confident in what we have got out there in terms of demand, and, you know, we expect the product to do really well this year. Timothy C. Stonesifer: Yeah. And I would just say on the share buyback, you know, the 498 million versus the 488 million, that is basically how the employee vesting is treated. So that is kind of the mechanics of the buyback. I would say in general, on future buybacks, listen. Our capital allocation philosophy has not changed. Our first priority is going to be investing in organic investments. Again, if you think about PanOptix Pro, Vivity, those types of things, those are doing very, very well. At the same time, we realize that we cannot develop everything. So we will continue to be active in BD&L and M&A. And then, obviously, the third leg of the stool is the returning cash to shareholders. So we review that every year with the Board when we do our strategic plan. So if we have any changes or any more buybacks, we will certainly announce it as appropriate. Operator: Our next question is from Matt Mitnick with Barclays. Please proceed. Matt Mitnick: Hi, thanks for taking the question. So I wanted to follow up on some of the dynamics in the IOL market, cataract market a little bit. If you could maybe elaborate on anything that you are seeing in market capacity, in market volumes, trends that could be improving there? And then anything in the pipeline, PanOptix Pro has been great. And your market leadership is impressive. But anything that you think could help sort of either expand laterally or penetration or drive share in other geographies or pick up the growth a little bit closer to some of the competitors in that segment? David Endicott: Yes. Thanks, Matt. And let me just comment a little bit on the IOL market broadly. It is kind of a, this quarter, or fourth quarter itself, was a little bit a kind of a very different market quarter, with PanOptix Pro kind of leading the way. And so we gained some share. Our AT-IOL penetration was high. And I think that did very well. We have got TruPlus coming right now. We have got Vivity 2.0 at the end of the year. And frankly, over the longer haul, we have got a number of ideas, you know, on how to, you know, continue to stay out in front of competition on this one. So we feel pretty good about the U.S. We weathered a bit of a storm there. And at this point, I think we feel like we have kind of got it under control, if you will. Internationally, a little bit different. Much more competitive. And I would just say, we still have not launched Pro, and we need to do that. We will get Tru out, and we will get a new Vivity product late this year. But those products are yet to be seen into the market, and I think that is where we will see a bit of turn there. The other dynamic in the market for International was International was soft in Japan and soft in Asia in particular, partly because China ran into some trouble with their AT-IOL market. So they hit a bit of a cap in the VBP, where they ran out of money at a hospital level. Vivity had done so well during the year, they ended up using a lot of bifocal product, you know, towards the end of the year. And so we had a little bit of a challenge in the China market for us. That is a little bit different than the market per se, but the market, generally speaking, was soft. Generally speaking, China has made up a big part of that in terms of growth in AT-IOLs, where it was soft. So if you look at that part of it, it needs to improve, but I think, generally speaking, we are well positioned. Operator: Our next question is from Ryan Benjamin Zimmerman with BTIG. Please proceed. Ryan Benjamin Zimmerman: Thank you. Thanks for taking the question. On the guidance, I want to ask a question. And I think you kind of alluded to this, but I just want to be clear. Historically, we have thought about 200 basis points of innovation coming from Alcon Inc. on top of market growth. But if you look at the high end of the guide, at 7% and given where you assume markets to be, that implies about 300 basis points. So it is a little bit higher than what we have historically thought of on top of your market growth rates. And so if you can kind of bridge that 100 basis point delta for us, David, is that mostly Truqtra and Unity? Or is there anything embedded in that, in that, you know, higher growth rate at the top end of the guide that we are not thinking about from a product standpoint. David Endicott: Yeah. Look, we have been disciplined about the guide here. I think, you know, what we are trying to do here is say, look, we think the prudent thing to do at this moment is pick up the fourth quarter rate. We do not think that is the normalized rate, but at the same time, that is what we have seen for the last couple quarters. So let us start there. To your point, we always say we have got a couple of 100 basis points of new product flow which should sit on top of that. So if you say 3% to 4%, which is where roughly the market was, you know, in the fourth quarter, then I think you add 200 basis points, and you are exactly right. We have a little bit on the top because we do not really know what the new product flow is going to do. And I think, look, if it does well, we will be on, you know, on the upper end of that. If it, you know, does kind of what we expected, or a little bit, you know, any other kind of concerns that show up, you know, we will see it, you know, in that range. So we have been, I think, disciplined about the way we think this one through. Ryan Benjamin Zimmerman: Okay. And then, David, I would like to ask maybe what is the strategy in refractive at this point? I know we went through the STAAR saga. There was a share buyback, obviously, on the back of that. But do you feel like, and again, appreciating that it is not needed necessarily to achieve your growth targets, as you alluded to on the last call. But where do you stand on refractive, and what do you want to do at this point? David Endicott: Well, I mean, first and foremost, we are excited about WaveLight. And WaveLight Plus in particular, you know, if you compare it to, for example, the competitive procedures, particularly, you know, the lenticular extraction procedure, we are getting a substantially better outcome. And I think we are, you know, our main objective right now is for six and unders, you know, these minus six patients, they should be getting LASIK. LASIK is a better procedure in our minds, and I think the data bears that out. You know, I think we had almost 50% or 60% at 20/14, you know, postoperative, and 100% at 20/20, and something like 80% at 20/20. What was it? 20/38, I think. So it was, I mean, we are getting tremendous results from this customized LASIK. We will keep moving down that path. We obviously would like to augment that with an ICL. Whether that, you know, it does not look like it is going to be STAAR at this point, but there are a lot of ICLs out there. And I think, you know, maybe the good news on this is, you know, we have got lots of other options out there. We are not in a hurry on refractive, but we are definitely moving down a path of committing to the refractive area. Whether that is RLE, whether that is laser work, whether that is an ICL, you know, there are a lot of options here that we are going to work at. But refractive is clearly one of a number of white spaces for us that we are interested in. Glaucoma as well. In the Vision Care business, we have got a lot of pharmaceuticals we are interested in. So we are looking broadly at white space. Refractive is certainly one of them. Timothy C. Stonesifer: Thank you. Operator: Our next question is from Jack Reynolds-Clark with RBC Capital Markets. Please proceed. Jack Reynolds-Clark: My first one is on Implantables. Could you remind us what your expectations are around timelines of the launch of PanOptix Pro outside the U.S.? And just to kind of dig in a bit deeper here, at what point do you expect growth in this segment to grow in line with the market? Is it 2027? Is it 2028? And are launches sufficient to make that happen, or is there something else that you think is needed to make that happen? And then sorry, just to ask again on the guidance, but it is a wide range on the revenue side for the year, obviously, given the market growth range too. What is it that drives revenues coming in at 5% constant currency growth versus the top end 7%? Thank you. David Endicott: Yes. The second one is pretty easy. Let me kind of give you where it is. I mean, we basically are saying 3% to 4% with the market. If the market does better than that, that is the high, or worse than that, that is the low on the market. And then the new product flow trajectory, we have got 10, or actually more than that now, new products kind of in play that have variation around the mean. So we are obviously going to have some variable answers there. Some of them are going to do better, some of them may not do as well as we expect, but how that mix is will also give us a high and a low around the range. So think about it as both a market dynamic and then also new product trajectory dynamic. On the Implantables piece, look, we are launching PanOptix Pro in Japan right now and Australia right now. I think we are waiting on a regulatory approval in Europe. I think you are going to see TruPlus and Vivity 2.0, I think late this year. Maybe it is early next year, but I would say that, you know, we have got lots coming ex-U.S. And I do think that that will help a lot in our competitive fight there because, you know, I would just say this TruPlus product is, you know, we have kind of ignored the Monofocal Plus category for a while. We found a very clever way to do something I do not think anybody else can do with our optical design on that. So we are excited about, particularly internationally, the toric Monofocal Plus and the Monofocal Plus base lens are relatively good sized, and so we like our chances in that market with new products. So we will see how those go. Jack Reynolds-Clark: That is great. Thank you. Operator: Our next question is from Anthony Charles Petrone with Mizuho Group. Please proceed. Anthony Charles Petrone: Thank you, and good morning everyone. I actually had a question on the U.S. IOL cataract market. David, you spoke in the past about how surgeon capacity is constrained for a good part of 2025. Timing on that was a little bit opaque. So wondering where U.S. surgeon capacity is on the cataract side as we enter 2026? And I will have a quick follow-up on margins. David Endicott: Yeah, Anthony, it is a really good question. We have been working on this one for a while, and I do think that surgeon productivity is the main dynamic. You know, when you look out and you see where the practice of cataract surgery or ophthalmology is going, there are some practices, for example, in the Midwest that we follow very carefully. And, you know, what they are doing is they are doing more surgery days right now by employing optometrists to do some of the pre-op work, some of the post-op work. They are using paraprofessionals around the clinic days so that they have got more time to spend in the OR. And then, you know, to a large degree, in states where you do not need a certificate of need to get an ASC, there is a lot of ASC movement now. And then I would say, in other states, you know, where you do need a certificate of need and where hospital time has been difficult to get because there is so much other demand, you know, you see the societies and the surgeons looking for alternative ways to get OR time. And so I think the market is working it out. And it makes sense that they should because there is a lot of demand for cataract surgery right now. Days are actually going up in terms of wait time, not down. There is a lot to be done out there and money to be made if the facilities can provide the time and the surgeons can provide the skill. And so I think you are going to see that normalize, as we said it would. But again, we are playing that just a little bit more balanced than perhaps we have in the past, just because, you know, we have not seen it happen yet. We expect it to, but we will see when it happens. Anthony Charles Petrone: Great. And then just follow-up on margins would be, when you look at the high end of the range here, 170 basis points, I know you called out the restructuring program, $50 million this year, $150 million total. But you also have some pretty good new product mix. Truqtra is doing well. Unity is getting off and running. I am just wondering to what extent new products plus price is in that margin guide versus the $50 million cost-out program? Thanks. Timothy C. Stonesifer: Yeah. Again, we are, I would say that we are going to continue to get price this year, probably not as much as we got last year, but we will continue to get price. We are going to continue to get leverage out of the M&S. Again, think about, we invested a lot in the new product launches last year. We are going to invest more this year. But when you look at it from a year-over-year comparison, we are not going to see as much pressure. And then the new product launches, yeah, again, to David’s point, it just depends how that flows. Truqtra should be favorable. The more equipment we do puts pressure on the overall margin rates. But we feel comfortable with the range we provided. Operator: Our next question is from Patrick Wood with Morgan Stanley. Please proceed. Patrick Wood: Beautiful. Thank you so much for taking the questions. Just two quick ones. First one around Voyager, how you guys are feeling about things, how things are going there? How it fits into glaucoma treatment and how that has gone recently? David Endicott: Yeah, look, Voyager, we are excited about Voyager. SLT is one of those things that, if you ask surgeons, or ophthalmologists, generally speaking, should you do SLT, a 100% of them, I think, will say yes. That is where we should start. And then you ask them a second question, which is, you know, how many of you all are doing it? And, you know, you get a kind of a mixed bag. And that is because it is a tedious procedure to sit and click from the kind of the traditional, you know, laser systems that are in the office. So Voyager represents something that is very efficient, but really great for patients. And, you know, I think this is a move that is going to take some time, but I think the glaucoma community is definitely on board with this. You know, we made a good move, I think, this year in the U.S. in particular in consolidating Voyager with our Valeda product to improve our in-office coverage. Remember, this is in-office equipment. This is a piece of equipment that sits in the office, not the OR. And I think one of the challenges we had last year with Voyager, we were in the OR because of Hydrus. We were struggling to get everybody covered properly. So I think you will see, you know, a nice move on Voyager and Valeda, both of which I think, you know, sit in that kind of efficiency play for, you know, in-office equipment, which, again, in the U.S., we are doing a lot with, and we will see how that goes. Obviously, internationally, there are some reimbursement challenges that we are going to continue to work through. But we are very excited about Voyager directionally. Patrick Wood: Makes a ton of sense. And then just quickly as a follow-up, you guys touch the consumer in a whole bunch of different categories in different ways, whether it is contacts or whether it is the non-Rx business in Ocular Health. Like, what do you think you are seeing? How do you think the consumer’s health is? I know that is a very broad question, but is promotional activity going up at the retail side? And just curious, the big picture, how you think the consumer is doing based on the categories you guys are in? David Endicott: Well, I think big picture, I would say the U.S. is pretty okay for us. International maybe a little bit more mixed. It is hard to tell. In the Contact Lens business, which is probably one of our, you know, if there was a sensitive business, it is probably that one. That particular business internationally has resisted price, partly because it is chain-dominant. So if you look at the Europe market, you have got a lot of big chains who basically are telling us we are not going to take price from you. And that is really what is causing kind of a big chunk of the challenge in market growth in the International business. I think the same is in Japan. Japan is a big Contact Lens market and has a lot of chains which, frankly, just are not going to take price right now. So for a number of years, we took price pretty easily. That has slowed down. Certainly last year it did. So I think, generally speaking, the U.S. was very healthy, and we, I think, were 6% or 7% growth in the U.S. So I think the U.S. also, if you look at the consumer, you think about sensitivities that would matter to us, our OTC business, shoot, we had, I think, a 6% artificial tear growth in that market. That was a valuable market for us. And the promotional efforts or the health of the consumer, you know, is driving AT-IOL penetration up significantly in the U.S. So U.S., I think, was up a 100 and some odd basis points in promotion. So if there was really any consumer sensitivity, you would see it in one of those categories in the U.S., and it really has not appeared to us, at least in the data, that that is what is going on. A little bit more sensitive maybe outside the U.S., but I think that is, again, none of our markets are terribly sensitive to the consumer. Eye care, as you know, is obviously a very kind of inelastic demand. Patrick Wood: Thanks for the details, David. Operator: Our next question is from Issie Kirby with Redburn Atlantic. Please proceed. Issie Kirby: Hi, guys. Thanks so much for taking my question. I wanted to start on Unity and the cataract system in particular. Appreciate it is only a couple of months and relatively early within the launch. But what are you seeing in terms of your placement rate? I know with VCS, perhaps there were some difficulties in getting trained up. Is that something you are seeing with the CS system? Just wondering about the momentum there. And then I have a follow-up on Contact Lenses. David Endicott: Yeah. Issie, like I said earlier, I would say the visibility to the order book is very high. And obviously, the cataract system is going to be the bigger of the systems. The VCS, which we spent most of last year on, is really a retina system with, you know, I think some degree of, you know, actually, we sold a lot into mixed groups where there was a retina person and a cataract surgeon, so there was quite a little bit of that. But I do think, you know, the volume is going to be, you know, in the cataract system because that is just, you know, naturally where most of the volume is. So we have real good visibility to that. I would just say that the response has been excellent. I mean, I think we are working our way through, you know, as fast as we can getting these things installed, but the demand is high right now. Issie Kirby: Great, thanks. And then actually as my follow-up, just sticking on cataracts. Are you seeing any benefit really to the broader portfolio within particularly the Implantable business when you are placing a cataract system? I am just wondering if there is any sort of real halo effect coming through with having an Alcon Inc. rep in the door, ramping it up, ramping the system up. David Endicott: Well, you know, I mean, obviously, all these decisions are independent on a product basis. And I think, you know, certainly one of the beautiful things about having a really important piece of equipment is that you get to be in the OR a lot. So you do have opportunities to talk with the staff and the surgeons a little bit more, perhaps, than people who are not there every day. But I do think that really what is driving our IOL share in the U.S. is PanOptix Pro. We had a really good quarter on Pro, share was up and, you know, stabilized, you know, year on year. So I think we are feeling pretty good about the potential of that product around the International markets as we kind of get out there. So really, I think as we go forward, you know, think about it mostly as discrete choice of, is our lens better than their lens, and I think that is the fight we are really taking on most every day. Operator: Our next question is from Thomas Stephan with Stifel. Please proceed. Thomas Stephan: Great. Hey, guys. Good morning. First one on cataract physician fee cuts just here in the U.S. David, maybe if you can talk about how you are seeing, to date, or expecting these dynamics to potentially impact different areas of the business like AT-IOLs, capital equipment? And then I have a follow-up. David Endicott: Yeah. You know, oddly enough, I think cataract fee cuts, which, you know, again, for the, just for everybody who may not know this, physician fee came down. I think it is about $4.50 or something like that per procedure. Actually, facility fee went up 3%. So just to be clear, there was not a cut in the facility fee, and the facility is generally who purchases the AT-IOL. So just, you know, that is an important distinction. What is interesting though is, you know, penetration in the U.S., for example, was up 130 basis points for AT-IOLs. And I do think there is, look, there is some promotional effect going on here, but we have seen a couple, three quarters now where you are seeing very significant AT-IOL growth, but particularly in the fourth quarter. We saw a kind of a step up in it. And I do think that people are aware that if they are going to do a limited amount of surgery, and they are going to get paid $4.50 for it, you know, they can make more money, you know, getting the patient a better lens, kind of talking to them about what it looks like to invest a little bit more but get them a better outcome. And that is, I think, what is driving some of this. And I think some of that is actually coming off of these fee cuts. That is going to move people to say, hey, I could do something else here. Thomas Stephan: Got it. That is great. And then my follow-up is just on Contact Lenses, grew about 5% this year. So probably still above market, but maybe a smaller delta than usual. So, David, to stick with you, I mean, can you talk about just your confidence in growing above market? And more importantly, what are the incremental drivers, I guess, Total30 and Precision1? But just curious if you can, you know, speak a bit to, you know, how we should think about growth next year relative to market? Thanks. David Endicott: Yes, really important comment, and I think probably we have not talked enough about it. Look, the market was pretty solid. I mean, it remained on the low end of normal, but I think it was probably 5% globally last year, and I would just be careful with our fourth quarter because we are wrapping around an 11% number from the prior year which involved our P1 launch and some inventory there. So again, I think if you normalize for all of that, we have been growing ahead of market most of the year. You can see that we had a very good quarter in the fourth quarter in Contact Lenses. If you look at the audited data, our global share of Contact Lenses was up, maybe we gained almost a full share point, like 70 basis points. Our global share of Reusable was well over that. Our daily disposable SiHy was double digits. We had really nice share growth in dailies and reusables in the fourth quarter. So I think, you know, we are feeling good about Contact Lenses, and it is really coming from, I think, a combination of our ability to focus on both Reusables and Daily. So our, obviously our daily is Total1 product, P1 product. Those are, we believe, really well positioned for both value and then premium markets. The Reusable market is a very profitable, I think kind of underappreciated market, because almost half of the patients are going into reusables. So we are gaining a good bit of share there by focusing on it. I do not know that a lot of other people are, and that has been very positive for us. So, you know, we are continuing to work on our multifocal toric, which is exciting to get into that. But I would just say that if there is one place we are a little bit soft, it is probably in that multifocal area where we have been losing a little bit of share. And I say all of that with the underlying belief that, you know, we have been letting go a little bit our DHPC product. So, you know, we have got some downward pressure from some of the older legacy brands that we, you know, try to move away from and get them into the higher-end, more profitable brands. So we had a good quarter in Contact Lens. Thanks for asking. Operator: Our next question is from Susannah Ludwig with Bernstein. Please proceed. Susannah Ludwig: Good afternoon, and thanks for taking my questions. I guess I wanted to follow up in terms of International IOLs. You guys talked about China. Could you remind us what percentage of your Implantables business China is and what your expectations are for the upcoming VBP? David Endicott: Yeah. I do not think we break out the, we do not break it out at that level. I think China broadly is 5% or 6% of the total, and you can find that in the general financials of our total business. And I would just also say that China is mostly a Surgical business. Relative to the IOLs in China, what really went on, I think, was we had a really fast-growing business with Vivity that kind of hit a ceiling because there is a DRG level of reimbursement that comes to the hospital level a lot of the hospitals ran up against, and they kind of had to slow everybody down in the hospital. So they went to a lot of bifocals. So when you look into it, monofocal growth was pretty high, foldable growth was pretty high, but it was not coming out of AT-IOLs. I think that was a valuable lesson for us. The VBP expectation going forward, it is going to be tough. We expect some price erosion here. We expect to get into this and kind of continue to be roughly year on year, I would say, roughly, we would be flat would be a good number for us. So I think we will get volume, but we are going to have to give up some price, and that assumes we win. So again, all of those things are in play. Middle part of the year is the current expectations, but we will see how that all plays out. It is an increasingly competitive market in China, but it is also a very big market. So we think volume will grow nicely and offset some of the pricing erosion. And again, prices are still pretty good in China, actually. So you look at it relative to Europe, they are pretty similar. Susannah Ludwig: