加载中...
共找到 24,993 条相关资讯
Gunnar Pedersen: Good morning, everyone, and welcome to this fourth quarter presentation for Vow. I will start with some highlights. Then Cecilie Hekneby, with me here today, will take you through the numbers. I will come back and give you a market update before we spend a bit more time than normal on the strategy, as we have completed our strategy work, and we'll go through the update with you on that. My name is Gunnar Pedersen. I'm the CEO of the company. So, the fourth quarter delivered all-time high revenues. This is driven particularly by strong performance in Maritime and also in Aftersales. Our operation has improved across the board with better project deliveries, higher activity levels, and strengthening margins in the key segments. Our Industrial Solutions is progressing and delivering in line with our expectations, but the results are still impacted by the previously announced noncash impairment. Now this reflects updated assumptions, also on a more cautious outlook following the strategic review. Our liquidity position has strengthened significantly. The covenants for the fourth quarter were waived, and the covenants for the first quarter of 2026 have been waived. And also, we have come to a new structure for the covenants for Q2 and onwards for 2026. I should mention that in terms of liquidity, we do expect fluctuations resulting from milestone payments and the delivery activities into the projects. Our order intake remains strong with NOK 545 million in the quarter and a backlog of NOK 1.7 billion. There's another NOK 400 million worth of options, which is giving us a very solid visibility going forward. Also, subsequent to this quarter, we have signed a contract for 4 new cruise vessels valued at NOK 27 million. Aftersales continues to grow, supported, of course, by the expanding installed base and also improved operational performance. Now Cecilie will take you through the numbers, the details on the numbers, and I'll be back to talk about the market afterwards. Cecilie Margrethe Braend Hekneby: So, good morning. I will give you an update on the financial numbers for the fourth quarter, starting with the key financials for the group. The reporting currency is in the Norwegian kroner. In the fourth quarter, we had high activity and saw an uplift in revenue. Reported revenue for the quarter was NOK 347 million compared to NOK 265 million 1 year earlier, as you can see on the graph on the left-hand side, positively impacted by all-time high revenue in the Maritime Solutions and Aftersales segments. Revenue from the 2 Circular Solution projects developed according to the updated assumptions from Q3, while revenue from Heat Treatment strengthened the Industrial Solutions segment in the quarter. Moving on to the graph in the middle, we see positive numbers again with adjusted EBITDA for the quarter of NOK 16 million, although negatively impacted by warehouse write-downs of NOK 10 million. The graph on the right-hand side shows the development in the order backlog. At the end of the quarter, the backlog amounted to NOK 1.7 million. It is steadily increasing and gives good visibility. Total revenue in Q4 was NOK 347 million, up NOK 82 million from Q4 '24. Revenue in the Maritime Solutions segment of NOK 171 million is an all-time high following progress on large newbuilding contracts and up NOK 53 million from Q4 '24. Aftersales has revenue of NOK 64 million in the quarter, which is also an all-time high and up NOK 12 million from 1 year earlier. The 23% increase from Q4 '24 is related to high activity and an increasing volume of vessels in operation that gives scale advantages. Revenue in the Industrial Solutions segment is up NOK 16 million from Q4 last year. Revenue development for the 2 Circular Solutions segment is developing in line with updated assumptions from Q3, and positive development in Heat Treatment adds to the segment. The full-year numbers for the Maritime Solutions segment are impacted by the catch-up effect in Q2 but are still up 25% year-on-year. Aftersales is up 14% year-on-year, while the Industrial Solutions segment is down NOK 119 million year-over-year, heavily impacted by the updated assumptions for the 2 Circular Solution projects that led to the reversal of revenue in Q3. So, let's move on to the operational key figures for the fourth quarter. Gross profit of NOK 79 million in the quarter is up NOK 3 million from Q4 '24. Gross profit in the Maritime Solutions segment is up NOK 11 million, with gross margins up from 19% to 20%. Gross profit in the Aftersales segment is up NOK 7 million, with gross margin increasing from 33% to 38%. In the Industrial Solutions segment, gross profit is down NOK 15 million from 1 year earlier. In Q4 '24, the gross margin was 37% compared to 18% this quarter. COGS in the quarter is impacted by write-downs of inventory in both the Maritime Solutions and Industrial Solutions segments in connection with the annual close and detailed review of inventory, amounting to NOK 10 million, and increased allocation of recovery hours in projects. Recovery hours are up NOK 6 million, following improved time tracking and hourly rate position, as explained in the Q3 presentation, while reported employee expenses are in line with reported numbers 1 year earlier. Gross employee expenses, including recovery hours, adjusted for the nonrecurring items, amounted to NOK 79 million in the quarter and is up NOK 7 million from 1 year earlier. Other operating expenses adjusted for nonrecurring items amounted to NOK 25 million, up NOK 3 million from Q4 '24. Included in this increase is a NOK 2 million lower government grant in ETIA this year compared to 1 year earlier. The nonrecurring cost of NOK 1 million in the quarter is related to the closing of one test facility in France. Adjusted EBITDA in the quarter of NOK 16 million is at the same level as 1 year earlier, including the noncash warehouse write-off of NOK 10 million. And I'm pleased to see that the underlying performance is improving. The financial performance in the quarter is heavily impacted by the announced noncash impairment. All companies must perform an annual impairment test to assess whether assets carrying value exceeds their recoverable amount. We have had a thorough process resulting in recognition of a total impairment of NOK 119 million. In the Maritime segment, an impairment of NOK 23 million was recognized related to intangible assets associated with MAP technology, that is, microwave-assisted paralysis. As this technology has been discontinued and replaced by the new EAP platform, electrical-assisted paralysis. In the Industrial Solutions segment, the impairment amounted to NOK 96 million, comprising impairments of intangible assets of NOK 38 million and goodwill of NOK 58 million. The impairments reflect updated assessments of recoverable amounts following revised expectations for future economic benefits across projects and operations, driven by changes in underlying market assumptions and updated financial projections. We continue to see significant long-term potential in the Industrial Solution market. However, as with early-stage and emerging markets, visibility on the pace of technology adoption remain limited, and we have taken a more cautious approach. Depreciation in the quarter of NOK 12 million is NOK 1 million higher than in Q4 '24. Over the last years, the group has invested substantial amounts in terms of acquisition and R&D, and a significant share of projects will commence amortization from 2026. We expect an increase of approximately NOK 4 million in increased amortization during 2026, increasing by another NOK 7 million during 2027. We have now implemented a revised capitalization policy under which only expenditures deemed strictly necessary will be capitalized, supporting a more prudent and disciplined balance sheet approach. Financial items in the quarter of negative NOK 10 million are NOK 6 million lower than in Q4 '24. Interest costs on bank loans amounted to NOK 11 million, down NOK 4 million from Q4 last year. There was a foreign exchange loss of NOK 1 million in the quarter. We report in Norwegian kroner, but most of the contracts are in euro and about 60% of the project costs are in the contract currency as a natural hedge. Fluctuation in foreign exchange rates may however, have an impact on key financial figures and we are looking into alternatives to mitigate the risk. Following the sale of Vow's shares in Vow Green Metal in June last year, the share of net loss of NOK 3 million and a gain of NOK 1 million is recognized in the full year numbers. Result before tax ended at negative NOK 127 million. Adjusted for the noncash impairment of NOK 119 million and the noncash warehouse write-down of NOK 10 million result before tax is NOK 2.5 million, showing improved operational performance. Sorry, it's a bit difficult to get this one to work. Well, subsequent to the reporting period, we obtained a waiver for the first quarter of '26. And yesterday, we agreed on a new covenant structure for the second quarter '26 and the following periods. We have close and constructive dialogue with DNB, and I'm particularly pleased that the peak interest that has been added to the loans now is being terminated. So, we will, in a short moment, move over to the cash flow, yes. And looking at the cash flow development, we started 2025 with NOK 229 million in available liquidity following the private placement in December '24. This was reduced to NOK 49 million in available liquidity at the end of Q3. Cash collected in Q3 was used to resolve overdue payables, improving the overall financial position. During the fourth quarter, liquidity improved significantly following large milestone payments, and we ended 2025 with NOK 136 million in available liquidity. I will continue to closely monitor working capital, and we will see fluctuations over the next quarters, driven by project execution and timing of milestone invoicing and collections. So, this was a walk-through of the key financial development in the quarter. And now Gunnar will give you a business and strategy update. Gunnar Pedersen: Thank you, Cecilie. So, I will start by having a look at Maritime Solutions. Now the cruise market continues to strengthen with improved profitability and high occupancy levels on board cruise vessels, which also then drives demand for new builds. Fourth quarter showed all-time high revenue in Maritime Solutions, driven by higher delivery volumes and progress on new building projects. Our order intake is very strong, and backlog provides long visibility with deliveries now stretching well into the 30s. The shift from legacy contracts to new contracts with more updated terms is improving margins and stability as well. We expect to see continued good performance [indiscernible] Demonstrating continued strong demand from European shipyards as well as our strong position in that market. The backlog is strong for maritime around NOK 1.6 billion, giving us long visibility. On the upper right-hand graph, you can see how the backlog is expected to turn [indiscernible]. So, we will do Maritime Solutions market update once again. So, the cruise market continues to strengthen with improved profitability and high occupancy levels on board the cruise vessels, supporting a sustained demand for new builds. Fourth quarter showed all-time high revenue for Maritime Solutions, driven by higher delivery volumes and progress on the new building contracts. Our order intake is very strong, and the backlog provides long visibility with deliveries stretching well into the 30s. The shift from legacy contracts to new contracts with updated terms is improving margins and stability. We expect good performance also into the first quarter of 2026. On the contract development for Maritime, so in the fourth quarter, we signed 3 major contracts which demonstrates continued strong demand from the European shipyards but also our strong position in the newbuild market. The backlog for Maritime is around NOK 1.6 billion, which gives us long visibility, as I said, well into the 30s. On the upper right-hand graph, you can see how this backlog is expected to turn into revenue in the coming years. So, the percentage being the percentage of the backlog that we expect to become revenue. I should also add that sometimes you see a little bit change in this if the yards needs to delay a project or move deliveries. The legacy contracts are declining steadily. You can see that on the bottom right-hand graph. And already by 2026, the majority of revenue will come from new contracts that are less vulnerable to inflation and with better margins. To help you read the numbers correctly, the share of legacy contracts if you look at Q4, so 56% of the 2025 total revenue came from legacy contracts, whereas 44% came from new contracts. And into 2026, you can see that we are in the 30s somewhat range when it comes to revenue from legacy contracts. This slide illustrates our position in the global cruise market, both in terms of deliveries and also the long-term pipeline. On the left on this chart, you can see the number of vessels that we have delivered equipment to and also what cruise line we deliver to. And you can also see how many vessels we've had commissioning activities on. So we delivered main systems for 18 vessels and we commissioned. Scanship, our Scanship subsidiary is a trusted technology provider to not only the leading cruise operators but also to the yards. We are working closely with all the major European shipyards that you can see on the center map. And this is basically where the cruise vessels are built. To the right, you can see the number of vessels that are under contract. That will be the dark blue ones. How many are under option, kind of green color on those. And then the gray which is the number of contracts that we have actively placed bids for. And it's lined up in time with the year that the vessels are expected to be handed over from the yard to the cruise owner, to the cruise line to go into operation. Typically, we deliver equipment 18 to 24 months before. It can be earlier. It can even be in the same year depending on what type of equipment. And that is, of course, what also makes it a bit tricky to read this as how the revenue is going to play out. Subsequent to the quarter, we signed a contract for 4 vessels to be delivered from 2029, so handover date from 2029 to 2031. Those are not shown on this graph. The growing installed base is also an important driver for Aftersales, supporting revenues going forward. And by that, we'll switch to Aftersales. So, our Aftersales activities delivered record sales in fourth quarter with strong performance across all its segments. Margins improved further, driven by scaling effects and improved operational efficiency. So, to put it simple, we delivered more with the same organization. We entered 2026 with high activity, including mid-life upgrades and preventive maintenance agreements. The growing global fleet equipped with our systems continues to drive demand forward. Overall, Aftersales demonstrates healthy margins and a solid outlook going into first quarter. Industrial Solutions. And I haven't said this, but on the lower right-hand side, you can see the percentage it makes up of the revenue for 2025. So, for Maritime, that was 52%. It's 23%, I think, for Aftersales and 25% then for Industry. So Industrial Solutions. After the major adjustments that we made in Q3, both revenue and margin trends are now developing in line with our expectations. The 2 circular projects are developing as expected. Commissioning is ongoing. We successfully produced first biocarbon in the fourth quarter, which is an important milestone. And we expect the 2 ongoing projects to be concluding sometime in 2026, which will reduce our risk exposure and support improved margins going forward. The large pyrolysis reactor from C.H. Evensen that you can see on the photo on your right-hand side was delivered in the fourth quarter and is expected to go into operation sometime in 2026. Within Heat Treatment, we have seen a slight pickup after a soft third quarter. Still, the galvanization market is soft, but the aluminum industry is promising and picking up. On the contract side for Industrial Solutions, the order backlog now stands at NOK 112 million, and the composition reflects our more selective and controlled approach going forward. We continue to see positive momentum with our key customers, particularly, I would say, with Arbion Industries, where cooperation continues to mature. And of course, this supports also our long-term potential. We're also seeing encouraging developments in our collaboration with Murfitts Industries within the end-of-life-tires processing segment. FEED study has been completed and also the permitting process is progressing with some clear milestones passed over the last couple of weeks. Again, within Heat Treatment, the market softened in Q3, but the pipeline has strengthened again. Across all these subsegments, our focus remains on prioritizing the right opportunities and securing that projects fit our new and more disciplined profile. We have touched on strategy and strategy revisit in earlier presentations, and we will spend a little more time on that this time as we have come to conclusions. Not all the action plans have been completed, but the direction and so on has been concluded. So, to summarize our starting point, I think we can say that the cruise market remains strong, supporting continued growth in our core Maritime segment. Our order backlog provides visibility well into the 30s, giving a solid foundation for long-term planning. Our pyrolysis technology is moving into a commercial demonstration phase. Passing some important milestones for Industrial Solutions. The Circular Solutions part of Industry develop at different speeds, and we are aligning resources and capital accordingly. We see a significant long-term potential, both within Maritime and also within selected industrial applications. Simply put, we believe that the starting point and the path forward can be defined by clear focus, strong position and disciplined execution. At the start of the year, we implemented a new organizational structure to support our updated strategy. We now operate 3 business units: Maritime Solutions, Industrial Solutions and Aftersales, each with crystal clear profit and loss responsibility. This creates clearer accountability and faster decision-making. We have strengthened and streamlined the management team, and we have introduced a new operating model focused on delivery excellence and project control. The finance function has been reinforced to improve cost control, margin focus and cash discipline. And finally, we're gradually separating Industry from Maritime to position Scanship as a pure-play Maritime Solutions company over time. Overall, these changes sharpen execution, and they give us a stronger foundation for profitable growth. So, for Maritime Solutions, this is the backbone of our business, and we continue to hold 70%-ish market share in the global cruise newbuild segment. The market remains robust. Cruise operators report strong profitability and high occupancy, which fuels continued investment in new vessels. Our strategic intent is straightforward, defend our leadership position, improve margins and also expand value creation throughout the vessel life cycle. We continue to innovate and are now refining our onboard pyrolysis solutions, which strengthen the environmental performance of our cruise customers and support their decarbonization ambitions. With a strong installed base and a solid order backlog stretching well into the 30s, we have excellent visibility and a clear runway for continued growth. Going forward, our focus is operational excellence, predictable deliveries and ensuring that every new contract contributes positively to the profitability. Aftersales. Aftersales is becoming an increasingly important part of our business model. It strengthens customer relationships, and it provides high-quality recurring revenues. We now serve around 200 cruise vessels worldwide. And as the installed base grows, the addressable Aftersales market grows with it. This business unit consolidates all global Aftersales activities under one leadership team with full profit and loss responsibility. The offering includes spares, consumables, services and upgrades as well as new digital solutions being developed in close collaboration with our customers. The cruise fleet continues to expand and environmental regulations remain tight. These are both drivers for steady long-term growth in this segment. So, our strategic intent is to increase recurring revenue, improve margin stability and enhance customer lifetime value. Industrial Solutions. Well, in Industrial Solutions, the priority is disciplined commercialization. We will focus on applications with clear commercial traction and strong strategic relevance. We are applying very strict capital discipline, emphasizing an asset-light model, partnerships and also milestone-based commitments. The immediate commercial focus is on 3 areas. One is turning biomass into biocarbon. The other one is turning end-of-life tires to recycled carbon black and pyrolysis oil. And the third one is growth within heat treatment. The markets for these applications are growing but maturing at different speeds. We are, therefore, prioritizing where we deploy capital and engineering capacity. As an example, pyrolysis of sludge for PFAS treatment remains a relevant future opportunity. As the market matures, this could become the next focused application. But this remains to be seen. Our strategic intent to become a leading supplier of systems, our core pyrolysis technology supported by engineering services. Given the revised strategy, we have decided to initiate a strategic review of our subsidiary, ETIA's food safety activities. Some concluding remarks. The strategy is now sharpened, and the organizational foundation is in place. The path forward focuses on value creation through disciplined execution. We have set clear priorities to strengthen and defend our Maritime leadership, to commercialize pyrolysis technology using milestone-based capital allocation. Scaling recurring revenues in Aftersales, improved execution, margins, and cash generation, and allocating capital selectively with strict return requirements. These priorities will guide how we think about projects. It will guide our investment decisions and also our organizational focus for the coming years. So, to conclude, we are building a stronger, more focused company with clear accountability, disciplined capital allocation, and a firm commitment to profitable growth. So, that concludes our presentation, and I believe we are now ready for questions. Unknown Executive: Thank you, Gunnar and Cecilie. You are absolutely right. We have quite a few questions from our online audience. And we'll start from the top. There's a question asking for a further elaboration of the opportunities in the land-based industries part. You commented on some of the projects that we heard about before, but there are a number of other projects that we have or opportunities that have been heard about before. How do you see the future for those? Gunnar Pedersen: I think our core technology within pyrolysis and our systems has a great potential. But we see that these markets are developing at different speeds. So, it is about adapting to the maturing of the markets and don't go in way too early or in prospects that will never become profitable for our customers. So, it's trying to understand the market. Unknown Executive: And on that topic, within Industrial Solutions, are the projects you're pursuing now directly profitable for your customers? Or are they reliant on carbon credits or subsidies from governments to be profitable? Gunnar Pedersen: It's a very good question. And we try to focus going after projects that do not rely on carbon credits and such, and the regulatory part. So, we are through our early studies, FEED studies. We know a lot about how much investment is needed. We know the value of the products coming out of it and what the business case looks like for our customers. And that gives us a solid background to determine where we want to focus our efforts. Unknown Executive: The 2 projects in Industrials will be finalized in 2026, you say. Can you be a little bit more specific? And are there still uncertainties related to the completion of these? Gunnar Pedersen: No, there are plans. They are following plans, and they are in the commissioning phase. It's not all just up to us as a supplier of some parts of the system, but also the other remaining systems for each of these plans. Also, of course, these are new systems at industrial scale. So, we do expect to learn along the way, find issues, resolve issues, and so on. But there is a plan. The plan is being followed. And we know when the schedule is for those to complete, yes. Unknown Executive: Then there is a very specific question related to margins for Maritime. Why is the Maritime margin for Q4 down compared to Q3, even if the amount of legacy contracts is significantly down? Cecilie Margrethe Braend Hekneby: For the Maritime Solutions segment, the write-down that we had to make in the quarter impacts the COGS and the margins. So, if you adjust for the write-down, the gross margin would have been 23% instead of 20%, which is up from 19%. And EBITDA margin, excluding the write-off, would have been 16%, up then from 11%. So, that's a major impact for the margin development in the quarter. This was a noncash effect that had to be made in connection with the annual close, and a thorough review of everything in the inventory. Unknown Executive: Now turning to Scanship. You mentioned that it's tricky to draw the relationship between the revenue and number of ships going into service for a particular year. But how then should we expect Scanship's revenue to trend in '27 and '28? Gunnar Pedersen: We are not guiding very much on the revenue, but there is another graph showing how the backlog is turning into revenue. And you can see that about 24%, I think it was for 1 year. So, we're not completely sold out. There is still room to fill up with some more orders. Some new orders have been signed and are not in those numbers. So, it's filling up. Unknown Executive: There's a question related to this. Given the updated strategy, what can you say about the financial targets for the business, for instance, with regards to growth and margin, EBITDA margin going forward? Cecilie Margrethe Braend Hekneby: Well, we are not ready to guide on that yet, at least. But we are building this company step-by-step and improving the financial status, and yes, are starting to see effects of all the measures that have been implemented since this summer. Unknown Executive: And why is it important to separate Scanship as a pure Maritime player? Gunnar Pedersen: I think following the new structure we have put in place, it's kind of natural that Scanship becomes a pure-play Maritime company. If you go on board a cruise vessel, if you go to a yard, if you go to a cruise line, Scanship is the brand that they recognize. It's what they expect to see on anything from the bid, your invoice, everything. So, maintaining that brand and building on that for that part of the industry, and then also separating the industrial activities into a separate company makes it easier. Follows the organizational structure, decision lines are shorter, and it's really easy to see the impact of the different decisions made in the business. Unknown Executive: Then there are 2 more questions, and greetings from Voppatol. The questions from Voppatol is, what will be the connection to Kongsberg Maritime? And what are the plans for connections to China going forward? Gunnar Pedersen: So, in terms of Kongsberg Maritime, no specific connections for the time being. I know from my history in Kongsberg Maritime that the cruise industry is a segment that is of interest to them. However, I'm not up to date on what their strategies are for that segment. That will be for Kongsberg Maritime to communicate. And the final part was related to the Chinese market. So yes, we work with the Chinese market. We have had deliveries to a couple of cruise vessels being built at Waigaoqiao, Shanghai. And that relation is still there, and we are following the development in that market. Unknown Executive: Thank you. There are no further questions from the audience. So, we hand it back to you to round up. Gunnar Pedersen: Well, thank you. Thank you for watching this. I think what we can say now as a kind of a summary is that we think we have a very strong position with the new strategy. We have very clear focus. So, now we really look forward to some disciplined execution of the new strategy. So, by that, thank you, everyone. Have a wonderful day. Cecilie Margrethe Braend Hekneby: Thank you.