Okay. And then I guess just as a follow-up to how do you guys think about sort of long-term? Would you ever sort of look at long-term moving production to China given their focus on local production? David Endicott: Well, we will look at that every year and see. Right now, we do not produce in China. We are manufacturing a couple of things in the Equipment land that we are, or we are thinking about moving there, because for exactly the reason you indicate, which is there is a Buy China rule there for folks that are making product there. There is a small advantage, depending on what product we are talking about. So we will move a little bit of Equipment there. But generally speaking, we are sourcing China out of other locations than the U.S. So I think we are trying to do that. There is obviously some challenge with that, particularly around Equipment. But, you know, IOLs, I think we can move to a neutral location for trying to avoid tariffs, if that is the purpose of your question. But in terms of long-term production in China, good question. Not sure we have discussed it in a broad sense for anything other than Equipment. Operator: Our next question is from David Joshua Saxon with Needham & Company. Please proceed. David Joshua Saxon: Great. Thanks, guys, for taking my questions. Just a couple of ones. Maybe starting with Tim, you talked in the script, I believe, about Truqtra starting to benefit margins in the back half. So can you talk about just the magnitude of the investments you are making behind that product? And once that does turn profitable, kind of the magnitude of the benefit you could see? Timothy C. Stonesifer: Yeah. Again, we are not going to give product-level margin analysis, but we are investing what we feel is appropriate to make sure that that launch is successful. And as David said, right now, it is performing better than expectations. David Joshua Saxon: Okay. Great. And then just on Unity, as it relates to Consumables, I mean, how soon after a unit is placed do you start to see those Unity Consumables start flowing through? And if the market is growing 3%, I mean, do you get a couple extra points from the Unity Consumable pricing? Thanks so much. David Endicott: Yeah. I mean, I think, generally speaking, you can, you know, as a, I will just call it a broad rule of thumb and, you know, depends on, you know, lots of things. But I would say we generally look at the market and say Consumables will run a couple of points hotter than the market. That is generally what happens and has happened in the past. I would expect that to continue. I would not really interpret the Unity placements as driving a lot of additional above that. I think a couple of points above market growth would be the right way to think about it. Operator: Our next question is from Jeffrey D. Johnson with Baird. Please proceed. Jeffrey D. Johnson: Guys, good morning. Thanks for squeezing me in. I will be quick here with just two questions. David, going back just on your TruPlus comments, I think you alluded to this, but I do not believe you have ever had a Monofocal Plus. Can you just, one, confirm that? Two, can you remind us monofocal versus Monofocal Plus kind of mix in the U.S., but especially in some of the International markets? How much Monofocal Plus share has been taken over the last, call it, couple of years or what the current mix is? And remind me if you do get a little pricing premium on a Monofocal Plus over a monofocal? Thanks. David Endicott: Yeah. You do get a little bit of a price premium. Let me start by saying, you know, in the U.S., the monofocal business, Monofocal Plus business, has not been a huge phenomenon. It probably had its biggest effect on the toric business. And I would say, you know, partly because you can, you know, in the add collect space you can collect extra money from them for an advanced technology lens like this. And so they positioned the toric lens, I think, with an increased amount of intermediate vision, which is really nice. And it is better than the monofocal. But the impact has been really in the toric space. So, you know, we lost a fair bit of share in the U.S. over the last several years in toric. I think to some degree it was to the Monofocal Plus, so we are looking specifically, that is the opportunity, I think, in the U.S. Internationally, a little bit different because they really, you know, I think had a price point challenge internationally, and Monofocal Plus did do a better job, I think, in the, I have just thought, somewhere between monofocal lenses and AT-IOL lenses. They carved out some space. I am not sure what size of that was, but it is meaningful. And I do think that, you know, when you really think about it, this world may just turn into being, you know, the monofocal business turns into Monofocal Plus. I mean, I think it comes with a little bit of a premium, and, you know, this is a better lens than our core lens because you get more intermediate, but you do not give up much distance. So I am excited about the opportunity. It is a modest one, but I think important in terms of our share in toric. Jeffrey D. Johnson: Fair enough. And then just one quick question on EPS gating. I heard your comments on second half profitability higher than first half profitability, but you also are guiding a couple of 100 basis points of FX tailwind to earnings, to EPS growth, I am sorry, this year. So I just want to make sure I am understanding. Gating up EPS because I think those currency tailwinds should be probably more first half weighted, should gating of EPS throughout the year be relatively flat or consistent, even if profitability improves in the back half of the year? Timothy C. Stonesifer: Yes. Again, the EPS growth that we are talking about is in constant currency. But if you think about sort of phasing in general and profitability, just go down the P&L. We talked about revenue. We talked about gross margin. Gross margin flat year over year. The only thing I would say there is the first half will be lighter than the second half, and that is because you have the impact of the tariffs coming through. But overall, they should be flat year over year. SG&A will be a similar profile as last year when you think about it on a percent of revenue basis. Again, as we have seen in the last two or three years, be a little careful with Q2. That is a heavy M&S spend for us from a back-to-school perspective. So I would go back and look at the prior years and see how much it is. You know, it is $40 million or $50 million, probably more in Q2 versus Q1. The savings we talked about, that will be probably 60% to 70% back-half loaded. So that is another driver why the second half is better, and then you can work the rest of the P&L. But we feel pretty good about the guide, and we are going to continue to grow the business faster than the market. We are going to continue to expand margins, and that should drop through some nice free cash flow. Operator: Our next question is from Steve Lichtman with William Blair. Please proceed. Steve Lichtman: Thank you. Hi, guys. Maybe a couple for you. First, any color you can give on free cash flow outlook for this year? You gave some inputs with CapEx, and it looks like a restructuring charge. But any other you could provide on puts and takes and where you could end up would be great. Timothy C. Stonesifer: Yes. Again, I think as we continue to drive margin expansion and grow the business, that is going to drop through some nice free cash flow. So I would expect it to be similar to what we had last year. That would include the restructuring charges that we talked about. But we feel pretty good about the free cash flow this business can generate. Steve Lichtman: Okay. Got it. And then are you still expecting some incremental spend on Auryon this year? Looks like you are talking about getting some leverage on the R&D line. So any update on where you are at with that program and the incremental costs? Thanks. Timothy C. Stonesifer: Yes. There is still probably 40 basis points, as we talked about last time. That really has not changed from the Auryon perspective. But again, we have talked about over the last, call it, you know, 12 to 18 months, about some of the efficiency programs that we are working on. One of them is in the create-to-make space that we have talked about. You know, our internal goal there is about a 20% improvement of getting product to market faster. Now, some of that is in these numbers, which is why you are seeing a little bit of the leverage. But certainly not all of it. But we feel pretty good about the R&D spend and the innovation pipeline that we have, and we feel like we are investing appropriately behind it. Operator: We have reached the end of our question and answer session. I would like to turn the conference back over to Daniel for closing remarks. Daniel Cravens: Great. Well, thank you, and thanks again for joining us this morning. For any follow-up questions, from an investor standpoint, reach out to either Alan Tring or myself, and for media, reach out to our Corporate Communications department. Thanks again. Have a good day. Operator: Thank you. This will conclude today’s conference. You may disconnect at this time. Thank you for your participation.
Operator: Good day, ladies and gentlemen, and welcome to the LivaNova PLC fourth quarter and full year 2025 earnings conference call. My name is Emily, and I will be coordinating your call today. After the presentation, you will have the opportunity to ask any questions. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Briana Gotlin, LivaNova PLC’s Vice President of Investor Relations. Please go ahead. Briana Gotlin: Thank you, and welcome to our conference call and webcast discussing LivaNova PLC’s financial results for the fourth quarter and full year of 2025. Joining me on today's call are Vladimir Makatsaria, our Chief Executive Officer and member of the Board of Directors; Alex Shvartsburg, our Chief Financial Officer; Ahmet Tezel, our Chief Innovation Officer; and Zach Glaser, Director of Investor Relations. Before we begin, I would like to remind you that the discussions during this call will include forward-looking statements. Factors that could cause actual results to differ materially are discussed in the company’s most recent filings and documents furnished to the SEC, including today's press release that is available on our website. We do not undertake to update any forward-looking statement. Also, the discussions will include certain non-GAAP financial measures with respect to our performance, including, but not limited to, revenue results, which will be stated on a constant currency and organic basis. Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release, which is available on our website. We have also posted a presentation to our website that summarizes the points of today's call. This presentation is complementary to the other call materials and should be used as an enhanced communication tool. You can find the presentation and press release in the investor section of our website under News, Events and Presentations at investors.livanova.com. I will now turn the call over to Vladimir Makatsaria. Vladimir Makatsaria: Thank you, Briana, and thank you everyone for joining us today. Welcome to LivaNova PLC’s conference call for the fourth quarter and full year of 2025. 2025 was a year of strong performance for LivaNova PLC. We delivered double-digit revenue growth, meaningful adjusted operating margin expansion, and robust cash generation, reflecting strong execution across our cardiopulmonary and epilepsy businesses. 2025 marked LivaNova PLC’s fifth consecutive year of double-digit EPS growth, and third consecutive year of double-digit organic revenue growth. Importantly, we also continued to advance our long-term strategy and made progress toward the financial targets outlined at our November Investor Day. Our core businesses provide a durable foundation of growth, profitability, and cash generation, which enables disciplined investment in innovation to drive our next chapter, entering high-growth, high-margin markets to build a more profitable, more sustainable financial profile over time. The first stage of that next chapter is obstructive sleep apnea, where we have a clear right to win based on rigorous clinical evidence, a differentiated technology designed to treat a broader range of challenging patients, and our existing neuromodulation capabilities. At the same time, we will continue to preserve upside optionality in difficult-to-treat depression pending a CMS reimbursement decision, and we remain focused on advancing the work required to reach clarity there. As we execute the strategy, our goal is to transform LivaNova PLC into a best-in-class medtech company for the long term. Over time, entering higher growth markets like OSA will shift LivaNova PLC’s overall weighted average market growth upward and position the company for sustained acceleration. Our approach leverages our competitive advantages and is grounded in disciplined capital allocation and focused execution. We have also been deliberate in strengthening the capabilities required to execute the strategy, including our innovation engine, our digital platform investments, and targeted leadership and talent upgrades across the organization. Consistent with that focus, we recently appointed Lucille Blaise as Global Head of Commercialization for obstructive sleep apnea, further strengthening our leadership team as we prepare to scale this opportunity. Lucille brings a strong track record in creating new sleep therapy pathways, improving patients' access to care, and building high-performing teams. I would like to welcome Lucille to LivaNova PLC and look forward to her leadership in advancing our OSA program. For the remainder of the call, I will discuss our fourth quarter and full year 2025 segment results and provide top-line guidance for 2026. After my comments, Ahmet will discuss key innovation updates, including recent clinical and regulatory progress. Alex will then provide additional details on our results and 2026 guidance. I will wrap up with closing remarks before moving on to Q&A. Now turning to segment results. For the cardiopulmonary segment, revenue was $207 million in the quarter, an increase of 10% versus 2024. Cardiopulmonary revenue for the full year was $785 million and grew 13%. The heart-lung machine revenue grew in the mid-single digits in the quarter, driven by an increase in Essence placements and sustained favorable price premiums. Some planned Essence placements and tender activity for the quarter shifted into 2026, moderating the fourth quarter contribution. As a point of reference, Essence represented approximately 55% of our annual HLM units placed in 2025. HLM growth remains strong with full year revenue growing in the mid-teens. Cardiopulmonary consumables revenue grew in the mid-teens in the quarter, driven by market share gains, procedure growth, and price. Strong demand for oxygenators continues to outpace the market's ability to supply. Our manufacturing capacity expansion plans are progressing well and remain on track, and we continue to partner with third-party suppliers to increase component supply for even more rapid expansion. For the full year, consumables revenue grew in the low teens. Looking ahead, our growth strategy in cardiopulmonary is driven by three levers, as we outlined at Investor Day. First, continued market share gains in consumables, enabled by capacity expansion and enhanced by our next-generation oxygenator, with an estimated launch in 2028. Second, the continued upgrade cycle of 80% of our new heart-lung machine placements to be Essence by 2026. And third, recurring revenue streams via software, hardware, and service attachments leveraging the breadth of our HLM installed base. For the full year 2026, we expect cardiopulmonary revenue to grow 7% to 8%. Our forecast incorporates continued HLM growth as we drive Essence penetration globally. It also reflects strong demand for consumables and expanded manufacturing capacity. Turning to epilepsy. Revenue increased 9% versus 2024 with growth across all regions. Epilepsy revenue in the Europe and Rest of World regions increased a combined 17% versus the prior-year period, while U.S. epilepsy revenue increased 8% year over year. These results reflect strong commercial execution globally. For the full year, epilepsy revenue grew 6%, with strength across all regions. Epilepsy revenue in Europe and Rest of World grew a combined 13% versus 2024, while U.S. epilepsy revenue grew 5% year over year. We expect continued profitable growth in this business supported by three key strategic levers. First, impactful clinical evidence leveraging the CORE VNS clinical study, which we presented at the American Epilepsy Society in the fourth quarter. The study has been well received and is reshaping the perception of VNS Therapy effectiveness, prompting clinicians to reevaluate where VNS Therapy sits within the treatment algorithm. Second, innovation, including our Connected Care and Bluetooth-enabled generator, will remove barriers to access and improve both the patient experience and physician workflow. Ahmet will provide additional details on recent progress with our digital health platform and how we intend to leverage it as a foundational innovation. Finally, sustained commercial excellence, including reimbursement and market access initiatives, will continue to be a driver as demonstrated by recently improved reimbursement in the U.S. Effective 01/01/2026, provider reimbursement for VNS Therapy procedures for drug-resistant epilepsy under Medicare increased significantly, with hospital outpatient payments rising by approximately 48% for new patient implants and 47% for end-of-service procedures versus 2025 rates. This shift will improve hospital economics for VNS Therapy, creating a more sustainable financial foundation for providers and paving the way for expanded patient access. As a reminder, there are more than 1,000,000 DRE patients in the U.S., yet fewer than 10% receive advanced treatment. These changes significantly reduce a known barrier to procedure penetration, as historical hospital rates for Medicare patients did not fully cover VNS Therapy procedure costs. For the full year 2026, we expect epilepsy revenue growth of 5.5% to 6.5%. This forecast incorporates mid-single-digit growth in the U.S. We continue to evaluate the positive impact of reimbursement on the U.S. business. It also assumes the Europe and Rest of World regions will deliver a combined growth of high single digits for the year. In summary, our growth in 2025 was driven by healthy markets, the continued successful rollout of Essence, market share gains in cardiopulmonary consumables, strong commercial execution in epilepsy, and pricing strategies. These drivers will continue to fuel growth in 2026, supported by sustained execution in cardiopulmonary, and the combination of impactful clinical evidence and improved reimbursement dynamics in epilepsy that should support expanded patient access over time. As a result, we are guiding full year 2026 revenue growth between 6% and 7%, which is consistent with the 2025 to 2028 framework detailed at our Investor Day. Alex will provide additional details on our 2026 guidance later in the call. I will now turn the call over to Ahmet Tezel to discuss progress with our digital health platform and continued regulatory and clinical evidence momentum in OSA and difficult-to-treat depression. Ahmet Tezel: Thank you, Vlad. Innovation remains the key driver of value creation for LivaNova PLC, both by strengthening our core businesses and by enabling our next chapter of growth. Starting in epilepsy, we recently received FDA approval for our cloud-based digital health platform. This approval establishes the foundation for our Connected Care roadmap and enables the initial rollout of our cloud-based clinician portal. At Investor Day, we also described a multiyear innovation roadmap in epilepsy, starting with the clinician portal, followed by a Bluetooth-enabled generator that integrates patient and clinician applications. The goal is to streamline workflows that include remote titration, provide immediate access to patient insights, and enable more digitally connected care pathways that remove barriers to access. Consistent with this roadmap, we expect a limited market rollout of the clinician portal in 2026, primarily focused on workflow validation and clinical engagement, with limited financial impact. A full market release is planned for 2027 alongside the launch of our next-generation Bluetooth-enabled implantable pulse generator. More broadly, this is a strategic investment in Connected Care, and epilepsy is the first step. Importantly, it also establishes a single shared cloud platform across the entire portfolio. That means the same digital infrastructure we are building for epilepsy can be leveraged across OSA, depression, and cardiopulmonary over time, accelerating the cadence of our software and digital health innovations and supporting a connected ecosystem approach. To be more specific, for cardiopulmonary, these same capabilities can also support more connected workflows and data-driven insights as we continue to build around Essence. This includes a pipeline of hardware and software upgrades designed to improve workflow and outcomes. Our innovation efforts in cardiopulmonary consumables also continue to progress. We recently completed a design freeze for our next-generation oxygenator and will now move towards manufacturing scale-up. Turning to obstructive sleep apnea, our modular PMA submission continues to progress with the FDA, and our timing expectations have not changed. We continue to expect PMA approval for the clinical trial device in the first half of this year, followed by a PMA supplement for the commercial MRI-compatible device. This supports a limited market release of the MRI-compatible device in 2027, followed by a broader commercial launch in the second half of that year. We continue to view OSA as a very compelling de-risked opportunity, grounded in differentiated technology and clinical evidence, as well as our established neuromodulation capabilities. On the clinical evidence front, we expect a full 12-month dataset from the OSPREY trial to be published imminently. OSPREY is the first and only randomized controlled trial in the HGNS space, bringing gold standard scientific rigor to the field. As previously disclosed, patients with the complete concentric collapse, or CCC, were not excluded from OSPREY, and approximately 45% of participants were high risk for this condition. OSPREY also enrolled a challenging patient population with higher baseline AHI and BMI compared to other pivotal U.S. trials, yet the responder rates were comparable to these studies, even though other studies screened the more difficult-to-treat patients out. This is reflected in their FDA labels as contraindications or warnings. Additionally, our PolySync evaluation continues to progress. As a reminder, PolySync is our advanced titration algorithm designed to fully leverage the six-electrode architecture of our HGNS cuff, which was not done in OSPREY. It enables multicontact activation for greater nerve and muscle selectivity, optimizing therapy for each patient. PolySync’s demonstrated ability to convert nonresponders into responders both strengthens our competitive positioning versus existing HGNS therapies and has the potential to expand penetration by bringing neurostimulation to a broader range of patients. We look forward to sharing the full PolySync results at the SLEEP conference in June, but are confident we will be able to convert at least half of the nonresponders into responders using the PolySync algorithm. As a reminder, we intend to make PolySync immediately available during our commercial launch to ensure all of our patients have access to this advanced algorithm at their initial titration. This will not be used as a follow-up for nonresponders. We will optimize therapy with PolySync for all patients from the start. Now turning to difficult-to-treat depression. In January, the RECOVER durability manuscript was published in the International Journal of Neuropsychopharmacology. The durability profile of VNS Therapy is central to why we believe it is a differentiated option in this markedly ill patient population, where therapies can often get patients better for a short time but cannot keep patients better over time. RECOVER demonstrated that after 24 months, more than 80% of patients maintain clinically meaningful improvements across symptoms, daily function, and quality of life. With respect to CMS, we remain in active contact with the agency, and we are working toward our next meeting with them. We view this as an important step towards submitting our reconsideration package, which remains a top priority. Given current scheduling uncertainty, we will not speculate on the exact submission timing at this stage. In summary, we are encouraged by our progress, from advancing our Connected Care foundation across our portfolio to continued regulatory and clinical evidence momentum in OSA and DTD. We look forward to providing future updates as milestones are achieved. I will now turn the call over to Alex. Alex Shvartsburg: Thanks, Ahmet. During my portion of the call, I will share a brief recap of the fourth quarter results and provide commentary on 2026 guidance. Turning to results. Revenue in the quarter was $361 million, an increase of 9.5% on a constant currency and organic basis versus the prior year. Foreign exchange in the quarter had a favorable year-over-year impact on revenue of approximately $9 million, or 3%. Adjusted gross margin as a percent of net revenue was 68%, in line with 2024. Favorable product mix and pricing across segments and geographies were offset by unfavorable currency changes and tariff impacts. Adjusted SG&A expense for the fourth quarter was $131 million compared to $122 million in 2024. SG&A as a percent of net revenue was 36%, down from 38% in 2024. The year-over-year decline as a percent of net revenue was driven by fixed cost leverage. Adjusted R&D expense in the fourth quarter was $49 million compared to $40 million in 2024. R&D as a percent of net revenue was 14%, up from 13% in 2024. The year-over-year increase was driven by OSA and core product development investments. Adjusted operating income was $64 million compared to $56 million in 2024. Adjusted operating income margin was 18%, as compared to 17% in 2024. The increase was primarily driven by revenue growth and operating leverage from fixed costs, partially offset by investments in cardiopulmonary oxygenator capacity expansion as well as higher R&D spend in both OSA and the core. Adjusted effective tax rate in the quarter was 24%, up from 20% in 2024. The increase was related to changes in geographic mix and the roll-off of certain tax attributes that have contributed to our historically low effective tax rate. Adjusted diluted earnings per share was $0.86 compared to $0.81 in 2024, reflecting strong revenue growth in both the epilepsy and cardiopulmonary businesses, as well as effective cost management. Additionally, Q4 2025 included $0.04 of favorable impact versus prior guidance assumptions related to cardiopulmonary investments, primarily due to timing of the Essence printed circuit board conversion, where the related costs have been rephased over the rollout period. Importantly, the printed circuit board conversion program remains on track and is reflected in our 2026 guidance assumptions that I will cover in a moment. Moving to our cash balance at December 31, cash was $636 million, up from $429 million at year-end 2024. The increase reflects improvements in operating cash flows and the release of $295 million of restricted cash following the SNIA litigation guarantee termination. Total debt at December 31 was $377 million compared to $628 million at year-end 2024. The reduction in total debt was a result of the $200 million early repayment of a portion of the term facilities as well as the $58 million repayment of the 2025 convertible notes. On January 8, we fully repaid the outstanding term facilities through an early payment of $98 million inclusive of accrued interest. Adjusted free cash flow for the quarter was $53 million as compared to $62 million in the prior-year period. The year-over-year decrease was driven by increased capital spend. Adjusted free cash flow for the full year of 2025 was $183 million, up from $163 million in the prior-year period. We forecast 2026 revenue growth between 6% and 7% on a constant currency basis. Adjusted effective tax rate is forecasted at approximately 23%. We project adjusted diluted earnings per share in the range of $4.15 to $4.25, with adjusted diluted weighted average shares outstanding to be approximately 56 million for the full year. The EPS range represents approximately 8% growth at midpoint. This range also incorporates the assumption of a third-quarter SNIA payment of approximately $400 million, representing a $0.06 unfavorable impact to adjusted free cash flow due to the liability. Adjusted free cash flow is expected to be in the range of $160 million to $180 million. This range includes $120 million in capital spend, and the next-generation oxygenator manufacturing changes shared today incorporate our best estimate of the impact of current assumptions. Vladimir Makatsaria: To close the prepared remarks, 2026 is an important year for LivaNova PLC with a number of key milestones, including the manufacturing scale-up of our next-generation oxygenator in cardiopulmonary, the launch of our digital health platform in epilepsy, PMA approval for our clinical trial device in OSA followed by PMA supplement submission for the MRI-compatible system, and the formal submission of reimbursement reconsideration to CMS in difficult-to-treat depression. I want to thank our colleagues around the world for their focus and dedication to serving our customers and improving outcomes for patients. We have the right team and the right strategy, and I am confident in LivaNova PLC’s path forward and our ability to deliver sustained value for shareholders as we look ahead. We will now open for questions. Operator: If you have a question at this time, please press the star then the number one key on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press star then 2. As we enter the Q&A session, please limit yourself to one question and one follow-up question and then return to the queue if you have additional follow-ups. The first question today comes from Adam Maeder with Piper Sandler. Please go ahead, Adam. Adam Maeder: Hi, good morning. Congrats on a nice 2025 campaign, and thank you for taking the questions. Two for me. The first one on 7% to 8% growth for FY 2026. Can you help us think about how you are thinking about oxygenators versus HLM growth in 2026? And then you did signal some HLM tenders shifted from Q4 into 2026. Maybe just flesh that out for us in more detail and which regions, and if possible, could you quantify that? And then I had a follow-up. Thanks. Alex Shvartsburg: Hi, Adam. Yes. We expect the same growth drivers in 2026 that we saw last year: one, Essence upgrades; two, market share gains in consumables; and three, price. As far as the components of the guide, the Essence upgrades are going to drive approximately double-digit growth, which means that the market share gains will continue into the year, so we will have good growth on consumables as well. Given the timing of the year and consistent with the typical guidance philosophy that we have, we have made some prudent assumptions around our outlook. We have assumed a moderation in the price premium for Essence, as well as being conservative on the oxygenator output, given the third-party supply constraints that we experienced in 2025. Adam Maeder: And Alex, any color on the shifting of the tenders from Q4 to 2026? Alex Shvartsburg: Yes. We are going to fully recapture those in the first quarter. It was not super material in terms of the shift, so it is fully incorporated into our full-year guide. Adam Maeder: Thank you. Operator: The next question comes from David Rescott with Baird. David, please go ahead. David Rescott: Great. Thanks for taking the question, and congrats on the strong end to the year here. I wanted to ask maybe first on the epilepsy business and what is baked into the guide for the year. It looks like the outlook that you have laid out for this year is higher than the epilepsy guidance you initially laid out in 2025. So curious if at all there is anything with comps there or if it is fair to read into maybe some incremental tailwinds coming in from the elevated reimbursement front. If so, when you think about the potential either pricing or contracting tailwinds that could be there or utilization benefits through the year, how should we be thinking about the pieces that you have baked into this epilepsy look for 2026? Vladimir Makatsaria: David, good morning. Thank you for the question. I will start and then I will turn it over to Alex and Ahmet because there are important components in that. Just to remind everybody, in our epilepsy business, the procedure penetration is still significantly low and there were a number of barriers to this penetration. We have two significant tailwinds that happened early this year and last year in terms of removing those barriers. The first one is reimbursement improvement close to 50% on both new patient implants and replacement implants. The second one is the CORE VNS study clinical results that were published and received very strong support from the clinical community. While maybe this is early to measure the impact, strategically those two drivers will be lasting levers to continue growth and durability of growth in the epilepsy business. Maybe Alex can address reimbursement, and Ahmet can address the clinical side. Alex Shvartsburg: Sure. As Vlad said, we are excited about the tailwinds with both the CORE VNS as well as the increased Medicare reimbursement. What we have baked into the guide is price will be driving increased penetration and will be a short-term contributor to growth, but it will take some time, so we are being prudent at this point given those assumptions. We ended 2025 with strong results, and we are confident we can continue building on that momentum, but it also means that we have a difficult comp in the second half of 2026. The other thing I want to remind everybody is that two-thirds of the U.S. epilepsy revenue comes from replacement implants. This provides us with a durable, profitable recurring revenue stream, but it also means that increased growth in new patient volume has less of an impact on the overall epilepsy growth rate in 2026. Ahmet Tezel: Yes. Maybe I will give a quick summary of the CORE study. This was the largest global prospective study for VNS to date, with 800 patients in 60 sites over 16 countries, and the study demonstrated that VNS Therapy delivers early, durable, and meaningful seizure reduction and freedom in both children and adults that have drug-resistant epilepsy. Just to give you a few key points, the study demonstrated that seizure frequency across multiple seizure types, including the most severe and disabling seizures, significantly reduced. For example, at 36 months, seizure reduction was 80% for patients with focal onset seizures, and there was a meaningful improvement in outcomes. We continue to roll it out in conferences and through publications. Vladimir Makatsaria: David, I think in summary, the combination of those two factors gives us more confidence in the durability of our growth in epilepsy. Unknown Analyst: Okay. Thank you. Maybe just on this WISER program that I think may have an impact on the VNS business. Maybe it does not. But I know we have heard some other companies call out some of the denials in the Medicare patient populations so far in 2025. Can you be more specific on where that is happening and, if it is in China, your fresh perspective as it launches in China? Vladimir Makatsaria: Yes. So, Mike, good morning. Good to hear from you. On the first part of the question, like Alex said, the shift in some placements was immaterial and will be fully captured, the majority of it in Q1 of this year and then maybe potentially some in Q2. Regarding China, our launch is going as planned. We continue to be very optimistic about that market. Just a reminder, China is our second-largest market in terms of placed units. We are the market leader there, and our current win rate in China is above 80%. To give you a little bit of flavor on the launch, we had the product approved in the first half of the year. We had a commercial launch in the second half of the year. Given the timing of capital sales cycles, the first placement actually was in November, which gives you a little bit of a flavor that 2025 was the year of preparation and launch, and 2026 will be the first year of significant impact with this launch in China. We see the funnel of new placements, and we are very confident. As a reminder, Essence in terms of percent placements of all HLM is going from approximately 55% last year to approximately 80% this year. Unknown Analyst: On the reimbursement increase, can you remind us how long the window is to get a replacement? I am imagining it is 12 months. I think I see evidence the device alerts that much in advance. Could there be a dynamic that you have not fully thought about with the reimbursement change? Vladimir Makatsaria: We always thought of the improvement in reimbursement for end of service as a step-up in end of service, similar to a new patient implant opportunity. Expanding penetration across all of our account universe is what we are focused on. Unknown Analyst: A couple of months ago, CMS actually removed the HGNS procedures from joining your current reimbursement. Can you comment on the change versus any changes in economics as it pertains to the HGNS opportunity down the road? Ahmet Tezel: This is Ahmet. Maybe I will start by summarizing what happened so that everyone on the call has the same information. Just as a reminder, with HGNS, the previous-generation device of the incumbent was in a different code than VNS. When they moved into the latest generation, temporarily they started utilizing the VNS code for HGNS therapy as well. Consistent with the recent statement by CMS, we believe that the code for VNS Therapy for epilepsy should be separate and not shared with reimbursement codes for HGNS or OSA. As we prepare for our launch, we will continue to work with the relevant medical societies to have the most appropriate HGNS code, and at the time of our launch we will utilize the prevailing codes at that time. Because the features and the procedure of our technology for HGNS are similar to the incumbent, we do not see any risk of misclassifications for new patients with VNS Therapy, and as I said, we believe VNS Therapy for epilepsy and OSA therapy should be separate codes. Unknown Analyst: Alright. Super helpful. And then may I ask for an early read on commercial focus areas this year? You had said you were going to focus on reopening accounts that had closed for you and prioritizing price relative to volume. Any update there? Ahmet Tezel: I can answer this. Our early read is consistent with what we said we were going to focus on. First and foremost, trying to reopen accounts that have closed for us, and we are seeing some green shoots there that we are pleased with. On price relative to volume, we remain focused on value-based discussions with accounts. Operator: Our next question comes from Anthony Petrone with Mizuho Group. Anthony, please go ahead. Anthony Petrone: Thank you, and good morning, everyone. Congrats on a strong 2025. Question on RECOVER and one on R&D spend. When we think on RECOVER and depression, I know timing is still up for debate. But if we look ahead and take a glass half-full approach, assuming that we get favorable coverage, I am wondering from the company's perspective: is favorable coverage now level six coding—that in depression we should expect that to code to level six, i.e., payout $45,000 or so on an outpatient basis versus what we estimate is a $25,000 device input cost—or should we assume that still level five coding at $30,000 to $35,000 is still a best-case outcome? And I have one quick question on R&D spend. Thanks. Ahmet Tezel: I will comment on the code piece and then ask Alex to comment on the pricing piece. We anticipate that depression would be the same code as VNS Therapy. So whatever the classification for VNS Therapy is for epilepsy, depression will be together with it. Alex Shvartsburg: I would just say it is too early to comment on our ASPs, given that we are still awaiting the reimbursement decision from CMS. Anthony Petrone: Helpful. And then just R&D spend, Alex. It ticked up a little bit in Q4. I am just wondering what the complexion was there. Was that RECOVER manuscripts? Was it setting up sleep apnea? Something else that we are not seeing—device redesign—and is the fourth quarter level for R&D sort of the new run rate? Alex Shvartsburg: I will speak to R&D in general as it relates to 2026. We are largely maintaining our R&D investment in the core for 2026. Obviously, we want to continue to advance innovation, and that is what is going to fuel the sustainable growth for both epilepsy and cardiopulmonary. As far as focus in 2026, in epilepsy we are prioritizing development of our next-generation Bluetooth-enabled IPG, which we intend to launch in 2027. In cardiopulmonary, we are investing in the next-gen oxygenator and additional HLM hardware enhancements to strengthen our market leadership. The next-gen oxygenator is expected to launch in 2027/2028. Ahmet Tezel: This year, we are increasing our investment in OSA product development. The investment is focused on our next-generation device, which will be the product that we launch into the market in 2027. Just as a reminder, our goal is to continue to drive adjusted operating margins above 20% annually, despite the fact that we are ramping investments in the OSA business, and so our 2026 guidance is very much in line with the targets we set. Operator: The next question comes from Mike Matson with Needham & Company. Mike, please go ahead. Mike Matson: Yes, thanks. With where things currently stand with the OSA HGNS reimbursement, assuming nothing changes there going into 2027 when you go into your full launch, what does that mean for that launch and that business for LivaNova PLC? Does it limit you somehow, or can it still be equally successful if reimbursement does not improve? Ahmet Tezel: I am going to comment on the reimbursement piece. We are very comfortable with the current coding that CMS guided towards. It will still be a very meaningful growth opportunity for us. Our excitement around the OSA space has not changed at all. We believe we have a differentiated technology with very interesting and differentiated clinical outcomes, and we believe this is a disease state that has unmet needs. It is underdiagnosed. The growth for the patient population is there. Nothing has changed for us since the Investor Day that we communicated around our excitement. Mike Matson: Got it. And then just another one on sleep apnea. I think at the Investor Day you had spoken about making some investments in 2026. Can you maybe talk about what you are doing this year to set the stage there? Are you going to start hiring reps, and then how much have you baked into the OpEx guidance to account for those investments this year? Ahmet Tezel: This is Ahmet again. I will give a broad answer to that. On the R&D side, we have multiple key deliverables. One, we need to continue and finalize the PolySync clinical piece; we are spending time and energy there. We are still actively working in getting our clinical trial device approved. Nothing has changed there; we expect that in the first half of this year, and we are actively working on our commercial launch device, which is the MRI-compatible version, which will be submitted after we have the FDA approval of the clinical trial version. Those are the key R&D pieces where we are spending time and energy. We are going to invest in our commercial organization, but it is fairly limited in 2026. The broader build of the commercial capabilities is more in 2027 onwards, as we discussed during the Investor Day. Again, nothing has changed compared to what we shared in November. Operator: Our next question comes from John McAulay with Stifel. John, please go ahead. John McAulay: Hi, good morning. Just want to follow up on the earlier guidance questions we heard. The last three years, by our math, you grew double digits. This year, you are saying 6% to 7%, albeit that is in line with the Investor Day guidance. I just want to be very clear that there is not any negative shift in dynamics that is reflected there, whether it be tougher comps or being later in the Essence upgrade cycle. Is this truly just conservative positioning as you start the year? Vladimir Makatsaria: John, thank you for the question. There are no negative dynamics. We are consistent with our guidance philosophy that we have had in the past years. I was asked a question during Investor Day: what are the biggest levers to the upside from our plan? They remain the same. We have to see how the reimbursement improvement and the clinical data impacts our epilepsy business. On the cardiopulmonary side, Alex noted that we are continuing to gain market share in our oxygenator business, and our ability to scale manufacturing faster will be an additional lever of growth. Alex Shvartsburg: I would just add to that. In terms of our guidance, we assumed a moderation in the price premium on Essence relative to the premiums we realized in 2025. The other conservative assumption is on the oxygenator output, given the third-party component supply constraints that we have been working through. Those are the two elements that have moderated our assumptions going into 2026. John McAulay: That is very helpful color. Switching gears to epilepsy, if I recall, something like 40% of your patient population is covered by Medicaid—you can correct me if that number is off—but my understanding is that the reimbursement there for a decent portion of states has to be adjusted at the state level. Could you give us an update on where you are in terms of Medicaid reimbursement changes and where you might expect to be by the end of the year? Alex Shvartsburg: The way to think about this is Medicaid is essentially going to follow Medicare. While it is going to take some time to work through the individual state situations, we assume that ultimately Medicaid will get to the same level of reimbursement. Operator: Those are all the questions we have time for today, and so I will turn the call back over to Vladimir Makatsaria for closing remarks. Vladimir Makatsaria: Thank you, everyone, for joining the call today, and thank you for your continued support and interest in LivaNova PLC, and have a good day ahead. Operator: Thank you everyone for joining us today. Bye-bye.
Aleksey Lakchakov: Good afternoon, and welcome to CS Disco, Inc.’s fourth quarter 2025 financial results conference call. Joining me today are Aaron Barfoot, CS Disco, Inc.’s Chief Financial Officer, and Richard Crum, CS Disco, Inc.’s Chief Product, Technology, and Strategy Officer. Today’s call will include forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding our financial outlook and future performance, our future capital expenditures, market opportunity, market position, product and go-to-market strategies, growth opportunities, and the benefits of our product offerings and developments in the legal technology industry. In addition to our prepared remarks, our earnings press release, SEC filings, and a replay of today’s call can be found on our investor relations website at ir.csdisco.com. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements. Information on factors that could affect the company’s financial results is included in its filings with the SEC from time to time, including the section titled “Risk Factors” in the company’s Quarterly Report on Form 10-Q for the quarter ended 09/30/2025, filed with the SEC on 11/05/2025, and the company’s upcoming Annual Report on Form 10-K for the year ended 12/31/2025. Forward-looking statements represent our management’s beliefs and assumptions only as of the date made. In addition, during today’s call, we will discuss non-GAAP financial measures. These non-GAAP financial measures are in addition to, and not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP financial measures and a discussion of the limitations of using non-GAAP measures versus our closest GAAP equivalents are available in our earnings release. I will now turn the call over to our Chief Executive Officer, Eric Friedrichsen. Eric Friedrichsen: Thank you, Aleksey, and good morning, everyone. Thank you for joining us. Right here at the start, I want to welcome aboard Aaron Barfoot, as CS Disco, Inc.’s Chief Financial Officer. Many of you saw our announcement in December and we are thrilled to have Aaron on board. His deep experience in enterprise software and AI-driven business transformation at several industry-leading companies, along with his inspiring leadership approach, is a perfect match for CS Disco, Inc. Aaron has hit the ground running and has already become a great partner on CS Disco, Inc.’s journey to revolutionize the eDiscovery industry. Speaking of that journey, I can tell you that I have never been more confident of CS Disco, Inc.’s role as the disruptor and our ability to help our customers drive better outcomes for their clients and their litigation matters. CS Disco, Inc. was built from the ground up on cloud-based, AI-native technology specifically designed for the rigors of high-stakes, complex litigation. Unlike general purpose AI tools, CS Disco, Inc. is built by lawyers for lawyers across massive volumes of complex and sensitive data with privilege controls, audit trails, and litigation-specific workflows that lawyers can stand behind in court. In order to best understand this, you really need to draw a mental picture of the four layers of our AI-native stack. At the foundation sits CS Disco, Inc.’s proprietary data layer, which is the result of a decade of innovation on data, machine learning, and artificial intelligence, with inference engines that power the industry’s fastest and most advanced eDiscovery platform. Built on top of that foundation is CS Disco, Inc.’s core eDiscovery solution, with its integrated workflows that are purpose-built for litigation professionals and trusted across the most complex high-stakes matters in the world. Our third layer brings in generative AI with Cecilia. It answers complex questions in natural language and surfaces key evidence in seconds, connecting complex and nuanced concepts across different types of data to dramatically accelerate evidence finding and document review. This is the layer where we recently announced agentic capabilities such as advanced research. Cecilia allows lawyers to speak to the data like never before possible. At the top of the stack, CS Disco, Inc.’s managed services layer is powered by Auto Review, bringing generative AI to the work traditionally carried out by large human review teams and thus delivering managed service expertise at software scale and economics. The result is a coherent AI-native stack underpinned by the enterprise-grade security, compliance, and auditability that litigators require. Our opportunity to disrupt the industry was a key driver in the strategy we built and began executing after I joined CS Disco, Inc. in 2024. Coming into 2025, CS Disco, Inc. set high goals for progress against our new strategy, and I am very proud of the team’s results. In Q4, total revenue grew 11% year over year to $41,200,000, and software revenue grew 14% year over year to $35,100,000. This was the third consecutive quarter of accelerating growth of both total and software revenue, excluding the one-time contingent deal we recognized and called out specifically in the previous quarter. We are very pleased to be at the high end of the guidance range in total revenue. Adjusted EBITDA was negative $2,200,000 in Q4, representing an adjusted EBITDA margin of negative 5%, compared to an adjusted EBITDA margin of negative 12% in Q4 of the prior year. Full-year 2025 total revenue was $156,800,000, up 8% year over year, while software revenue was $134,000,000, up 12% year over year. Full-year 2025 adjusted EBITDA was negative $10,200,000, a margin of negative 7% compared to a margin of negative 13% in 2024. While I continue to be proud of the end results, I am even prouder of how we got there, as it continually reaffirms that our strategy is working as we drive to durable growth and sustainable profitability over time. The main contributors to our performance included overall growth in usage on our platform, increases in large matters, and acceleration of adoption of our generative AI capabilities. In Q4, we set record highs in total terabytes on our platform with accelerated year-over-year growth. We finished the