Katariina Hietaranta: Good morning, and welcome to Kamux's Q4 '25 Results Information Session. My name is Katariina Hietaranta. I'm Kamux's Head of Investor Relations. And I'm here with our CEO, Juha Kalliokoski; and CFO, Enel Sintonen, who will present to you the results. Please go ahead, Juha. Juha Kalliokoski: Good morning. Thank you, Katariina. Let's get started. Here is our agenda for presentation. As usual, we shall first take a brief look at the market, followed by a review by country. Enel will then dive deeper into the financial development, including our outlook for 2026. She will also present the dividend proposal and the extension in our share buyback program that was announced this morning. As usual, we will take the questions at the end. 2025 was a tough year for Kamux, and obviously, we are not satisfied with the results. Last year was the first year in Kamux's 22 years of history that the volumes and revenue decreased. The reason behind the 13% revenue decrease is a combination of volumes and average price. While volumes were stable in Sweden and Germany, they declined by 10% in Finland. The rest of the revenue decrease came from the lower average price. Despite the decrease in gross profit, gross margin improved to 8.7%. Margins were better in Finland and Sweden. During this market, we have wanted to ensure that the keys are in our own hands, therefore, focusing on strong cash flow. We have seen that many in the industry have had issues with their cash positions. We focused heavily on inventory turnover and our inventories decreased by 23%, which is 10% more than the revenue decrease. At the moment, we are in a position to start increasing our inventory again towards the spring and summer season. Revenue from the integrated services was EUR 13.3 million with Kamux Plus at the previous year level. I'm very happy about the customer satisfaction improved throughout the year. Our long-term target is 60 and we beat that in the fourth quarter with NPS at 65. At the year end, NPS was as high as 66. Despite the disappointing volume development, we maintained our position as the market leader in Finland, selling the most used cars, both in the fourth quarter and over the whole year. New car markets were subdued in Kamux's operating countries last year, affecting the inflow of trading cars. We can already see that the car park of 1 to 5 years old cars is decreasing in all our operating countries, which means even tougher purchasing market. This may lead to higher prices of used cars also. There were no major changes to our showroom network during 2025. In Finland, our showrooms in Jyvaskyla moved to new purpose-built premises during the last quarter. Earlier in the year, we closed the showrooms in Mantsala and Savonlinna. There were no changes in network in Sweden. We have -- where we had closed altogether 6 showrooms in 2024. In Germany, we opened a new showroom in Schwerin, near Lubeck and Rostock in the Northeastern part of Germany. To improve our efficiency in the capital region in Finland, we have decided to close 2 showrooms. The Malmi showroom closes by end of February and Herttoniemi by end of March. The cars and most of the sellers will move to other showrooms in the capital area. The Seinajoki showroom will relocate by end of March to better premises. Moving to comments per country. In Finland, the competition continued tight. Consumer continued to prefer affordable cars, which were not so easy to source, as many dealers were after them. The volume development was disappointing, but the good news is that despite the decline, we maintained our position as the market leader in terms of number of cars sold. Revenue was impacted by volumes and lower average prices. Volumes were down by 10%, and the rest was due to lower average price. Gross margin developed positively for the third quarter in a row, although margin per car was slightly down. Adjusted operating profit decreased mainly due to volumes. Insurance penetration increased to 66%. The decrease in Kamux Plus penetration rate is largely explained by the lower average prices of cars sold. Our showroom in Jyvaskyla moved to new premises during the quarter. This is one of the few premises that we own ourselves. Customer satisfaction improved further and was 65 for Q4. On a full year basis, NPS was 62. And then we will move to Sweden. In Sweden, we have made good progress into the right direction during '25, but obviously, there is still a lot of work to do. The market did not help us in Q4, and our volumes stayed at the previous year level. Revenue decreased as the average price of cars was lower than in the previous year, and fewer cars were exported to Finland. It's also good to keep in mind when thinking about the full year volumes, that in the first half of '24, we had 6 showrooms more than in 2025. 3 showrooms were closed at the end of July '24 and another 3 by end of December '24. We took active inventory management measures during the quarter, which impacted the margin per car. Despite this, gross margin continued to improve, but gross profit decreased due to lower average price. Kamux Plus penetration rates have increased quite nicely and the finance and insurance penetrations rates have remained on a good level. Customer satisfaction has developed well also in Sweden, and there is a significant improvement in NPS. It was 56 in Q4 '24. And now in Q4 '25, it was already 64. I'm also happy to say we announced the appointment of Niklas Eriksson as the new MD of Kamux Sweden yesterday evening. He will begin in the MD role in mid-April, but joins the company a little bit earlier. In Germany, our challenges continued. In Q4, did a lot of inventory cleaning by lowering prices and selling cars also to the other dealers. As a result, the number of sold cars grew compared to Q4 '24. This was at the cost of the margin, leading to a weaker gross profit and gross margin and also with an impact on financing services. Adjusted EBIT was also affected. The good news regarding Germany is that also in there, our customer satisfaction has improved. NPS for the quarter was as high as 70, and even the full year 62. And now I hand over to Enel for more details on the figures. Enel Sintonen: Thank you, Juha. Summarizing our financial performance in the quarter. Sold volumes and revenue declined. And despite slowing decline in Q4, current volumes do not meet our ambition and we continue to work to turn it. Gross margin improved for the third consecutive quarter. Looking at financial performance per country. Finland and Sweden are moving step by step to the right direction. In Germany, we continue to face challenges, noted also by Juha earlier. And we work intensively and with discipline to turn it to the right direction. In response to headwinds in sold volumes, we have prioritized the right size and health of inventory. Inventory is adjusted to EUR 100 million level, unlocking a significant amount of cash. Inventory turnover has improved. Right steps towards capital efficiency have been done and will continue. Balance sheet ratios are at healthy level, net debt is at historically low level and equity ratio is 53.5%. And as a summary, at the time, we continue to have headwinds in volumes, we ensured right size and health of inventory, healthy financial and liquidity position. Here are our financial ratios. Revenue declined by 13 percentage points and key drivers were underlined earlier. Gross margin was 8.7% and improved slightly. Driven by lower volumes, operating result was negative. Items affecting comparability included termination of CEO contract costs. Adjusting operating result was negative. Inventory turnover, that we talk a lot in our business, has improved and we continued activities to gain further improvements in this area. Equity ratio has improved and is at over 50% level, as said earlier as well. After this year, volume is our key area to improve. We are looking our financial position. We are better equipped to go for volumes. Our inventory is at the right size and fit. Here we can see trend in volumes. Volumes declined in the quarter, but less than in recent quarters, mostly due to profitability focus and with impact from lower showroom network. In Q2, we sold about 3,800 cars less compared to the previous year same time. In Q3, about 2,800 cars less. And in Q4, we sold about 1,000 cars less than in previous year same quarter. So the decline has somewhat slowed down. We can see revenue and adjusted operating results trend here. Looking recent 4 quarters, adjusted operating profit trend was to the right direction in Q2 and Q3. However, low volumes impacted heavily to Q4 results. At the end of the fourth quarter, our cash position was EUR 18.5 million. In Q4, we paid back EUR 12 million of revolving credit facilities that can be withdrawn later when needed. Cash position and unused credit facilities gives us a good position to build up inventory and volumes. Our integrated services revenue development was hit by lower volumes. We are not satisfied with this trend, even though the share of integrated services has slightly increased to total revenue. And here is a visual representation on how our net working capital developed. We can see EUR 30.8 million reduction in net working capital, driven by decline in inventory. Our inventory is in a better fit from both structural and price points perspective. Outlook for 2026. Kamux expects its adjusted operating profit for 2026 to increase from the previous year. And dividend distribution. Based on the dividend policy, Kamux aims for a dividend payout of at least 25% of the profit for the financial year. This year, the result has been negative. However, the Board of Directors proposes dividend of EUR 0.05 per share to be distributed for the year 2025. In this morning, we have announced also an extension to our share buyback program. The program that was initially launched in November, has progressed well and Board of Directors decided to increase the number of shares to be bought. The new totals are: acquire at maximum 2 million shares, and this means extension of 1 million shares compared to initial launch. The maximum amount to be used for the repurchase of shares is EUR 4.5 million. The program will end April 16 at the latest. And back to you, Juha. Juha Kalliokoski: Thank you, Enel. So a few words about long-term targets and strategy. In terms of our long-term targets, we have progressed well in customer satisfaction, where we have already achieved our long-term target of 60. The group level NPS for Q4 was 65. Our task is to keep it there. We have also progressed well in terms of employee satisfaction in the last 6 months, and the eNPS has risen to 15. This is obviously still below our target, but an important improvement nevertheless. On the financial side, as we have shown earlier today, we are not where we want to be. However, we are still standing by our long-term targets. Here is our current management team, to which there will unfortunately be some changes this spring, as Johan and Joanna will be leaving us. We are progressing well with their replacements, however, and we have just announced that Niklas Eriksson will join us in April as Kamux Sweden's new Managing Director. This is a reminder of our focus areas in improving productivity. During Q4, we worked especially hard on managing our inventory in preparation for 2026 and ensuring that we have a solid cash position. There is still a lot to do and we continue to work on these on daily basis. Our strategy remains unchanged. In 2025, we made good progress in advancing customer satisfaction in all our operating countries, as seen in our NPS results. The group's NPS improved from 55 to 65. We have also progressed in improving our operational efficiency, but there is still a lot to do. 2026 is the last year of this current strategy period and we will review our strategy during the year. Our vision also remains unchanged, to become the number one used car retailer in Europe. Katariina Hietaranta: Thank you, Juha. Thank you, Enel. It is now time for questions. And we will begin by questions from the teleconference, if there are any. Operator: [Operator Instructions] The next question comes from Joonas Hayha from OP. Joonas Häyhä: It's Joonas Hayha from OP. So a couple of questions, starting from the inventory actions in Q4 that you did. Could you provide some additional color on what was the reason? Why did you need to clear inventory? Was it too low turnover or perhaps unsuccessful purchases or what? And how are you expecting metal margins to behave going forward? Juha Kalliokoski: When you speak of inventories, it's always so important to remember about the inventory turnover. If the inventory turnover is too low, it means that you are getting all the time old stock, which means losses. And that's why we focused last year to turning the inventory in just the right level, but also that we can achieve our target, the inventory turnover. And as I mentioned that now we are in a situation that we are possible to increase our inventories towards the summer and spring season. And it's easier to manage lower inventory compared to EUR 30 million higher inventory. And as we saw Q1 '25, what was the impact over there. Joonas Häyhä: Okay. And then regarding operating expenses, those seem to have increased somewhat in Sweden and Germany in Q4. Was there anything specific behind those developments? And can you elaborate the drivers a little bit? Enel Sintonen: Yes. So I would say that we had very operational Q4 in that sense. So operating costs were slightly bigger in Sweden and Germany. I would say that nothing special in there. Joonas Häyhä: Okay. And then can you update us on your store network plans for each of the countries? You talked a little bit about the plans in Finland, but what about Sweden and Germany? Juha Kalliokoski: If you start from Sweden, as we said after Q3 or Q3 presentation that we are -- we have 17 stores in Sweden and we are happy about that. But of course, it can't -- it doesn't mean that we don't change the places where we are or the buildings where we are. And there is possible to use 2,000 cars in our places what we have. It means that we pay rents 100%, but we use capacity only 60%. And we are in the same situation in Germany that we have stores there, and we are not opening the new stores for both of those countries before we are making a profit in both countries. And as I mentioned earlier, it means that we must turn the inventory in the right level and then we can expand our inventories higher. Katariina Hietaranta: Thank you, Joonas. There seems to be other questions on teleconference as well. Operator: The next question comes from Rauli Juva from Inderes. Rauli Juva: Yes, Rauli from Inderes here. Just a question on your outlook, if you can a bit elaborate more kind of the drivers behind the earnings growth expectation and the volume development and the margin development and what are the measures that will enable those? Enel Sintonen: What a difficult question, difficult to answer. So as said by Juha, our long-term target remains the same, 100,000 cars. What we have seen in 2025, both operating environment, but also our own operations have seen some challenges. So when looking ahead, we have made a number of steps to improve our own operational daily routines, also putting in place better inventory, inventory in better fit in better structure. So this is why we see that we improve in profitability. However, as seen, it has been tough. And we are -- it also sees in our outlook that we have given. Juha Kalliokoski: And maybe if I continue shortly. If you think about the building, you must first -- if there is something broken, you must first building the ground of the house. And we did that in last year in many ways. And now we think that we are better positioned to start to also grow. Rauli Juva: All right. All right. Yes, so it's mainly kind of based in your own, let's say, processes or so, so no big changes expected in the markets or perhaps in your market share on the cost side as such? Juha Kalliokoski: Of course, we are taking -- as we mentioned about the showroom network in Finland, we are taking off about the property costs a little bit and share the costs and people to the newer stores. And also, we don't believe a big change in the consumer confidence in this year. Of course, we heard something about the positive feedback from the market, but we don't calculate about the big number of that. Katariina Hietaranta: That was all questions from the teleconference, if I'm correct. Very good. Before we take questions here from the audience, there's a couple sort of related but perhaps expanding a little bit, particularly on the outlook via the chat. So questioning, again, the volume assumptions within the outlook. If there's any sort of ideas behind that in terms of unit number or year-on-year growth range? And whether the profit improvement is thought to be more volume-driven or gross margin expansion? And maybe also related to that, to the guidance is that are there some uncertainties that could prevent us from achieving it? And how should that be interpreted? Enel Sintonen: So when looking at the -- I will start with the inventory level we entered the year. So we have a much lower inventory level compared to last year when starting there. And this was also our target to enter the market with this level when we -- and this is the base where we start. Our thinking is that we build up volumes and inventory accordingly, but we do it very -- in a conscious way. So no quick fix in volumes in that sense. So we have been quite, how to say, conscious and cautious with volumes in our thinking behind the outlook. What we still think is what is the right balance between profitability and volumes. We still aim on -- continue to aim on profitable deals, healthy business. So we expect margins to remain or improve in that sense. Anything to add, Juha? Juha Kalliokoski: That was a good answer. Katariina Hietaranta: Okay. Thank you. I'll take a couple of more questions here from the chat. And there's 2 that I'll try to combine. They are related to the purchasing organization. There's a question that the purchasing organization, is it partly outsourced or 100% in your own hands and with reference to the purchase of webcasts. And then also asking how are the sourcing channels evolving today and whether we expect to have an impact of the sourcing channels in '26? Juha Kalliokoski: The purchase side and sourcing side, it's all inside the company, our own employees. You can't outsource that. We have the purchase organizations in all countries with purchase just the cars what needed in the Finnish market, in the Swedish market, in the German market. And then we have the cooperate between the countries and they have the meetings and try to share about the packages, what are the market can we share those or are we interested in Sweden, cars which are in Germany and so on. And when we speak about the channels, it depends a lot of the market. If we start about Germany, it's very much business-to-business how we purchase the cars. And in Sweden, it's totally different way. Most of the cars, what we purchased, we purchased from the private customers or business-to-consumer business and try to increase about trading cars, and we are improving over there, and it's important. And Finland, it's the highest rates about the trading cars, over 50%. And we buy locally from the private customers, but also from business-to-business inside the country, but all over the Europe also. Katariina Hietaranta: We've been speaking quite a bit about the car park development in countries and particularly in Finland and I believe also in Sweden, suggesting that due to the new car market being so slow, so the number of available used cars is getting lower, which means that particularly to Sweden and Finland, there needs to be more imports. Anything you'd like to comment on that? Juha Kalliokoski: Yes. In Finland, it means more imported cars. In Sweden, it means that, of course, the crown is now stronger compared to a year back or 2 years back. It means that it's not so easy to export cars from Sweden or import from Sweden to Finland. And that's why in the Swedish car park, it's not so much out of Sweden. But many, many, many years back, there is 100,000 cars per year what moved from Sweden to other European countries. Katariina Hietaranta: Okay. One more question from the chat and then we'll move to questions from the audience. How far are you from your normal sales levels -- normal sales level? And how much of the gap is due to the weak economy versus increased competition? Juha Kalliokoski: How far away we are, of course, we cannot set our budgets, but as we said earlier, it's very important to increase hand by hand the inventory turnover, what means to sales and the inventory levels. If you do so that you increase the inventory, of course, it's very short-term good impact. But after the 3 months, there is coming a lot of bad things on the table. And that's why we are very carefully about increasing the inventories and the sales speed coming with the inventory increases. Katariina Hietaranta: Very good. Thank you. Any questions from the audience here? Maria, please, you get the mic, just a second. Maria Wikstrom: Yes. Maria Wikstrom from SEB. I had 3 questions. I'll take them one by one. I'd like to start asking like who is winning share given that, I mean, your number of cars in Finland you sold was down 10%. The official statistics show about a percentage drop in the Finnish used car volumes. So who is currently gaining share? Juha Kalliokoski: If you look about the last year numbers, there is both Rinta-Jouppi, K-Auto and Bilar99. Those are the strongest companies which grew last year. Maria Wikstrom: And if I may expand a little bit here that, I mean, you probably have analyzed the situation, I mean, with the Board. What do you think has been like the winning recipe then in 2025? Juha Kalliokoski: Of course, if you open -- if you start somewhere and you open new stores and new locations, hire more people and increase the inventory, it means automatically -- not automatically, but it's easy to grow. But if you are the market leader and you have tough situations as we had Q4 '24, Q1 '25, then you must take -- make a choose where you want to win. And we -- as Enel mentioned, that we made decisions that we are taking a margin, healthy inventory, good cash positions. Maria Wikstrom: There have also been some, I mean, news articles about like Finnish customs having an investigation on certain car dealers for their practices of importing cars and I guess, I mean, paying for the VAT. Are you part of these investigations? Katariina Hietaranta: Maybe I'll take this one. So we haven't been contacted by authorities. Of course, we look at the news and follow the situation, but no contact -- they have not contacted us on that. Maria Wikstrom: And then finally, on Sweden. So what kind of mandate you have given -- I think his name was Niklas, the new country Head of Sweden. So is that more like a growth or profitability mandate that you gave him when he's taking the helm in Sweden? Juha Kalliokoski: I would say that in Sweden we need the growth that you can achieve the profit also. It's not so -- now in Sweden that we only need the margin. We need both of the margin, but we need also the growth. It's hand by hand. Maria Wikstrom: And if -- one follow-up there. So would that be more, I mean, growing the number of cars in the inventory? Or have you given him a possibility to start increasing the number of locations as well? Juha Kalliokoski: As I said earlier, we don't open -- and we were very clear about Niklas that we said we don't open any store before we are taking place -- use all the places what we have in our Swedish stores and store networks. And it means that we can grow our inventory, but not open any stores before we are profitable there. Katariina Hietaranta: Any further questions? Unknown Analyst: [ Jussi Koskinen ] Kamux's story was competitive advantages through or based on scale, financial services, database management and so on. So what has happened to those competitive advantages you told me to us a couple of years back? Have they disappeared? And can we somehow enhance those or get some new competitive advantages? Enel Sintonen: The areas that you mentioned are still there. The competition is more tough on those because when you go first with the competitive advantages, your competitors are very eager to copy those. So what we are -- have started already is our strategy update process. We look into those areas very carefully and our strategy overall and also competitive advantages as part of it. Juha Kalliokoski: If I continue shortly, maybe also the size of the store network, especially in Finland and Sweden, those are still in our own hands. We have our own tailor-made ERP CRM system, Kamux management system. And we know many competitors which works in many countries, and they have several different systems what they use, and it's quite tough. And of course, the brand. We are still 22 years old company and the best known in -- especially in Finland. Unknown Analyst: Is it possible to execute those old advantages more efficiently or find some new advantages? Juha Kalliokoski: We believe that we can find also some new when we are updating our strategy in this year. And also, we need strength about those advantages what we have. Unknown Analyst: I'm not sure if I remember right, but at some point of time, there was discussion that you would like to have more stores in capital area, and now you are closing 2 of those. So has the situation somehow changed or? Juha Kalliokoski: Yes. We look about how many cars we can set or put in our stores in the capital region. And now we had so many places and the sales were not as good as needed and we didn't have so many cars what are possible. And it's not okay in a financial perspective to use the place where we can -- where we couldn't make a good business. Katariina Hietaranta: Then we have questions from Davit, please. Davit Kantola: It's Davit Kantola from eQ. I have a question on the inventory cleaning or decrease you did in Q4. Could you elaborate, was it done during the quarter evenly or was it at the beginning or at the end of that? Juha Kalliokoski: I would say that we made systematic work the whole quarter. And the level where we are at the end of the year was very near about the target what we set when the quarter started. Katariina Hietaranta: Any further questions? Sorry, Maria, I was typing, replying. Maria Wikstrom: No worries. Yes, I have a few more follow-up questions, which I mean, today, when I walked here, the sun is shining and that typically means that the high season is ahead of us. And given your inventories were quite low at the end of Q4, so have you been able to source attractive used cars, I mean, ahead of the high season or are the next explanation for lower volumes being that, I mean, there were everybody in the market sourcing for attractive used cars? Juha Kalliokoski: As I mentioned, we are in a situation that we can start to grow our inventory and we started it. Maria Wikstrom: And then I think you mentioned in your CEO notes that one of the like weak points in '25 was high employee turnover. And I guess, I mean, that's probably following the lower used cars -- number of used cars sold, which then I mean reduced the compensation for the sales employees. So how you are going to tackle this in 2026? And is it possible to tackle it with the current model? Juha Kalliokoski: Yes. We started -- you can continue after me. We started the program for the leaders, I mean, store managers and the area managers start of this year to give more tools for them to handle the purchasers and the sellers and take better care of the employees. And as we see that we are on the right track when we think about the eNPS, what happened last year, the second half of the year, but we have still a lot to do. And of course, it's also how much the sellers can earn, how much they can sell, what is the margin of the cars. And it's one reason, of course. Maria Wikstrom: And I think, I mean, given that I followed you guys, I mean, quite a long time, and I think we talked about the quality of data that you have in your database. And I mean, now the AI is a big theme everywhere and I would assume that, I mean, with the AI tools, I mean, the kind of information that you previously perhaps have held by yourself is easier to accessible to other players as well. So how would you see the impact of an AI to your business? Enel Sintonen: This is something we discussed about in our strategy work as well. But of course, we have discussed many months, at least since I have been here. We see in many areas, of course, first, you mentioned that maybe competitors who doesn't have their own database have an advantage. But at the same time, we see it as an advantage as well because we own the data that we have and we can do a lot with that with IA. Also, of course, we see customer journey -- very, very traditional areas, customer journey, inventory management. It's -- the development is so fast in IA, and we also are in the journey with the development. So this is something we really work on and continue in 2026 and particularly within our strategy work. Katariina Hietaranta: Any further questions from the audience? There's at least one more via the chat. So we'll take that. How many cars do you have to return for repairs after you sell them? And how does that affect your bottom line? So after costs. Juha Kalliokoski: I would say that 70% of the costs coming when we speak about the repair cost or maintenance costs coming before the sales. It means that 25% to 30% coming after the sales. And of course, we have the ticket system. We see all the tickets. How many claims we have, how fast we handle those and what are the cost of those. Maybe that's the answer. Katariina Hietaranta: Any further questions? If not, then we thank the audience online and the audience here at Flik Studio and wish everyone a good day. Thank you. Juha Kalliokoski: Thank you very much. Have a nice day.