year with double-digit growth in multi-terabyte matters and with revenue growing over 30% from those matters year over year in Q4. We increased customers that generated more than $100,000 in total revenue during the last twelve months to 330. The revenue attributable to these customers totaled $119,000,000 in 2025, representing 76% of total revenue. Additionally, we saw significant acceleration in the adoption of our generative AI capabilities, including 4,100% attributable to these features. And it is important to point out that when customers choose to use our gen AI capabilities, they are also choosing our core CS Disco, Inc. platform. Our core CS Disco, Inc. platform with Cecilia AI, including our newly announced agentic capabilities, acts as a senior investigator that lives inside your data. It reasons, it performs multi-step operations, it links new concepts. It moves you from the “what” of the case to the “why” in a fraction of the time. I think it is always powerful to hear how our customers are specifically using CS Disco, Inc. eDiscovery. There are other capabilities where our platform narrowed the review population and did the review in just two days, delivering 98% precision and 97% recall—results that are not only superior to industry-accepted human review standards, but provide the statistical defensibility our clients require for court-mandated productions. To give a sense of the size of impact, in order to hit the same deadline with human reviewers, this would have taken a team of 70 people four weeks to complete. Instead, the client had the information they needed in record time with exceptional quality. This is a powerful example of how our gen AI capabilities augment our core litigation platform and are transforming outcomes for our customers, and why they decide to choose CS Disco, Inc. time and time again for their most important matters. The second example that I want to mention is from one of the preeminent law firms, Osborne Clarke. While they were already a fantastic customer when I joined CS Disco, Inc. twenty-two months ago, they were using us primarily for smaller cases. They were very pleased with the CS Disco, Inc. platform but were unaware of the services that we provide to help on larger and more complex cases. Over the course of this past year, CS Disco, Inc. has continued to build on the partnership with Osborne Clarke by providing strong client service, exceptional results, and value for the money. We made sure our enterprise-grade software, leading AI technology, and comprehensive services came through clearly in every interaction. So over the course of 2025, they more than doubled their matters with us. Osborne Clarke is an innovation-focused law firm, and they are leveraging their partnership with CS Disco, Inc. to help enable them to deliver better outcomes for their clients. The story of 2025 is one of accelerating adoption of AI and Auto Review on our platform and accelerating growth and improving profitability. We started to see the benefit of our new strategy in action. I will now turn the call over to Richard Crum for some exciting updates. Richard Crum: Thanks, Eric. In our daily conversations with customers, including at our recent customer advisory board meeting, it is clear that AI is a powerful catalyst for the legal industry. The real excitement, however, lies in how we apply it. While general purpose AI tools offer interesting solutions for transactional work, our customers highlighted that they are not sufficient for high-stakes litigation. Let me outline a few key reasons why purpose-built AI technology for managing complex litigation is so important to our customers. Accountability remains with lawyers, not AI. Our platform is designed to leverage AI in strict privilege control that manages data accessibility and establishes audit trails that law firms require to avoid malpractice risk. When you are dealing with the most sensitive data, corporate and privileged, you must exceed long-standing industry precision standards and provide lawyers with the high-quality output they can trust their careers with. Next, we are solving for scale. Many of the recently announced AI point solutions are great at helping lawyers with discrete legal work, such as drafting a memo or reviewing an agreement. This is useful to a legal professional, but it is not the same as supporting the legally mandated document review processes we support. CS Disco, Inc. is used to manage multi-step, litigation-specific workflows across millions of documents. Litigators are connecting the dots between years of private data, including email, Slack messages, PDF, audio, video, and financial records, to find the evidence and build their case. This is not a simple search problem. It is a massive, multi-format data engineering problem that requires an industrial-grade backbone to ingest, secure, and act on terabytes of data. Further, litigation is a complex, team-oriented workflow. Document review is a process involving many stakeholders—law firm partners, corporate attorneys, and outside counsel teams—who must collaborate seamlessly. And finally, our AI just works. With our newly announced agentic reasoning, Cecilia Q&A, and Cecilia deep research, which we will be rolling out, we have moved into the next level of legal insight. Cecilia is now an AI assistant that can find the deep connections across all types of evidence to answer why something is happening. The deep research mode for Cecilia can understand a question, create a plan, execute a multi-stage research flow, verify sources, and deliver cited answers. Again, it works across millions of documents to bring our customers the case insights they have been asking for, like analyzing evidence for inconsistency. We continue to push the boundaries of what our platform can do, both with the core technology that our lawyers require and the AI that makes them better at their craft. It is why our customers trust CS Disco, Inc. to lead the way in bringing innovation to legal tech. Now I want to transition to a new topic. While we have been innovating quickly, we have also been listening closely to how customers want to buy. For example, we see positive reactions in recent pilots, and we are excited to announce that, going forward, we are combining all of our powerful CS Disco, Inc. eDiscovery and Cecilia AI capabilities into a single offering, along with updates to our pricing and contracting approach. Let me dive a little bit deeper into these three exciting changes that we are making to how we bring our products to market. First, and I think most excitingly, with our new pricing model, all of Cecilia AI will be included on every matter. This means that incredibly powerful and industry-leading tools like Cecilia Q&A, auto timelines, document classification, and investigatory agents will be available as one integrated AI capability in one solution. Customers will have everything they need to manage and win their matters for one competitive price. We are also evolving the way we price the CS Disco, Inc. platform. In addition to now offering all of the great technology I just spoke about for one simple per-gigabyte rate, we are also adopting the industry-standard approach of pricing. The formula will be based on the size of the customer data as it grows over time rather than basing our pricing on the initial data load size, which has often required us to discount our rates to meet competitor pricing levels, reducing both revenue and margin from full potential. The unique approach we have historically used offered clients a level of cost certainty but often also led to some customers wrongly viewing CS Disco, Inc. as more expensive compared to other similar solutions and caused us to lose out on sales opportunities. Finally, we are updating our contracting options to better match the way our customers want to buy CS Disco, Inc. We know there are good reasons why law firms and corporations desire to buy either matter-by-matter or by selecting a solution to standardize on. We also recognize that often the decision process can be influenced by different drivers. To meet the market, we will now offer simple contracting alternatives that make it easier than ever to select and do business with CS Disco, Inc. We have been testing this approach with select customers for the last six months and have received great feedback. Starting today, it is now generally available to everyone, and we are looking forward to discussing this new platform and pricing model with customers at Legal Week in New York in a few weeks. All these changes and new product solutions are driven by a deep understanding of how our customers’ businesses are evolving, along with the powerful technology we offer. The long-term value derived from these changes will come in three ways. One, this new model will provide CS Disco, Inc. customers with all the tools they need to do their jobs better than ever before and elevate their legal craft and capabilities. We believe that when more customers see the full power and potential of the CS Disco, Inc. platform, there will be a natural acceleration in usage of both our core capabilities and AI. Second, by meeting the market with a more simplified and industry-standard pricing model, we expect to see an increase in win rates with less discounting pressure. At full implementation, we expect that this will provide a revenue and gross margin lift for CS Disco, Inc. over the long term. Third, by presenting customers with smart buying options, we make it easier to buy from CS Disco, Inc. and reward our most loyal customers who make spend commitments with our best rates on technology and services. We will grow our percentage of committed spend while keeping our offering at a competitive price in a smart commercial model. These pricing model changes, coupled with our leap forward in product capabilities, are part of our core strategy to grow wallet share with our largest customers and attract the largest and most strategic matters to our platform. I will now turn the call over to our Chief Financial Officer, Aaron Barfoot. Aaron Barfoot: Thank you, Richard. First and foremost, I am very excited to be here with the team at CS Disco, Inc. as we revolutionize eDiscovery and litigation and accelerate CS Disco, Inc.’s momentum. In my first month, I have been diving deep into the company, operations, and vision. So far, everything I have seen reaffirms my thesis for joining CS Disco, Inc., which is that the company has industry-leading technology and has the capacity to transform a historically services-oriented space into an AI-enabled software workflow. Capabilities such as Cecilia and Auto Review are central to that thesis. Eric has built a strong leadership team that balances domain-specific expertise with technical know-how. I believe that with the right operational execution and financial discipline, CS Disco, Inc. has the potential to accelerate growth, produce robust free cash flow, and generate attractive returns to our shareholders. With that, I would like to discuss our results. In Q4 of 2025, total revenue was $41,200,000, up 11% year over year. Software revenue was $35,100,000, up 14% year over year. This was the third consecutive quarter of accelerating revenue growth, excluding the impact of one-time contingent software revenue recognized in Q3. Services revenue was $6,000,000, down 3% year over year, driven by a reduction in traditional review. Full-year 2025 total revenue was $157,000,000, up 8% year over year. Software revenue was $134,000,000, up 12% year over year. Services revenue was $22,800,000, down 8% year over year. The decline was attributed to a decline in our traditional review business. However, we are excited as Auto Review had strong growth in its first year of sales and partially offset the decline. We are pleased to see Auto Review show nice adoption this year. What is even more positive is we are seeing repeat usage. The Auto Review process involves the customer and our AI team developing a review prompt for Auto Review to execute across millions of documents. This motion results in services revenue in addition to the software revenue. As customers begin to move to the prompt process without CS Disco, Inc. support, more of this revenue will be purely software. Our traditional review product is still all in services. We exceeded the top end of the guidance provided for the quarter across both software and total revenue. Looking back to the initial full-year guidance we provided in February 2025, we beat the high end of software revenue and came in near the high end of total revenue in that initial 2025 guide. We accelerated the growth of our software business for the third year in a row, from 3% in 2023 to 7% in 2024 and now 12% in 2025. We saw accelerating growth in the transaction gigabytes and revenue on our platform, especially the gigabytes of complex, multi-terabyte matters. These require an enterprise-caliber approach to the sale, navigating complex objections, providing value to the customer through software, and leveraging our services team to ensure success for the customer. These factors combined to increase our software dollar-based net retention to over 103%. Total dollar-based net retention finished the year at 98%. We finished the year with 20 customers contributing more than $1,000,000 in revenue, while our multiproduct attach rate was 19% at year end, including our AI. Unless otherwise specified, our references to gross margin, operating expenses, and net loss are on a non-GAAP basis. Adjusted EBITDA is also a non-GAAP financial measure. Our gross margin in Q4 was 77%. Gross margin for fiscal year 2025 was 76% compared to 75% in fiscal year 2024. As we mentioned before, our gross margin can fluctuate from period to period based on the nature of our customers’ usage—for example, the amount and types of data ingested and managed on our platform. Sales and marketing expense for Q4 was $13,900,000, or 34% of revenue, compared to 37% of revenue in Q4 of the prior year. For fiscal year 2025, sales and marketing expense was $54,400,000, or 35% of revenue, compared to 39% of revenue for fiscal year 2024, a decrease of over $2,300,000 year on year. The decline was primarily driven by a decrease in personnel costs and a reduction in marketing spend. Research and development expense for Q4 was $13,000,000, or 31% of revenue, compared to 32% of revenue in Q4 of the prior year. For fiscal year 2025, research and development expenses were $48,400,000, or 31% of revenue, compared to 30% of revenue in fiscal year 2024, an increase of over $4,500,000 year on year. This increase was primarily driven by an increase in research and development personnel spend as we continue to invest and innovate in our product capabilities. General and administrative expenses in Q4 were $7,900,000, or 19% of revenue, compared to 20% of revenue in Q4 of the prior year. For fiscal year 2025, general and administrative expenses were $31,300,000, or 20% of revenue, compared to 22% of revenue in fiscal year 2024. Adjusted EBITDA was negative $2,200,000 in Q4, representing an adjusted EBITDA margin of negative 5%, compared to an adjusted EBITDA margin of negative 12% in Q4 of the prior year. Adjusted EBITDA in fiscal year 2025 was negative $10,200,000, a margin of negative 7% compared to a margin of negative 13% in 2024. Net loss in Q4 was $2,500,000, or negative 6% of revenue, compared to a net loss of $4,300,000, or negative 12% of revenue in Q4 of the prior year. Net loss for fiscal year 2025 was $10,700,000, or negative 7% of revenue, compared to a net loss of $17,200,000, or negative 12% of revenue in 2024. Net loss per share for fiscal year 2025 was $0.17 per share compared to $0.29 per share for fiscal year 2024. Turning to the balance sheet and cash flow statement, we ended Q4 with $114,600,000 in cash, cash equivalents, and short-term investments, and no debt. Operating cash flow in fiscal year 2025 was negative $14,900,000 compared to negative $8,700,000 in fiscal year 2024. Now turning to the outlook. For Q1 2026, we are providing total revenue guidance in the range of $39,000,000 to $41,500,000 and software revenue guidance in the range of $33,750,000 to $35,250,000. We expect adjusted EBITDA to be in the range of negative $6,000,000 to negative $4,000,000. The decrease in Q1 2026 adjusted EBITDA relative to Q4 is primarily driven by increased employee costs and one-time expenses related to sales kickoff, marketing campaigns, and professional services. We believe we will be on track to achieve adjusted EBITDA breakeven by 2026 as our revenue grows and as one-time costs in the first half do not reoccur. For fiscal year 2026, we anticipate total revenue guidance in the range of $167,000,000 to $177,000,000 and software revenue guidance in the range of $145,500,000 to $152,500,000. We expect adjusted EBITDA to be in the range of negative $8,500,000 to negative $4,500,000. The story of the coming year will be continued growth acceleration, driving us toward adjusted EBITDA breakeven by 2026. I will now turn the call over to the operator to open up the line for Q&A. Operator: At this time, I would like to remind everyone, if you would like to ask a question, press star then the number 1 on your telephone keypad. Your first question comes from Scott Berg with Needham & Company. Scott Berg: Hi, everyone. Nice quarter. Two questions for me. Eric, wanted to start off with the pricing and packaging changes—why now? You have been there obviously twenty-two months. Why not maybe a year ago with what you have seen? And then how does that impact maybe existing customers in their current contracts? And I just, do you expect it to, I assume, positively impact deal cycles going forward, but any thoughts on deals that are in process? Is there any opportunity to disrupt or maybe accelerate those deals? Thanks. And then from a follow-up question, Eric, you mentioned that under twenty-two months now, the company has accelerated its revenue growth rate for two straight years—very, I would say very, very positive, especially on the software revenue line item. But as you have seen the business evolve with what you are looking at, whether it is product changes or the pricing/packaging changes, how do you think about the intermediate-term growth rate of the company now? What does that look like to you? Is it at a rate higher than where you are today? Is it lower? Help us understand maybe some of the industry dynamics and how you triangulate to what is the right kind of stable growth rate as you proceed forward. Thanks. Eric Friedrichsen: For sure, Scott. Thanks for the props on the quarter too. It was a great quarter, and I am super proud of the team. In terms of the packaging and our pricing approach, we just saw an opportunity driven really by the demand from our customers, and so I will let Richard talk a little bit more about how we worked through that process. With respect to your follow-up, I appreciate it, Scott. I have been really proud of the team and the fact that we went from 3% growth to 7% growth to 12% growth over the last three years. I have said before that I believe that CS Disco, Inc. can be a 20% plus grower, and I am actually more optimistic than ever. I actually think we have 20% in our sights—not calling out a specific quarter or a time frame that we are going to hit that—but we clearly have 20% in our sights, and I believe we can grow much faster than that. So just getting to 20% plus growth, if you look at the strategy that we are driving towards with our larger customers, with larger matters, and with more adoption of our generative AI capabilities, those things alone can help us get to 20% plus growth. As I mentioned in the past, you look at many of our largest customers, they are spending more than $100,000 with us and, in some cases, more than $1,000,000 with us. In many of those cases, we might only have 15% or 20% of their wallet share. So doubling down in that particular strategy and driving forward is, I believe, a path to easily get us to 20% plus growth. However, I think there is actually a lot more upside from there. If you think about the adoption of generative AI—particularly when it comes to the review piece of our space and the fact that it is a multibillion-dollar market that is being done by armies of human resources today, contract attorneys—we have the ability to leverage our Auto Review capabilities on top of our core platform to turn much of that into AI-driven software revenue instead of services revenue. That is an incredible win for CS Disco, Inc., obviously, but also for the end customers, for the corporate clients, who now will have the opportunity to bring the review process in eDiscovery much sooner in the litigation lifecycle, which can help them improve outcomes, increase their revenue streams relative to what has been traditionally done by these armies of contract attorneys, and it will help CS Disco, Inc. along the way. So I am actually optimistic beyond even this 20% plus growth profile. Richard Crum: Yeah, thanks, Eric. And you are right—the impetus for the model changes that we talked about and that we are bringing to market starts with listening to our customers who tell us they want to use CS Disco, Inc. more and they want to use it on larger matters, but that they faced some friction in selling it into some of the partner teams and corporate teams because of the uniqueness of the way in which we had previously priced. We took that feedback, and you couple it with the vision that we have for CS Disco, Inc., and that is what landed us on this new approach. As I said in my prepared remarks, we have been out testing this. We have been running this through with customers and signing deals based on this new model, and the feedback has been great. They are really excited about the inclusion of all of our tools and all of our AI into the core offering. And we are excited that it is going to reduce the friction to getting our customers access to that great technology on more matters. Making it easier to buy means they are going to have the tools on more matters, and it is great for CS Disco, Inc. We do expect it will improve our win rates, help us win those larger matters that we have been growing with many of our customers, which ultimately leads to improved sales efficiency and a higher lifetime value of matters, because, as we have talked about in previous calls, those larger matters last on the platform a lot longer. So we are real optimistic about the impact this new model is going to have on CS Disco, Inc.’s performance. Operator: Your next question comes from David E. Hynes with Canaccord. David E. Hynes: Good morning, guys. Nice quarter. Nice to see the software acceleration continue, and I appreciate all the commentary on the call. Eric, maybe we could tackle the elephant in the room. You did a good job talking about the moats that CS Disco, Inc. has, kind of less directly hit on competition from the foundational model companies. Obviously, there is lots of noise in the market around those folks targeting legal tech as an attractive area for automation. Are you seeing those LLMs show up in your customers at all? Are they exploring with that technology? Can you talk about which areas of the tech stack are most at risk of disruption, which are not, and how you think that impacts CS Disco, Inc. over the next two or three years? Aaron, maybe a follow-up for you. You are obviously pretty fresh in the seat, but you are also a fresh set of eyes on the model and only the second CFO since the IPO. I am curious of your impressions of the visibility that the usage-based model provides, and given this is your first call, maybe you could talk a little bit about how that informs your guidance philosophy. Eric Friedrichsen: Sure, David. I did notice there was some disruption in the stock market recently, for sure. No question about it. But look, I have had the good fortune of spending time with our customers on a regular basis. Two weeks ago, I was in the U.K., in London and Manchester. Three weeks ago, I was in Austin with our customer advisory board members, and I have not heard of a single customer utilizing general AI or these frontier models for the eDiscovery process. Frankly, I would have been shocked had I heard about it. It is a very different space. You have to look at the industry that we are in specifically, you have to look at the competitive advantages that we have, and then you have to look at the way we are innovating. The industry that we are in is squarely focused on litigation and eDiscovery, and it is just a very different space than areas like contracts or M&A or transactional areas where these general AI and frontier AI companies are really focused. When it comes to litigation, you either win or you lose, and eDiscovery is at the heart of all of that. It is complex, it is court-mandated, it is a legal process where the adversaries in a matter have to agree upon the methodology that they are using for eDiscovery. They are dealing with extremely sensitive data that gets highly processed before it even comes into our platform or as part of coming into our platform, and it is really not valuable outside the context of the integrated workflow. On top of that, ultimately, lawyers cannot make mistakes when it comes to litigation. It could cause a malpractice lawsuit, or even worse yet, it could cause a crushing outcome for their firm’s clients. So we are just in a very different segment of legal. Think of us as AI for litigators—that would be the first thing. As for competitive advantages, CS Disco, Inc., as I mentioned before, has been AI-native since our inception, long before these frontier models came out. We were the first to embrace gen AI in eDiscovery when we put Cecilia out three years ago, and we have ultimately built a very powerful, scalable, integrated platform, as I detailed earlier, that deals with the largest and most complex matters and with processed volumes of data that are well beyond what other solutions can handle. When it comes to technology for eDiscovery, that is really where CS Disco, Inc. is the answer. And then you also have to think about the innovation; CS Disco, Inc. is never sitting still. Our entire history has been about improving the way litigation works. As I mentioned earlier, if you think back to that story about one of our customers that in two days did what 70 contractors could do in four weeks, that is just a game-changing opportunity that can create a win-win-win for the corporate end client, for the law firm, and for CS Disco, Inc. along the way. So I think we are in a better position than we have ever been, David. Aaron