Operator: Good day, and thank you for standing by. Welcome to the Wolters Kluwer Full Year 2025 Results Webcast. My name is Lauren, and I will be your coordinator for today's event. [Operator Instructions] Please be advised today's call is being recorded. I will now hand over to your host, Meg Geldens, Vice President, Investor Relations, to begin today's call. Please go ahead. Margaret Helene Geldens: Hello, everyone, and welcome to our full year 2025 results presentation. Today's earnings release and the presentation slides are available on the Investors section of our website, wolterskluwer.com. On the call today are Nancy McKinstry, our CEO; Stacey Caywood, our Designated CEO; and Kevin Entricken, our CFO. Nancy, Stacey and Kevin will present the important aspects of our results. After the presentation, we will take your questions. Before we start, I'll remind you that some statements we make today will be forward-looking. We caution that these statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in these statements. Factors that could affect Wolters Kluwer's future financial results are disclosed in Note 2 of today's earnings release and in our annual reports. As usual, we refer to adjusted profits, which exclude non-benchmark items. We also refer to growth in constant currencies, which excludes the effect of exchange rate movements. And we refer to organic growth, which excludes both the effect of currency and the effect of acquisitions and divestments. Reconciliations to IFRS numbers can be found in Note 3 of today's release. At this time, I'd like to hand over to our CEO, Nancy McKinstry. Nancy McKinstry: Thank you, Meg. Hello, everyone, and thank you for joining today's call. I'll start with a brief introduction, summarizing the highlights of 2025. Next, Kevin will take you through the financial results in detail. After that, I'll return to cover the divisional performance, and then hand off to Stacey, who will provide an update on our strategy and her near-term priorities as she takes over as CEO. She will finish with an outlook for 2026. So let's begin with the highlights on Slide 4. We delivered another year of good organic growth and an improvement in our adjusted operating profit margin. Recurring revenues, which account for 83% of total revenues grew 7% organically. We've made significant progress in adding important Generative and Agentic AI capabilities into our integrated productivity platforms, leveraging our trusted proprietary content, our deep domain expertise and our advanced AI technology. Today, nearly 70% of our digital revenues are from AI-powered solutions. Among our many innovations last year were UpToDate Expert AI and CCH Axcess Expert AI, which embed our AI technology and provide significant productivity benefits while keeping experts in the loop. Last year's acquisitions, RASi, Brightflag and Libra are all performing strongly and are offering new growth opportunities. All-in-all, it was a good year financially during which we made significant progress on our AI strategy. I'll now hand to Kevin to cover the financials. Kevin Entricken: Thank you, Nancy. Let me start with a summary on Slide 6. Full year 2025 revenues were EUR 6.125 billion, an increase of 7% in constant currencies. Organic growth was 6%, in line with the prior year. Adjusted operating profit was EUR 1.687 billion, up 9% in constant currencies. The adjusted operating profit margin increased 40 basis points to 27.5%, which was at the top end of our guidance range. Diluted adjusted earnings per share increased 9% in constant currencies, in line with our guidance, which we raised in July of 2025. Adjusted free cash flow was EUR 1.348 billion, an increase of 10% in constant currencies. This was above our expectation and reflects strong year-end collections. We continue to have a robust balance sheet, ending the year with a net debt-to-EBITDA ratio of 2.0x. Return on invested capital was 18.0%. Now let's look at revenues by division on the next slide. Health grew 5% organically, in line with our guidance. Within Health, Clinical Solutions sustained 7% organic growth. Tax & Accounting delivered 7% organic growth, in line with the prior year. This was supported by strong double-digit organic growth in cloud solutions in North America and Europe. Financial & Corporate Compliance grew 3% organically. As we had guided, this was slower than the prior year due to a more subdued environment for transactions and the suspended enforcement of the Corporate Transparency Act in the United States. Legal & Regulatory grew 5% organically, in line with the prior year and supported by strong 7% organic growth in digital and service subscriptions in Europe and the United States. Finally, Corporate Performance & ESG grew 7% organically ahead of the prior year. This was driven by continued double-digit growth in cloud software solutions. Let's turn to Slide 8 to review revenues by type. The chart on the left shows our recurring revenue streams, which account for 83% of total revenues, while the chart on the right shows our non-recurring revenues. Let me first address Print, which is shown in both charts. Print makes up under 5% of group revenues. The long-term trend is still one of decline. In 2025, the Print decline reduced group organic growth by 50 basis points. The largest and most important component of our revenues, digital and service subscriptions, shown by the blue line, grew 7% organically. It slowed slightly in 2025 due primarily to the slowdown in financial and corporate compliance. Other recurring revenues grew 8% organically, a slight improvement on the prior year. Turning to non-organic revenues, which can be volatile. We experienced an overall decline of 1% last year. FCC transactional revenues shown in red were up 2% for the year, driven by improvement in the second half. The backdrop for U.S. M&A and lending volumes remained subdued last year. Legal & Regulatory transactional revenues are volume-linked fees in the ELM solutions unit. These grew 9% organically, in line with the prior year. Other non-recurring revenues, which are mainly on-premise software licenses and implementation services declined 5% organically. Our customers are continuing to opt for cloud subscription offerings. Turning to the divisional margins on Slide 9. As mentioned earlier, the adjusted operating profit margin increased 40 basis points to 27.5%, reaching the top of our guidance range. Health and Tax & Accounting drove this performance. This reflects operational gearing, the mix shift of revenues, scaling of expert solutions and operational excellence programs. Investment in product development, including capitalized spend was broadly stable to last year at 11% of revenues. We are realizing the benefit of internal use of AI and the completion of several large projects. Adjusted operating profit included EUR 37 million of restructuring spend, an increase as compared to the prior year. Moving to the rest of the income statement on Slide 10. Adjusted net financing costs increased to EUR 86 million. This reflects lower interest income on cash balances and higher coupon rates on euro bonds issued in 2025. Adjusted financing costs also included a EUR 10 million net foreign exchange gain, mainly related to the currency translation of intercompany balances. The prior year included a EUR 9 million net foreign exchange loss. As a result, adjusted profit before tax increased 7% in constant currencies. The benchmark effective tax rate increased to 23.6%, reflecting unfavorable movements in our deferred tax positions. In 2026, we are guiding to an effective benchmark tax rate range of 23.5% to 24.5%. Adjusted operating profit was EUR 1.225 billion, up 6% in constant currencies. Diluted adjusted EPS was EUR 5.29, a 9% increase in constant currencies. The increases in net financing and tax were offset by a 3% reduction in the weighted average number of shares outstanding. Turning to cash flow on Slide 11. Adjusted operating cash flow increased 12% in constant currencies, and the cash conversion ratio was 103%. This was ahead of our expectations due to year-end collections, which were largely timing related. Capital expenditures were EUR 303 million, a slight decrease compared to the prior year due to the completion of large projects in financial and corporate compliance. Net interest paid, excluding lease interest, increased to EUR 72 million. This reflects the higher coupon interest paid and lower interest income on cash balances. Cash taxes increased to EUR 358 million, reflecting higher income. All-in-all, adjusted free cash flow increased 10% in constant currencies to reach over EUR 1.3 billion. Now let's turn to uses of our cash on Slide 12. Acquisition spend was EUR 896 million, reflecting the acquisitions of RASi in Financial & Corporate Compliance and Brightflag and Libra in Legal & Regulatory. All three acquisitions are performing ahead of initial expectations. The divestment of FRR generated cash proceeds of nearly EUR 400 million. Dividends paid increased 8% to EUR 563 million. Cash deployed towards share repurchases amounted to EUR 1.096 billion as we completed the 2025 buyback and brought forward EUR 100 million from our envisioned 2026 buyback program. Together, dividends and share repurchases totaled EUR 1.7 billion. We returned more than 120% of our free cash flow to shareholders last year. We ended the year with net debt of just over EUR 4 billion. Our net debt-to-EBITDA ratio increased to 1.0x and remains within our targeted range for leverage. We remain in solid financial position with sufficient room to support our organic investments in the business and make select acquisitions. At the same time, we are committed to our progressive dividend while continuing to execute on share repurchases. Moving to the next slide. We are proposing to increase the total 2025 dividend per share by 8% to EUR 2.52 per share. This would result in a final dividend of EUR 1.59 per share to be paid in June of this year, conditional on shareholder approval at our Annual General Meeting in May. As indicated in our release, we announced our intention to repurchase up to EUR 500 million in shares in 2026. Of this amount, EUR 100 million has already been repurchased in the months of January and February. Starting this Friday through the end of May, we have a third-party mandate in place to repurchase shares for EUR 60 million. Let me sum up results on the next slide. We delivered organic growth of 6% with recurring revenues up 7%. The adjusted operating profit margin increased 40 basis points to 27.5%. Diluted adjusted EPS increased 9% in constant currencies. Adjusted free cash flow increased 10% in constant currencies. We remain in a solid financial position with net debt-to-EBITDA ratio of 2.0x. Return on invested capital was 18.0%. I'd now like to turn the call back to Nancy. Nancy McKinstry: Thank you, Kevin. I'd now like to begin the divisional review, starting with Health. Health delivered 5% organic growth led by Clinical Solutions. The adjusted operating margin increased by 180 basis points, reflecting operational gearing, ongoing mix shift, efficiencies and the absence of prior year write-offs. Clinical Solutions grew 7% organically in line with the prior year. Growth was driven by good renewal rates at UpToDate clinical decision support and drug data solutions globally. Most of our large U.S. institutional customers are now on the UpToDate enterprise platform, and we are rapidly rolling out our conversational AI interface UpToDate Expert AI. Learning, Research & Practice delivered 3% organic growth. Excluding Print, organic growth would have been 7%. Medical Research recorded steady 3% organic growth while Learning & Practice grew 5%, driven by continued strong growth from our nursing education solutions. Now let's turn to Tax & Accounting on Slide 17. Tax & Accounting delivered 7% organic growth with continued strong performance across North America and Europe. The adjusted operating margin increased by 200 basis points driven by operational gearing and cost efficiencies. In North America, revenues grew 8% organically led by 19% growth in cloud software as customers continue to move to the CCH Axcess cloud platform and adopt more modules. In 2025, we launched several agentic AI modules integrated into the CCH Axcess platform that provides significant productivity benefits to customers. We also made major enhancements to our cloud-based audit suite, CCH Axcess Audit, adding expert AI capabilities. In Europe, revenues also grew 8% organically, driven by 17% growth in cloud software solutions with all regions performing well. Moving now to the next slide on Page 18. Financial & Corporate Compliance delivered 3% organic growth led by legal services. The adjusted operating margin was broadly stable, supported by cost efficiencies. Legal services delivered 4% organic growth, driven by 5% growth in recurring service subscriptions. As expected, the slowdown was partly due to the suspension of the Corporate Transparency Act and subdued corporate transactions. Recently acquired RASi performed very well and brings opportunities to grow in the midsized U.S. corporate market. Financial Services grew 1% organically, supported by a 3% increase in recurring revenues while lending related transactional revenues remain subdued. Turning now to Legal & Regulatory on Slide 19. Legal & Regulatory delivered 5% organic growth with strong 8% organic growth in digital and service subscriptions in Europe and in the U.S. The adjusted operating margin eased slightly due to the absence of last year's onetime pension gain, which was, to a large extent, compensated by strong underlying margin improvement. Legal & Regulatory Information Solutions grew 5% organically supported by 8% organic growth in digital and services subscriptions. We continue to enhance our legal research platforms with AI embedded functionality throughout the year. In November, we acquired Libra Technology and are now integrated the Libra AI Assistants into our trusted proprietary legal content across Europe. Legal & Regulatory software delivered 5% organic growth. ELM Solutions sustained mid-single-digit organic growth, supported by 9% growth in transactional volumes. In June, we acquired Brightflag, a provider of ELM Software serving midsized and large corporations globally. Brightflag delivered strong revenue growth ahead of expectations. Now let's finish up with Corporate Performance & ESG. This division delivered 7% organic growth, supported by 18% growth in recurring cloud software revenues. On-premise license fees declined as customers continue to prefer subscription-based cloud solutions. The adjusted operating margin decline, reflecting the decline in licenses and a higher proportion of services provided by third parties. In EHS and ESG, the Enablon suite grew 10% organically, driven by 19% growth in recurring cloud revenues through new customer wins and upsell activity. Within corporate performance, CCH Tagetik delivered 5% organic growth, driven by 19% organic growth in recurring cloud revenues as a result of new customer additions and upgrades. Audit and assurance delivered robust organic growth, also driven by recurring cloud revenues. Last month, TeamMate acquired StandardFusion, which extends the platform into risk and control management. With that, I'd now like to hand it over to Stacey to discuss the strategic opportunities for Wolters Kluwer and her near-term priorities. Stacey Caywood: Thank you, Nancy and Kevin. As I take over as CEO, I've never been more excited about what's ahead for Wolters Kluwer. We are seeing the fastest technology adoption in history and the opportunities for creating value for our customers and shareholders are tremendous. Wolters Kluwer is built on a strong foundation, a foundation that we are extending to drive growth and profitability. The business is diversified with strong market positions and high-quality recurring organic revenue growth. We see opportunities across the portfolio to leverage these strengths to create additional value. 85% of our revenues come from digital solutions, and the majority of that revenue approaching 70% comes from products that are powered by AI. But our ambitions go much further. We are launching products with advanced AI functionality, which leverage our proprietary content, our deep domain expertise, our workflow expertise and our advanced technology platforms, all to deliver enhanced value to our customers. Embedding advanced AI capabilities into our solutions is one of our most important growth opportunities, and our customers who have placed their trust in us for decades are telling us that's exactly what they need and we are uniquely positioned to deliver it. Let's turn to the next slide. The strategic plan we set out a year ago is the right one, and I plan to accelerate it in a few areas to capture the incredible opportunities we see. This will require some additional investment, taking our product development spend to between 12% and 13% of revenues this year and beyond. And we will fund this investment while increasing our operating profit margin. The increased investment and focus will help us accelerate the pace at which we are capturing the AI opportunities we have to deliver improved productivity and outcomes for our customers. My immediate priorities are, one, to accelerate our pace of innovation to capture strong market demand. We all know that AI will fundamentally change how professionals work. We have the opportunity to scale our current AI solutions while driving more new products into the market. Our proprietary FAB AI enablement platform enables us to accelerate development cycles and improve customer integration. Two, we will foster and scale our expanding list of strategic partnerships. These relationships allow us to be fully embedded in our customers' workflows and ecosystems, extending our markets and the value to customers. And three, we will optimize value capture by using data-driven, scalable sales, marketing and revenue processes that intensify our go-to-market approach. Moving to the next slide. We bring four unique advantages to the table that in combination no LLM or AI-native disruptor can replicate. This is our moat. First, trusted proprietary content, a foundational strength that supports our customers in their daily mission-critical and high stakes decision-making. Second, customer-centric modular software platforms, which deliver productivity benefits and data-rich insights, while providing audit and traceability capabilities as the system of record. Third, market-leading validated AI that builds on our 190 years of domain expertise. We ground our AI models and proprietary content and data, and we also apply expert reasoning layers, deploy our deep expert network to validate and tune outputs and operate with enterprise-grade security and compliance. This is a scalable AI designed for high stakes regulated professions where our customers cannot afford to get it wrong, and it is already deployed and being used daily across our markets. And lastly, we have deep ecosystem integration. It's not just about being right. It's also about being so embedded that we are present at the moment decisions are made, both inside and alongside the customer ecosystem. These advantages power our strong brand, our deep customer relationships and position us to lead in the age of AI. So let's look at some examples. Our CCH Axcess software suite for U.S. accounting firms is a cloud-native modular platform that leverages our proprietary content and domain expertise and integrates with the accounting firms data and the end clients' data. Our expert AI technology amplifies this foundation with agentic capabilities that drive significant efficiencies for firms. We have recently launched six Expert AI-powered modules that cut across the workflow, from document intake and analysis to faster collaboration to conversational intelligence and to provide proactive advisory and insights. Feedback from accounting firms on these new AI modules has been very positive. They love the seamless integration with their own data and the security that our solutions offer. With these launches, we are also evolving our pricing models from tiers of users for our classic desktop offering to hybrid approaches that factor in firm characteristics, usage or outputs such as the number of returns or engagements. Turning to the next slide. Let's move to legal. We are the leader in proprietary legal research in Europe and offer deep expertise in specialty areas such as securities law in the U.S. Our position is grounded in the unmatched depth and authority of our legal content. And just a few weeks after closing the acquisition of Libra, we have launched the Libra legal AI workspace in the Netherlands, Germany, Italy and Poland, a significant expansion of our capabilities. The workspace provides lawyers with an integrated working environment that combines Libra's powerful AI capabilities with our proprietary content. It is also connected to our workflow tools such as Kleos practice management. Our corporate legal software tools such as ELM, Legisway and Brightflag are not shown in this wheel, but we are actively deploying Expert AI capabilities across these as well. What differentiates us from other players in the market, including stand-alone AI assistance is a single platform for research, analysis and document creation seamlessly integrated into existing workflows and customers' data. Trusted AI output based on current, curated and country-specific legal content, including legislation, commentaries, specialist literature and practical guides, and comprehensive transparency and traceability of sources. Customer feedback is very strong and leading law firms have signed up. They appreciate the unified workspace, the way the output is presented, the integration with outlook and the quick time to market. In Health, UpToDate has evolved from product to platform from its original focus of providing clinical decision support. Today, UpToDate Enterprise offers an integrated modular platform that drives clinical outcomes for the enterprise. Our harmonized content and tools provide value across the continuum of care, from diagnosis to treatment to drug dosing and patient level education. 75% of our enterprise customers today purchased additional modules beyond core UpToDate. It is also embedded directly into the clinical workflow. API connectivity with all the major EMRs, partnerships with leading ambient scribe vendors, integrations with local hospital guidelines and connections to pharmacy and other systems. Last year, enterprise was enhanced with UpToDate Expert AI, the conversational interface that gives clinicians fast, accurate answers grounded in our own proprietary content. We also recently launched Medi-Span Expert AI, which provides medication intelligence for hospital pharmacies and third-party developers for a range of use cases, including Agentic workflows like AI-driven prescription renewals and medication verification. Let's dive into UpToDate. UpToDate is long focused on supporting clinicians within healthcare institutions. Over 80% of UpToDate revenues and usage are from institutional customers. The UpToDate user base has grown to reach over 3 million currently. Our user base is strong and enduring. We have been driving growth by upselling across our solution suite, adding new functionalities and launching new offerings for care areas. In terms of usage, the metric we track for UpToDate is clinical content interactions. Each year, UpToDate supports between 600 million and 700 million clinical content interactions. Importantly, public web traffic is not a reliable proxy for engagement as it excludes usage outside the public web, such as EMRs. And what matters most is that retention remains very strong. NPS is world-class and the core value proposition of evidence-based clinical decision support at the point of care remains highly resilient. We take our competitive edge seriously and continue to innovate with our customers. With a large loyal institution base and sustained engagement across workflows, the next phase of growth is about expanding the enterprise platform while driving rapid adoption of UpToDate Expert AI. UpToDate Expert AI is the market-leading solution for health enterprises. Our customers rely on us for our trusted foundational content and our triple layered expert in the loop process. Also important for our clinicians is that UpToDate Expert AI is the only leading clinical solution with accreditation for continuing medical education. Moving to the next slide. You can see the strong demand for our solutions and the trust advantage we have in response to the rollout of UpToDate Expert AI. As of this week, we've signed on about 1/3 of our enterprise customers across the largest and most prominent health systems in the U.S., representing approximately 1,600 hospitals. These include health systems that are piloting tools from other LLMs or medical AI vendors. Before going live, Expert AI has to go through rigorous governance process and security reviews and activation is also accompanied by training for clinicians. Feedback is positive, thumbs-up rating to answers is high, and we are in active engagement with customers to expand capabilities, including dosing and local content. The individual offering, UpToDate Pros Plus is also making progress. This is a premium bundle with Expert AI and other value-added features, and we are also seeing strong usage trends by those who have chosen to upgrade. This is available at discounted rates for students and trainees to encourage early career adoption. I am very excited about the momentum of Expert AI, and we are laser-focused on continuing to improve and expand the capabilities of our platform. As I said at the start, we see opportunities for growth across all parts of the business, both in enhancing the core and extending our addressable markets. So let's turn to the next slide. AI is powering growth across both levers. On the core side, AI takes capabilities customers already rely on and makes them meaningfully better. These use cases drive growth by increasing the value and stickiness of our core products, supporting higher retention, consistent annual price increase, and in some cases, upsell. On the market expansion side, AI powers entirely new use cases that we do not address in the workflow today such as drafting and review in our legal workspace and proactive insights scenario modeling and advisory in CCH Axcess and Tagetik. It also allows us to build offerings for new segments such as Ovid Guidelines for medical societies to streamline development of clinical practice guidelines. Here, we monetize through premium packages, add-ons or new offerings, but always tied to clear customer value, and many of our premium packages are tied to tiers of usage, productivity or outcome improvements. This is a transformational opportunity, and our competitive position has never been stronger. We will increase our investments to deliver more AI solutions, while also increasing operating margins and expanding our innovation capacity. As we scale AI-powered expert solutions, we benefit from operating margin leverage driven by stronger retention and higher customer lifetime value. The deployment of AI internally is driving margin improvements as well. It is already raising our development team's productivity and increasing our developers' capacity, allowing us to do more with the same number of engineers. Similarly, in customer support and other functions, we are seeing significant savings from the use of dedicated AI agents that can handle routine calls, allowing us to not replace natural turnover and staffing levels. The combination of these actions allows us to increase investment in our AI road maps and deliver growth while increasing our margin. Now let me turn to the outlook. As noted in our release this morning, we expect another year of good organic growth with all divisions contributing. While there will be some quarterly phasing to take into account as detailed in our release, for the full year, we expect Health and Tax & Accounting to deliver organic growth in line with 2025. We expect Financial & Corporate Compliance, Legal & Regulatory and Corporate Performance & ESG to deliver organic growth ahead of the 2025 levels. The outlook for the group as a whole, as shown on the next slide, is for good organic growth, a further margin increase and high single-digit growth in diluted adjusted EPS in constant currencies. Importantly, we expect to increase the margin while we simultaneously increase product development spending to between 12% and 13% of revenues in 2026 to further advance our AI strategy. Let me wrap up on the next slide. We are well positioned as a market leader in growing markets with a track record of driving growth through innovation and of creating value for shareholders. We are excited about the opportunities ahead of us, and we look forward to executing on our priorities. Operator, we can now turn to questions. Operator: [Operator Instructions] Our first question today comes from Nick Dempsey from Barclays. Nick Dempsey: I've got three questions, if possible. So just first of all, you've got that chart on Slide 34, showing your margins going up over time. I guess some people will say that in 2026, the sale of FRR and some lower restructuring accounts for at least all of the guided margin improvement. So excluding those factors is kind of sideways. As at the same time, you've moved your product development spend up to 12% to 13%, and that's permanent. So can we get some reassurance that margin improvement of a similar rate to that chart is what you expect beyond '26? And what kind of savings can you put in place to continue achieving that? So that was just one question. Second one, can you talk a bit more about customer reaction to your AI offerings, UpToDate and in tax as you've been collecting those up in the last few months? And then third question, given where your shares are, I guess, it seems like it would make sense to do a higher buyback than you are doing. Do you consider slightly changing your thinking on gearing, given that the share price is at a low level and how accretive it would be to buy back your shares? Stacey Caywood: Okay. Thanks very much. Why don't I take the first question, Kevin, and then I'll hand over the margin and other question to you. So yes, in terms of the customer reaction, we're seeing very strong positive reaction to all of our AI and Agentic solutions that we've