Barfoot: Sure. When you think about the visibility the usage model gives us, there are elements that become more predictable with scale, and I have seen this in prior roles as well. The larger the scale, the more predictable it becomes. You have to pick up the trends that occur within the model. As our business continues to scale, we pick up more and more predictability in the usage model. There are still parts of the revenue model—when you look at services and Auto Review as it stands today—where there is an element that is less predictable. But once again, with scale, you gain the advantage of predictability—the law of large numbers type of math. Going into our guidance philosophy, when you think about that part of it, we obviously provide it as a range for that reason. We know that our customers are voting with their wallets every time they choose to use CS Disco, Inc., and I think that explains a lot of why we do provide the range. If we look at Q1, the range in software from 9% to 14% is relatively wide for that reason, but I think as time goes on, it allows us to get more and more precise. Operator: Your next question comes from Mark Schappel with Loop Capital Markets. Mark Schappel: Hi, thank you for taking my question. Nice job on the quarter. Eric, I just want to build on the earlier question about the new commercial model. I was wondering if you could discuss the trade-offs a little bit more, and maybe what potential downsides or trade-offs you foresee with the shift? And then as a follow-up, the start of the year is typically when software companies adjust their sales organizations and their go-to-market strategies. Eighteen to twenty-four months or so back, you made a significant change to the sales org. I was wondering if you could talk about any meaningful changes to the sales org as we start the year here. Eric Friedrichsen: Yeah, thanks, Mark. As Richard mentioned earlier, this really originated from our customers. If you think about it, our focus with our strategy is on winning more wallet share within our biggest and best customers and getting large matters from their biggest and best customers. We have great relationships with our champions at these customers, and sometimes they have struggled to explain our pricing model to the various case teams within their firms. While we might be getting $100,000 or $1,000,000 worth of revenue from some customers, we might only have 15% or 20% of their wallet, and our champions want to do more with CS Disco, Inc. They want to make sure that they can explain our pricing model. Sometimes we have seemed more expensive than our competition when we are really not, and we have had to teach our champions how to explain our pricing model to customers. You can do that for so long and then you realize maybe there is an easier way to just simplify the model. I also think there have been a number of cases where we have had to discount more than I would like to discount because our model was not as understandable. Now, with this new model, it is much more clear, much more understandable, and we think that gives us the chance to really proliferate along our strategy of getting larger matters and more wallet share within our largest customers. Regarding your follow-up on the sales organization, the strategy that we executed upon with our go-to-market shift has worked really, really well. It started with ensuring that we are bringing in the right leaders, the right talent, the right reps. As you know, we made some shifts last year, moving from less inside sales to more outside salespeople, as we are focusing on larger customers and larger matters. We did not add cost to sales and marketing last year, but we did shift the way we spent that money, and it has paid off. Also, the comp plan that we put in place to really incentivize sales reps for new matters and new revenue has worked out really well for us. The systems and processes that we put in place, the contract simplification—these are a lot of the things that we have already put into place that are starting to work. The main thing that we are doing is just doubling down and executing on that. As I mentioned, we did not add a lot of cost to sales and marketing in 2025 because we needed to go through that process of reorganizing and reaccelerating revenue. I think there is an opportunity this year to potentially bring in some additional talent to take advantage of the opportunity that we see ahead. Operator: There are no further questions at this time. I will now turn the call back over to CS Disco, Inc.’s CEO, Eric Friedrichsen, for any closing remarks. Eric Friedrichsen: Yes, thank you very much. To wrap up, our performance in 2025 was remarkable. It gives me extreme confidence that our strategy—focused on expanding our wallet share with existing customers, focusing on large and strategic matters, and accelerating our gen AI adoption of Cecilia and Auto Review—are the right strategy. Focusing on our customers and winning every case, combined with the innovation that we are delivering, has really put CS Disco, Inc. on the right path. We are going to do a lot of the same things that we did in 2025 in 2026. We are going to take advantage of the momentum that we started to gain. We are going to layer on top of that the new agentic AI capabilities that we just announced and our new pricing and platform approach. It has been two consecutive years on top of 2023 where you have been able to see the acceleration. It is a very large market within eDiscovery and litigation that CS Disco, Inc. is in a prime position to disrupt, and I am really excited. I think it is going to be a great year. I look forward to updating you as we progress throughout 2026, and I really appreciate you all joining. Thank you. Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.
Operator: And these statements are intended to qualify for the safe harbor liability established by the Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions. In an effort to provide investors with additional information regarding the company's results, the company refers to various U.S. GAAP and non-GAAP financial measures, which management believes provide useful information to investors. These non-GAAP measures have no standardized meaning prescribed by U.S. GAAP and are therefore unlikely to be comparable to the calculation of similar measures for other companies. Management does not intend these items to be considered in isolation or as a substitute for the related GAAP measures. A reconciliation of GAAP to non-GAAP results is included in our news release and the appendix of our slide presentation. And now turning to slide three, I will turn the call over to the CEO. CEO: Thank you, Steve. Good morning, everyone, and thank you for joining us. We were pleased to report hard work that produced a successful year in 2025. On slide four, we highlight our fourth quarter and full-year performance. For the quarter, we achieved record fourth-quarter net sales of $400.6 million. Full-year net sales increased 8.1% due to a combination of organic and inorganic growth. Adjusted EBITDA for the quarter was a solid $44.7 million. This yielded an adjusted EBITDA margin of 11.2%. Adjusted EBITDA of $140.7 million for the year was at the upper end of our guidance range. The full-year adjusted EBITDA margin was 10%, which was a 140 basis point increase over the prior year. We are optimistic about 2026 due to our progress on internal initiatives and positive customer-centric momentum. Full-year 2026 adjusted EBITDA guidance range is $170 million to $190 million. We continue to generate positive free cash flow, which allows us to fund both organic and inorganic growth. In 2025, we saw healthy demand for asphalt plants and concrete plants within the Infrastructure Solutions segment, while forestry and mobile paving equipment were challenged. During the fourth quarter, we saw an increase in the backlogs for forestry and mobile paving equipment, though they remain at the lower end of historical ranges. The Material Solutions segment demonstrated anticipated recovery late in the year with a combination of organic and inorganic growth. Federal funding, healthy state and local budgets, and the construction of data centers are expected to drive multiyear demand in the Material Solutions and Infrastructure Solutions segments in 2026. Parts sales increased 19.7% versus the fourth quarter prior year. For the year, parts sales totaled $432.7 million, representing an 11.5% increase over the prior year and 30.7% of total net sales in 2025. As previously stated, growing our parts and service business continues to be a priority. We were pleased to show an increase in backlog to $514 million. This represented sequential and year-over-year growth of 14.4% and 22.5%, respectively, through a combination of organic and inorganic activity. On slide five, we highlight the acquisitions of TerraSource and CWMF that collectively represent over $200 million of annual revenue acquired by Astec Industries, Inc. As part of the TerraSource integration, we will share the new brand and designs at CONEXPO. The new designs are consistent with existing Astec Industries, Inc. products and incorporate our name and logo with the TerraSource legacy flagship brands, including Gunlop, Jeffrey Rader, Pennsylvania Crusher, and Elgin. Our joint teams are busy expanding the parts sales force, coordinating sales channels and cross-selling strategies, pursuing new product development, and assessing opportunities for optimal use. We anticipate benefits from these actions will be realized in 2026. On 01/01/2026, we were excited to welcome the skilled and dedicated employees of CWMF to the Astec Industries, Inc. family. As a reminder, CWMF is a highly respected manufacturer of portable and stationary asphalt plant equipment and parts primarily concentrated in the Midwest, South Central, and Great Lakes regions of the United States. Our organizations are a strong cultural fit, and we expect CWMF to be accretive from day one. Slide six provides detail on the state of the U.S. infrastructure and aggregate industries. Astec Industries, Inc. benefits from strong road construction and aggregate markets in the United States. As you may know, in 2022, Congress approved a five-year $347.5 billion infrastructure investment bill. Funds committed within the bill totaled $148 billion, or 71%, through 11/30/2025. Congress recently reached an agreement on transportation spending legislation for the remainder of fiscal year 2026. Street construction also supports the U.S. aggregate industry, as aggregates are used in asphalt, concrete, and as base. In addition to expected increases in federal funds for roads and bridge construction, 2026 state transportation budgets anticipate growth as well. Data centers, and the aggregates and the infrastructure necessary to support them, are also expected to drive multiyear demand. In an October 2025 study by Thompson Research Group, aggregate quarries within a 30-mile truck distance of a major data center construction project saw demand for aggregate tonnage that nearly doubled that of pre-construction levels. Overall, a healthy compound annual rate of 3.41% is expected for the U.S. aggregate markets through 2033. These industry trends provide advantages for Astec Industries, Inc., a company specializing in the rock-to-road sector. Ongoing infrastructure enhancements contribute to sustained demand for our equipment, parts, and implied orders, which were up $46 million, or 11%, from the prior quarter in 2024. Our book-to-bill ratio was 116% on a consolidated basis. Furthermore, our backlog grew to $504 million, an increase on a sequential and year-over-year basis by 14.4% and 22.5%, respectively. In forestry equipment, we are especially pleased with increased backlog in our Material Solutions segment. I will now turn the call over to Brian Harris for the financial results. Brian Harris: Thank you, Jacob, and good morning. Next I will cover our fourth-quarter consolidated results, detail by segment, liquidity and leverage, along with some 2026 outlook detail. Capital equipment and aftermarket parts adjusted EBITDA and margins increased due to strong volume, favorable pricing, and product mix. For the fourth quarter, adjusted earnings per share was $1.06. For the full year, net sales grew 8.1%, which was attributable to incremental net sales from the acquired TerraSource business, as well as positive organic volume and mix coupled with favorable pricing. As Jacob mentioned, we were pleased to report an adjusted EBITDA of $140.7 million, which was at the high end of our guidance range. Both segments experienced growth as adjusted EBITDA margin expanded by 140 basis points on a consolidated basis to 10%. Adjusted earnings per share for the full year ending 2025 was $3.33, representing a 28.6% increase over the prior year. On slide 11, we show the Infrastructure Solutions segment, which generated fourth-quarter net sales of $223.6 million. This measured to a strong prior-year comparison of $248.8 million as solid demand for asphalt and concrete plant sales was offset by softness from mobile paving and forestry equipment. Aftermarket parts sales were relatively flat, albeit at healthy levels. Q4 sales increased $20 million, or 2.4%. Segment operating adjusted EBITDA was $134.3 million for 2025, compared to $121.5 million for 2024, for an increase of $12.8 million, or 10.5%. Full-year adjusted EBITDA margin grew 120 basis points to 15.7% compared to 14.5% in 2024. Increases were primarily due to the impact of net favorable volume and mix from inorganic and organic operations, coupled with favorable pricing. Adjusted EBITDA margin for the quarter increased 530 basis points to 11.8%. For the year, net sales increased 18.2% to $553 million over the prior year, and the adjusted EBITDA grew 49.5% to $55.6 million. Adjusted EBITDA margin in 2025 reached 10.1% compared to 8% in 2024, an increase of 210 basis points. As shown on slide 13, our balance sheet remains strong, supported by substantial liquidity. At quarter end, we had $70 million in cash and cash equivalents along with $244.7 million of available credit, resulting in total liquidity of $314.7 million. Net debt to adjusted EBITDA of approximately 2 times is well within our target range. For 2026, account for the following anticipated full-year ranges: adjusted EBITDA of $170 million to $190 million; an effective tax rate between 25% and 28%; capital expenditures of $40 million to $50 million; depreciation and amortization of $55 million to $65 million; and the quarterly range for adjusted SG&A of $70 million to $80 million. I will now hand the call back to the CEO. CEO: Thank you, Brian. Moving to slide 14, please mark your calendars to visit us at the 2026 CONEXPO-CON/AGG Trade Show in Las Vegas from March 3 through the 7th. Our display will be located in the Central Hall in Booth C30236, where we will showcase several new products. We will also demonstrate our existing new signal. Slide 15 provides an overview of our key investment highlights. We are proud of Astec Industries, Inc.'s long-standing reputation and premium solutions for our customers. Our team is highly engaged with customers. Based on recent interaction, customers have a favorable outlook. Efforts within our manufacturing and procurement are enhancing efficiency, and we are seeing continued improvement in adjusted EBITDA. Our growth is supported by several promising opportunities, including growing our recurring aftermarket parts business, which remains a top priority for the Astec Industries, Inc. team; advancing our robust pipeline of innovative new products, many of which will be on display at CONEXPO; having consistent multiyear federal and state funding for interstate and highway projects within our core U.S. market; exploring expansion possibilities in both established and emerging international markets; and pursuing inorganic growth with our demonstrated disciplined and focused approach to strategic acquisitions. As Brian mentioned, our strong balance sheet provides flexibility to fund our growth initiatives and manage leverage effectively. With that, Operator, we are ready to draw your questions. Operator: Simply press 1 again. We will pause for just a moment to compile the Q&A. Your first question comes from the line of Steve Ferazani with JMP. Please go ahead. Steve Ferazani: I am really surprised by the strong backlog in 4Q, the orders as well as the guide. So I want to dig into some of those pieces. As far as what you are seeing in Material Solutions, it looks like that is where you really significantly beat on the top line in the quarter. I am assuming that is what is contributing to the strong guide. Higher interest rates as they came down, that could help as well as well as all of those products were underused. Just because some of the smaller customers were not ready to buy, and it was coming. CEO: And now we see it is coming even if we back out TerraSource. We saw it on the organic side. Can you inmates and PSG business. I will say PSG also came through really strong during the fourth quarter, and we got the results that we were looking for when we did the business. I will say we talked a lot about the state of inventory in our dealer network, and we have seen and spoke to our dealers just here recently. They have very healthy backlog situations now. They have very healthy inventory. For a while there, they did not necessarily have the right inventory. We worked through all of that. We have also seen a very positive development around data centers that is affecting this business. We see multiple of those super large projects coming through, and our team is very well positioned to enjoy some of that business, and I know our dealers are are highly engaged. These last projects. So, yes, we are also excited about this. I think our team is ready to take advantage of this and enhance the output that we provided for 2026. Steve Ferazani: Okay. And flipping over to Infrastructure Solutions, that backlog actually was ahead of where we were thinking as well, just because our expectation was as you enter the last year of the current highway funding bill, maybe you would see a slowdown in concrete and asphalt plant orders. That does not seem to be happening. CEO: Yes. No. You are right, Steve. So we are happy with how the year ended. Obviously, we had a very strong comp versus the prior year, but bookings stayed pretty strong. And I am happy to say here in the first couple of weeks of the year, MS and the IS business, the order intake has been strong as well. Steve Ferazani: And you are a little bit closer to this. Any updates on what you think highway funding might move forward this year, and are there any concerns on your end if it slowed down? CEO: Yes. So, you know, a couple of things on that. We believe that conversations are on track, that we will hear something about an infrastructure bill here in the next couple of months. On a positive note, as we mentioned in our prepared remarks, funding for 2026 was actually approved by Congress. So, overall, I think our customers are in a good space. We know that most of them have very good backlogs for the year. So I think our customers are really focused on the long term. The need for infrastructure is there, and I think our customers are looking beyond just the full year at the end of the year. Of course, if we do get the bill, I think it will be very positive for us and for the customers. Steve Ferazani: Got it. That is helpful. I want to turn to the guidance, which is certainly on EBITDA well above where we were. I am trying to think about, since you have taken over, you have tried to improve production efficiencies. I know you have made investments in the plants. You have been growing parts sales, higher margin. I am trying to think of how much of this growth is driven straight by top line or how much you think this is on margin beyond just the margin improvement generated by higher throughput? CEO: So, if you look at the walk from 2025, which will basically be workforce for the full year, we built some synergies in there for those two deals, and we feel pretty good about our progress around synergies. Obviously, these synergies take a while to work through the inventory that we already have. And we do see some organic growth for this year, and we have baked some of that into the number. If we get a highway bill or a new infrastructure bill, we could probably go to the higher end of the range, but we felt that that range is something that we feel makes sense this early on in the year. Steve Ferazani: You have not talked that much about the numbers around CWMF. I know CWMF is much smaller. Can you talk about what that contribution is to your range in 2026? And then as a follow-up, how we should read through on what your M&A strategy is with TerraSource and now CWMF? CEO: Yes. So, you know, on CWMF, obviously, we disclosed the profitability. We have not shared exactly what their sales are, but, Steve, we did mention that it is accretive from day one. So we are very happy with where they fit, their margin profile fit. From an acquisition point of view, we have a good momentum right now. I will say our team has done a fantastic job with teeing these two deals up. The integration has been going really well. And we have the team available to continue to go down this path. Our liquidity is in a strong position right now. So we are going to continue to look, and there are a lot of opportunities for us still to grow both in the U.S. and internationally. So, and CWMF to add to the team. Steve Ferazani: Right. Thanks so much. Operator: Your next question comes from the line of Steven Ramsey with Thompson Research Group. Please go ahead. Steven Ramsey: Hi. Good morning, everyone, and thanks. What I wanted to start with, maybe kind of continue the CWMF topics, and seeing that it is accretive day one, if you could talk to their parts contribution and maybe where Astec Industries, Inc. can help on that front. CEO: Yes. No. Absolutely. When I look at the CWMF business, the first thing is the owners, Colby and Travis, they have done a fantastic job with this business. They have created a great culture, and that culture fits in so well with Astec Industries, Inc. It is amazing to me just how fast our teams have come together here. Obviously, we know this business in and out, and the discussions between our teams around working together, integrating sales structures, synergies, has gone as good as what we could have imagined. This business and the previous owners, they have done a fantastic job creating a very nice manufacturing facility with good capabilities. And we see opportunities to use that facility and grow the output together with the rest of our Astec Industries, Inc. Asphalt teams. From a parts point of view, their parts mix is a little bit lower than what we have on our traditional asphalt business, Steve. So there is a big opportunity there to grow that. We are going to do the same thing with them to make sure we have great parts availability. And we will give our customers the support that they deserve and they are used to from a legacy Astec Industries, Inc. point of view. So we are excited about this. This buy will give us much more than just another asphalt product line. It will give us manufacturing capability, as it brings a great team to the table. So we feel very confident about what this will look like in a couple of years. Steven Ramsey: Excellent. And then sticking to recent acquisitions, for TerraSource, can you talk about the progress with this business? Good to see margin improvement in the Materials segment. And can you talk about the improving fill rates within TerraSource? I know that was a focal point. Can you talk about where it is now versus where it was when you closed the deal? CEO: Yes. No. Steve, obviously we are still pretty early in that improvement cycle. One thing that I will say is that our teams have done all the calculations. We know exactly what we need to do and what is the inventory that we need to put on the shelf. That process is going, and I will say within the next three to six months, we are going to be very close to where we want them to be. And we know that that will have a positive influence on the business. So good interaction, good buy-in from the team. They are running with this, and the Astec Industries, Inc. team just supports them. The other thing that we are making sure of is as we bring this inventory in, we make sure that we take advantage of the synergy opportunities that we have so that we can bring that inventory in at the levels that we can buy for in our legacy Astec Industries, Inc. business. So we are excited about that. Overall, the performance for TerraSource for the six months we have owned them has been in line with our expectations. And I will say here in the last couple of weeks, we have made significant improvements in the integration of the team. Just yesterday, I listened to our engineering team talking about the products that we are going to have at CONEXPO, and this just fits in so well with the Astec Industries, Inc. business. So we are excited about what they are going to bring to the table in the future. Steven Ramsey: Okay. That is great. You pointed out, obviously, infrastructure activity and data centers, and on the Material Solutions segment, can you talk a little bit more on data centers and how your equipment is being deployed there, and how much of your data center growth is following customers versus intentional efforts on your part, and then maybe one other thing on data centers is ballpark how, if you can gauge it, how much data center exposure you have. CEO: We actually try to calculate that a little bit because I will say the majority of the crushing and screening that is going to be needed to get these data centers built will be done by companies that we already do business with. So it is not that you will see a huge amount of new start-ups popping up. These are customers that we have relationships with. They are close to our dealers. And we have seen quite a few large projects that are coming our way, and we are going to try to take advantage of that as much as we can. We are adding capacity in our facilities again to make sure we can take advantage of this. So, Steve, I think we are well positioned. Exactly how much it will contribute, we have not got to a number that we feel comfortable with yet, but we can see what is in our quoting pipeline, and we feel that this business will be strong and support our EBITDA guidance range for the year. Steven Ramsey: Okay. That is excellent. And to clarify, the demand for