been launching. With respect to our Expert AI solution within Health, feedback is terrific. We hear from our Chief Medical Officers that the expert clinician in the loop approach, which I described earlier, gives them confidence in our product as opposed to training on raw medical literature. They love the interface. They like the quick summary, along with the underlying assumptions, the nudges that we include in the interface as well as the seamless platform that we provide to them when they also include patient-oriented content on the enterprise solution, drug dosing, guidelines. And very importantly now is the integration with the ambient players, which allow for a much more efficient clinical note taking and our partnerships that we are expanding are very well received by our customers. And one of the things that's really important in these high stakes environments is that they trust both the precision that they get from our solution as well as the protection in terms of data privacy and safety. So they're rolling out the systems quickly. We're very pleased that we have 30% of our enterprise base already signed up, and we expect that number to rise to about 70% by the half year. So very strong feedback. We're seeing also very good adoption of our AI solutions within our tax business. As you saw earlier, we recently launched AI and Agentic solutions. We are seeing a very positive reactions. They love the fact that they drive significant productivity gains. In one of the solutions we've been testing, there's about 3 to 4 hours of savings per week for our professionals. So again, they feel that combination of trust that we have in our solutions that are very much embedded in their overall enterprise. So a strong reaction so far. So with that, I'll hand over to you, Kevin. Kevin Entricken: Great. Thanks, Stacey. Nick, I'm going to address your margin question first. Yes, you're right, the FRR business unit was below the group average. But I'll remind you, it's relatively small, just over EUR 100 million. So while it does improve the margin, not by a whole lot in the grand scheme of things. You were asking questions about beyond 2026, what margin development will be. While we're not giving guidance beyond '26 today, I can tell you that you've seen a good improvement in the margin over the years due to a couple of reasons. First, mix shift in revenue. As we scale our expert solutions, they tend to have better margins overall. Another thing I would point to is operational excellence is embedded in the DNA of Wolters Kluwer. And every year, we're looking to work more efficiently. And certainly, internal use of AI tools is also helping on that grade. So the improvement in margin you've seen over the last several years, we're certainly guiding to that for 2026. But based on the reason I've given you, I do expect that, that trend would continue. The next question you had was on the share buyback. And on the share buyback, one of the priorities we have or we try to balance our priorities in capital allocation. First, investing in the business, both organically and through bolt-on M&A. Secondly, pay down debt. And thirdly, we want to make sure we reward our shareholders with our progressive dividend and share buyback program. So that is what we are constantly looking at, striking the right balance. And we believe the EUR 500 million share buyback that we're announcing today for 2026 is at that right balance. We've considered acquisitions of the past. I think in the last 18 months, you've seen us spend EUR 1.3 billion on acquisitions, most notably, [ Firmcheck, ] RASi, Brightflag. And those have all been very strong acquisitions. In fact, they're performing ahead of our initial expectations. So we're delighted about that. Our leverage right now, our leverage is at 2.0x. We are in the good middle of our leverage range. The buybacks we've done in the past were EPS accretive. We expect this buyback will be EPS accretive. And finally, I want to remind you, we'll be returning close to 100% of our free cash flow to investors through our dividend, through our share buyback program. So I hope that gives you a little bit of insight into our thinking as we announced the share buyback program today. Operator: Our next question today comes from Ciaran Donnelly from Citi. Ciaran Donnelly: A few for myself. Firstly, on the increase in product development spend. Can you help us understand why the 12% to 13% is the right range and how you've landed on that? And just in terms of your comments around the increase in spend to capture the AI opportunity, how should we think about the time line to see that translate to accelerated organic revenue growth? And maybe secondly, just going back to that margin question from Nick. Could you quantify the contribution from the FRR disposal, just to understand that like-for-like margin progression in 2026, that would be great. And then just lastly. On the dynamics around deferred income, I'd say it hasn't increased year-on-year, perhaps it is a timing factor, but if you can help us understand the dynamics around that, that would be helpful. Stacey Caywood: Yes. So why don't I start with the question around the increase in product development. And let me just start by kind of giving a little bit more detail on the foundation and beyond, platform that I briefly mentioned earlier. The foundation and beyond platform is a platform that we built to allow all of our product and engineering teams to rapidly develop and integrate AI and agentic capabilities into both our content and software products. And it leverages our proprietary content and deep domain expertise. So this is the internal model that we use to be able to deploy solutions quickly. And the key strength of the platform is that it's model agnostic, so the teams can switch between different LLM models to select the best model for their use case. It also gives us the guardrails that allow us to give the trusted and very protected content that our customers rely on us for. So because we created that offering and really deployed it across the enterprise, midyear last year, our teams are able to develop our AI and Agentic solutions more quickly. That's why you've seen six of the releases that we were able to do in CCH Axcess for example, and the solutions across our portfolio. So what we're able to do is to increase the resources, product leads, our subject matter experts to be able to leverage that platform and deploy more quickly. So we have this great combination of having an efficient way of building our Agentic solutions, and we're able to move our road map up more quickly. So we got all of our teams focused on our Horizon 1 launches and now the investments can support the kind of Horizon 2 and 3 work to begin. So we think it's a great way for us to balance the -- our ability to get our launch done more quickly. And we also have increased investments to improve and accelerate our development. And maybe, Kevin, you could hit on the other question. Kevin Entricken: Sure. Yes, coming back on FRR, Ciaran. As I mentioned, the business unit was a smaller business unit, just over EUR 100 million. The margin was below our group average. In fact, margin was like mid-single-digit margins. So you can use that to factor into your modeling going forward. So the exit of that business will be a positive for margin. But again, probably a smaller impact as compared to the more important mix shift of revenue and continued operational excellence programs throughout the business. So I hope that helps you. On the deferred income, I may ask you to repeat your question, but I think it was about the deferred income increase on the balance sheet. And yes, indeed, with the growth of our subscription revenue portfolio, signing contracts for longer-term periods, you do see an improvement in deferred income. But I'd also remind you that on the balance sheet, the face of our balance sheet, you will also have to consider the deterioration in the U.S. dollar as compared to year-end 2024. Stacey Caywood: And let me just go back to the question earlier, where you also were curious about how the investment turns into -- shows up in the revenue. So as you know, the vast majority of our revenue is subscription based. And as we roll out our solutions and adoption increases, you'll start to see that flow through into our revenues in the midterm. Operator: Our next question comes from Christophe Cherblanc from Bernstein. Christophe Cherblanc: I had two questions. The first one was on Tax & Accounting. The operating leverage was super impressive in '25 with a drop above 60%. Is that a level we should expect again in '26? And the second question was just on the buyback. Because of the buyback, you've been shrinking equity. So is there a need to retain positive book equity? And is that the reason why you cannot buy more than -- buy back more than EUR 500 million or EUR 600 million given the level at which book equity is at the end of '25? Stacey Caywood: Okay. Thanks, Kevin, why don't you take these? Kevin Entricken: I did not quite get the first question on TAA, Christophe, but I will say -- okay, I will say. Stacey Caywood: He's asking about the operating leverage, why a drop? Yes. Kevin Entricken: Okay. I will say. Let me start with the share buyback. Obviously, we consider a lot of things when we consider the allocation of capital. Obviously, we do have to consider equity as part of that. But as I said, we're trying to balance the priorities of this allocation between investing in the business organically and through bolt-on M&A leverage and finally, rewarding our shareholders. Obviously, we want to have a robust balance sheet, so we can take opportunities as they come. So all of these go into our thinking when we are thinking about dividends, share buybacks and other capital allocation considerations. Also on Tax & Accounting, I think you were saying the leverage, the improvement in the margin in Tax & Accounting. Well, certainly, we are seeing good throughput on the revenue growth in that business. Revenue growth at 7% certainly gives us the ability to improve margins. Tax & Accounting, just like every other business, you do see a positive impact of the mix shift in revenues, the more and more that business moves to software and SaaS software. We do see an improvement as these products mature. And again, operational excellence is key throughout Wolters Kluwer. So that does underpin what you see in the improvement in the margin. Christophe Cherblanc: And just sorry to insist on this, but is it by low legal constraints that you have to maintain positive book equity? Kevin Entricken: We absolutely take equity into account as we do other priorities I've mentioned. Christophe Cherblanc: So you cannot go into negative equity, correct? Kevin Entricken: Like I say, Christophe, this one part of our capital allocation criteria, we consider that amongst other things. Operator: Our next question today comes from George Webb from Morgan Stanley. George Webb: Thanks for taking my questions, And just before I go into those, I guess one final congratulations from my side, Nancy, on your extensive career achievements, and I wish you the very best in your future endeavors. On the question specifically, I think there's three areas I'd like to get -- yes, no worries at all. I think there are three areas I'd like to go into some of the questions. Firstly, you mentioned partnerships being a priority for you, Stacey. Could you maybe elaborate a little bit on what partnerships those might include? Are we sticking to the, I guess, more traditional playbook of SaaS vendor partnerships and other areas you can get your content and product in front of people? I think more recently, we've seen some players out there decide to do more specific partnerships with certain AI labs. Would that be something you consider or would you prefer to keep a more multimodal approach? Secondly, on the Health division, I guess within that mix, you're talking to the kind of growth rate being steady year-over-year. UpToDate is an important part of that. You mentioned the retention remains very strong. You mentioned the number of clinical content interactions that move to the system being pretty consistent. Could you kind of add any color on where your gross retention runs at for UpToDate, I believe it's low 90s, but anything over that and how that's been evolving would be helpful. And also if you're seeing any specific usage pattern differences between users that now have the conversational Expert AI front end versus those that are not using that or don't have access yet. And just lastly, maybe one for you, Kevin, on the product development increase of 1 to 2 points. How much of that do you expect to come through CapEx versus OpEx this year? Stacey Caywood: Yes. Thanks, George. I'll take the first two. With regard to partnerships, we are very focused on making sure that we can be deeply embedded in our customers' workflow. So as I mentioned, in Health, we're all very focused on extending the partnerships, many of which we've announced, but we will continue to move in that direction to make sure we've got strong partnerships. So this is all about making sure we're embedded in our customers' ecosystem. Similarly, in Tax, we've always -- over the last many years, we've had a Tax marketplace with the API connectors. We're looking at how do we enhance that as we think about the Agentic capabilities. In terms of our use of the foundational models, our FAB platform, which I mentioned earlier, includes all the core foundational models. So we make sure that we are using those capabilities that are the right ones for the right use cases. So that's our approach for now. In terms of our Health business, as I mentioned, our business is very strong. Our enterprise customer base, as you know, has high renewals and continue to have very strong renewals and up-selling last year. In fact, we signed more multiyear contracts for longer durations with higher annual contract value last year than we had in prior years. So what's happening is that our customers are -- certainly, we're very focused on the adoption of Expert AI. But we're also very engaged with our customers to extend the value along the full platform that we offer. So expanding with drug information, drug dosing, patient education, guidelines and so on. So again, the health of the business is very strong. And in terms of usage patterns, yes, in fact, we see that when our customers move to Expert AI, they do very deep conversational interfaces. They're much faster in their ability to get to their answer. So we see strength there. And you see that across the portfolio, strong productivity improvements when our customers are adopting our AI and Agentic solutions. And I think the last question, Kevin, for you. Kevin Entricken: Yes. On product development, the mix between CapEx and OpEx, I would expect it to be very similar, George, to what you see today. Usually, our CapEx is about 5% of our revenues or so. Going forward, even though we're going to invest more, I think the balance between those two will be similar. It really all depends on IFRS requires us to capitalize costs once we reach technical feasibility. So we'll evaluate this on each product and each investment idea going forward. But my thinking is it's going to be very similar to what you see today. Operator: [Operator Instructions] Our next question comes from Thymen Rundberg from ING. Thymen Rundberg: Two from my side. So looking across the business, are there parts of the portfolio where customer needs or market dynamics are evolving or perhaps have evolved faster than you expected? And where that might lead to you to perhaps adjust your priorities over, let's say, the next 1 or 2 years? And then the second is on pricing. So as your products continue to add a lot more functionality and support more workflows for your customers, so you're consistently adding more value to them. How do you think about your pricing over the next few years? And in particular, how do you approach, let's say, this more value-based pricing model so that's a greater impact that your solutions deliver or will deliver is just more systematically reflected in monetization? Stacey Caywood: Yes, I'll take those. In terms of the approach for where -- how we make sure that we are at pace in terms of the customer demand for our solutions, our -- the relationships we've had with our customers stands decades. And so we are with our customers daily and really helping them to understand the productivity gains that can be created when they deploy our solutions. And in fact, I was talking to the leader of our tax business who just came off of his sales meeting. And he was saying that the difference between last year and this year in terms of customer interest and recognition that these solutions can really deliver value has increased a lot. So we feel like we're at the right time now with the solutions we've launched. And as I mentioned earlier, we're just really excited to be able to launch even more of our capabilities because I think the customers recognize now that there are really nice opportunities for them, particularly with many of our customers, they have challenges with just having enough supply of professionals. So they see the benefits of this. And we're -- again, we're moving quick. What I would say around pricing is that our core strategy is to price on value, and we have a variety of pricing metrics across our products today. We don't use a single metric. For example, CCH Axcess is based on the firm size plus the number of returns. The UpToDate enterprise is based on institutions. And with our new AI solutions, we're really using those to -- in some cases, particularly for the AI solutions launched in '23 and '24, it was more about supporting our renewal rates with price increases and upselling that reflects the value. But with some of the newer AI solutions, we are discretely monetizing those solutions, and again, always focused on price to value. And I'd say the unit of value varies based on the benefit we provide for our legal content businesses. Expert AI is embedded with our content. We typically sell that with kind of an upsell model for Libra, which is the solution that moves us into new addressable market with the legal workspace. We are -- the average price is about 2x the value of the content offering that we would sell to a law firm. And what we do is we get the benefit of combining the trusted deep proprietary content into the legal workspace, Libra solution, which provides an extension to do contract drafting and contract review. So the value is evident. In CCH Axcess, for example, for the client collaboration AI tool, we tie it to request lists that are sent out, which is a measure of output. And then in intelligence, we have consumption tiers. That's also a solution within the CCH Axcess suite. And so we're really looking at the value we're offering and reflecting that in the value and the way that we deliver our pricing. Operator: We have no further questions. So Stacey, would you like to have any closing remarks? Stacey Caywood: Yes. Thank you so much. I really appreciate all the questions. We're excited to build on our momentum and to accelerate our strategy to deliver more value for customers while delivering continued good growth in 2026. Thanks so much for joining us today. Operator: This concludes today's call. Thank you for joining, everyone. You may now disconnect your lines.
Operator: Good afternoon, and welcome to TransMedics Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Laine Morgan from the Gilmartin Group for a few introductory comments. Dorothy Morgan: Thank you. Earlier today, TransMedics released financial results for the quarter and full year ended December 31, 2025. A copy of the press release is available on the company's website. Before we begin, I would like to remind you that management will make statements during this call, including during the question-and-answer portion of the call, that include forward-looking statements within the meaning of federal securities laws. Any statements made during this call that relate to future events, results or performance, including expectations or predictions are forward-looking statements. All forward-looking statements, including, without limitation, are examination of operating trends, the potential commercial opportunity of our products and services, the potential timing, benefits or outcomes of new clinical programs and our future financial expectations, which include expectations for growth in our organization and guidance and/or expectations for revenue, gross margins and operating expenses in 2026 and beyond are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. Additional information regarding these risks and uncertainties appears under the heading Risk Factors of our 10-K filed with the Securities and Exchange Commission on February 24, 2026, and our subsequent SEC filings and the forward-looking statements included in today's earnings press release, which are available at www.sec.gov and our website at www.transmedics.com. TransMedics disclaims any intention or obligation, except as required by law, to update or revise any financial projections, expectations, predictions or forward-looking statements, whether because of new information, future events or developments or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 24, 2026. And with that, I will now turn the call over to Waleed Hassanein, President and Chief Executive Officer. Waleed Hassanein: Thank you so much, Laine. Good afternoon, everyone, and welcome to TransMedics' Fourth Quarter and Full Year 2025 Earnings Call. Joining me today is Gerardo Hernandez, our Chief Financial Officer. I'm thrilled to be here tonight reporting our fourth quarter performance, capping off an outstanding year for TransMedics as we delivered our best operational performance to date. These results were achieved despite external challenges earlier in the year that were designed to distract and disrupt our sustained and transformational growth. I'm extremely proud of the resilience of our team and our business. In addition, I'm grateful to our global clinical users for their continued partnership with TransMedics and their trust in our OCS NOP program throughout the year. Based on our performance in 2025 and our continued investment in expanding the caliber and the breadth of our team, I am growing exceedingly confident in TransMedics' ability to overcome future challenges as we continue to innovate and disrupt antiquated and inefficient transplant processes in the U.S. and around the world. We are highly motivated and inspired by our mission to expand the utilization of available donor organs for transplantation while aiming to deliver the absolute best possible clinical outcomes for transplant patients worldwide. We strongly believe that TransMedics is just getting started, and we have our sights focused on new peaks, which we will share with you on today's call. Now let me proceed with discussing our business performance. On our last call, we stated our expectation that 3Q seasonality in U.S. transplant activities would be transient and that we should recover in 4Q. Today, we're excited to report that 4Q results that validate our views. 4Q 2025 was a banner quarter for our business and allowed us to conclude 2025 on a very high note. Here are the key operational highlights for 4Q 2025. Total revenue for 4Q '25 was $160.8 million, representing approximately 32% growth year-over-year and approximately 12% sequential growth from 3Q 2025. U.S. transplant revenue grew approximately 11% sequentially to $155 million, while OUS transplant revenue grew approximately 33% sequentially to $5 million. Finally, we delivered an operating profit of approximately $21.3 million in 4Q, representing approximately 13.2% of total revenue for fourth quarter while making substantial investments to fuel our growth. Now let me provide the financial results for the full year 2025. Total revenue for the full year 2025 was $605.5 million, representing approximately 37% growth year-over-year. We delivered operating profit of approximately $108.6 million, representing approximately 18% of total revenue for the full year 2025. Importantly, we ended the year with approximately $488.4 million of cash and cash equivalents. Shifting now to TransMedics transplant logistics infrastructure and performance. TransMedics transplant logistics service revenue for 4Q was approximately $28.6 million, up from $21.7 million in 4Q 2024, representing approximately 32% year-over-year growth and up from $27.2 million in 3Q, representing approximately 5% sequential growth. Throughout 4Q, we owned and operated 22 aircraft. In Q4, we maintained coverage of approximately 80% of our NOP missions requiring air transport, compared to 75% in the same period in 2024. We are very pleased by our strong performance in 4Q and full year 2025. That was fueled by growing OCS case volume and increased clinical adoption. Importantly, as we predicted, our performance enabled growth in overall U.S. liver and heart transplant volumes for the third consecutive year, driven primarily by OCS NOP cases. This is really unprecedented and frankly, humbling. As we do every year, I would like to share full year OCS transplant volumes and overall U.S. transplants per order. Here are the key highlights. For the third consecutive year, we grew the total OCS transplant volume. As of February 2022 -- 2026, our internal company data and UNOS database recorded records show that there were 5,139 total U.S. OCS transplants performed in the full year 2025. Let me repeat this. As of February 22, 2026, our internal company and UNOS database records show that OCS was responsible for 5,139 transplants performed in the full year 2025, up from 3,735 U.S. OCS transplants in 2024. The overall transplants represented approximately 26% of the total 19,833 U.S. transplants for the year for heart, lung and liver in 2025 and up from 20% of the 2024 U.S. transplant volume for the same organs. Importantly, for the third consecutive year, we saw growth in overall U.S. liver and heart and lung transplant volumes. For the full year 2025, there were 19,833 liver, heart and lung transplants, up from 18,894 in 2024. We strongly believe that the OCS NOP once again played a key role in driving overall liver and heart market growth due to the increased use of DCD and DBD donors in the U.S. Since 2022, U.S. national transplant volumes for liver, heart and lung grew at a rate of 25%, including OCS NOP transplant volume. Without OCS volume, national volumes for the same organs would have declined by approximately 1% over the same period. Please allow me to repeat this. U.S. transplant volumes for liver, heart and lung grew 25% with OCS NOP and would have declined by approximately 1% without OCS NOP case volume. Based on these facts, we believe that we are delivering on our vision of growing the overall U.S. market. Said differently, we are expanding the overall market, not just taking share. Now let me discuss our clinical adoption per organ. For liver, in 2025, OCS Liver transplant represented 4,197 transplants or 36% of the overall liver transplant volume in the United States. That is up from 26% in the same period in 2024. For heart, OCS transplant represented 854 cases or approximately 18% of the overall heart transplant volume, modestly up from the 17% seen in 2024. For lung, the numbers are small. OCS Lung transplants represented only 88 cases or approximately 2%. These are very small numbers, and we will discuss below how we are planning to address this particular topic. These results underscore the significant remaining greenfield potential for OCS NOP cases across all 3 organs. Specifically, we are focused on the ENHANCE Heart program to drive increased use in heart transplantation across the donor types. Finally, our DENOVO Lung clinical program will focus on reinvigorating the OCS Lung market segment in the U.S. while driving much needed expansion of the utilization rates for donor lungs. Both programs have been cleared by FDA and are in various stages of trial activation and enrollment in the U.S. We're looking forward to reporting the progress of these 2 crucial programs at the upcoming ISHLT in late April. Now let me move on to discuss our 2026 plans and guidance. As we stated before, we're excited for 2026 as we believe it will represent another critical and transformative year for TransMedics business given our focus on few, wide -- few wide-ranging and far-reaching catalysts for near, mid- and long-term growth for our business. Let me share with you a summary overview of all the growth catalysts we are focused on in 2026. First, OCS ENHANCE Heart program. Simply stated, Part A of this program is designed to move cardiac transplantation beyond preservation and into functional enhancement of donor hearts. Importantly, it was designed to significantly expand the time and distance limitations currently imposed on the 4-hour DBD heart transplants preserved using cold static storage. Initial feedback is promising, but we are still early in the process. Now let's talk about Part B. Part B of this program is designed to allow OCS to gain a potential new clinical indication in DBD Heart Transplant segment that are sub 4 hours preservation by demonstrating superiority of outcomes in a head-to-head comparison to current cold static storage modalities. Progress in Part B has been slightly impacted by our competitive dynamic as it relates to a cold storage arm of the trial. Specifically, there is a hesitation amongst competition to a head-to-head comparison between OCS and their static cold storage modality. We are confident in our ability to overcome this competitive dynamic that we somewhat expected. Importantly, we are committed to conducting this important part of our heart program with the highest level clinical evidence and robust protocol and randomization scheme. If successful, one or both parts combined, could dramatically increase the use of OCS Heart in the U.S. and should have a huge impact on our transplant volume and top line revenue growth. Next is OCS DENOVO Lung program. As I've stated before, in our humble view, this is the last real chance for lung transplant community to experience the benefits of machine perfusion and integrated NOP services in lung transplantation in the U.S. If successful, this program would resurrect a sleeping giant of lung transplant market and would add significant lung clinical adoption and top line revenue growth for TransMedics. Next is bringing the NOP model to Europe and rest of the world. This program is actively launching in Italy and few other European countries have expressed strong interest in exploring the NOP model in their local geography. This program has the potential to significantly grow our OCS market adoption in Europe. Expanding our commercial activities in Europe has the potential to nearly double our transplant total addressable market for TransMedics. We are actively engaged in building our European NOP transplant air and ground logistics network while also expanding our European clinical support infrastructure. Next is the OCS Kidney program. This represents our next frontier and will be the first organ to launch on our OCS Gen 3.0 technology platform. OCS Gen 3.0 will have a completely redesigned technology and perfusion systems that is smaller, lighter and with a much lower part count. Importantly, it's designed for automated assembly and was designed to operate with a high degree of reliability. There are currently more than 20,000 deceased kidney transplants in the U.S. annually and an additional 8,000 to 9,000 kidneys that are discarded annually in the U.S. for only prolonged ischemic times. To our knowledge, the OCS Kidney system will be the first and only warm perfusion oxygenated kidney platform for kidney transplantation, used from the donor to the recipient. Currently, the development program is running in full gear throughout 2026 to get the platform ready for FDA trial by early 2027. Next is OCS Gen 3.0 for liver, heart and lung systems. This program is running in parallel to the kidney program to upgrade our current liver, heart and lung system and help grow our clinical adoption rates and scale our operations. Finally, we are exploring the potential to capitalize on the U.S. transplant modernization initiatives, driven by HRSA, CMS and U.S. Congress. Specifically, we are exploring if TransMedics can be a more integrated contributor to the national transplant ecosystem in the U.S. The goal is to maximize donor organ utilization for transplantation and continue to save more American lives and save significant health care dollars. As you can see, these are significant potential short, mid- and long-term catalysts for our business, and we are laser-focused on ensuring successful execution of these initiatives throughout 2026. That being said, we're also cognizant of a few operational challenges that could influence the pace and timing of these initiatives. First, as stated, we are still building out our logistics infrastructure in Europe, which could moderate the initial pace of our EU NOP launch as we ensure we have the right foundation in place. Second, timing of the full DENOVO trial accrual will depend on how long and how the lung transplant market adopts machine perfusion and NOP, which remains to be proven. Third, timing of ENHANCE Part B completion will be influenced by some of the inertia created by competitive dynamics for the cold storage arm in the marketplace. Fourth, the -- very common and now, I hope, well understood annual phenomena of potential Q3 seasonality in U.S. transplant market that temporarily slows down transplant activities. And finally, ramping our infrastructure and clinical staffing to meet the growing demand for OCS NOP will be critical to achieve our full growth potential in 2026. With all this in mind, we are setting our revenue guidance for full year 2026 between $727 million and $757 million, representing approximately 20% to 25% growth over full year 2025. With that, let me turn the call to Gerardo to cover the detailed financial results for the quarter. Gerardo Hernandez: Thank you, Waleed. Good afternoon, everybody. I am pleased to share TransMedics Fourth Quarter 2025 Results. Please note that a supplemental slide presentation with additional details is available on the Investors section of our website. As Waleed highlighted, we sustained strong momentum through the fourth quarter, closing the year with solid performance following an expected seasonally softer third quarter in U.S. transplant activities. As discussed in our Q3 call, our rapid growth in prior years often marked the natural seasonality in the U.S. transplant activity. At our current scale, those dynamics are more visible. However, as we have seen, these fluctuations tend to normalize over the full year. Total revenue for the quarter was approximately $161 million. U.S. transplant revenue was approximately $155 million, up 33% year-over-year and 11% sequentially. By organ, liver contributed with $127 million, heart [ $26 million ] and lung $2 million. International revenue was $4.8 million, up 24% year-over-year and 33% sequentially. Revenue by organ was $3.9 million in [ heart ], $0.2 million in lung and $0.7 million in [ liver ]. Growth was primarily driven by liver and heart. While we continue to make progress in our international expansion plans, the business remains at an early stage and quarterly variability is expected due to reimbursement and market dynamics. Product revenue for the fourth quarter was $100 million, up 34% year-over-year and 15% sequentially, reflecting continued momentum across both liver and heart programs. Service revenue for the fourth quarter was $60 million, up 29% year-over-year and 8% sequentially. The primary driver of growth was logistics revenue, which increased 32% year-over-year and 5% sequentially, reflecting continued expansion and strong utilization of our aviation fleet compared to 2024. Together, these results reflect strong order utilization, continued OCS adoption and increasing leverage of our integrated logistics platform. Total gross margin for the quarter was approximately 58%, down 110 basis points year-over-year and 70 basis points sequentially. The year-over-year decline primarily reflects higher clinical service costs associated with the expansion of our NOP program, increased logistic discounts and higher freight expenses. The sequential decrease was mainly, driven by inventory-related charges, associated with our year-end inventory procedures and higher freight costs from expediting shipments to replenish our costs. Total operating expenses for the fourth quarter of 2025 were $72 million, up 14% year-over-year and 18% sequentially. The year-over-year growth was mainly driven by increased R&D investment to advance our innovation pipeline and expand product development capabilities, including targeted additions to our technical and development teams. SG&A growth reflected continued IT infrastructure expansion, strategic growth initiatives and selected headcount investments to support scale. Sequentially, the increase was largely driven by higher R&D investments related to development and testing activities as well as incremental SG&A investments supporting growth and expansion initiatives. Operating income for the quarter was $21 million, 146% year-over-year and down 9% sequentially. The sequential decrease was primarily driven by higher operating expenses associated with increased investments during the quarter. Operating margin expanded to 13%, compared to 7% in the fourth quarter of 2024. Net income for the fourth quarter was $105 million, a significant increase both year-over-year and sequentially. Net profit included an income tax benefit of $83.8 million, compared to an income tax provision of $0.1 million in 2024, mainly related to the release of the valuation allowance. The release of the valuation allowance on our deferred tax assets is not merely an accounting adjustment, but a strong indication of our confidence in the sustainability of our long-term profitability grounded in continued growth and scalability. This decision follows a thorough and rigorous evaluation under applicable accounting and tax standards. Earnings per share were $3.08 and diluted earnings per share were $2.62 for the fourth quarter of 2025. We ended the year with $488 million in cash, up $22 million from September 30, 2025, driven by strong operating cash generation and continued disciplined working capital management. Overall, our fourth quarter performance reflects another quarter of strong execution, operational efficiency and continued advancement across our clinical programs. As we operate at a greater scale, the TransMedics team continues to demonstrate focus and discipline, investing in growth while maintaining strong financial and operational performance. Now let me summarize our full year 2025 results. Full year revenue reached approximately $605 million, representing 37% growth over 2024. Growth was led by liver, which grew almost 49% and continued strength in heart at almost 15%. Lung revenue was lower compared to 2024. U.S. transplant revenue reached approximately $585 million, reflecting a 38.6% growth year-over-year. Our international transplant revenue ended the year at $16.7 million, representing a 9.3% year-over-year growth, primarily driven by liver and heart. Breaking it down by categories, product revenue totaled $372 million, while service revenue contributes with $233 million. Breaking it down by organ, liver revenue reached $461 million, heart revenue reached $126 million and lung reached approximately $15 million. Flight School revenue for the year was $4 million. Gross margin for the full year was 59.9%, up from 59.4% in 2024, reflecting logistics efficiencies and scale benefits. A portion of these gains was strategically share with customers through logistic discounts enabled by our integrated network. Margins also reflects incremental costs related to our double shifting programs and higher expedited hub replenishment expenses. Total operating expenses were $254 million, up 13% year-over-year. The increase was primarily driven by a 23% increase in R&D investments, reflecting continued investment in our innovation pipeline and product enhancements. SG&A grew almost 10% year-over-year, reflecting ongoing expansion of our IT infrastructure and investment in strategic growth initiatives. Operating margin expanded from 8.5% in 2024 to 18% in 2025. A significant achievement in a year where gross margin improved only modestly. This performance demonstrate that the primary driver of margin expansion in our model is operating leverage as revenue scale, supported by a strong discipline to cost management. Net profit for the year was $190 million, compared to approximately $36 million in 2024. Results benefit from strong operating performance as well as the previously mentioned onetime income tax benefits recognized during the fourth quarter related to the deferred tax assets. This performance positions us well as we enter 2026 with continued growth momentum and a strong financial foundation. Earnings per share was $5.60 and diluted earnings per share was $4.87. Now turning to our total revenue guidance for 2026. We anticipate revenue growth of 20% to 25% over the full year of 2025, which translates to a full year revenue range of approximately $727 million to $757 million. Growth is expected to be driven primarily by the increased order utilization, continued OCS adoption and expansion of our service revenue. In 2026, we expect similar seasonal dynamics in the U.S. transplant activities consistent with prior years. In terms of gross margin, we expect overall margins to remain around 60% over the long term. This outlook reflects factors influencing both product and service margins beyond mix alone. As we expand internationally and continue investing ahead of growth, we may experience some near-term pressure. However, we expect this impact to normalize as volumes scale across markets. In terms of capital allocation, our focus remains on driving long-term value. We are concentrating our investments in 3 key areas: first, fueling growth through continued R&D investments, strengthening our NOP network and targeting expansion into selected international markets. Second, building a stronger foundation by implementing systems to simplify and optimize processes across the business, improving efficiency as we grow. And third, enhancing our infrastructure and strategic optionality, including our planned move to a new global headquarters to accommodate growth, ongoing upgrades to expand our manufacturing and project development capabilities and our continued evaluation of strategic opportunities that could further strengthen our platform for the future. Collectively, these initiatives are preparing TransMedics for its next stage of expansion as we move beyond the 10,000 transplant milestone. We continue to make progress on our double shifting pilot program to improve fleet utilization and expect to see early results in the first half of 2026. These insights will help us determine the rightly sized and utilization model to maximize capital efficiency. We achieved our goal of owning 22 jets by the end of 2025. While there are no current plans to increase the fleet in 2026, we remain open to acquiring additional aircraft when the right conditions are in place, whether to enhance U.S. capacity or to support international expansion. In 2026, we plan to meaningfully increase investment and with particular focus on advancing our clinical programs, completing the final development phase of our OCS Kidney program and continued development of our next-generation OCS platform. It is important to note that approximately half of the incremental investment is transitory in nature and as these initiatives are completed, expense levels should normalize, allowing us to capture additional operating levels over time. Based on the current revenue guidance for 2026, we expect operating margins to be up to approximately 250 basis points below 2025 full year levels, primarily reflecting the timing and scale of these investments. As investment levels normalize and the business continues to scale, we would expect operating margins to resume expansion. We continue to expect operating margins to approach 30% by 2028. As shared in previous quarters, we may see some fluctuations as we expand international and invest ahead of growth. However, we remain confident in the long-term direction and scalability of our model. As we look ahead, we see meaningful growth opportunities from multiple sources beyond continued organ utilization and OCS adoption including the expected impact of our clinical programs, advancement OCS kidney program and ongoing international expansion efforts. Together, these initiatives expand our addressable markets and reinforce the long-term growth potential of our platform. With a proven track record of delivering on what we set out to do, we are well positioned to continue creating long-term value while expanding access of transplantation and giving more patients as second chance at life. And with that, I'll turn the call over to Waleed for closing remarks. Waleed Hassanein: Thank you so much, Gerardo. Overall, we're very proud of our 2025 results as we delivered 37% year-over-year growth and achieved positive cash flow from operating activities. We did this while investing in our pipeline and continuing to build our infrastructure to capitalize on our highly differentiated OCS technology and service offering. We are now laser focused on executing in our initiatives in the potentially transformative 2026 year and are excited about what's ahead. In conclusion, we are humbled and proud of the significant life-saving impact of our OCS technology, NOP service and dedicated team and remain committed to our mission of expanding access and improving clinical outcomes to patients in need of organ transplantation worldwide. With that, I will now turn the call to the operator for Q&A. Operator? Operator: [Operator Instructions] We will take our first question from Allen Gong from JPMorgan Chase & Company. K. Gong: Thanks for the question. Congrats on the really good quarter to end the year. I guess my question is going to be on guidance if I'm limiting it to one, you're guiding a step above TheStreet even after factoring in being the quarter when we think about the midpoint of the range. You clearly have a lot of moving parts next year between underlying growth in liver and heart and the enrollment of the clinical trials and you also have Italy in the back half. So when it comes to those 3 dynamics, can you talk broadly about your expectations for those and how that factors into your guidance philosophy? Waleed Hassanein: Thanks, Allen. As always, we take guidance very, very seriously at TransMedics and we have huge opportunities ahead of us as we outlined, Gerardo and myself. But also we have a few challenges -- a few moving dynamics. So in our guidance, we factored in all of the above and issued what we believe is a realistic guidance that would enable us to execute and let the execution and performance dictate what do we do if we need to revisit the guidance. So we feel confident in the guidance that we are putting forth here. And as it bakes in all the uncertainties or the opportunities and uncertainties in front of us. So again, we would go and execute, and we let the execution and the results and the performance dictate if we need to revisit the guidance as we move forward throughout the year. Operator: We will take our next question from the line of Josh Jennings from TD Cowen. Joshua Jennings: Great to see the strong start to the end of the year. I appreciate the breakout of the catalyst late in 2026. I was hoping to ask a question on OCS Liver. Waleed, you've talked publicly about a registry publication coming up in the near term that it could be a huge catalyst for liver adoption. I know you can't front run the results here, but I was wondering, one, just -- I mean, could we see some cost effectiveness data published in the near term and just thinking about that element of OCS Liver as new competition is coming into place? And just are you seeing any competitive headwinds out there that are new in 2026 for the OCS Liver franchise? Waleed Hassanein: I think -- let me address that question in 3 pieces. The first piece is there are health economic data on liver transplant that's already published, many of them for the last 2 years, single center experience. So that's already in the print. But what's coming is really the unequivocal drop-the-mic statistical superiority in the most important outcomes after liver transplantation, which would justify and support all the evidence that's been built in having more than 14 or 15 publications now already in print out there. Those publications that are coming, they are aggregated of thousands of cases, they're coming out of our registry and many of them are already under review. I cannot comment when are they going to come out, because obviously, I cannot interfere with the review process, given that these are very high impact journals. The last piece, the comment about competition. Listen, we're very cognizant of everything that moves in the field of organ transplant. We are not seeing competitive dynamic impacting our ability to execute in 2026 and beyond. And I will leave it at that. Operator: Our next question comes from the line of Bill Plovanic from Canaccord Genuity. Zachary Day: It's Zachary on for Bill. Just a quick one on can you provide more details on NOP Connect 2.0? I believe you talked about that in the last earnings call saying it would provide you operational efficiencies. Can you talk about what you've seen early on so far? Waleed Hassanein: Thank you, Zach. We've seen a lot. We've seen -- it's now at the platform. I would say the vast majority of our cases are now coming through the NOP Connect 2.0, and we're seeing efficiency in the management. We're seeing efficiency in the billing. But again, these are early days, early quarters. We are -- as we look forward, we see continuous improvement and expansion of our digital ecosystem, this is our -- this is going to be our second legacy after the OCS. This digital ecosystem is now fully integrated, fully supporting significant portion of the national transplant volume in the U.S. And our commitment is to continue to support it, continue to expand it to provide the best service for our customers, but the best and the broadest transparency about the status of the organ, the management of the organ as well as the financial billing around TransMedics services. So we're very, very encouraged by what we're seeing, and we're going to continue to make strategic investments in the digital platform to continue to expand and efficientize our market adoption of OCS. Operator: Our next question comes from the line of Suraj Kalia from Oppenheimer & Company. Suraj Kalia: Waleed, Gerardo, Tamer, Nick, excellent quarter. Can you hear me all right, Waleed? Waleed Hassanein: We can hear you loud and clear, Suraj. Suraj Kalia: Perfect. So Waleed, forgive me, I'll just kind of quickly sneak in 2. It seems like you guys gained about 400 bps of liver share in Q4. Why was that? And Waleed, your comments about Part B of ENHANCE, look, the numbers are suggesting you guys are going to exit FY '26 with approximately 6,300 organs. But if I parlay your clinical trial commentary, it means like you're not expecting a lot of contribution. You all must have put in some safeguards in place if Paragonics or others threw a wrench in the control arm, could you share some additional color on how do you keep the ball moving in Part B? Gentleman, congrats again. Waleed Hassanein: Thank you, Suraj. The first part of the question about the liver execution. Listen, this is a testament to the outcomes of the OCS Liver. This is a testament to our clinical leadership of the liver program. This is pure TransMedics execution excellence, period, full stop. So that answer Part 1. Part B, listen, we were not -- this is not our first rodeo. We are the company that have supported and completed the largest number of randomized and single-arm trials in the history of organ transplant. None of these cold static storage technologies have ever seen one FDA randomized or non-randomized trial. So we were prepared and we somewhat expected this. We will execute Part B, and it will be, hopefully, a significant success for TransMedics. It might take a few extra months to navigate through this dynamic, but the bottom line is we're extremely confident in our strategy, in our design, in our technology. And it says a lot when the control arm is worried about randomizing against OCS. So again, we're humbled by it. We're not letting that distract us from the task at hand. And as we committed, we are going to complete the study with the best protocol and the best randomization and with the control arm. Operator: Our next question comes from the line of Ryan Daniels from William Blair. Matthew Mardula: This is Matthew Mardula on for Ryan. Congrats on the quarter. And I kind of want to piggyback on that question, but I want to focus on the feedback you have received regarding the heart clinical trial. Given that you have already mentioned doing a handful of heart transplants for the trial, and I know it is still early in the process and ongoing, but I'm curious to hear what transplant surgeons feedback has been on the trial as they progress. And I kind of believe you previously mentioned in meeting all expectations. So I'm curious how that has trended? And is there anything in particular, transplant surgeons have called out regarding the device and maybe express more interest in using the device more in the future. Waleed Hassanein: If I tell you -- if I answer that -- it's a great question, Matt, and I appreciate the question. But if I answer that question, I might as well have seen the results. The trial is just early in the process. It's good feedback. It speaks to the value of everything we're trying to execute. I would leave it at that, and I hope to have more meaningful presentations by users of the technology, not by TransMedics, at the ISHLT symposium. Operator: Our next question comes from the line of David Rescott from Baird. David Rescott: Great. Congrats on the results here. I wanted to ask -- I've been hopping around a bit. So I'm not sure if it's been covered yet, but the CMS' proposal on some of the OPO changes. There's obviously a lot of stuff going on just on the OPO front in general. So wondering if you could give us some updated thoughts on the state of affairs, just on the broader OPO environment and whether or not there's any benefit that you could see or if this is building out some of the thoughts on the OCS service in general and how we should think about this potentially over the longer term? Waleed Hassanein: Thank you, David. All I could say is organ transplant system in the United States has gone through really significant transformation, hopefully, to the positive. We are supportive of the CMS language, proposed language. We're supportive of Senator Wyden's proposed bill to open up the historical closed transplant system to more competition, more transparency, more efficiency, more high standards of execution and metric -- performance metrics and we are going to try to play a bigger role to support the vision, the growth in overall transplant in the United States, saving more American lives, delivering cost-effective therapy to patients in need, that's costing CMS billions and billions of dollars, but also support existing OPOs in their missions. So we look at our role as -- it's a win-win opportunity for TransMedics to play a bigger role, but also support existing OPOs. That's all I can comment on at the moment. Operator: Our next question comes from the line of Daniel Markowitz from Evercore ISI. Daniel Markowitz: Congrats on the quarter. I wanted to ask on the operating margin guide for 2026. It sounds like the gross margins may see some volatility as you expand internationally, and then OpEx as a percent of sales is expected to increase as well to get to that 250 bps of contraction year-on-year. I guess, can you give us the breakout of how much of the margin contraction is coming from some expansion dynamics that weren't really areas of investment yet in 2025, things like international expansion, the trial spend that are kind of, I guess, onetime in nature. And with so many exciting investment opportunities, what are you looking at that tells you that it will make sense to get the business back to significant margin expansion in 2027 and 2028 as opposed to continuing to bring money into investments. Gerardo Hernandez: Right. So the big drivers of almost 50% of the incremental investment that we have in 2026 is driven by really 3 elements. One is our -- the completion of our clinical programs, OCS ENHANCE and DENOVO. We have -- the second part is the completion of our OCS Kidney development. And the third one is the continued development of our OCS Next Generation or 3.0 as we are calling it recently. Those 3 elements account for -- I think with more than half of incremental investment. And those, by nature, are transitory. So once we complete those elements, that's what gives me the confidence that spend should normalize and then we should be able to start capture an operating leverage as we continue to grow. I hope that answers the question. Operator: Our next question comes from the line of Mike Matson from Needham & Company. Michael Matson: Yes. So just wanted to get some clarification on your comments on the Part B of the ENHANCE trial around the competitive issue that you called out. So I guess the competitor is static cold storage. So does that -- I guess I would have assumed that was just putting the organ on ice, but does that really mean one of these cooler type technologies that's out there? And then is the competitor sort of trying to prevent their product from being used in the trial or being enrolled in this trial, is that the issue? I guess I don't completely understand what's happening there. Waleed Hassanein: Yes. That's exactly what's happening. Not everybody is using ice. Static cold storage boxes using face changing elements are being used. And the makers of that styrofoam box is refusing to randomize their technology to ours. Michael Matson: And I mean, I guess, how do you plan to kind of work around that or address that. Waleed Hassanein: Wait and see. Yes. I mean we have to -- we had hoped that this won't be the case, but we are kind of somewhat expecting it. So we have a plan to bypass that. And at the end of the day, it's the transplant programs that need to take control of the trial and TransMedics will support them with the right control arm that would be acceptable to FDA. Anymore questions? Operator: Yes, Mr. Hassanein, we have our next question coming from the line of Chris Pasquale from Nephron. Christopher Pasquale: Waleed, you had a really nice quarter in liver, but heart and lung were both a little bit lower than we expected. Was there anything that you noticed in those segments of the business around the end of the year? In particular, I'm wondering if the trials, which got going a little bit slower than expected might have caused any disruption or if there are any other dynamics there that would sort of explain the deceleration we saw? Waleed Hassanein: The lung -- Chris, as you know -- thank you for the question. The lung as you know, it's a rounding error for us. So really, I wouldn't read too much into the lung dynamic. I think most -- frankly speaking, most of the lung centers were waiting to see the FDA approval to start launching into DENOVO. The heart, I would say, has a similar impact, but also there has been a couple of other activities in trials wrapping up in the second half of 2025 that may have played a role. One is the cold perfusion trial, but that's wrapped up. And then the other one is a couple of centers decided to do something -- that they are doing organically. And that, again, we will address all these dynamics at the ISHLT symposium. As we sit here, we don't -- any of these dynamics, we believe, wholeheartedly, it's transient in nature. And all that's going to get washed with ENHANCE firing up and DENOVO hopefully getting initiated here pretty soon. So we're looking forward to seeing the impact of ENHANCE Part A and Part B. And hopefully, we can reverse these dynamics throughout '26 and then to '27. Anymore questions, operator? Operator: No, sir. We don't have any further questions. That concludes our question-and-answer session. I will now pass it back over to our CEO, Waleed Hassanein, for closing remarks. Waleed Hassanein: Thank you all very much, and looking forward to speaking again to report on Q1 results. Have a wonderful evening, everyone. Thank you. Operator: The meeting has now concluded. Thank you all for joining. You may now disconnect.