data centers that you are seeing, is it being filled through dealers primarily, or is there any direct business? CEO: Yes. No. Most of that is through dealers. Our crushing and screening product line goes through dealers. Obviously, there is concrete needed there as well. That goes through a dealer structure. Any asphalt that is done around data centers, we sell directly to customers. And once again, a lot of our existing customers are involved in that construction. Steven Ramsey: Okay. That is helpful. And one thing I wanted to make sure of with the EBITDA guidance: do you expect margin expansion in both segments? CEO: Yes. So, Steven, we have been talking about growing our margins 0.7% to 1.5% a year on average. And if you go and look at the last three years, I think we have successfully done that. It is our aim to build on that and continue to try to achieve those improvements year over year. We will not do our job if we do not do that again this year. Obviously, there is a lot of work to be done to achieve that, but I think we have shown that we can do it. The team is ready to go this year. We know how to do it. We know that we have the opportunity. So now it is just up to us to go and execute. Steven Ramsey: Excellent. And then last quick one for me. CONEXPO, a big event that clearly does not happen every year. Can you talk about in the past if this helps sales in the coming quarters to a degree as you roll out new products or highlight improvements to existing products? And is there any scenario where CONEXPO is a needle mover enough to shift the guidance or go to the high end? CEO: Yes. These big shows can always raise the question, is it delivering good return on investment? I will just say we are very excited about this CONEXPO. Basically, every product that we have on display is either new or substantially upgraded. We are going to launch our Signal digital platform there that I am very excited about. So, Steven, I will say, are we going to walk away there with $100 million in new orders? Probably not. But will this send a signal to the market and to our customers that Astec Industries, Inc. is strong? We are unified under our brands. We will have TerraSource on display. Our CWMF team will be part of us. I think we are going to show really strong, and it is going to give our customers confidence. And I will be honest with you, I think it is going to give our own team members a boost just to see how well we show up now as still a relatively small player in the market. So, yes, I am excited. Hopefully, we will see you there next week, and hopefully, we will have great— Steven Ramsey: Yep. I will be there. Looking forward to it. Thank you. Operator: Your next question comes from the line of David MacGregor with Longbow Research. Please go ahead. David MacGregor: Yes. Good morning, everyone, and congratulations on the strong results. CEO: Morning, David. David MacGregor: Good morning. I wanted to begin by just maybe picking up on your last point there with regard to rolling out the digital platform at CONEXPO. Maybe you could just talk about progress on building out digital solutions generally. I know this is something you have been doing a lot of work on, but I guess the goal is ultimately to make Astec Industries, Inc. easier to buy from. And just how should we think about this as a revenue growth facilitator in 2026? CEO: Yes. No, David. That is a great question. If I look at the state of our industry and some of the larger players and where we want to take this business, the world is going to look at what I call dumb iron and how we make this dumb iron more productive and more reliable. That is one of the things that we want to achieve with our digital platform. We want to give our customers great visibility around how their equipment is performing. Are they getting the utilization of their equipment? And then, most importantly, how do we help our customers to ensure that their equipment runs all the time? Our digital platform is going to help them to do that. We see various opportunities coming out of that: driving parts business and increasing our service offerings. It will help us to grow that parts and service business in the future. There is a big opportunity here. I will say we are just scratching the surface on what this business can become, and if you go to CONEXPO, you will see how this is now integrated in every piece of equipment. I hate to use the AI term here, but our teams are doing really good things to start to bring more and more opportunities that we can help our customers, using the data to make better decisions. We have multiple large customers now that are standardizing on our platform, and they are going to be the beneficiaries of this. They are all looking forward to next week because they are going to see the full capability. We are excited. I think it is going to be great for us long term. Yes, it is exciting. David MacGregor: Second question for me, you mentioned in your prepared remarks that you were seeing a modest positive inflection in orders within the forestry business. I just wanted to maybe get you to talk about that a little bit further and what you think you are seeing there and the extent to which you may expect some follow-through. CEO: Yes. The forestry business was an interesting one the last 12 to 18 months. We have owned the Petersen business now for, I think, 12 to 13 years, and this down cycle was probably the worst we have seen since we have owned it. A couple of things there: the paper and pulp industry is a little bit in turmoil. And then, thank goodness the U.S. did not have much storm damage last year, but, obviously, that typically drives quite a bit of business for us. I am, however, happy to say that the last couple of weeks we have actually seen some decent order intake there. That is a business that traditionally, when it was running at full cylinders, made really good profit. So if that comes back, it will add to our profitability. We baked some of that in already in the EBITDA outlook. David MacGregor: Okay. Good. Thank you for that detail. I wanted to get you to talk a little bit about the parts business in 2026 as well. I know that you did a lot of work in the strategic inventory investments and expanding the service support. How should we think about the drivers here in 2026? What changes, if anything, in terms of how you go after that business? CEO: Yes. A couple of things there. We are continuously looking at the way we go to market. One of the platforms that you will see at CONEXPO is what we call MyAstec, and that is a digital platform that we have created starting for asphalt plants, where we are creating a digital twin for our customers that makes the ordering so much easier. That platform is rolled out. We have just started to now introduce that to the concrete plant side of the business. We are really trying to find ways to make it easier for our customers to do business with us. That is one thing. The second thing is, as you know, we are continuously strengthening our presence in the market. So with CWMF on board now, we got some parts sales guys from them. We have broken up our territories a little bit. Now we have even more feet on the street for parts on the asphalt side. And then, of course, the TSG side, big opportunity there. These guys, when we bought them, were in the, I will say, second or third innings of reviving these historically strong brands, and we are enabling them, focusing on fill rate. We are adding salespeople to go after that parts business. David, obviously, these things take time. The actions of last year will pay off this year, and the actions we are putting in place now will play out well later in the year and into next year. David MacGregor: Got it. Last question for me is maybe for Brian, just on working capital in the model for 2026 and how we should be thinking about source versus use, and I guess within that, I know that on the equipment side, you have seen people ordering on shorter lead times. Does that give you the ability to fund growth in parts inventory with maybe a little less equipment inventory? Brian Harris: Yes. Thanks, Dave. Thanks for the question. Working capital continues to be an area of focus for us, obviously. The better the cash flow that we can generate, the more ability we have to grow. I think in 2026, we are going to see further opportunities to improve our working capital management. It is always a little bit tricky to judge exactly where you will be at the year end. We ship a lot of inventory, but sometimes it goes into receivables in the short term, so year-end forecasting can be a little challenging. But overall, I do see opportunities for continued improvement. And, of course, we are going to drive cash through increased operating earnings as well. And then we have got, as you see in our guide, capital expenditures of $40 million to $50 million next year. We have a lot of good projects in our plants for operational improvement, improved quality, and automation. So we will be reinvesting some of that free cash flow back into the business. But overall, I think working capital should improve slightly. David MacGregor: Okay. CEO: Yes. David, maybe one other comment just to add to that. A lot of our ETO business, we do not have finished goods inventory. So the real opportunity is strengthening that parts availability, and you hit the nail on the head there by saying that we want to make sure we drive that. On the TSG side, we have done the calculations, and yes, it will take a couple of million or so of inventory, but it is not that it is going to be a double-digit number that we need to add to fix that. It is doable within a pretty decent investment. David MacGregor: Great. Thanks. Congratulations again on all the progress, and look forward to catching up with you next week. CEO: Thank you. Operator: That concludes the Q&A session. And now I will turn the call over to Stephen C. Anderson, Senior Vice President of Investor Relations. Stephen C. Anderson: All right. Thank you. We appreciate your participation in our conference call this morning and thank you for your interest in Astec Industries, Inc. As today’s news release states, this conference call has been recorded. A replay of the conference call will be available through 03/11/2026, and an archived webcast will be available for 90 days. The transcript will be available under the Investor Relations section of the Astec Industries, Inc. website within the next five business days. This concludes our call, but we are happy to connect later if there are additional questions. Thank you all, and have a good day. Operator: Ladies and gentlemen, this concludes today’s call. Thank you all for joining. You may now disconnect.
Operator: Hello, everyone. Thank you for joining and welcome to Lineage, Inc. Fourth Quarter 2025 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. To withdraw the question, press star 1 again. I will now hand the call over to Ki Bin Kim, Head of Investor Relations. Please go ahead. Ki Bin Kim: Thank you. Welcome to Lineage, Inc.'s discussion of its fourth quarter 2025 financial results. Joining me today are W. Gregory Lehmkuhl, Lineage, Inc.'s President and Chief Executive Officer, and Robert C. Crisci, Chief Financial Officer. Our earnings presentation, which includes supplemental financial information, can be found on our Investor Relations website at https://ir.onesinh.com. Following management's prepared remarks, we will be happy to take your questions. Before we start, I would like to remind everyone that our comments today will include forward looking statements under federal securities law. These statements are subject to numerous risks and uncertainties as described in our filings with the SEC. These risks could cause our actual results to differ materially from those expressed in or implied by our comments. Forward looking statements in the earnings release that we issued today, along with the comments on this call, are made only as of today and will not be updated as actual events unfold. In addition, reference will be made to certain non-GAAP financial measures. Information regarding our use of these measures and a reconciliation of non-GAAP to GAAP measures can be found in the press release and supplemental package that was issued this morning. Unless otherwise noted, reported figures are rounded and comparisons are of 2025 to 2024. Now I would like to turn the call over to W. Gregory Lehmkuhl. W. Gregory Lehmkuhl: Thank you, Ki Bin, and good morning, everyone. Let me start by first thanking our valued customers and all our incredible team members at Lineage, Inc. who did an outstanding job driving efficiencies and executing on significant new business wins in the quarter and throughout 2025. I am truly grateful to be working alongside such an outstanding group of men and women each and every day. I will walk through our agenda for this morning. First, I will recap our fourth quarter performance, which came in line or slightly ahead of our expectations on all key metrics. Then we will discuss our 2026 outlook, followed by our latest view of cold storage supply and demand. Following my remarks, I will turn it over to Robert C. Crisci, our new CFO, who started back in November and has already made meaningful contributions to the business. Robert will walk through the details of our segment performance, expense management initiatives, capital structure, and our outlook for 2026. I will then return to share some closing comments before we open up the line to your questions. Turning to quarterly performance on slide four. During the fourth quarter, total revenue was flat year over year and adjusted EBITDA decreased 2% to $327,000,000. Total AFFO of $214,000,000 and AFFO per share of $0.83 were flat year over year but both ahead of our expectations. AFFO this quarter was propelled by better management of maintenance capital expenditures and more advanced cash tax planning relative to our initial expectations. I continue to push the team to optimize every aspect of our business to drive cash flow generation. Robert will expand on these efforts later in his remarks. Full year 2025 adjusted EBITDA declined 2.3% year over year to $1,300,000,000.00 and full year AFFO per share increased 2.4% year over year. Looking at the underlying business drivers. We saw further occupancy stabilization in the fourth quarter. Same store physical occupancy improved sequentially by 400 basis points to 79.3% further signaling that our business is returning to a more normalized seasonality just as we anticipated when providing second half guidance last year. Year over year physical occupancy was down only 50 basis points and improved cadence compared to the first half. That being said, we are entering 2026 at a slightly lower occupancy level compared to last year. Encouragingly, our economic occupancy continues to track nicely with our physical occupancy. And we expect to maintain a similar spread between the two metrics to what we observed throughout 2025. We look to partner with our customers to manage the seasonal ebb and flow of their inventory levels. And we are comfortable that our physical versus economic occupancy spread is both appropriate and sustainable. As a reminder, we have largely navigated the volume guarantee adjustments stemming from customers' multiyear inventory destocking post COVID. During the quarter, we grew rent and storage revenue per pallet year over year by more than 1.5% on a same store basis and by over 3% for the total warehouse segment despite headwinds from the industry's challenging macro environment. Throughput volumes declined 2.8% and warehouse services per throughput pallet was down 70 basis points as a result of lower import/export volumes we highlighted as a concern in our third quarter call. Our container volumes for the fourth quarter were down 9% year over year. This softer volume and lower price mix weighed on profitability resulting in lower margins for the warehousing sector. Overall, same store NOI was down 5% year over year but was in line with our guide. We continue to see early signs of stabilization in many areas of our business. And in fact, many geographies are stable or growing, including Europe, Asia Pac, Canada, and most U.S. regional markets. While we are not out of the woods yet, we believe we will continue to build on these trends throughout 2026 and drive further productivity to address this temporary new normal. We plan to deliver significant incremental new business given our strong performance for customers, strategically located assets, and our unmatched breadth of service offerings. Turning to our Global Integrated Solutions segment. In the fourth quarter, GIS saw year over year NOI growth of 15%, led by our U.S. Transportation and foodservice businesses. This rounds out a really great year for the global GIS team who delivered nearly 10% year-over-year growth in 2025. Great job to Greg Bryan and the entire GIS team. Turning to capital investments, which is a compelling driver of upside to our medium term growth model. In the quarter, we invested $170,000,000 of growth capital primarily in our development and we are pleased with the continued progress on these projects. As a reminder, we have 24 facilities that are under construction, or in the process of ramping and stabilizing. These projects represent over $1,000,000,000 of previously invested capital, a significant amount of our future asset mix. We expect these assets to deliver over $150,000,000,000 of incremental EBITDA once stabilized. A considerable addition to the Lineage, Inc. earnings base. Also, we are not just growing to grow. We are constantly looking to manage our portfolio of assets. In December, we sold a noncore asset in Santa Maria, California, at a mid-6% cap rate for $60,000,000. This is consistent with several other recent private cold storage transactions that were executed around a 6% cap. Further reinforcing the strength and resilience of private market valuations for our real estate. We are actively looking at numerous options to take advantage of the mispricing between the public and private markets to enhance shareholder value. We think this makes sense, especially as you consider that most recent research implies that we trade at over a 35% discount to our NAV, over an 8.5% implied cap rate, and in our view an even larger discount to the replacement cost of our portfolio. We have plenty of attractive opportunities to redeploy this capital into our balance sheet to further enable strategic acquisitions, customer-led developments, and capital return strategies. This is a very active work stream, and we look forward to updating you in future quarters. We believe these efforts will not only highlight the mismatch between private and public valuations, but also position us to continue to consolidate the U.S. market as opportunities present themselves. Turning now to our outlook for 2026. We expect same store NOI growth of negative 4% to negative 1%, adjusted EBITDA of $1,250,000,000.00 to $1,300,000,000.0 and AFFO per share of $2.75 to $3 per share. Robert will provide future guidance details in a moment, but I will share the macro assumptions that inform our guidance. In 2026, we expect 1% to 2% net pricing increase in our warehousing segment. While it is only February, we have already worked through 65% of our warehousing revenue base. We also expect our business to track to normal seasonality in 2026, albeit entering the year at a slightly lower occupancy level than we entered 2025. We anticipate that the industry will continue to digest new supply and remain competitive. Our observations mirror what many food producers and distributors are saying. Global food demand remains stable as highlighted by the recently published Circana and Nielsen data. But the consumer continues to exhibit value seeking behavior, trade down activity, and incrementally shifting their spend from restaurants to retail. Given that we ultimately serve the end customer, whether they choose to eat at home or at a restaurant, buy national or store brands, demand in our business in the long run remains stable. And as I mentioned, we believe that we are past the inventory drawdown after COVID, and remain optimistic that the categories we serve will continue to grow. Overall, we are assuming a similar operating environment as 2025 and not building into our guidance any upside from potential catalysts such as tariff resolution, interest rate reductions, a stronger consumer, or the benefits to the consumer from pending tax relief. In the meantime, we are not standing by waiting for a stimulus. Lineage, Inc. remains focused on controlling the controllables and driving efficiencies wherever possible. Robert will discuss this more later, but he has helped accelerate our efforts and we expect to remove $50,000,000 annualized admin and indirect cost by the end of this year. These savings will not discourage our investments in our sales, our customer support team, nor our prudent technology investments to stay the industry leader in automation and warehouse execution. We are using this challenging time in the industry to become a better, leaner company with even more positive operating leverage in the future. Turning to slide five. As a reminder, last quarter we collaborated with CBRE to gain additional insights into new supply and demand trends within the industry. At this point, our analysis is focused on U.S. markets where we have the most accessible data. To recap the analysis we put out recently, CBRE data shows that from 2021 to 2025, U.S. public refrigerated warehouse supply increased 14.5% on a square foot basis, while consumer demand for these categories stored in our network grew 5%. That implies a 9.5% excess capacity across the U.S. over four years. Even so, Lineage, Inc.'s 2025 average physical occupancy was 75%. Only 300 basis points below its 2021 level, despite tariffs, reduced U.S. agricultural exports, and inventory destocking. A testament to our network scale, hardworking commercial team, and the customer's desire to align with the industry leader. Looking ahead, new supply in 2026 is expected to slow significantly. Which is logical given the current environment just does not support speculative development. To further mitigate supply side challenges, we are idling buildings where appropriate and finding alternative real estate uses. We also think competitor weaknesses and asset obsolescence could help ease industry capacity. On the demand side, potential catalysts such as tariff resolution, tax stimulus, moderating food inflation, and lower interest rates could serve as meaningful tailwinds to our business. Moving to slide six, using the latest CBRE data, we take a closer look at when the new supply has come online and its magnitude. As new supply is added to the market, customers naturally reassess their options. They decide whether to stay with Lineage, Inc. or to switch providers. In the near term, this increases competitive pressure. What we have observed is that this customer switching largely occurs in the one to two years after new supply comes online. Then, markets typically begin to stabilize. To break this down, we are focusing on a subset of our U.S. assets that have been in the same store pool since 2021 and represent over a half $1,000,000,000 of our U.S. NOI. The top chart, shown in green, reflects markets that have seen less than 15% cumulative new supply over the last four years. Many of these markets have high barriers to entry, constrained land, challenged permitting, and high building costs. And together, they represent over 60% of our U.S. portfolio. NOI growth in these markets has been relatively insulated from new supply pressure, though they were impacted by inventory destocking coming out of COVID in 2023 and 2024 as well as other macro factors like declines in import/export volumes and tariffs. Now that customers have rationalized their inventories, we are seeing stabilization in 2026. The next two charts represent markets that have experienced more than 15% cumulative new capacity in the last four years. We further split these into early cycle supply markets, shown in blue, where most of the new capacity was delivered in 2022 and 2023, and late cycle supply markets, shown in gray, where most of the new capacity was delivered in 2024 and 2025. The early cycles chart in blue saw on average same store NOI declines in 2023 and 2024. But thereafter, these markets saw slight organic NOI growth in 2025 and are forecasted to be relatively flat in 2026. To be clear, these markets still carry new capacity overhang. But NOI has begun to stabilize as the inventory destocking is behind us and as the markets absorb the new supply, leading to market rent equilibrium. Importantly, in many cases, customers who originally left for lower prices have since returned to our network because of our service. With limited incremental new supply over the past couple of years, and with inventory destocking behind us, we have a more favorable outlook for this group, which accounts for 21% of our sampled NOI. Combined, the low new supply markets and the early cycle supply markets make up 85% of our U.S. NOI, and both groups have demonstrated improved NOI stability. Something we expect to continue in 2026. Finally, the gray chart at the bottom represents the late cycle supply segment. These are places where we are seeing the most competitive pressure today as the new supply was delivered more recent. And we expect this competitive pressure to continue into 2026. These markets make up only about 15% of our U.S. NOI in this pool. Importantly, across the U.S. overall, and especially in these late cycle supply markets, we expect to see a significant decline in new deliveries in 2026. And as the supply is digested, we expect to regain opportunities to grow with our customers. Net net, this data shows while a small portion of our portfolio is navigating a temporary supply demand imbalance, 85% of our NOI in the U.S. is on stable footing. Despite macro headwinds, I am confident that we are well positioned to grow over time as the food industry normalizes, new capacity is absorbed, and our commercial, energy, admin, and productivity initiatives, including LinnOS, continue to accelerate. Now let me turn it over to Robert C. Crisci. Robert, welcome to Lineage, Inc. Robert C. Crisci: Thanks, Greg, and good morning, everyone. I joined Lineage, Inc. a little over three months ago, and it has been great meeting our talented team members and many of the investors on this call. These past three months have confirmed my view that Lineage, Inc. is a world class organization, and