Operator: Thank you for standing by, and welcome to the Centuria Capital Group HY '26 results. [Operator Instructions] I would now like to hand the conference over to Mr. John McBain, Centuria Capital Group's Joint CEO. Please go ahead. John McBain: Good morning, everyone, and thank you for joining us. I'm John McBain, Joint Chief Executive. With me today is my fellow joint CEO, Jason Huljich; and our Chief Financial Officer, Simon Holt; also Tim Mitchell and Peter Ho from our Investor Relations and Corporate Strategy team. Today, we'll cover group performance for the half, divisional execution, our financial position and our strategy and outlook. The group delivered repeatable earnings growth for the half, underpinned by both contracted and recurring revenue streams and conservative balance sheet settings. Execution during the half has improved forward earnings visibility, supporting our decision to upgrade FY '26 operating earnings guidance to $0.136 per security. I'll begin with an overview of the group's performance and our through-cycle approach to growth. Jason will cover divisional performance across property funds management, investment, real estate finance and data centers. Simon will cover the financial results before I comment on strategy and outlook. Key outcomes for the half are summarized on Slide 4. Group assets under management increased by 6% to $21.8 billion, supported by strong contributions across property funds management and real estate finance. Across the property platform, we executed approximately $500 million of real estate acquisitions during the half and are on track to exceed our $1 billion full year target. We also completed the acquisition of the Arrow funds management platform, adding $440 billion of agriculture AUM and further strengthening our private investor and family office networks. Taken together, this execution and improved earnings visibility underpins our decision to upgrade FY '26 earnings to $0.136, representing an 11.5% uplift on FY '25. This upgrade reflects underlying run rate momentum rather than one-off items. Moving to the platform overview on Slide 5, which highlights the scale and diversification of Centuria today and what matters for earnings quality and capital allocation. Virtually all verticals now exceed $1 billion in assets under management, supporting operating leverage, while preserving flexibility in how and where we deploy capital. We operate across listed and unlisted vehicles, real estate and credit and span most -- major property sectors across Australia and New Zealand. Diversification is not just about earnings volatility reduction. It allows us to allocate capital based on risk-adjusted returns and investor demand rather than being forced to pursue growth in any single product, sector or market. In the current volatile environment, that flexibility is vital. As the platform continues to scale, we see opportunities for margin expansion over time without reliance on any single product sector or capital source. Slide 6 demonstrates how diversification has supported earnings and AUM resilience through the sharpest rate hiking cycle in decades, with group AUM achieving a new record in this half. While performance fees can introduce period-to-period volatility, the underlying base of management fees, property income and credit earnings, continue to grow. This reinforces our conviction that the platform is designed to perform through the cycle, not just in support of market conditions. Turning briefly to the broader environment on Slide 7. Despite higher rates, the Centuria platform weighted average cap rate and product returns remain significantly above term deposit rates, and we continue to capture opportunities across real estate and transaction markets, many of which are showing signs of constrained supply and improving rental growth. Structural capital flows also remain supportive. These include ongoing superannuation inflows, continued SMSF growth and approximately $30 billion of capital expected to be repatriated from expiring bank hybrids over coming years. Turning to Slide 8. Private credit remains a strategic priority for Centuria and a good example of disciplined growth in a structurally expanded segment. We have been active in real estate credit since 2016, partnered with Bass Credit in 2018 and following a strong track record, we acquired a 50% interest in 2021, with the platform growing at a compound rate of approximately 36% per annum since that time. We increased our stake to 80% in 2024. And this morning, as previously forecast, we announced we have exercised our option to increase our interest to 100%. During the half, this business executed approximately $1.4 billion of total loan origination, restructuring and exit activity. Market share remains modest at around 1%, highlighting significant runway for the group within a large and growing market. Importantly, the previously announced succession and integration plan for Centuria Bass remains in place with David Giffin and Yehuda Gottlieb being promoted from within the business to CEO and Deputy CEO, respectively. We believe steps such as this support continuity and long-term sustainable growth. I'll now hand over to Jason to go through the divisional performance in more detail. Jason Huljich: Thank you, John, and good morning, everyone. Half year '26 was another consistent period of execution for the property platform, as illustrated on Slide 10. Property funds management AUM increased by 5% to $18.3 billion during the half. We executed approximately $700 million of real estate acquisitions and divestments, supported by strong engagement from unlisted investors, which has underpinned transaction execution as other sources of capital have tightened. Property fundamentals remained supportive with limited forward supply and improving rental growth across most sectors underpinning earnings visibility. Turning to Slide 11. The half was a period focused on integration and value creation. We established Australia's largest unlisted single asset industrial fund at Port Adelaide with strong participation across our investor base and significant oversubscriptions. In agriculture, we secured Australia's largest hydroponic glasshouse by an off-market acquisition and commenced capital raising ahead of settlement. Listed REITs continue to selectively recycle capital, demonstrating the ability to divest assets at premiums to book value as well as generate strong leasing outcomes to improve the income profiles of each portfolio. Slide 12. Distribution remains one of Centuria's most important competitive advantages. Calendar year '25 was a strong period for new investors joining the platform, including more than 460 investors and family offices acquired through the Arrow transaction. Early engagement with these investors is already translating into interest across additional Centuria products, consistent with the proven integration blueprint applied across our M&A activity. We saw a similar outcome following the Primewest merger where 5 years on, strong integration and ongoing engagement has resulted in approximately 50% of Primewest investors committing to other Centuria products beyond their original investment. This behavior reflects the strength of Centuria's unlisted real estate platform where investors can self-diversify across multiple strategies within a single platform. Today, we have over 15,500 unlisted investors with more than 1,600 invested in 3 or more Centuria funds and almost 10% of these invested in 10 or more funds. This depth of engagement supports capital recycling as funds mature and position Centuria to consistently repatriate and redeploy private capital. We believe this distribution capability is difficult to replicate and represents a durable competitive moat for Centuria. Turning to Property and Development Finance on Slide 13. Property and Development Finance AUM increased by approximately 9% to $2.5 billion during the half. During the half, Centuria Bass Credit executed approximately $1.4 billion of loan origination, restructuring exit activity, while also raising $200 million of gross unlisted investor inflows. The business remains well positioned for further growth beyond its current market share of around 1% of Australia's private credit market. Turning to Slide 14. We can see that growth has been achieved alongside high-volume origination, restructuring and loan repayment activity. This has been paired with a strong focus on managing the book's composition, which remains largely exposed to residential asset-backed lending. Growth has not come from stretching average LVRs or loan structures across the overall book. Centuria Bass Credit is highly operational hands-on business within Centuria, underpinned by deep in-house expertise. Since the JV commenced in 2021, we have made targeted investments in systems, processes and people to support scalable growth, while maintaining disciplined risk management. In addition, Centuria Bass benefits from Centuria's broader platform with access to specialist expertise across valuation, governance, distribution and development as required. Slide 15 highlights Centuria's track record of progressively building the platform over time, primarily through organic growth, selectively supplemented by inorganic opportunities. From a data center perspective, the key takeaway is that this represents the early stages of a long-dated disciplined strategy aligned with durable long-term demand drivers. Slide 16. To further emphasize this evolving strategy, Slide 16 highlights that data centers and sovereign AI represent long-dated strategic optionality within a market characterized by sustained demand and significant capacity constraints. Accordingly, our current focus is on progressing planning and power outcomes to maximize development optionality across identified sites. As tangible milestones are achieved, we will assess the most appropriate value realization pathways on a site-by-site basis. ResetData remains at an early stage of this strategy. Since acquiring an interest in the business, we have partnered with leading global operators, successfully launched Australia's first public sovereign AI factory and scaled internal capability following initial integration. The business is now transitioning into an early commercialization phase as customer onboarding progresses, which is expected to support improving profitability over time. Importantly, capital deployment remains return-driven, fully considers balance sheet integrity and short-term profitability is not required to meet FY '26 earnings guidance. I'll now hand over to Simon to cover the financial results. Simon Holt: Thanks, Jason, and good morning, everyone. Before stepping through the numbers, it's important to revisit the segment changes introduced at the full year '25 and carried through into these half year accounts. These changes were made to better align reported performance with Centuria's underlying economic exposure and how the platform is managed. We restructured our operating segments and adopted a proportionate consolidation approach for co-invested property assets, providing a clearer view of underlying economics. Financing costs attributable to these investments are disclosed separately as nonrecourse loans. Now turning to the result. FY '26 was another period of disciplined execution. Statutory NPAT was higher, reflecting fair value movements on co-invested property assets and operating EBITDA of $89.3 million was delivered for the half. From a quality perspective, what's important here is not just the headline result, but the mix of earnings underpinning it. The majority of operating earnings continue to be generated from recurring and contracted sources with performance fees remaining a secondary contributor rather than a dependency. This provides confidence in the sustainability of the run rate as we move through to the second half. Property funds management earnings reflects -- reflected strong activity, increased transaction volumes and performance fee contributions. Investment earnings moderated as expected due to asset recycling rather than any deterioration in asset quality or returns. Real estate and Development Finance earnings were stable across the halves. ResetData impacted earnings and our share of Centuria's share was $2.8 million at 50% and this happened during the period and is expected to be a net negative contributor to full year earnings, reflecting its current investment and early commercialization phase. Importantly, this reflects a deliberate and disciplined approach. Capital is being deployed against long-dated strategic optionality rather than short-term earnings contribution. As customer onboarding progresses, we expect this impact to moderate over time. Cost savings remained contained across the platform, reflecting disciplined balance sheet management and access to lower cost of funding. As a result, operating profit after tax increased to $54.6 million, delivering operating earnings per security of $0.066, up 6.5% on the prior period. A distribution of $0.052 per security was declared. Turning to Slide 19 highlights. This page highlights the quality and sustainability of funds management earnings. Property Funds Management is considered a core segment for the group, and as such, the majority of the business resources are dedicated to this segment. Centuria's focus on accelerating operating leverage from this segment forms part of the group's overall growth strategy, and we anticipate that margins will continue to expand as the platform scales through time. Recurring management fees remain the dominant contributor to this segment. Performance fees were booked where funds formed part of their respective testing thresholds adopted by the group. Centuria's underlying funds also retain additional latent fees, which remained unrecognized. These are expected to fluctuate in line with prevailing valuations from period to period as well as when newer vintage funds mature through the cycle. Turning to Slide 20. During the half, the group realized $133 million of cash through the sale and recycling of balance sheet assets. And gearing remains steady. Liquidity is strong, and there are no near-term debt maturities. From a capital management perspective, the balance sheet is doing exactly what we want it to do, funding growth, supporting selective investment and preserving flexibility. Asset recycling continues to be a key lever, allowing us to redeploy capital without increasing balance sheet risk. Also, the average cost of debt reduced during the half following the repayment of our listed notes, lowering our all-in margin from approximately 325 basis points to approximately 275 basis points. This supports self-funded growth while maintaining a conservative and flexible funding profile. Turning to Slide 21 and talking about the platform. Beyond the corporate balance sheet, Centuria has access to $8.3 billion of diverse lending facilities across listed and unlisted funds provided by a broad group of 24 lenders. This diversity reduces reliance on a single capital source and allows us to manage funding proactively across market cycles. Average margins improved to 1.5% -- 1.57% in the half, highlighting the benefit of stronger lender engagement and an active funding strategy. The funding profile and covenants shown reflect a conservative and flexible balance sheet position with funding cost and risk setting actively monitored across the cycles. I will now hand you back to John for strategy and outlook. John McBain: Thanks, Simon. To conclude on Slide 23, our focus remains on scaling core property funds management, progressing targeted acquisitions and continuing to build Centuria Bass Credit. Data center, [ certain ] AI initiatives will be progressed selectively and only where returns are compelling and customer demand is locked in. These initiatives provide the group with long-term strategic optionality as we go through the buildup of this business. The group balance sheet remains a strong asset and strategic asset. Our platform and deep distribution networks are unique competitive advantages, which can generate a diversified and predominantly recurring earnings base. Factors such as these provide a degree of visibility into earnings underpinning the guidance upgrade and allowing Centuria to build through cycle momentum while remaining nimble as markets evolve. Thank you. That concludes the formal presentation. I'll now hand back to the operator to commence Q&A. Operator: [Operator Instructions] The first question comes from the line of Cody Shield from UBS. Cody Shield: Firstly, just on second half drivers, can you maybe talk a little bit to what you're expecting out of ResetData and performance fees in the second half? Simon Holt: Yes. So on the performance fees, we're expecting pretty much half-on-half to be about the same and consistent with what we said at the full year results back in August at around $20 million. In relation to ResetData, our expectation is that we probably will still make a loss, albeit smaller than this half in the second half. So obviously, setting us up for future tailwinds, but slight improvement. John McBain: I think there's quite a good pipeline of demand now for our capability. But the timing of it, of locking in that demand just has to be finalized. And as those people slot in, then we'll get more visibility. But this is a very, very young business, and we've got a measured approach to it. Cody Shield: Yes. Okay. Maybe if you could just provide a little bit more detail on what was causing the flip, because it wasn't '26, I think you're going to get a positive contribution from ResetData? Simon Holt: It's just timing of signing up customers. Cody Shield: Okay. That's clear. Maybe just turning to acquisitions that are in DD or secured. Can you just provide a read on maybe what type of assets are falling into that? And also what level of divestments you're expecting in the second half? Jason Huljich: Sure. It's Jason here. On the acquisition side, look, we obviously can't go into too much detail on some of them as we're still in due diligence. But it's a mix across industrial, data center, retail and office, both in Australia and New Zealand. So it's a nice mix of geographies and asset classes. Some of that has been secured and some is in DD. But it's nice to have a really good pipeline there. On the divestments, I think we had just under $200 million for the first 6 months. As I think I said at results, we'll probably end up somewhere around $500 million full year. Operator: Your next question comes from the line of Andrew Dodds from Jefferies. Andrew Dodds: Just following on from Cody's question around ResetData. I mean, you've called out that the lease-up is expected to sort of strengthen in the second half. But I mean the drag on earnings is pretty significant. So given that you've said that you sort of expect this to be a net negative contributor this year, I mean, when can we realistically expect this segment to become at least breakeven? John McBain: I mean, Simon, perhaps go through how significant it is. It's -- our half is 2-point-something million out of a $50 million after-tax profit. Is that right, $3 or $4 million? Simon Holt: Yes, $2 million or $3 million. John McBain: So I think -- Andrew, I think we've tested that comment up to where you think that's significant. And yes, we would prefer it not to be a drag -- but of course, like all things, when it goes away, when these customers sign up, and they could sign up sooner than we think, there's a very strong pipeline of significant clients. I guess that will help us not be on -- not have these conversations. Andrew Dodds: Right. Okay. Maybe just on Centuria Bass then. Are you able just to talk around the level of bad debt you're seeing across the book? And I sort of asked this just in the context of -- I mean, there's been some recent press around your exposure to a troubled developer in Western Sydney and if that's having any impact on the business? Jason Huljich: No. Look, that's basically nothing at the moment. The portfolio is in very good shape. We deal with a lot of different counterparties in this business. We're very comfortable with the book. In particular, relationships we have with some customers, we steer more towards things like residual stock, which are very liquid and a lot lower risk than obviously development finance. But yes, look, the book is in very, very good shape. It's probably as good as it's ever been. Operator: The next question comes from the line of Tom Bodor from Jarden. Tom Bodor: I'd just be interested in seeing your comfort with look-through gearing, it's ticking up to almost 38% now. And just noting that around 1/3 of your asset base is intangibles. And what level starts to cause this comfort from a gearing perspective? John McBain: Simon, [indiscernible] [ go ahead ]. Simon Holt: Look, I think the first comment I'd make, Tom, is all of that debt that sits in property investments is nonrecourse. So it doesn't actually flow up to the head stock and vice versa, doesn't us -- require us investing back down if there is anything challenged. So look through gearing moves around from time to time. Mainly the big 2 investments that we have are CIP and cost on our balance sheet and cost gearing has moved down a little bit. So that does have an impact to our look-through gearing. But I think what's important, we use operating gearing as a measure and supports looking at the intangible value as an important part of our business. We buy organic assets through funds management and we from time to time buy inorganic transactions. So we are sitting at around that 12.5% on that operating gearing level for which it's consistent with the half year and has been consistently in that target band that we've been quoting for, I'm going to say, 2 to 3 years now, that 10% to 15%. John McBain: Yes, Tom, I know it's a metric that a lot of you guys look at, and we understand that. But I think the other submission, I think Simon touched on it, we think the intangibles on our balance sheet are worth something. We think Centuria Bass is worth something. Centuria New Zealand is worth something. Jason Huljich: Primewest. John McBain: Primewest is worth something. So it's easier to just -- the word intangible has a connotation about it that could be negative, whereas we're very proud of those businesses, and we think they're highly valued. And in some cases -- well, a lot of cases were far more than we paid for them. But look, we get the question, Tom, we understand it, respect it. Tom Bodor: Okay. And then just on ResetData, just going back to that. I mean, has any leasing actually occurred to date? And what is the revenue from that leasing on a per annum basis? Jason Huljich: Yes. Look, we have leased part of the facility. I won't go into numbers, but we've leased a chunk of the facility. We have got strong demand over the rest of the current capacity as well which we... Tom Bodor: [indiscernible] that you are talking about? Jason Huljich: Correct. Correct. So we do expect that to lease up over the shorter term, as Simon talked about. So yes, probably the big thing that we've realized it is a longer decision process, a longer sales cycle to get both enterprise and government committed. There has definitely been increased demand over the last 4 or 5 months. And we have got, as I said, a very strong pipeline. So we've done a chunk of it and demand over the rest of it, good pipeline over the rest. Tom Bodor: And is there a point at which we can think of this business as breakeven? I don't know if it's 40% of the capacity or some number that as a guide will get the business to be breakeven? Jason Huljich: Yes. Look, it obviously depends on terms, and it depends on a lot of things. The revenues can fluctuate depending on lease -- on the terms of the customer commitment, on term. So it's a hard one to actually give you a number on that. John McBain: Yes. I think -- Tom, I think if we just looked at the Melbourne facility and looked at just leasing that up, the GPU capacity, and looked at our capital and looked at our return on capital there, I think that can come to profit quite easily. It's, ResetData is a very young start-up business, and it will go -- it will require further expenditure as time goes on to grow it. And that's no different than Centuria Bass, no different than Augusta, [ no different ] than all the other businesses we've built. We do think -- we're just trying to be measured about making predictions about when that point happens, but we're certain that it will occur. And look, we do think it's a huge opportunity in the space we're in and being an NVIDIA cloud partner in Australia. But it will take time to play out. But we are excited about it. Operator: Your next question comes from the line of James Druce from CLSA. James Druce: Apologies. Another question on ResetData. I'm just curious, from an industry perspective, single-phase direct-to-chip cooling technology seems to be preferred over immersion cooling even as we move down the track from [ Ruben ] to finement chips. It just seems to be easier to handle with equipment when it's not liquid. How do you think about the 2 technologies? Why would a customer necessarily prefer immersion? Or is it more about just getting access to some compute? Jason Huljich: Look, I think it is about access. We've got something built there ready to go. It doesn't necessarily affect the customer at all. They're after compute and those high-performance chips. So as we've seen with NVIDIA and others are doing and where they're going and what's happening in the chip space and the densities, it is going to go to a sort of combined unit of direct-to-chip as the next stage. But liquid emission works very well as well. So for our existing facility that we've now built, I think it's very fit for purpose. It suits customers, and we've got a wide range of customers looking at it all the way from large enterprise to government. So they seem very comfortable with it. Future facilities, assuming we build out further ResetData facilities, may go towards more the new version of direct-to-chip. John McBain: Reset guys are very close to NVIDIA. I think we'll follow what technology they spearhead really. Jason Huljich: All the facilities -- the facilities we build are built on the NVIDIA architecture. So they have to be happy with it, and we use their design protocols. John McBain: Well, the interesting part is the sovereign nature of -- there are 3 Neo cloud partners, NVIDIA partners in the country. We're one of them. And we're the only one that's purely sovereign. And I think particularly when you're talking to state and federal government, and universities, for example, that sovereign initiative or a capability or mandate is becoming more and more important. So that's another thing that we're really looking forward to unfolding where we have a competitive advantage, but very early days. James Druce: Yes. No, on the sovereign AI. Just a follow-up. Just remind me how the chip finance works? Are you on the hook if you don't have a tenant? What are the terms there? John McBain: Yes. It really is a P&I asset finance lend that we have at the moment on 818 in particular. So it's a P&I and if you have a tenant, you're generating revenue. If you don't, you still have the cost. James Druce: Yes. Okay. That's clear. And then just on the $0.8 billion of acquisitions and DD post balance date. Can we just get a -- you might have provided this on the call, I'm sorry if I've missed it, but can you just provide some color on what sectors they're in and where the momentum is coming from? John McBain: Yes. Look, I think I said earlier, it's a mix of geographies being Australia and New Zealand and sectors. And it's got a bit of everything. So we've got industrial, we've got data center, we've got retail and we've got office. So it is a nice range of asset classes and all opportunities that we think will be well received by our investors, both in New Zealand and Australia. James Druce: Yes. Okay. That's clear. And one more, if I may. Just on the performance fees coming through, which -- and just a bit of color on the funds where they're coming from, please? John McBain: Coming -- a lot of what's coming through this year is coming through from Primewest assets. Jason Huljich: Mainly retail and industrial. John McBain: Mainly retail and industrial, yes. That would be the 2 main ones. Operator: Your next question comes from the line of Richard Jones from JPMorgan. Richard Jones: Just wondering if you can discuss the Arrow Funds Management acquisition, just maybe perhaps how that came about? And I guess how you think about organic growth versus bolt-ons? Jason Huljich: Sure. I'm happy to take. On your first question, look, Arrow, we've been talking to them for a number of years. I think Primewest we've been talking to them before we merged that business in, sort of came to a hit last year, where we worked with the owners of that business. Why we liked it? Our ag strategy is quite focused. What it does allow, we like the portfolio of 26 assets, and it got us some very strong tenant relationships in some other subsectors in ag that we like, such as poultry. I think Bard is about half their tenant exposure, a very strong company. And there are a few other subsectors in there as well. So I think it gave us a bit more diversification into ag, but into ag subsectors that we'd like. On the investor base, there's just under 500 investors. Another thing we liked was the makeup of those investors, a lot of high net worth and a lot of family offices. It's sort of been owned out of Melbourne. And a lot of the investors, substantial individuals and family offices out of Victoria, which would strengthen our investor base down in that state. So I think we've got a number of benefits out of it. Obviously, the financial stacked up, too, with synergies. We're picking up for about 5.5 multiple, which I think screens pretty well. And it's something that we think we can grow. And as we said in the presentation, we're already talking to some of the larger groups about investing into other asset class -- other products. Obviously, CAP, we've built organically, which is the other large ag vehicle. And your second part of the question, organic versus nonorganic. Look, obviously, we like to grow organically and with $800 million of acquisitions in the pipe, that part of the business is going strong. Inorganic growth, we like buying platforms that really add value to us, be it a new sector that we like, that we can scale up. Also, we like, obviously, things that are very accretive as well. But this sort of did help us scale up that ag vertical and get us through that $1 billion mark -- well through the $1 billion mark and get us into those other subsectors. Richard Jones: Okay. And then just a second question. Just a second question just on -- sorry, half on the ResetData. Just what is the likely capital deployment that business needs over the next, call it, 2 years? And can you discuss the options from a funding perspective that you guys are thinking about? Jason Huljich: Look, it really depends where we take it. As John said, we're being very measured. I think we think it's a huge opportunity. You're seeing what others are doing, some of our peers are doing at the moment and some are scaling up pretty quickly. We have chosen really to, as I said, take a measured approach, work out how it plays out in the sort of subsector of AI and data centers -- the relationship with NVIDIA is definitely a huge asset. We are very close to them. And I think it helps the other play, which is our real estate ownership of data centers as well, and does give us some optionality there. So I think it's something that we don't necessarily have to commit a lot of capital to, unless we want to, unless it makes sense. But at this stage, we're just doing the sort of measured approach and scaling up in that sort of fashion. John McBain: Yes. I think to add to what Jason said, I completely agree. It's nice to make it clear, Richard, look, we started buying data centers in 2020. Am I correct, Jason, but the Telstra one for $400 million. Back at that time, no one heard the word data center, right? And we've been adding to that. There's about just over $500 million of just real estate investments, just data center but -- with data center operators as tenants or Telstra or someone [indiscernible]. That's fine. So -- but as Jason said, that gives us -- so we're going to have an involvement in data centers whatever happens. ResetData came along, that just gave us an opportunity just to be at the leading edge. And I think some of the important things about ResetData are the NVIDIA relationship. And if we can build out where I think we're different to other people and your balance sheet question, the answer to it is probably this. We want customers to be locked in before we go out and secure some sort of debt that Simon described before. It's unlikely that we're going to try and attempt to raise a lot of debt and then hope customers arrive. So a little bit of build as they come. We are actually the only ones that have built such a big [ data ] so far outside government. And -- but less hope, more measure, more locking in clients. Once that happens, I think we can find outside sources to fund progress as we make it. Richard Jones: Just one more quick one. John McBain: Yes, sorry. Richard Jones: No, you keep going. I don't want to cut you off. John McBain: No, just -- we don't want anyone to be surprised. This space is dominated by flash releases, quick -- we just don't want any of it. This is slow -- I hope it's not too slow, but measured and deliberate and based on customer demand. And we -- it's exciting because it's a big pipeline, but we want that pipeline to be cemented and then we want to come back and tell you we've done it. Richard Jones: Just a quick one for Simon. Just the second half cost of debt, just can you tell us where you think that heads and any capacity for further margin reduction on balance sheet? Simon Holt: So obviously, this first half had the list of notes being repaid. So the weighted average cost came down about 60 bps from last full year, and it will probably come down another 60-odd bps in terms of the full second half. Sorry, what was the second part of your question? Richard Jones: So that will be 7% for second half is what you're saying? And I just... Simon Holt: Yes. Richard Jones: And the other question was any further capacity for margin reduction on the rest of the book, whether you can bring any of that forward? Simon Holt: No. Look, we've got to a point that we've got -- we've refinanced all of our corporate notes out. So at the corporate level, I think at 2.75 or 275 bps is about where we're going to land for the moment. Some of the shorter term debt may roll off, it might come in slightly, but that's where we're kind of sitting on the margin side. Operator: Your next question comes from the line of Ben Brayshaw from Barrenjoey. Benjamin Brayshaw: You previously flagged the potential for the IPO of a couple of listed entities. Just wondering if you could provide an update on that? And is that something you're still considering? Jason Huljich: Yes. Look, we are. It's subject to obviously market conditions. Obviously, the market is a little over the shop at the moment. So that window isn't there. We have done a lot of preparations. So if that window does open, we're ready to go on certain vehicles. But yes, it's totally at the mercy of the market at the moment. And look, we don't need those particular vehicles to be launched over the next 4 months to hit our guidance either. Benjamin Brayshaw: And just a question on the financials. I was wondering if there's been any development operating earnings recognized from the inventory on the balance sheet for this period? And if so, if you could just quantify those roughly, please? Simon Holt: No, there's no profit coming through from that activity. I'm just trying to remember what was in my list of inventory. Yes. So most of what was in inventory were properties held for sale as opposed to development properties. So it's just more of a classification thing under accounting standards as to why they call inventory. So yes, no, not a lot of profit coming through on this period, was 0 profit coming through from any developments on balance sheet. Operator: Your next question comes from the line of Simon Chan from Morgan Stanley. Simon Chan: Performance fee is pretty good, and you've reiterated $20 million for the year. Just the way I'm thinking about it, you started booking performance fees. That suggests to me that there are probably some funds or some AUM that's coming towards the end of their set periods, right? Am I right? And if I am right, like how big is that chunk? How much of your unlisted platform have funds coming to the end of their lives over the next, I guess, 18 months? Simon Holt: Yes. The majority still is in '28, '29, which has been there since we've purchased Primewest. And a lot of what is the unbooked performance fees relates to that particular period of time. These are just some other funds that are inside that 2-year window, that have come into that 2-year window. Some of that will because the funds expiring, some of it will because there's opportunities with investors to do different things with that particular asset that create that outcome of something likely to happen within -- in the next year. In addition, in many cases, as has been the case the last couple of years, investors choosing to extend those funds as well, even though they come into that 2-year window. So it's a mix of things that are going on. But in essence, there's a number of funds, as we said earlier, around industrial and retail that are coming into that 2-year window. Simon Chan: How big is that bucket, Simon? Simon Holt: Well, the latent performance fees of -- that are in there, it's about $70 million, isn't it? Simon Chan: No, no, I'm not talking about fee. I'm talking about the funds bucket that you're referring to? Jason Huljich: A few hundred million. Simon Chan: Yes. Sorry, Jason, did you say a few hundred? Jason Huljich: Yes, a few hundred million roughly. Simon Chan: Okay. Okay. Fair enough. And that excludes the Primewest, right, Simon? Simon Holt: No, no. That would include the Primewest assets. Simon Chan: Okay. Simon Holt: Most of what's been booked through this period is off the Primewest assets. John McBain: A big chunk of the Primewest assets got extended out to '29 upon their listing, but there was a big -- it was also a part that didn't. So they did expire earlier. Simon Chan: Okay. Cool. How is fundraising at Two Wells going? Simon Holt: It's good. So that vehicle has got a large cornerstone investor. We expect them to take a significant chunk of the equity required for that purchase, which is positive as well as new investors coming into the fund. Simon Chan: Okay. Which sector would you say was -- I mean, over the last, I guess, 12 months, you've done Logan, you've done -- well you're doing Two Wells and you've done Port Adelaide. Simon Holt: Yes. Simon Chan: Which of those 3 sectors was the easiest to get money? Jason Huljich: The Port Adelaide raise is probably the best I've ever seen, to raise sort of circa $300 million for $116 million raise, which we thought was reasonably large at that time for an Adelaide asset. We got bought over. Everyone got scaled back over 50%. We also said no to a number of offshore institutions that wanted minority stakes as well. So yes, that was definitely the most demand I've seen. Logan went well as well. That was oversubscribed. But yes, I think we've got pretty good demand across the book, particularly retail and industrial. Ag is good, but that one cornerstone is a big chunk of the demand into that fund, which they keep supporting, which is great. Simon Chan: Great. And just one last one. Can I check in on Allendale? Are you guys still holding on to some units there? Or have you managed to get it the way now? Jason Huljich: We do have a holding. It's been coming down over time, but there is a holding at this stage. Simon Chan: How big is it? That's [ alright ]. You can get back to me. That's fine. Simon Holt: We'll come back to you. Simon Chan: Yes, of course. Operator: Your next question comes from the line of Andy MacFarlane from Bell Porto. Andrew MacFarlane: Just a couple from me. Can you just talk about the level of redemptions, if any, across the various funds at the moment? Jason Huljich: Yes. Look, we only have the 3 funds that have redemptions, the -- which are the open-ended funds. So CDPF, which our diversified fund, it's a small fund, our health care fund and our ag fund. We have quarterly redemption -- limited quarterly redemption features. Now both the health care fund and the CDPF came up with their 5-year liquidity events where we go out to investors and -- we go out to investors and give them the opportunity to let us know if they do want to redeem out the fund. We then have a period of time to raise more equity, sell assets and so forth to satisfy that. CHPF, I think we reported last results, we were at over 30% of investors, put their hand up there, and we're just going through the process of satisfying those. The latest was CDPF diversified fund. Again, around 30-odd percent, put their hand up for redemptions. We've already satisfied about 25% of them, and the rest will be sorted out pretty quickly with some assets that are going through the sale process at the moment. It's not a lot. It's sort of less than $120-odd million across the board. Andrew MacFarlane: Just in the pack, you got a chart on bank hybrids rolling off and some of your peers looking at doing things as product replacements. How do you think either Bass and Centuria could play a role in finding products here, if so? Jason Huljich: Look, we think these investors are looking for yield. Our products can supply that across either the credit or equity side of things. So we think it will be a tailwind for us and obviously other managers as well. As I said earlier, we have been pretty surprised on some of our raises and the amount of demand out there. As these hybrids roll off year-on-year over time, I think that will help support demand for our sorts of products. So yes, as long as we can keep up an attractive yield and a buffer over term deposit rates, which is looking like we can do on both sides of the Tasman, our products should be pretty well received. Andrew MacFarlane: So last one, if I may. LVR, it's creeping up a little bit in the debt book. Just wondering kind of where you're happy with that sitting? Jason Huljich: On the -- in the funds? Andrew MacFarlane: Yes. Jason Huljich: Look, our funds hasn't -- I don't think it's moved too much. We sort of sit normally around that for a new fund in that 45% to 50% range. Andrew MacFarlane: Sorry, Jason, I meant, Centuria Bass, apologies. Centuria Bass. Jason Huljich: Centuria Bass. Look, a couple of percent on LVRs. But look, we put that graph on there to show it hasn't moved that much. It's been pretty stable. We stuck to about, I think, just over about 92% first mortgage. It's about 90% residential. Look, where the LVRs around where it is now is where we're comfortable. Each deal is obviously diligence on its merits on the counterparty, on the quality of the asset, but how we look at it is it's an asset [ lead ] and what is the value of what we're lending against and having the teams in-house that can really have a close look at it, a large development team, a large valves team. I think it really gives us a bit of a point of difference compared to most of the other managers out there. Operator: There are no further questions at this time. I will now hand back to Mr. Bain for closing remarks. John McBain: Yes. I'd like to thank everyone for attending this morning and for the questions. We enjoy it and send out thanks to Tim and Peter, in particular, for helping put a really nice set of documents together. Thank you. Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to Tabcorp Holdings Limited Half Year Results 2026. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Gillon Mclachlan, Managing Director and CEO. Please go ahead. Gillon Mclachlan: Good morning, everyone, and welcome to our results for the first half FY '26. I'm Gil Mclachlan, and I'm joined on the call by CFO, Mark Howell. I'm going to take the presentation as read and talk you through the key areas. Start on Slide 2. We released our revised game plan a year ago, and I believe we're executing on that plan. The numbers today reflect the progress we've made, and we're steadily building a culture of doing what we say we will do. And for me, that's critically important. I want to stress that we're midway through our turnaround plan, and there's still work to do. We're not yet at the level I want us to be, but I'm pleased we're on track against our FY '26 objectives, and we made good progress in the first half. Our improved execution continued with AFL Miss-By-One and Mega Pot during the footy season. We showed up strongly through the Spring Carnival with TAB Takeover and TAB Time continue to sell out. The Spring Carnival, however, was a customer's carnival. Yields from September and November were historically low because of an unusually high number of favorites winning major races. Despite those challenges, the diversification of our business allowed us to deliver a pleasing result. It was a company-wide effort, cost and capital discipline and improved omnichannel customer offering and growth in MAX. These are the outcomes of creating a better company with greater capability. If you look at Slide 6, we continue to execute our best pillar of the appointments of general managers to lead retail, MAX, marketing and strategy. People are everything, and these appointments are part of our continuous journey of improvement. I'll now refer you to Slide 7 and our second pillar. We are going to deliver a national Tote and our target remains the end of this financial year. One pool will increase liquidity of partners and in time, create new product opportunities. Australian racing also have a greater global reach and potential for more world pools, which will better connect us to a global calendar. I want to acknowledge the principal racing authorities in each state are working collaboratively on this opportunity. Our in-play product, TAB Live, is progressing. And we recently received ACMA clearance, and we are now working to build our launch plans in New South Wales. Discussions with other states are advanced. On this slide, I also want to call out our Integrity Services business MAX. With a consistent and growing business, and our key partnerships are renewed in the half, and we're looking at opportunities which could expand our footprint. And now I'll push you to Slide 8. The core pillar of our game plan is to deliver unrivaled omnichannel experiences. We continue to innovate with new products and a better looking field to create a greater, genuine racing and sports entertainment offering. TAB Time was the first to launch and a sell out every week since the project commenced. Sold out in a record 3 minutes on Sunday. TAB Takeover highlights how all of our assets coming together to deliver something unique in the market. We're delivering exclusive in-venue generosities that incorporate both racing and sport, encouraging more people to attend venues. We have a strong product and generosity pipeline for both AFL and NRL seasons which we launched in venues this week. Pushing to Slide 9 now. And the TAB brand is becoming more youthful, sports-oriented and experiential. Turnover among 18 to 24 year olds was up 14% in the first half '26. I want to touch on Liv Golf and Superbowl as an example how we're talking to a new cohort of sports fans. We know customers want live experiences and attention spans are getting shorter. Story sales and brand connection is increasingly more important. Tentpole assets like Superbowl and Liv Golf are examples how we are delivering in this space. We'll be activating our brand and entertainment propositions across these assets and showcasing these activations on TAB-owned channels. We'll be visibly branded more than just raced. Flemington and Randwick will continue to be our flagship properties, and we know we also need to connect with more sporting audiences. On Slide 10, some numbers there, and this refreshed offering is delivering. Digital and venue turnover increased 12% in the half, including growth in sport of 26% and 42% growth in the 18- to 24-year-old cohort. Looking ahead, next-generation EBT will commence rollout in July, and in conjunction with TAB Live will further differentiate our offer in the market. Slide 11. Our fourth pillar has been delivering growth underpinned by a sustainable retail channel. To this, we'll invest in retail, we're redirecting generosity, developing new products and rolling out modernized betting terminals to attract customers and grow turnover for benefit of TAB and our venue partners. This enables us to create a structurally profitable channel that is sustainable. This drives a new commercial model that improves alignment with our partner venues and simplifies the existing framework. Finally, Slides 12 and 13 showcase our media business. I said in August, the look and feel of scale will be different during the Spring Racing Carnival and the team delivered. We introduced new content, evolved our talent and overhauled our magazine programs to remain contemporary. Our leading tipsters have a permanent place in the home page of the TAB app. Every partner can access the tips with prefilled bets, continues our evolution to a true omnichannel experience. We have also strengthened our core rights portfolio, including Victorian media rights domestically and internationally. Our focus remains on enhancing our core offering and content and expanding distribution both in Australia and internationally. I'll now hand over to Mark to talk you through the detailed financial results. Mark Howell: Thanks, Gil. Good morning, everyone. As Gil mentioned, the growth in earnings in the first half '26 reflects a modestly improving turnover environment, strong strategic execution and cost and capital discipline. We have delivered a pleasing set of results given the impact of below-average wagering yields and have responded to the revenue environment with continued focus on cost control and disciplined capital investment. This has led to earnings growth, margin expansion and a reduction in our leverage ratio to 1.5x net debt to EBITDA at the end of the calendar year. Before I run you through the results in detail, there are 4 key aspects I want to call out. First, domestic wagering revenue pre-VRI impact fell by 2.5% despite modest growth in turnover due to below average yields during the half. The reduction in yield versus longer-term averages was due to run of customer-friendly results during the NRL AFL finals and through the Spring Racing Carnival. Some of these softer yield was recovered through the back end of November and in December when yields were very strong. We estimate the net yield impact across the period was around 15 basis points or about $10 million of net revenue when compared to longer-term averages. Second, the benefit of the reform Victorian wagering license applies for the whole 6 months, on the half versus only 4.5 months in the PCP. We estimate this delivered an incremental $12.2 million of EBITDA in the first half '26. Third, we continue to focus on improving cost discipline across the business. OpEx adjusted for the reform Victorian license decreased by 3.7%. This, together with some modest revenue growth and some benefits from Phase 1 of the new retail commercial model helped us deliver operating leverage and a 190 basis point improvement in EBITDA margin to 16.2%. Fourth, we continue to focus on efficient investment and capital. In the first half '26, CapEx reduced by 11% on the PCP to $51 million. This provides additional capacity to invest in growth for the second half including the rollout of new modernized betting terminals in retail venues to support an improved customer experience in venue and support our omnichannel strategy. Our leverage ratio reduced to 1.5x, providing us with significant balance sheet flexibility as we deliver our strategy. So now moving on to the results. Slide 15 sets out the first half '26 group financial results. Group revenue grew 1% to $1.34 billion, variable contribution increased 4.3%, while reported OpEx decreased 1.1%, delivering 14.3% growth in EBITDA to $217.4 million and 18.9% growth in EBIT to $110.2 million. Net interest expense decreased due to the reduced net debt as we continue to delever. As discussed in prior Tabcorp results, the high effective tax rate in P&L was driven by nondeductible weak license amortization and the interest discount unwind. And finally, NPAT before significant items, grew at 61.5%. An interim dividend of $0.015 per share has been declared, representing a 56% payout ratio and a 50% increase on the PCP. For the remainder of the presentation, I'll focus on 3 areas: the drivers of EBITDA growth, cost control to deliver operating leverage and a strengthened balance sheet. So turning to Slide 17, you can see the drivers of the 14% EBITDA growth delivered during the half. We are pleased to deliver this level of earnings growth in line with modest turnover environment, which, as I've already discussed, was also impacted by unfavorable yields. The incremental earnings uplift from the reform Victorian wagering license contributed an incremental $21.7 million to VC, which was offset by $9.5 million of costs to deliver a net benefit to EBITDA of $12.2 million. As discussed earlier, this was partly offset by the impact of VC of the low average wagering yields. Other benefits to earnings include the increase in Integrity Services VC as a result of the annual CPI increase as well as increased project work and some benefit to VC from Phase 1 of the new retail commercial model. Underlying costs improved by $13.5 million, which I'll turn to now. Slide 18 demonstrates the focus on costs, which we have had over the last 18 months with first half '26 OpEx benefiting from the annualization of actions taken in F '25 as well as the continuation of cost discipline on discretionary costs. Cost inflation remains an ongoing headwind, particularly in technology. So we have more than offset this for $13.9 million of cost reductions and a further $10.5 million of cost benefits relating to A&P timing and some other smaller cost-related actions. Looking forward in the second half, we continue our ongoing focus to offset inflation. We also expect to incur additional advertising and promotion spend of around $5 million in relation to the 2026 FIFA World Cup. Slide 19 demonstrates a continued focus on capital discipline with CapEx for the first half '26, reducing 11% to $51 million. Together with the increase in profitability, this has driven a 360 basis point return -- basis point improvement on return on invested capital relative to the prior corresponding period. Our F '26 CapEx forecast remains unchanged at $120 million to $140 million, implying an uplift in the second half run rate related to the rollout of the modernized betting terminals under the new retail commercial model. Turning to Slide 20 and cash flow. Underlying cash conversion was 86%, impacted by the timing of some large payments in the first half. This is in line with expectations and similar to the first half of last year. We continue to expect that on a full year basis, cash conversion to be between 90% and 100%. One point to note is that cash interest expense of $54.6 million includes $24.9 million of interest relating to our annual payment each August for the Victorian license. This will not reoccur in the second half. So all things being equal, the cash interest in the second half should be closer to $30 million. On to Slide 21. In November, we issued $300 million under a new Australian medium-term note program. The notes carry competitively priced fixed coupon of 5.99%, and a tenor of 5.5 years. The AMTN delivered on our 3 objectives being to diversify our funding sources, extend our average maturity, which now stands at 5.4 years and increased liquidity. The strong AMTN outcome reflected the significant improvement in the company's prospects over the last 18 months. Slide 22 shows that our balance sheet remains strong and provides us with the necessary flexibility and funding capacity to pursue with our strategy. At 31 December, leverage is 1.5x, well below our target range of less than 2.5x through the cycle. As I remarked at the outset, overall, this is a sound result, and we continue to deliver on our strategic agenda. I'll now hand you back to Gil for some closing remarks. Gillon Mclachlan: Thanks, Mark. I believe the company continued to improve over the last 6 months. Our turnaround plan is on track. Earnings have increased. We continue to deliver meaningful cost savings and our balance sheet is in good shape. We are focused on executing our strategic agenda of the remainder of FY '26 and beyond, and we're going to be relentless in executing it. We expect the wagering turnover environment in the second half to be similar to the first half, and I'm pleased with the progress and happy to take your questions. Operator: [Operator Instructions] First question comes from Andre Fromyhr from UBS. Andre Fromyhr: First, I just wanted to focus on the turnover environment. You called out in the second half, you're expecting similar conditions or the outlook looks similar to what you've seen in the first half. Is that a comment technically around sort of the level of growth in terms of like a year-on-year growth rate? Or are you talking more in overall dollars of turnover. And I'm wondering as well if you can distinguish between the cash environment and the digital environment because it looks like cash has outperformed in both the turnover growth and yield perspective in the half year just reported. Mark Howell: Yes. Thanks, Andre. It's Mark. We're talking about growth. So I think we talked about turnover growth for the half -- first half being around 0.3%. We have seen in that a range of what we call modest growth, and we sort of see that continuing. We don't -- I mean, in terms of the dissection between digital and cash, I'm probably not going to give you a forecast on that. But obviously, we're just sort of pleased with good trends we've been seeing as we've sort of exploited, I suppose, our omnichannel assets. Andre Fromyhr: Maybe another way to ask that, like in terms of the mix of your cash business versus digital like how much of a role is that playing? Because it looks like racing as a category was weaker than sport, but also is this part of the strategy playing out that you're having more success through building participation in retail venues? Gillon Mclachlan: Yes. Thanks, Andre, it's Gil. We certainly see -- we're very confident in our retail strategy. We see obviously the DIV off low basis, the digital venue going up. Cash is in positive growth. And with some of the strategic things we're announcing today, whether it be the approval from ACMA or different -- the success of different products in retail, it's central to our strategy, and we see underpinning our numbers. Andre Fromyhr: Maybe just last one for me and following up on the retail strategy. I understand Gil, you sort of launched the new framework with your venue members late last year, doesn't come into effect until the middle of this year. But what's been the reception so far? Is it right to assume that there are some venues that are going to be better off immediately versus worse off immediately? And are you expecting any sort of attrition in your venues as you transition to the new model? Gillon Mclachlan: Thanks, Andre. I mean we are -- we put retail at the center of our strategy, and we've called out the cash numbers and I called out the digital venue numbers that's been strong. The model is simplified. We're going to invest more in the network than the changes and we're working through that. We think broadly speaking, we're on track to deliver that new commercial model, and we're actively engaged with the venues through that period and comfortable where it's at. Operator: Next, we have Matt Ryan from Barrenjoey. Matthew Ryan: I was just interested in some of the comments around TAB Time and some of the growth that you're seeing from your younger cohort. And if you could just provide any color on and what you're seeing there? Obviously, that's the pretty strong numbers, the benefits that that's giving to your business? Gillon Mclachlan: I think, Matt -- so it's Gil. I think the standout number in the deck is the fact that across the board of total turnover, the 18- to 24-year-old category grew by 14.2% -- over 14%. And that's what I feel when we're talking about our push to talk to sport as much as racing to be younger and more experiential and activate all our assets in that energetic way, whether it's TAB Time or TAB Takeover or whatever, that number is the one that jumps off the page, I think what it means to us is some different numbers in retail specifically. But 14% across the board, not just in retail in terms of the turnover increase, I think is one that says our brand repositioning is trying to get some traction. And it's early to talk to , I called out -- sorry, Matt, I've called out for the experiential part of that and that sort of energetic piece, but those products through omnichannel through retail that are obviously, I think, are important in all that, which I think you're calling out, certainly, that's my perception of your question. Matthew Ryan: Yes. That's what it looks like. I was going to also just ask about Phase 2 of the new retail commercial model. I think you mentioned that EBT may be arriving in the middle of this year. If you could just I guess, talk about what the key features are of that Phase 2? And any comments around phasing or timing? Gillon Mclachlan: Yes, we'll start rolling out the first week of July. EBTs are in production. I think what I'd say to this, they obviously aesthetically functionally compliance or all significant improvements. They facilitate the use of cash, clearly, but also tap and play functionality. There's -- I think on a compliance basis, we are future-proofing what we can do that to be a safe and compliant retail network. Not only new hardware, but all the software is being replaced and redeveloped so that ultimately, any changes -- well, first of all, the EBTs, you interact, there will be the same functionality and same look and feel as the TAB app on your phone. So -- and then any upgrades and product development that plays out through the phone will play out through the terminal. So there'll be -- so if we talk about having a seamless TAB experience, that will play out both in venue and cash in the same way is using your phone. I think that's significant progression. So not only how looks and feels, it's all of the side of the product, the fact that it's digital and cash and as obviously, have some compliance benefits as well. And it would talk to the future state of the full maximization of our license. So we think it's a very critical part of it. And we'll still start rolling out nationally first week of July. Operator: Next, we have David Fabris from Macquarie. David Fabris: Can I just start off with in-play betting. Great to see you've got the ACMA clearance now. Are there any more hurdles that we need to think about? And can you provide a time line for the rollout across all your jurisdictions? Or is this more just a New South Wales piece upfront? Gillon Mclachlan: Thanks, David. I think it's -- you can draw the line that we want to be in lockstep with regulators. And we have the approval in New South Wales, and we're obviously well engaged with all state regulators. But the ACMA sign-off was important. So we've paused because we don't want to be out of step with anyone. With that approval coming through and being confirmed yesterday, it means now we will actively start rolling out in New South Wales and then get the work through the approvals in each state. So the timing of those, I don't know, will be, but obviously, we're ready to go in New South Wales. I'm confident given the discussions we've had that we're now, with the ACMA approval that will play out, and we'll push ahead quickly. Does that make sense? David Fabris: Yes. No. Crystal clear. That's fine. I appreciate that. The next question, I don't know how you'll take this one, but just curious to understand the place of BetMakers. I mean are you signaling that there might be some shortfalls in your tech stack that BetMakers may have been helpful with? And I'm curious to unpack that piece because if we think about BetMakers, they've got retail terminals and a global tote. So any commentary there would be helpful. Gillon Mclachlan: Thanks, David. I'll make some comments. First of all, I don't believe we've been in the position for the last -- I mean whether it is 17 or 18 months. I don't think we've been in a position, and we've been clear with you guys that our primary task was to get fit and get our house in order. And I think the fact that we are working through that phase, and I do believe we are now organized in a position that if there was a corporate opportunity, we're in a position with our balance sheet and our operating model to look at that. I would say to you that we are still focused on growing our business operationally and executing on the strategic initiatives in front of us. If any corporate opportunity presents itself, it would have to be absolutely on strategy and any opportunity we will be absolutely disciplined about price and about how we look at it. With respect to BetMakers, we haven't made any comment. I know BetMakers did. I would say I don't think you should draw a line. The fact that it was a tech sale necessarily. There'll be some tech advances and other broader strategic opportunities in why we had to look at that. But ultimately, it didn't make commercial sense to us because we're going to be disciplined about things and they have to really stack up, absolutely. And I think there'll be other stuff around that people want to put to us from a position to talk to people, but you guys need to know it will have to be a great strategic fit, and we'll be disciplined about anything we look at. I would add, David, there in terms of the tech piece. I want to commend the work that our CTO has done in the last year and the stability of our platform and the way our tech environment is working both with an app and across retail and what we're able to do functionally and the upgrades and the controller set, I feel we made great progress on our technology. And I'm just adding to your specific question. Operator: Next question comes from Justin Barratt from CLSA. Justin Barratt: I just wanted to follow up on the TAB Live question. I appreciate you're developing the launch and rollout plan for New South Wales. But I just wanted to try to get an indication of how soon that could potentially start rolling out? And I guess whether that is included in your FY '26 CapEx guidance, if you think it can be commenced in the next few months. Gillon Mclachlan: Yes. So the TAB -- I'll let Mark talk to the CapEx guidance, but there is obviously EBTs in there, and they are -- they do have the functionality to do with TAB Live, but they are broader than that. Obviously, I think we're well progressed and positioned with state-based regulators. I don't want to preempt how long that would take. But I would say that we've been progressing our operating and operational plans for the rollout of TAB Live, confident in our position with ACMA, which was endorsed yesterday, and I think we're well advanced. And there'll be -- Mark might talk to the capital provisions. Mark Howell: Yes. Thanks, Gil. Yes. So the answer is yes. Within the -- on the life of the $120 million to $140 million, there is an allowance for terminal spend and having play stations in the second half, which will be rolled out into next year. There will obviously be some spend next year that will need to be incurred that I'll provide some guidance on that at the end of the year. And what I'd say to what my speaker notes earlier was that the uptick in run rate from a capital spend into half 2 will be largely driven by that terminal spend for the new -- to support the new retail and commercial models. Justin Barratt: Yes, fantastic. Okay. And then, Mark, just while I've got you, I just wanted to see if you could divulge a little bit more around the cost reductions that you saw in this first half. I appreciate some of that has been the annualizing of processes or cost out from the prior year. But I was just wondering if you could actually split it out and help us understand what potentially came from initiatives introduced in this financial year to date, please? Mark Howell: Yes. Most of it is -- the vast majority of it comes from -- Justin, from actions we took in FY '25. Obviously, the biggest one was the zero-based design that we did towards the back end of the financial year that's fine through this year and will play into half 2 as well. There's also some other smaller, call it, structural cost benefits that we took that part of that $13.9 million that we called out in the OpEx bridge. And then the other part, the sort of $10.5 million is really around sort of tighter spend on some discretionary costs. We've talked about some benefit from A&P timing and some of that A&P spend, as I called out, will be incurred, about $5 million of that will actually come into half 2 to support the 2026 FIFA World Cup. Justin Barratt: Yes, okay. So let me just to follow that up. I mean in terms of the A&P spend, is this a new baseline for us to sort of think about A&P spend going forward? Or is it just the timing event this half that sort of drove that cost reduction? Mark Howell: Yes. So about half of that $10.5 million was the A&P and that, as I said, that will go into half 2. So I think across the year, you'll see it sort of -- you should be able to work out then what that brings based on spending patterns. Operator: Next, we have Kai Erman from Jefferies. Kai Erman: First one is a bit of a follow-up from David's question earlier. You mostly flagged a sort of your CapEx reduction yet in the first half and given CapEx guidance for the full year, you'll likely continue to delever this year and you're below your target gearing? Excluding any sort of M&A, how should we think about uses of capital balance sheet, capital management going forward? Gillon Mclachlan: Thanks, Kai. Look, I think what I've sort of said to help you decide. There are a number of relatively sizable payments in the first half that impacted cash flow. So to call a couple of out, a big license is the $30 million value-add contribution where the liability is paid in the first half and then some sponsorships are weighted into first half as well. So -- and then I've given you sort of the capital envelope for the second half. So that's sort of as you think about cash and cash flow, and I suppose the other piece of the puzzle is we've said that we expect cash flow conversion to be in that 90% to 100% range. So I think that should give you sort of all of the building blocks as it relates to sort of capital allocation for the year. Kai Erman: And then as a follow-up, the sort of trend of sports outperforming racing has seemed to continue. Based on your turnover numbers, do you guys think you're sort of outperforming the market in those categories? Or that's pretty reflective of what the market has sort of done in the last half? Gillon Mclachlan: Well, I think it's hard to know that. We just focus on what we are doing. I think everyone will have a better idea over the coming days, but there's also a lot of numbers out there that no one gets to see. So we're just focused on being better and growing our business. I'd say also that sports outperformed racing is leveling out and stabilizing, which I think is pertinent. Operator: Next, we have Rohan Sundram from MST Financial. Rohan Sundram: A question on the national tote. Apologies, Gil, if you already touched on it, but how -- it looks like everything is progressing in terms of time lines, how would you describe the industry discussions and engagement to date? And maybe if you can just reiterate the upside for customers and for Tabcorp in achieving this? Gillon Mclachlan: Thanks, Rohan. I think I called out in my commentary that I'm appreciative of the support of all the PRAs and the ability to lean into this. There is -- it is change and we've had strong support. And I think there is a mandate to go to a national tote, it's unequivocal now. Our tech development is largely complete and getting regulatory approval in most jurisdictions. We think we've got a commercial model that could take us through. And so there's some executional stuff to play out, but we feel actually we're on target to deliver in this financial year in terms of what that brings. I think the liquidity that will bring will actually generate its own additional liquidity, and that's also important here. And with that, then that hopefully, we're confident will then also bring the opportunity for product development and broader international co-mingling and liquidity opportunities. So it will -- the liquidity will actually drive, I think, broader liquidity. We will develop products and hopefully not just products for racing, but also sports and also there is international co-mingling opportunities. So I think it's a very important thing for us. I'm pleased with where we are in a very difficult thing, both sort of politically, technically and commercially to get done. I feel we're going okay. Operator: I see no further questions at this time. I will now hand the conference back to Gillon for closing remarks. Gillon Mclachlan: Thank you. Thank you all for your questions. Thanks for dialing in. I think I'll just reiterate where I finished, we are operationally going better every day, but we've got work to do. We're very comfortable with our strategic plan and where we're going and we've got high conviction on that and I think certainly across the business, I think we're starting to see some of that come through in our numbers, whether it's younger customers or what's going on in retail. We've got a lot of initiatives on the boil that we need to get done. We've confirmed where we think the market is going, and we're pleased with but not overconfident. We know we've got lots to do, but happy to be where we're at, at the half. Thanks for your support ongoing. I look forward to seeing you guys out over the coming days. Appreciate it. Thanks, everyone. Operator: This concludes today's conference call. Thank you for participating.