I look forward to actively engaging further with you all in the months to come. Now on slide seven, you can see our global warehouse set. In the fourth quarter, total warehouse NOI declined 2.4% year over year to $373,000,000 while same store NOI declined 5% year over year to $340,000,000, both in line with our previously provided guidance. In our same warehouse segment, as Greg highlighted, we grew our rent, storage, and blast revenue per physical pallet by 1.7% year over year. We also saw an impressive sequential growth in our physical utilization of 400 basis points to 79.3%, signaling further evidence of a return to the more normal seasonality Greg forecasted last summer. Conversely, throughput volumes were slightly softer, down 2.8% year over year, services revenue per throughput pallet down 70 basis points. For the full year, total warehouse NOI declined 3.3% to $1,480,000,000.00 while same store NOI growth was minus 5.8%. While our occupancy has been stable, services mix and throughput volume continue to be weighed down by lower import/export volumes related to the shifting tariff announcements during the second half of the year. Keep in mind, volume shifts in certain higher value commodities can incrementally impact results given the attachment of higher value-added services. Shifting to slide eight. Global Integrated Solutions segment's EBITDA grew 15% to $61,000,000 in our fourth quarter and was up 9% to $251,000,000 for the full year 2025, continuing this division's great trends all year. Our fourth quarter NOI margin for GIS improved by 470 basis points to 19.5%. We are continuing to see strong momentum in our U.S. Transportation and food service businesses, due to the value these integrated solutions provide to our customers. As a reminder, we see solid longer term upside in the combined offerings of our GIS businesses and our warehouse segment. Our ability to bring to market a global network of assets to offer customers an end-to-end solution is unique and rewarded by our customers. Turning to September adjusted EBITDA declined 2.4% year over year to $327,000,000 and full year adjusted EBITDA declined 2.3% to $1,300,000,000, both in line with our expectations. Fourth quarter AFFO per share was flat compared to the prior year at $0.83. And full year AFFO per share grew 2.4% to $3.37 per share. Both ahead of our expectations and consensus. As we progress through the wrap up of 2025, our first full year as a publicly traded REIT, our tax team was able to successfully enhance its tax planning initiatives to substantially drive upside to our guidance. We finished the year with a current tax expense for AFFO of $15,000,000 versus our prior guidance of $30,000,000 to $35,000,000. Our fourth quarter tax expense was better than our expectations by approximately $18,000,000 or $0.07 per share. On a go-forward basis, we expect about half of that beat to be sustainable. Hats off to our tax team for driving continuous improvement in our tax structure. $0.04 of nonrecurring tax benefits, ultimately, even if we excluded we still came in above the high end of the guidance range. In addition, our heightened cash flow focus allowed us to better manage recurring maintenance capital expenditures allowing us to come in slightly lower than our guidance at $56,000,000 for the quarter. We know investors focus on same store NOI and so do we. But we are also focused on driving every lever of efficiency and cash generation, not just same store metrics. We are proud to see our team members also focused on EBITDA and AFFO output. To that end, today, I want to announce that we have accelerated our internal efforts to drive efficiencies on our admin and indirect expense cost base. We see opportunities to further streamline our organization while continuing to fully support our team members in the field. We have line of sight to $50,000,000 plus of annualized cost savings by year end 2026 by streamlining and centralizing select functions. We have been studying this opportunity for a couple quarters and believe we can prudently rightsize and combine teams to drive immediate savings and speed up decision making. We see about half of this hitting 2026, and we will describe how we layer this into our guidance further in my prepared remarks. Turning to Slide 10. We ended the quarter with total net debt of $7,700,000,000 and total liquidity of $1,900,000,000. During the quarter, we issued $700,000,000 of seven-year Eurobonds at a 4.125% coupon and locked in a $1,250,000,000.00 floating-to-fixed forward swap at a rate of 3.15% through February 2028. These fourth quarter transactions come on the back of our inaugural $500,000,000 bond offering issued at a coupon of 5.25% in June 2025. We appreciate the confidence of our fixed income investors and our investment grade rated balance sheet. We welcome all these new global fixed income investors to our call, and I look forward to meeting you in the coming months. On leverage ratios, you can see here that our net debt to adjusted EBITDA was 6.0 times at the end of the quarter. Also on this slide, we added what we hope is a helpful supplemental disclosure commonly asked for by our investors. This metric adjusted net debt to transaction adjusted EBITDA adjusts for the $1,000,000,000 of capital investments made into our development pipeline, the corresponding non-stabilized NOI, and the NOI tied to intra-quarter acquisitions or dispositions. Under this methodology, which is consistent with the reporting practices of other top companies within the REIT sector, like Prologis and First Industrial, our leverage is 5.2 times. Also, keep in mind that our development projects have been significantly derisked given most of these projects are anchored by customers with long term commitments. Thanks to our new great leader of investor relations, Ki Bin Kim, who many of you know from his prior life. You will notice this and other supplemental disclosure enhancements now into the future. Finally, I would be remiss to not mention the sale of our Santa Maria site. A great example of the shareholder value enhancing transactions we are evaluating. As Greg mentioned, we will explore every opportunity to address the valuation mismatch between the public and private markets, including joint ventures and/or partial monetization action that help generate capital that highlight the locked up potential our world class portfolio. On page 11, let us discuss our outlook for 2026. We are initiating 2026 guidance with same store NOI growth of minus 4% to minus 1%, total warehouse NOI growth of minus 2% to plus 1%, GIS NOI growth of 0% to 2%, adjusted EBITDA of $1,250,000,000.00 to $1,300,000,000 and AFFO per share of $2.75 to $3 per share. You can also see the additional guidance details we have provided in the past, including admin of $465,000,000 to $480,000,000, stock-based comp of $125,000,000, interest expense, $340,000,000 to $360,000,000, current tax expense for AFFO calculations of $20,000,000 to $30,000,000 and recurring CapEx of $170,180,000,000. Further, we expect our same store NOI cadence to start the year at the lower end of our annual range and see improvement into the second half. Supporting this outlook will be the ramp of our development projects and the 2025 purchased M&A coming online throughout the year. We will also see acceleration of our productivity and SG&A as we move through the year. As we centralize as and optimized same store NOI. Ultimately, our guidance for admin is $465,000,000 to $480,000,000. Which contemplates the field cost shifts, inflation, higher 2026 bonus. These items will be off by the cost savings initiatives we outlined. Together, these fact factors and the typical seasonal shift from Q4 to Q1 will result in adjusted EBITDA in the 2026 following a sequential decline comparable to that experience in the Eurobond offerings we did in the middle of 2025. '26 and allow us to focus on continuing to sure the orders Lineage, Inc. remains extremely well positioned to exit these challenges as an even stronger company by increasing our our future future operating leverage across the business. Allow me to summarize the four key points. First, our industry is showing signs of normalization, with the return normal seasonality, many markets stabilizing after customer inventory destocking largely behind us, and many markets stabilizing after digesting new already in progress productivity issues. Including the OS, that are expected to offset inflation again this year. Third, while not built into our we will continue to look for opportunities to unlock value further further enhancing our liquidity. This will maintain our investment grade rating and enable us to opportunistically take advantage of strategic investment opportunities. Before turning it over to your Robert C. Crisci: Savings. We outlined a three. In December of a $100,000,000 run rate savings. Three to five years. Ki Bin Kim: When I take a step back and look at our company, W. Gregory Lehmkuhl: The second element of how we thought about our guidance is that while we are seeing great net price put out to the market, we have the same factors that impacted us in 2025 in terms of mix, in terms of import/export just as we look out. So that ultimately will be a little bit of a drag of our revenue per pallet, if you will. Again, we are seeing net pricing of 1% to 2%. That blends just slightly lower. And then the final factor as we thought about it is just, you know, we are fighting inflation overall at the company. We are doing a lot on the productivity side. So we are really striving to keep NOI margin, if you will, flat, but that of course, you have just minor pressure there. We saw a little bit of that in 2025. So those three factors really kind of blend up and we will see a good pattern as we evolve through the year. As we said, we are starting at the low end. But all the initiatives that Greg outlined really sets us up nicely as we kind of move through year. Operator: Next question comes from the line of Michael Goldsmith with UBS. Your line is open. Please go ahead. Michael Goldsmith: Good morning. Thanks a lot for taking my question. Can you talk through the impact of idling assets? How many assets did you idle during the quarter, did that have a positive impact on occupancy, and if you can quantify that? And then also, if you are idling, how should we think about the earnings impact and what has been moving in and out of the same-store pool and the financials? W. Gregory Lehmkuhl: Sure. Thanks, Michael, and good morning. So last year, we idled 10 sites, and the benefits are obvious. We can move labor, move the customers to adjacent sites, and lower overall cost and increase our occupancy in the receiving sites. For 2026, because our physical occupancy is relatively strong, we do not think we will see quite as many opportunities as in 2025. The overall impact on NOI and occupancy was pretty negligible. We took out around 1% of our supply. As far as how we treat these, we do not add back any of these costs. They roll into our non-same-store pool, AFFO and EBITDA accordingly. Operator: Your next question comes from the line of Caitlin Burrows with Goldman Sachs. Your line is open. Please go ahead. Caitlin Burrows: Hi, good morning everyone. On dispositions, the noncore SoCal disposition you did, what made that property noncore, and how representative is the mid-6% cap rate in the U.S.? And then are you willing to sell international assets? What types of cap rates are you seeing internationally? W. Gregory Lehmkuhl: Good morning, Caitlin. The SoCal asset was kind of a medium quality asset in our U.S. portfolio. It was a single user and did not support any of the surrounding public customers in that region. The user wanted to purchase it, it was a reasonable price for us, reasonable valuation, so we decided to go ahead and achieve a little bit of liquidity there. As far as other dispositions, we are looking at the entire portfolio to optimize and are certainly analyzing the public versus private disconnect in valuations. More to come on that as the year progresses—nothing to announce today. I would just comment that looking at the overall environment and transactions, we are pleasantly surprised with some of the comps we are seeing out there that we have been tracking. Over the past year, we have seen over a billion dollars of transactions—DHL or ColdLink or otherwise—and we are seeing strong mid-teens EBITDA multiples. That ultimately translates into low- to mid-6% cap rates. We feel good about that. We do not have specific geography comments—we will look at whether we are the best owner of that asset or not. We will be very unemotional, and we see the opportunity to create capacity for opportunities that we are almost sure will present themselves. We do not currently have anything on the docket now, but we are looking hard so that as the industry turns, we have the firepower to do what we want to do. Operator: Your next question comes from the line of Alexander David Goldfarb with Piper Sandler. Please go ahead. Alexander David Goldfarb: Hey, good morning. Going back to the topic of customers switching, you mentioned one to two years after a tenant takes a new facility they may end up switching. Is this more of a talking point, or are you seeing tangible evidence—like a noticeable uptick in people moving out of new entrants into your facilities? As the supply ebbs, how much is this a real tailwind versus just a talking point? W. Gregory Lehmkuhl: Thanks, Alex, and happy birthday to you. As we talked about in the prepared materials, we are seeing a clear trend. In the U.S.—really the only region in the world where we are seeing excess supply—60% plus of our markets have not seen excess new supply. We had to work through the destocking there, but those have been on stable ground for some time, and we expect them to be on stable ground in 2026. Directly to your question and why we feel so good about our ability to compete in the medium term, in markets like New Jersey, Dallas, Houston—where new supply hit earliest—we did take a hit, and now we are seeing a lot of customers come back to us because of our service and other structural advantages. Markets go through this cycle and we are starting to win again, which gives us confidence we can work through this last wave. And the new supply being delivered in '26 and beyond is declining. Even without supply absorption—which we think can happen faster than some may fear—we think we can win in this existing environment. Operator: Next question comes from the line of Blaine Matthew Heck with Wells Fargo. Please go ahead. Blaine Matthew Heck: Thanks. Good morning. High-level question: there has been a lot of attention on the impact of AI. You have done a lot on technology and data analytics already, but how do you see your business being impacted by AI, whether on the warehouse or GIS side? W. Gregory Lehmkuhl: I am glad you asked that. We have been thinking a lot about this. AI promises to make supply chains more efficient, which could potentially reduce storage needs over time, but supply chains take a long time to change and optimize. What we are seeing right now is that customer inventory levels are effectively at the bottom given a couple of years of destocking after COVID, high interest rates, food inflation, and international trade chaos driven by tariffs. When you take a step back and think about our industry and AI, we think we are one of the most insulated pieces of the supply chain between when food is produced and when it is consumed. AI cannot change when food is produced or when it is consumed, so cold storage is durable and essential in the long term, even in a world of AI. Think about a frozen chicken, frozen french fries, steak—those will not ship directly from a processing plant to somebody's home. AI cannot change the seasons nor when seasonal products are harvested, so they will always need to be stored. AI is not going to change the need for people to eat. Our industry has hard, expensive assets required to operate, and AI cannot create nor replicate those. If AI does change how consumers behave—more online shopping, more multichannel—that generally increases the need for warehousing because of more SKUs and assets. For more than ten years we have been a technology-native operator. We are already using AI in cold storage automation across our automation stack, in our energy management initiatives that have shown over many years to offset energy inflation, and in our computer vision technology we call the Lineage Eye in our most tech-forward warehouses. That technology identifies what the pallet is and its contents and streamlines the inbound process, making receiving more accurate and efficient. We are best positioned to leverage robotics as they get certified for cold—they are quickly getting there—and we are ready to interweave those into our workforce and gain efficiency faster than anybody else in our space. We are also effective acquirers and developers and can apply AI tools to acquired companies and developments better than any other company. Lastly, we have the largest dataset of warehousing data and probably the biggest dataset of temperature-controlled transportation data other than arguably C.H. Robinson. We can harvest that data to provide our customers with insights and help them optimize their supply chain overall. So yes, AI could help customers optimize supply chains over ten years, but we think we are very much insulated from disruption as an industry, and we see upside across the business here at Lineage, Inc. Operator: Your next question comes from the line of Michael Albert Carroll with RBC Capital Markets. Please go ahead. Michael Albert Carroll: Greg, can you provide some color on the seasonal pickup this past quarter? Was it more muted than normal seasonal patterns or in line with historical patterns? If it is in line, can we assume inventory destocking is behind most customers? Occupancy was higher than expected versus consensus in the fourth quarter. W. Gregory Lehmkuhl: Yes, good question. We returned to a normal seasonal pattern. The uptick happened a little bit later—it happened in July versus June—and then it hit as normal. Two important takeaways: we believe inventory destocking is behind us, and we believe our customers’ inventories are at very low levels given the macro. That underpins our 2026 guidance. Operator: Your next question comes from the line of Greg Michael McGinniss with Scotiabank. Please go ahead. Greg Michael McGinniss: I wanted to talk about Integrated Solutions. We saw considerable margin improvement with the European disposition. Is there more room to run in that business? If you get back into Europe, can margins improve further from here? Robert C. Crisci: The European business we exited frankly did not have comparable margins to the overall base. You take that out, you take the revenue out, and as you look at the fourth quarter, that is the way to think about the underlying business. We still see opportunity overall and good growth in that business, so of course we will leverage the cost there. We think that is a good run rate to be thinking about margins and the profile going forward. Operator: Your next question comes from the line of Craig Allen Mailman with Citi. Please go ahead. Craig Allen Mailman: I want to circle back on asset sales and market pricing for assets. You said the 6 cap was on a user sale. Was that already a triple net lease or were you operating it? What do you think pricing would have been on a sale to an investor rather than a user? And Rob, you said pricing may be in the mid-teens EV/EBITDA, translating into low-6% cap rates. Can you bridge that comment? W. Gregory Lehmkuhl: Overall, it was a lease. It is always hard to say how a different buyer would pay relative to a user sale—we cannot really go there. We think it was a good sale price overall. As mentioned, we are seeing mid-teens EBITDA multiples and low- to mid-6% cap rates. Ultimately, it depends on the region, the mix, and the buyer, but that gives you a general sense. Operator: Your next question comes from the line of Michael Anderson Griffin with Evercore. Please go ahead. Michael Anderson Griffin: On the march of alternative uses and helping supply, just curious about your thoughts there. W. Gregory Lehmkuhl: We think there are several reasons supply could get absorbed faster than simply comparing new supply to roughly 1% end-consumer demand growth. First, alternative uses—particularly power with utilities over time. It is a real opportunity. It will not dramatically change the 2026 supply picture by itself, but we are evaluating our global portfolio, calculating how much excess power we have in a number of buildings already, and looking to see how much more power we can get in areas that would be attractive to data center partners. Second, we believe some new entrants over the last four years will exit the industry. Some of those assets—especially in the most oversupplied markets—will not continue as cold storage, which will take out supply. Where they are in good markets, we want to be in position to absorb what makes sense into our network. Third, obsolescence. During COVID, when every pallet position was full, it did not make sense to retire old assets because they could still cash flow despite structural disadvantages. We are now seeing some older buildings shuttered and repurposed to residential or other applications. We think that could approach up to 1% a year in coming years. Fourth, the large operators have the advantage to idle facilities and take supply out that way. Between us and others, many buildings were idled last year and more will be this year. And maybe most importantly, even in the current environment, the best capitalized operators with the best service, reputation, technology, scope of services, and customer relationships are going to win. Even in this environment, we can be successful. Operator: Your next question comes from the line of Samir Upadhyay Khanal with Bank of America. Please go ahead. Samir Upadhyay Khanal: Good morning. On the GIS segment guidance for the year, 0% to 2% is a deceleration from 8% last year and double-digit in 4Q. Is that just tougher comps, or something else? W. Gregory Lehmkuhl: Yes, tougher comps are part of it. There are a couple of other things weighing on our guidance. First is fuel. Robert C. Crisci: Fuel is down, and we mark up fuel like we do everything else. When fuel declines, especially as is happening now and is forecast in the first half, that weighs on results. Also, as fuel is down and trucking continues to be relatively inexpensive, our rail business does not do as well—modal shifting happens for economic reasons. When truck is strong, rail is weakened. For those two reasons, we are a little more cautious on our GIS guide for 2026. Operator: Your next question comes from the line of Daniel Edward Guglielmo with Capital One Securities. Please go ahead. Daniel Edward Guglielmo: Hi, everyone. Thank you for taking my question. Can we get a quick update on the Lean Journey? W. Gregory Lehmkuhl: About a third of our revenue base is directly supported by a lean manager. We are elevating those resources from a single building or two buildings to regional support and joining their efforts with our LinnOS deployment team. We are deploying technology and process at the same time and are seeing good results—even since the NAREIT conference in December. We remain committed to lean as a philosophy to remove waste from our business. We continue down the same path and see good results. We expect to offset inflation through those efforts and other productivity initiatives even before LinnOS becomes meaningful to our financial results. Operator: Your next question comes from the line of Vince James Tibone with Green Street. Please go ahead. Vince James Tibone: Hi. Can you share a January or year-to-date occupancy update? And you commented that the 400 to 600 basis point spread between physical and economic occupancy is expected to be stable, and that you are through a good portion of the volume-based guarantees and resets this year. Last year there was some volatility from 4Q to 1Q. Can you provide more detail on where you are in that process? W. Gregory Lehmkuhl: January has come in line with our forecast. For modeling purposes, keep in mind the first quarter is seasonally soft. Historically, pre-COVID U.S. data would show the first quarter down roughly three percentage points in occupancy from Q4. We think the seasonal pattern this year will reflect more normal times, so we would expect a step down from Q4 to Q1. Also weighing on Q1 is the ongoing reduction in import/export container volume. In Q4, import/export volume was down 9% year over year, and that trend has continued into the first quarter, which we expect to be a headwind. With regard to volume guarantees and the spread between physical and economic occupancy, 400 to 600 basis points is our normal, and we would expect to hold that trend through the year. We effectively mark to market the majority of our business each year, so there is no big reset in January. We have already worked through 65% of our revenue base as we sit here today on contract negotiations. That gives us more confidence that the economic versus physical spread will be consistent, and we will be able to achieve net new pricing increases of 1% to 2%. Robert C. Crisci: I would add it is one of the lowest levels we have seen. If you look at our supplemental and same store data over several quarters, that 6% factor reflects the team’s great work to manage economic versus physical occupancy so it is not a headwind going forward. Operator: Your next question comes from the line of Brendan James Lynch with Barclays. Please go ahead. Brendan James Lynch: Good morning. Thanks for taking my question. On the evolving tariff situation and how it will impact your business—post Liberation Day there was some concern around seafood in particular. Is the current 10% or now 15% blanket tariff better or worse than policies in place since April? W. Gregory Lehmkuhl: Our seafood customers are opportunistic in their ordering—the tariffs drive that, ocean rates drive that, and sales prices in the U.S. drive that. We will see what happens with the Supreme Court hearing—obviously it is being challenged multiple ways. The bull case is tariffs could be lowered on China and Brazil, which could meaningfully increase trading with us given where they have been the last couple of years. But it is really hard to know as these are still being challenged in state and federal courts. If we look at import/export across multiple years, we are at historic lows right now, and that is hurting us, as much of our real estate is in high value, hard-to-replace port markets around the world. Operator: Your next question comes from the line of Omotayo Tejumade Okusanya with Deutsche Bank. Please go ahead. Omotayo Tejumade Okusanya: Good morning. On the $50,000,000 of savings discussed—are those mostly G&A, or more focused on site-level operations like labor and power? And how should we think about timing and magnitude through 2026? Robert C. Crisci: It is both an admin item as well as indirect at the sites. We have been looking at this for a while. We have grown rapidly and have been assessing where we can centralize, optimize, and eliminate overlaps between site and admin functions. We are deploying technologies, including AI, to do more with less. These are never easy decisions. For 2026, roughly half of the $50,000,000 will hit, depending on how initiatives progress. We also did an inventory of site versus corporate spend. We saw opportunity at the site level and are bringing some of those costs into corporate to optimize them. If we had not brought that into corporate, that would have been about a 100 basis point net impact; we would not be surprised if we optimize further and reduce that to something like 75 basis points on a pro forma basis. That gives you a sense for both the $50,000,000 and how it plays in admin. Operator: There are no further questions at this time. I will now turn the call back to Ki Bin Kim, Head of Investor Relations, for closing remarks. Ki Bin Kim: Thank you everyone for joining the fourth quarter conference call. Have a good week. We are around if you have any questions. Thanks, everybody. Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Operator: Welcome to Dole plc's fourth quarter and full year 2025 results webcast. This webcast is being broadcast live over the Internet and is also being recorded for playback purposes. Currently, all participants are in listen-only mode. After the speakers' presentations, there will be a question-and-answer session. For opening remarks and introductions, I would like to turn the call over to the Head of Investor Relations at Dole plc, James O'Regan. James O'Regan: Welcome, everybody, and thank you for joining our results webcast. Joining me today are our Chief Executive Officer, Rory Byrne; Chief Operating Officer, Johan Linden; and our Chief Financial Officer, Jacinta Devine. During this webcast, we will be referring to presentation slides for supplemental remarks, and these, along with our earnings release and other related materials, are available on the Investor Relations section of the Dole plc website. Please note, our remarks today will include certain forward-looking statements within the provisions of the Federal Securities Safe Harbor Law. These reflect circumstances at the time they are made, and the Company expressly disclaims any obligation to update or revise any forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied due to a wide range of factors, including those set forth in our SEC filings and press releases. Information regarding the use of non-GAAP financial measures may be found in our press release, which also includes a reconciliation to the most comparable GAAP measures. With that, I am pleased to turn today's call over to Rory. Rory Byrne: Thank you, James, and welcome everybody, and thank you for joining us today as we look back over 2025, discuss our latest quarterly results, and provide our initial outlook for the coming financial year. So turning firstly to Slide 4 for a recap of our key developments for 2025. We are very pleased to deliver strong operating results for the year with EBITDA of $395 million, coming in ahead of our latest guidance. Our two diversified fresh produce segments delivered excellent results and excellent growth, offsetting the anticipated short-term decline in Fresh Fruit due to higher sourcing costs. During 2025, we also achieved several important strategic milestones. A key strategic priority for us was to exit the Fresh Vegetables business, and we are very pleased to have successfully completed the sale of this division in August 2025 for gross consideration of $140 million. This sale has allowed us to fully focus on our core operating divisions and has created greater flexibility in our capital allocation strategy. Continuing with our strategic focus on optimizing our asset base and operations, we announced just before the year-end an agreement to sell our port and port operations company in Guayaquil, Ecuador. We expect to receive net proceeds of approximately $75 million once this transaction closes. Earlier in the year, we also successfully completed a $1.2 billion renewal of our credit facilities, which strengthened our financial capacity and enhanced our flexibility to support future growth initiatives. In November, we announced that our Board had approved a $100 million share repurchase program as part of the development of our capital allocation strategy. This will be used opportunistically and, to date, we have spent $4.5 million repurchasing shares. Another important milestone for the group was the exit of Castle & Cooke as a shareholder in September by way of a registered offering. This removed the overhang of the potential share sale and provided significant additional liquidity to our daily trading volumes. Following on from this theme, we have now transitioned to full U.S. domestic issuer filings. Over time, we believe this important transition will improve our eligibility for inclusion in a broader range of U.S. equity indices. Finally, in October, we had a key operational development with the successful launch of Cladeau Royale, our game-changing new variety of pineapple, and the culmination of 15 years of dedicated R&D at our research facilities on Juris. This conventionally bred variety has a sweeter taste than a typical pineapple, with the added distinction of coconut flavors. It has been extremely well received by both our customers and consumers and has already won multiple awards, including being voted best new product within the fresh fruit category in a recent survey by Newsweek. As volumes continue to come online, we believe this will be an important product within our portfolio. Turning now to the operational review and starting with the Fresh Fruit slide on Slide 6. In Q4, the industry continued to face elevated sourcing costs for bananas, pineapples, and plantains, resulting in lower profitability for this segment compared to the prior year. For full year 2025, we delivered EBITDA of $189 million, a resilient result given the sourcing and market backdrop and indeed the weather-related disruption, not least the knock-on effects of Tropical Storm Sarah's impact on production and supply. Thankfully, the rehabilitation of our Honduran farms is well underway and on track for full recovery later this year. We expect produced volumes and competitiveness to improve over the course of 2026 with the benefit of targeted investments in production and supply chain cost initiatives. Importantly, banana demand remains robust in both North America and Europe, and pineapple innovation, including the well-received Dole Collado Real, is supporting this category. Overall, while 2026 has started with the continuing unfavorable supply dynamic, we do expect the positive demand tailwinds, together with our investments and cost programs, to drive an improvement in profitability as 2026 progresses. Moving on to the Diversified EMEA segment, this segment had a stable final quarter, ultimately delivering an excellent full-year adjusted EBITDA result of $150 million, an increase of 14% year on year. Over the course of the year, we saw particularly strong contributions from key markets. For example, in Spain, our operations continue to benefit from product diversification and market expansion, underpinned by our very strong position in Canary Island bananas. In the Nordics, the benefits of our investments in our distribution and logistics capability continue to drive growth, and in the Netherlands we saw a good recovery in 2025 after some challenges in the prior year. Looking ahead, we expect our strong performance to continue in 2026, supported by further development investments across the segment. And lastly, turning to our Diversified Americas segment. This segment delivered another strong quarter to close the year, consolidating a very positive year of growth. Fourth quarter adjusted EBITDA increased by 32%. For the full year, this amounts to a 21% increase, driven by strong revenue growth, margin expansion, and increased EBITDA contributions from our joint venture businesses within the segment. We benefited from excellent product-led growth in North America in 2025 in products such as kiwis and citrus in particular. Our export teams have demonstrated excellent operational performance, particularly through efficient management of the evolving cherry marketplace during early 2025, and once more at the start of this latest cherry season. Looking ahead, we anticipate the delivery of a good result for this important export season overall. Looking out further into the year, we expect to deliver underlying growth in 2026, complemented by enhanced efficiencies from the Dole Diversified North America Haddafi integration. We also expect growth in our joint venture businesses within this segment. With that, I will hand you over to Jacinta to give the financial review for the fourth quarter and full year. Jacinta Devine: Thank you, Rory, and thank you all for joining our webcast. Firstly, turning to the financial highlights on Slide 10. Overall, our key performance metric, adjusted EBITDA, came in at £72.7 million, which was ahead of our own expectations for the quarter. Compared with Q4 2024, revenue was £2.4 billion and was 9.2% higher on a reported basis and 5.7% higher on a like-for-like basis, due to positive operational performance across all our segments. This growth followed the trend seen over the course of 2025, with full-year revenue increasing 8.2% to £9.2 billion. In the fourth quarter, net income increased to £6 million from a loss of £31.6 million in the prior year. The prior year was impacted by a loss of £61.2 million in the discontinued Fresh Vegetables division. On a full-year basis, net income decreased to £82 million from £143 million, reflecting a number of non-operational and non-cash items. Net income was lower due to a larger loss from discontinued operations as well as non-cash fair value losses on financial instruments, a non-cash discrete tax charge, and impairment charges on certain assets excluded from the Fresh Vegetable sale. 2024 also had the benefit of the gain on the sale of Progressive Produce. Looking now at the non-GAAP performance measures, fourth quarter adjusted EBITDA was modestly lower by £1.9 million compared to the prior year. The reduction was primarily driven by higher food costs in Fresh Fruit. This decrease was partially offset by an excellent performance in our Diversified Fresh Produce Americas and Rest of World segment and favorable impact from foreign currency translation. For the full year, adjusted EBITDA came in at $395 million, which was ahead of our latest guidance and 1% ahead of 2024. Adjusted net income decreased £1.5 million in the fourth quarter, predominantly due to the decrease in adjusted EBITDA as well as higher depreciation expense, partially offset by lower interest expense. For the full year, adjusted net income decreased £5.9 million to £115 million, and full-year adjusted diluted EPS was $1.20 versus $1.27 in 2024. Turning now to the divisional updates and starting with Fresh Fruit on Slide 12. Revenue increased 6.7% due to higher volumes of bananas sold as well as higher pricing of bananas, pineapples, and plantains, partially offset by lower volumes of pineapples and plantains sold. The decrease in adjusted EBITDA in the quarter was due to higher sourcing costs of bananas, pineapples, and plantains, partially offset by higher commercial cargo profits. Now looking at Diversified Fresh Produce in EMEA, reported revenue increased 12.7% primarily due to a favorable impact from FX as well as strong underlying performance in our operations in Spain, France, and South Africa. On a like-for-like basis, revenue increased 4.5% or $41 million. Adjusted EBITDA was in line with Q4 2024, with increased earnings in Scandinavia, Ireland, and Spain, as well as a favorable impact from FX translation, partially offset by lower underlying earnings in the UK and the Netherlands. On a like-for-like basis, adjusted EBITDA decreased by £3.5 million in the quarter. Finally, Diversified Americas had another very strong quarter. Revenue increased 5%, driven by growth in most commodities sold in the North American market, along with growth in Southern Hemisphere export products, primarily driven by higher cherry volumes and higher blueberry pricing. Adjusted EBITDA increased £3.2 million, driven by improved profitability in our joint venture businesses as well as by earnings growth in our Southern Hemisphere export business, driven particularly by the higher cherry volumes. On a like-for-like basis, adjusted EBITDA increased £4.1 million. Now turning to Slide 15. We remain focused on capital allocation and managing our leverage and are pleased that we were able to close out the year at a comfortable level, coming in at 1.5x, a reduction from 1.6x in the prior year. Interest expense has continued to decrease due to lower debt levels as well as lower base rates and came in at £66.5 million for the full year, in line with our latest guidance. Under the assumption that base rates will remain broadly stable in 2026, we expect full-year interest for 2026 to be approximately $60 million. Net cash provided by operating activities was £123 million in 2025. As anticipated, we saw a positive inflow in working capital in the fourth quarter, albeit curtailed this year by the strong volume and revenue growth being seen across the business. In addition, Q4 2024 benefited from accentuated seasonal inflows, which will not repeat to the same extent this year. Cash capital expenditure was £28.4 million for the quarter, and we added a further £700,000 of assets by way of finance leases. For the full year, routine CapEx was in line with our latest guidance of £85 million. Cash capital expenditure was £121.5 million, including the buyout of two vessel finance leases for £36 million that was already reflected in our net debt at the end of 2024. In addition, we added a further £16 million of assets by way of finance lease. Also included within the overall CapEx number was £16 million of expenditure related to the Honduran farm rehabilitations, which was covered by insurance proceeds. For 2026, we are forecasting routine CapEx of approximately £100 million, which is broadly in line with our annual depreciation charge. Free cash flow from continuing operations was £1.7 million for the full year. Excluding the buyout of the vessel finance leases, the Honduran farm rehabilitation supported by insurance proceeds, tax on sale of assets, and the final repatriation tax payment in April, this rises to $81 million. Looking ahead to 2026, we expect to see normalized cash generation, driven by the benefits of the disposal of the Fresh Vegetable business as well as by lower working capital investments and lower tax payments. Finally, we are pleased to declare an $0.085 dividend for the fourth quarter and, following on from the authorization of a $100 million share repurchase program in November, we purchased 300,000 shares at an average price of $15.15 post year-end and for a total consideration of $4.5 million. Now I will hand you back to Rory, who will discuss our outlook for 2026. Rory Byrne: Thank you, Jacinta. We are very pleased with our operating results for 2025, delivering adjusted EBITDA of $395 million, which, as I said earlier, came in ahead of our expectations. The result is a testament to the experience and scale of our management teams and people right across the group, as we navigated a year of macroeconomic uncertainty and many other industry-specific factors. We have made important strategic steps forward during 2025, particularly completing the sale of the Fresh Vegetables business, and today our business is well placed, with strong operational momentum across the group. With this platform, we are targeting growth for the coming financial year, and at this very early stage of the year, we are targeting adjusted EBITDA of at least $400 million. Our presentation sets out our key strategic priorities for 2026, and these are: firstly, executing on our development pipeline while maintaining a disciplined approach to capital allocation; continuing our focus on cost control and delivering operating efficiencies across the group; positioning ourselves to work efficiently in this dynamic macroeconomic and regulatory landscape; and, as ever, strengthening our position in our core business areas and categories. I want to conclude by once again thanking all our outstanding people across the group for their ongoing commitment and dedication to driving our business forward, particularly in light of the complexities faced by us this year. As always, we really appreciate all our essential partners, suppliers, customers, and all other stakeholders for their continued support. With that, I will hand you back to the operator to open the line for questions. Operator: We will now begin the question-and-answer session. If you would like to ask a question, please raise your hand now. If you have dialed in to today's call, please press 9 to raise your hand, and 6 to unmute. Please stand by while we compile the Q&A roster. Your first question comes from the line of Christopher Jayaseelan Barnes with Deutsche Bank. Your line is now open. Please go ahead. Just as a reminder, please make sure you are unmuted to ask a question. Thank you very much. Sorry about that. Christopher Jayaseelan Barnes: Rory, could you elaborate on some of the major puts and takes embedded in your 2026 outlook? Demand trends appear robust, but fruit sourcing costs continue to be a challenge, especially with the dollar weakness and supply pressures last year. It would be helpful to hear a little more about the cost programs you alluded to, whether you see opportunity to take incremental pricing to combat some of this inflationary pressure, and then some further detail around how you see industry supply and demand shaping up over the course of the year. Thanks. Rory Byrne: Thank you, Christopher. Guidance has become increasingly difficult to get the crystal ball out and predict what is going to happen in the next month, let alone in the next year. What we tend to do is look back over the last few years, and I think the base year we are working from, 2024, we had an absolutely exceptional performance, particularly in Fresh Fruit, and when we have a profitable year, we take it, but unfortunately that sets a high benchmark to try to maintain or grow from. Thankfully, we look back at 2025 and we managed to achieve that, so the sum of the parts for the three operating divisions did exceed our very strong 2024 number. It is very early in the year to guide. Certainly, the supply dynamics that we referred to in the script remain. There is a complex supply dynamic, and we are hoping our own Honduran production will come back over the course of this year and gradually get into full production for next year. We are back up and running, but not fully. There are other dynamics like Chiquita's exit out of Panama and reentry that will take some time to come in, and weather issues in Central America, particularly in Colombia, have put a lot of pressure on the exit price out of Colombia and driven up sourcing costs. They are continuing a little bit. We have been going through negotiations. We cannot get into specifics on price, but we are having constructive and sensible dialogue with all of our customers to reflect all of those underlying dynamics. We put all of that into the mix. We also have an exceptionally strong performance in our Americas Rest of the World business, and again it is a bit like 2024 in our Fresh Fruit business. We take it when it is there, and when the market dynamics are good and the supply-demand is good, we take it, but it necessarily sets the benchmark on which the level of growth we achieved was substantial in 2025 on the Diversified Americas division. It is very early in the year. I think there will be a little bit of a shift in the weighting of the profit streams over the course of the quarters, with it being a little bit more heavily weighted towards the back half of the year as well. So early in the year, some factors out there are putting a little bit of pressure on us, lots of positives as well, so we have set the target at a minimum of $400 million for the year, Christopher. Christopher Jayaseelan Barnes: Got it. That is helpful context. And then just one follow-up for Jacinta on cash flow. You mentioned normalized cash generation, but how should we think about the level of conversion relative to the at least $400 million of EBITDA? Do you think you can get back to historical 50% plus conversion, or is that more realistic for 2027 and beyond? Thanks. Jacinta Devine: Thanks, Chris. As I explained earlier on the call, there were some nonrecurring and seasonal items which impacted free cash flow in 2025, and we expect something more normalized in 2026. Generally, we have said free cash flow conversion of between 30%–35% over the longer term. We have outperformed that, Chris, you are quite right, over the last few years. We are targeting more normalized levels, maybe not as strong as we saw last year with a particularly strong inflow at the end of last year, so that makes the comparison a little bit more challenging, but 30% to 35% is the number we generally recommend people consider for the longer term. Christopher Jayaseelan Barnes: Okay. Thank you very much. I will pass it on. Operator: Your next question comes from the line of Pooran Sharma with Stephens. Your line is now open. Please go ahead. Pooran Sharma: Hi. Good morning, and I appreciate the question. Congrats on the results. I just wanted to maybe start off on guidance and dive in a little bit deeper. I was wondering if you could run through the set of factors that maybe get you to either range. You are targeting at least $400 million, so I was wondering what gets you to a higher end. I know you are not saying something explicit, but the higher end of your plan and the set of factors or circumstances that gets you there, and maybe what keeps you more at $400 million. Rory Byrne: I think I have tried to answer Chris's question and give you the overall backdrop to how we determined the very early guidance. We have a number of important seasons in the Diversified Americas division, such as the cherry season. Pricing has been a little bit weaker, but I think with our volume flow, we have probably done okay. That is a key season as we get to the end of the year, and the supply-demand around some of the other products from grapes to deciduous have all been very positive in 2025. We will have to see how that emerges over the course of this year. We have a number of key projects underway where we integrate our marketing activities in North America with the previously named Dole Direct North America, integrated with our OPI subsidiary in North America, and there is a bit of work to do to maximize efficiencies in that, but we are hopeful that it can develop well in the medium term. In Europe, particularly Southern Europe and indeed in Northern Europe as well, we have had lots of rains, so that has affected some of the production areas in Southern Europe, probably affected the impact of demand in things like food service, with people not eating out as often as previously. With some extremely bad weather, you are seeing in North America some weather conditions. We would hope that those kinds of weather impacts, while they might have some impact in the first quarter, tend to balance out over the course of the year. And then on the banana business, it is a little bit early. Our own Honduran production will come fully on stream over the course of the year, and some price modifications will filter in over the course of the year. We hope we do not have any issues around disruptions to shipping schedules. At the $400 million mark. Pooran Sharma: Maybe just around the Ecuador port asset sales. I am wondering, if you were to monetize the business today, how does this— Rory Byrne: It is an asset that has been within the whole food company for quite a long number of years, probably developed during a phase where it needed to be developed to improve our export position. We have found a leading operator—professional, serious, dedicated—and we believe that they can run the port and take advantage of the port in a better way from a commercial point of view than we could do on our own. We think it will be fairly neutral from a cost point of view. In terms of operations, we have entered into a use agreement that will be based on market cost structures and will leave us pretty much line ball in terms of cost. I think the capital allocation is very important. It is a very good business we are exploring. We significantly upgraded our facility to enhance the automation of our processes for our supply and delivery to our main retail customer in Scandinavia. We think that can be a very good model to even give us a strategic advantage, and we can find investments that at least beat the buyback alternative or are positive. James O'Regan: We can seek inclusion into some of the smaller S&P indices and some of the MSCI indices. It is an important part of our information. We are there and we qualify for inclusion, so we will just be working with the indices and seeking to get in there. We believe we should be in a position to join the S&P 600, so we will work towards that initially. And we are already in the Russell Index. Peter Thomas Galbo: Great. Okay. Thanks very much, guys. Operator: Thank you, Peter. There are no further questions at this time. I want to now turn the call back to Rory Byrne, CEO, for closing remarks. James O'Regan: Thank you very much. Rory Byrne: I think we can look back at 2025 with a great degree of satisfaction at the operating level. We certainly had some strong operating performance, with great contributions from all three of our divisions. We have made significant strategic progress in 2025. We believe we are well positioned to continue to grow in 2026. Thank you all for joining us today, and we look forward to the year progressing positively.