Operator: Good morning, ladies and gentlemen, and welcome to the Sandoz call today. I will now hand over to Craig Marks, Head of Investor Relations, for his opening remarks. Craig Marks: Thank you, and welcome to the Sandoz Full Year Results Call for 2025. Earlier today, we published the press release and an accompanying presentation on our website, which we'll follow on today's call. You can find these documents at sandoz.com/investors. Joining me on today's call are Richard Saynor, Chief Executive Officer; and Remco Steenbergen, Chief Financial Officer. Please turn to Slide 2. Our results announcement presentation and discussion include forward-looking statements. Please see our disclaimer here. Please turn to Slide 3. Richard will begin today's presentation with the highlights of 2025, followed by an update on the business. Remco will cover the financial performance as well as the guidance for 2026. Following the wrap-up of the presentation, we'll be happy to take your questions. And with that, I will now hand over to Richard. Please turn to Slide 4. Richard Saynor: Thank you, Craig, and hello, everyone. It is a pleasure to welcome you all on the call today. Our second full year as an independent company was a very successful one, and I'm proud to share our achievements. 2026 is a significant year for us as we celebrate some very special anniversaries that reflect our legacy and our future. 20 years ago, Sandoz pioneered the world's first biosimilar, opening the door to advance treatments for more patients and setting new standards for access and affordability. 80 years ago, we transformed a brewery into a penicillin factory, making antibiotics more accessible and saving millions of lives. Kundl remains Europe's last major end-to-end producer of penicillins, a legacy of reliability and innovation. And I'm delighted that we're also celebrating 140 years of Sandoz. These milestones are more than history. They are a source of pride and inspiration as we build our future that remind us of the impact that we have made and the responsibility we carry to continue expanding access for patients everywhere. Please turn to Slide 5. I am proud of the progress that we made last year when we cemented the fundamentals of our long-term growth potential. Let me take you through the 4 key areas where we made meaningful steps forward. We advanced our deep, diversified and industry-leading pipeline last year. Crucially, this pipeline already includes 27 biosimilars. 2025 was also a year of successful launches. We rolled out a number of important medicines like Pyzchiva in the U.S., Afqlir in Europe and Australia and Wyost and Jubbonti in the U.S., Europe, Brazil and Australia. And as the last of our Capital Market Day commitments, I was delighted that we launched Tyruko in the U.S. On the development supply side, we completed the acquisition of Just-Evotec Biologics Europe at the end of the year, which strengthens our technology base and accelerates our ability to scale next-generation biosimilar development and manufacturing. The construction of our biosimilar hub in Slovenia is also progressing very well. And finally, it was a year of strong results across the P&L, cash flow and balance sheet. Net sales grew by 5% at constant currencies to $11.1 billion. Our core EBITDA margin expanded by 160 basis points to 21.7%, driven by improving mix of sales, cost control and operating leverage. The return on our invested capital increased to 14.5%, reflecting growth of 2 percentage points. And finally, we're proposing to increase the dividend per share by 1/3 to CHF 0.80 a share. Now let's move to more details of the growth in net sales, starting with Slide 6. Looking firstly at the full year, net sales surpassed $11 billion for the first time, supported by biosimilar growth of 13% at constant exchange rates. Whilst generics provided a strong foundation for our business, the overall performance reflected the increasing contribution from biosimilars and strong execution across our organization. Biosimilars now represent 30% of total net sales, marking a significant milestone for our business and one we have proudly achieved earlier than expected. I am proud to say that quarter 4 represented our 17th quarter of consecutive growth. Underlying sales up by 7% and biosimilars representing 31% of the total. Please turn to Slide 7. Generics remain a core growth engine for Sandoz. Here, you can see some examples of the many launches last year, such as iron sucrose, rivaroxaban and enoxaparin sodium. We have more than 400 generic assets in development, targeting an originator market worth around $220 billion. Moreover, we're focused on a significant number of LOE opportunities, particularly in oral solids and injectables. Lastly, our global generic footprint includes 4 development centers and 15 in-house manufacturing sites, ensuring agility and reliability in supply. It is worth noting that the adverse impact last year on penicillin B2B business. Asian suppliers engaged in significant price dumping for key penicillin APIs, including some that we sell to other businesses. This impacted the sales value of this part of our business in the second half, and we expect it to continue impacting our generic performance in the first half of 2026. Furthermore, the recently announced introduction of minimum import prices in India for some penicillin APIs may well divert low-priced supply towards Europe, which continues to depend on Asia for key intermediates. Europe's growing dependency on a handful of global suppliers underpins our call for a fundamental shift in how Europe thinks about antibiotics, the backbone of modern medicine, especially given that they're a key part of the continent's security infrastructure. Please turn to Slide 8. Now turning to biosimilars. 2025 was a great year for this key part of our future. We delivered multiple successful launches that reinforced our leadership and execution capabilities. There were 2 major launches for Pyzchiva. Firstly, we launched in the U.S. earlier in the year, which included private label options. Secondly, we introduced the first commercially available auto-injector for ustekinumab in Europe, a major step forward in patient convenience. Next, Tyruko saw strong uptake in Europe and was rolled out across the U.S. in November. We also achieved a significant milestone with Wyost and Jubbonti, the first denosumab biosimilars in the U.S., followed by the launch in Europe in quarter 4. And finally, Afqlir entered the European market at the end of 2025, with the U.S. launch anticipated by quarter 4 this year. And you probably saw the great news last week that the FDA has approved an expanded label for Enzeevu to include multiple retinal indications. I fully expect these launches to perform strongly and contribute meaningful growth for Sandoz. Please turn to Slide 9. Let me now walk you through the continued performance of Pyzchiva and Hyrimoz across our key markets. Starting on the left, Pyzchiva in Europe, we see very solid trajectory. What's particularly encouraging is the sustained increase in biosimilar participation, which continues to expand quarter-after-quarter. This reflects not only strong underlying market growth, but also the faster uptake of ustekinumab biosimilars compared to what we saw with adalimumab. Alongside the auto-injector rollout last year, we're getting ready for more Pyzchiva launches in Europe and international in 2026. Hyrimoz continues to demonstrate strong global growth. Our market share remains stable, and we continue to see strong increases in biosimilar participation. We are very well positioned to benefit from this trend. Please turn to Slide 10. Now let me turn to Tyruko and Omnitrope. Starting with Tyruko, we are very pleased with the continued rate of adoption in Europe. Since launch, our market share has grown steadily, reflecting the strong clinical and economic value proposition of Tyruko as the only biosimilar approved in Europe for relapsing remitting multiple sclerosis. Alongside the recent launch in the U.S. in quarter 4 and additional launches are planned across other markets, we expect uptake to further expand as awareness and familiarity grow. Omnitrope continues to demonstrate exceptional stability and resilience in a highly competitive category. We've maintained the leading global market share, and we're delighted with the performance, especially in the international region. Overall, both medicines showcase the strength and diversity of our portfolio, Tyruko as a high potential launch with accelerating adoption, and Omnitrope as a reliable, long-standing leader in the class. Please turn to Slide 11. Let me now highlight the strong progress that we're making with Wyost and Jubbonti. Firstly, in the U.S., our launch execution has been highly effective. We were able to rapidly leverage our commercial footprint that covers more than 80% of the denosumab market volume to ensure broad visibility and accessibility from day one. We also successfully established average selling pricing, a critical milestone for provider confidence and reimbursement stability. And I want to call out the performance of Wyost and Jubbonti in Canada, where we've taken extremely high levels of share across the denosumab biosimilars. Turning to Europe. The launch at quarter 4 has been progressing well. Our leadership across both hospital and retail channels has helped us execute with speed and precision. This strong on-the-ground presence is enabling us to secure access, build awareness and support physicians as they integrate Wyost and Jubbonti into clinical practice. Overall, being first to market with these medicines has given us a powerful head start, and the early update confirms that our strategy is working. We're well positioned to continue building momentum as access, adoption and payer coverage expand across the regions. Please turn to Slide 12. Our pipeline is where the next wave of growth begins and is designed for high impact. We're advancing targeted development in key biologics and therapies with a clear focus on access areas that matter most to patients and health care systems. In the nearer term, we have several assets already in regulatory review. Looking further ahead, our clinical development portfolio includes major immunology and oncology assets such as Opdivo, Keytruda, Ocrevus and Tecentriq, biosimilars to some of the most widely used biologics today. Finally, we have a significant number of assets in early development. This pipeline positions Sandoz to lead in biosimilars for years to come, delivering scale, innovation and access to patients. Please turn to Slide 13. I am delighted by our sustainability progress in the year. In 2025, we served over 1 billion patients across more than 100 countries, a scale that underscores our global responsibility. Through our portfolio and partnerships, we've delivered $26 billion in savings to health care systems. This is a meaningful relief at a time when affordability pressures continue to rise. We've delivered measurable reductions across our emissions footprint, down 18% in Scope 1, 15% in Scope 2 and 1% in Scope 3. We've also submitted our SBTi targets for validation, covering all emission scopes, reinforcing our commitment to transparent climate action. Finally, on governance and integrity, we strengthened oversight and risk-based controls to ensure swift information decision-making without compromising compliance, and we continue to lead in transparency with open, compliant transfer of value disclosures across more than 36 markets aligned with global codes and standards. Altogether, these achievements reflect who we are as a company driven by purpose, committed to access, anchored in strong values and focused on delivering long-term impact for patients, partners and our people as well as society. Please turn to Slide 14. To secure long-term leadership in biosimilars, we're expanding our pipeline and commercial presence have been accompanied by significant investment in strategic integration and the expansion of in-house capabilities. I'm excited to say that this year, we'll begin to complete building of our end-to-end European biosimilars hub in Slovenia that includes a state-of-the-art technical development center in Ljubljana, a high-tech drug substance production site in Lendava and an aseptic production center in Brnik. These facilities will give us full control over development and manufacturing, ensuring quality and scalability. Secondly, our acquisition of Just-Evotec Biologics in Europe at the end of 2025 marks a major step forward. This brought us more capacity for growth as well as proprietary platform for integrated development and indefinite license to use Just-Evotec's continuous manufacturing technology. Finally, our overall European biosimilar manufacturing network will position us as a unique leader of in-house development and production, strengthening supply security, enabling us to respond quickly to market needs. Together, these investments will allow us to capitalize on the overwhelming biosimilar market opportunities that lie ahead. And with that, I hand over to Remco on Slide 15. Remco Steenbergen: Thank you, Richard, and hello to everyone. Please turn to Slide 16. We delivered strong underlying net sales growth of 6% in 2025, driven by another year of double-digit expansions in biosimilars. Importantly, this momentum was broad-based, with all regions contributing, underscoring the resilience and diversification of our business. Core EBITDA increased by 14%, with a margin expanding by 160 basis points to 21.7%, driven by a favorable mix shift, disciplined cost management and continued operating leverage. On cash generation, we increased management free cash flow by USD 435 million to USD 1.5 billion, reflecting a strong underlying EBITDA performance. We improved core ROIC by 220 basis points, reaching 14.5%. This uplift reflected an improved operating performance and disciplined capital deployment. It's an important indicator that our strategy is delivering not only earnings growth, but equally also high-quality returns. Finally, core diluted EPS grew by 33%, benefiting from the increase in operating profit, reduced financial expenses and a lower effective tax rate. Please turn to Slide 17. Turning to our top line performance in more detail. Our generics business accounted for 70% of the total. The main growth engine, however, continues to be biosimilars, with the results reflecting successful launches and sustained adoption. Regionally, the performance last year was well balanced. Europe remains our largest market, representing 54% of total net sales and delivering on strong underlying demand across both generics and biosimilars. International markets net sales were USD 2.7 billion or 24% of sales, supported by a robust performance in emerging markets and continued expansion of access-driven programs. North America contributed 22% of total net sales. Please turn to Slide 18. Over the full year, the 18% underlying biosimilars growth included encouraging contributions from Pyzchiva and Hyrimoz in Europe and Omnitrope and Hyrimoz in International. In North America, Wyost and Jubbonti got off to a flying start. Generics growth of 2% for the full year reflected many successful recent launches, including paclitaxel in North America, with International performance benefiting from price accretion. In Q4, biosimilars delivered an even stronger underlying growth of 20%, with generic sales up by 2%. Now let's have a look at the performance of our 3 regions on Slide 19. Europe sales grew by 6% in the year and in the quarter. Strong growth in biosimilars continued, partly reflecting successful launches over the past 2 years, including Hyrimoz, Pyzchiva and Tyruko. International sales were up by an underlying 9% in the year and even by 14% in the quarter, with strong contributions from Hyrimoz and Omnitrope. North America sales grew by 5% in the year on an underlying basis and 2% in the quarter, with the latter period adversely affected by the impact of a onetime gross to net generics adjustment in Q4 2024. Please turn to Slide 20. In breaking down the sales performance for 2025, you can see that volumes contributed 8% while price erosion remained at a moderate 3%. Foreign exchange had a positive impact of 2%. Let's now move to the P&L overview on Slide 21. Core gross profit increased by 5%, reaching USD 5.6 billion. A broadly stable gross profit margin of 50.6%, mainly reflected the favorable movement in the mix of sales, offset by price erosion. Core EBITDA growth of 14% at constant currencies was primarily driven by our growth while keeping our SG&A costs in U.S. dollars stable. Going forward, our ambition remains to limit SG&A cost increases to the absolute minimum, while we will support our pipeline through focused and increased D&R investments. Finally, core EPS grew by 1/3. Overall, 2025 was a year of strong profitability, underpinned by biosimilars growth and disciplined execution across the business. This positions us well for continued margin expansion and long-term value creation. Please turn to Slide 22. Moving to the core EBITDA margin performance. This increased by 1.6 percentage points from 20.1% to 21.7%. The favorable mix of sales benefited the margin by 1.3 percentage points, while price erosion had a 1.1 percentage points adverse impact. We reduced the ratio of OpEx to net sales, led by SG&A, reflecting disciplined cost management and the success of our transformation program. This illustrates the progress we are making in leveraging our cost base. From the P&L, now let's move to cash on Slide 23. I was really delighted with the USD 1.5 billion of cash we generated last year, which represented the $435 million increase over the previous year. While we exclude one-off items when focusing on management free cash flow, the performance reflected both the strong uplift in core EBITDA and continued discipline in how we manage working capital, particularly inventory. As Richard mentioned, we have continued to invest in our future, with CapEx in 2025 focused on the biosimilar hub in Slovenia. Please turn to Slide 24. Last year, we successfully further strengthened our balance sheet and improved our maturity profile. A substantially stronger euro and Swiss franc against the U.S. dollar had an adverse impact on net debt, which ended the period at USD 3.6 billion. When excluding the impact of foreign exchange, however, underlying net debt decreased by USD 200 million to USD 3.1 billion. Our strong balance sheet, improved liquidity and investment-grade ratings place Sandoz in a unique and excellent financial position to support our ambitions. Our net debt to core EBITDA ratio improved to 1.5x, reflecting continued balance sheet strengthening. Please turn to Slide 25. Turning to CapEx. We invested around USD 700 million in 2025 with the majority directed towards manufacturing. This reflects our continued build-out of our development and manufacturing vertically integrated biosimilar capabilities. Looking ahead to 2026, our peak year for CapEx investments, we expect an outlay of around USD 1.1 billion. The largest allocation will again be for strengthening our biosimilars capabilities. As Richard stated before, we expect our development in API biosimilar sites to be completed at the end of 2026 before we move to the tech transfer process. We anticipate completing the construction of our biosimilar fill-finish site next year, i.e., 2027. We expect to enhance our biosimilar pipeline through BD&L investments, and we will continue our path to bring our IT infrastructure at a required level. The uplift in IT will enable system upgrades that are designed to drive efficiency, streamline our operations globally and create a more scalable digital backbone. Please turn to Slide 26. One-off cost continue to decline. In 2024, this cost peaked as we completed the bulk of the work related to separation, transformation and the manufacturing footprint. In 2025, one-off cost declined to around USD 0.4 billion, reflecting a lower level of separation-related spending and reduced transformation activities. For 2026, we currently estimate the one-off cost to further decline to around USD 0.3 billion. This means that the one-off cost of USD 0.7 billion for '25 and '26 combined are fully in line with our prior expectations. Please be aware that one-off costs exclude software implementation cost accounting impacts. We're in the process of implementing new future-ready IT systems for Sandoz. Due to the nature of software licenses meeting the accounting definition of Software-as-a-Service, the related implementation costs do not meet the criteria for capitalization as intangible assets under IFRS. We have not guided for these costs historically as the assumption has been that such costs can normally be capitalized. These costs were around $50 million in 2025 and are likely to be similar this year. Please turn to Slide 27. This year, we expect net sales to grow by a mid- to high single-digit percentage in constant currencies, supported by the impact of our recent launches. The core EBITDA margin is targeted to increase by around 100 basis points. We expect price erosion of a low to mid-single-digit percentage. We also anticipate that the adverse dynamics of our penicillin B2B business will unfortunately persist in the first half of 2026. And as a one-off, we'll incur some costs related to the integration of the Just-Evotec business in France. Outside of guidance, we expect a 2 percentage points tailwind to net sales from currency movements. Based on recent spot rates and average rates in January 2026, we do not expect a material impact from currency movements on the core EBITDA margin. Please turn to Slide 28. Our hard work since the spin has led to strong results to date, which position us really well to reach our midterm outlook for 2028, which is unchanged. We have strong momentum, supported by numerous launches across key markets, and there is a clear visibility on the drivers of our margin expansion. And on that happy note, I will hand back to Richard. Please turn to Slide 29. Richard Saynor: Thank you so much, Remco. I'd now like to wrap up the presentation on Slide 30 before we go to questions. I'd like to remind everyone of the huge number of opportunities that lie ahead. The next golden decade presents a tremendous opportunity for Sandoz in both biosimilars and generics. On the biosimilar side, we're targeting more than $320 billion in LOE opportunities, with 27 assets currently in development. These represent approximately $200 billion of originator sales, covering nearly 60% of upcoming LOEs. Combined with the game-changing impact of recent regulatory streamlining, this positions us extremely well to accelerate access and capture more market share. On the generic side, the potential is equally compelling, around $340 billion in LOE opportunities, supported by a pipeline of more than 400 assets. These represent another $220 billion of originator sales or approximately 65% of LOEs over the next decade. And beyond that, we see GLP-1s as a long-term growth driver. Together, these pipelines create a powerful foundation for sustainable growth. Please turn to Slide 31. In 2026, we will continue to strengthen our leadership in affordable medicines by advancing our network, our portfolio and our pipeline. We'll complete the construction of key new biosimilar facilities in Slovenia. And with the strategic acquisition of Just-Evotec Biologics, I am confident that we will consolidate our position as the undisputed leader in biosimilars. Vertical integration will give us clearer control over our pipeline development and underscore our unwavering commitment to expanding access to high-quality, affordable biologics for millions of patients worldwide. At the same time, we will continue to focus on accelerating access for patients. One example will be the launch of Enzeevu in the U.S. by quarter 4, which represents another key addition to our ophthalmology portfolio. And finally, flawless execution remains central to how we operate. Across the organization, we're reinforcing capabilities, executing consistently against our strategic priorities and continue to embed our pioneering culture in everything we do. I am delighted by our progress and by the strong momentum in the business as we move into 2026. I want to express my heartfelt thanks to our colleagues for their dedication and passion which makes such a difference for patients around the world. Thank you so much for listening. Please turn to Slide 32, and I'll ask the operator to open the lines for Q&A. Thank you. Operator: [Operator Instructions] Our first question is from Charlie Haywood from Bank of America. Charlie Haywood: Charlie Haywood, Bank of America. It's on the denosumab flying start that you called out. I think data suggests fourth quarter U.S. denosumab sales trending to around the mid double-digit million dollars per month level. So is that ballpark sensible? And then does your guide reflects an annualization of those fourth quarter levels into '26? Or is there anything we should consider on competition or pricing dynamics that might change that? Richard Saynor: Charlie, thank you. And to answer your question, yes, we were delighted with the launch of denosumab. Obviously, we launched alone in the market. We set our ASP and executed well. I think, look, clearly, we expect volume gains to continue pretty much to that level, if not a little bit higher. But clearly, you've got a significant number of competitors coming in, which will naturally push down the pricing. So I think the net will probably balance out. But clearly, we're delighted where we've started. We're still seeing strong growth and expect a good performance during 2026. Operator: Our next question is from James Gordon from Barclays. James Gordon: James Gordon from Barclays. First one would just be GLP-1s. I heard you talk about it being a longer-term growth driver, but no material contribution in '26. So when do you think you now could resolve and launch in Canada? And what's the plan in Brazil? Is the plan still that you could launch with a vial? And longer term, so Novo's oral Wegovy launch is going well, which is also semaglutide. But will you do oral sema, so it's got the SNAC technology, and it needs more API? Is that also something that's in your plans? Or is a product like that not really attractive for a generic company and the GLP-1 plans you have are just to do injectable? And then second question was just, one other quick one, which is just -- so you have got one ADC, you've got Enhertu in development. And your cost to develop ADCs and bispecific biosimilars, should we think that, that's just a start, and you're going to do quite a lot of ADCs and bispecifics? Or are they still significantly more complicated to develop and more expensive? So Enhertu is a bit of a one-off? Richard Saynor: Great. James, thank you so much, and thank you for getting the GLP question in early. So look, we've not guided because I guess there's so many variables at the moment. We filed in Canada, Brazil and a number of other markets with one or more partners because when we get an approval and we launch a product, we will launch it. I've still said, look, we would look to anticipate to launch it probably in the latter half of this year in Canada, but we're very much dependent on the regulators. And at this point, nobody has got an approved file. Similarly with Brazil. I think in the medium term, yes, it's a very attractive market. But I've never -- I think I commented before, I've never known a product where I don't really understand how the volume dynamics are really going to play out, given that demand is far greater than the market can supply. So I think it's just prudent that we sort of learn as we go a little bit. And I always said I see Canada and Brazil to a lesser or greater extent as sort of a bit of an experiment in terms of how market dynamics will grow. As a generic company, yes, we will focus on bringing any product that we think is an attractive market opportunity, whether it's an injectable asset or in the medium term, an oral presentation of semaglutide. We've not disclosed our pipeline in small molecules, but naturally, we want to cover ideally about 80% of LOE for any product certainly in Europe. And that logic, I can't see would also -- or that logic should also apply to GLPs. But I think we're quite some way from the patent expiring from an oral GLP. And then there's still a dynamic of what that's going to play with the Lilly asset over the next couple of years. So this is really a long journey. We're going to be in it, and we'll make -- we'll share our journey with you as we do it. In terms of ADCs, I think it's less a cost of the development, to be brutally honest. Surprisingly, it's not that technically difficult. You've got to remember, we are a small molecule company and a large molecule company. So our technical ability to link those 2 things is already embedded, whether it's ADCs, bispecifics or even trispecifics. I think the question is more about the regulatory framework. You've got to remember 20 years ago, when we launched the first biosimilar, there wasn't really a regulatory framework about filing and launching biosimilar. That now has radically changed from monoclonals, and you're seeing that progressing quite quickly. We're working closely with the regulators to find the right path. So we do a reasonable amount of study work, but not an excessive amount of study work. And I think at the moment, that's where the cost is. It's not really the technical development. It's more the studies to satisfy the requirements of the regulators. We've not disclosed the quantum. But certainly, look, it's going to be more expensive than a classic monoclonal, but yes, we would expect to expand to that pipeline over the coming years. Operator: Our next question is from Harry Sephton from UBS. Harry Sephton: So I just wanted to touch on Slides 9 and 10 of the presentation. So given the progress on some of those biosimilars, it looks like that you're hitting more peak market share for those. So I would have implied that the strong guidance for the year is more for the more recent launches of denosumab, Tyruko and aflibercept. So would love for you to touch on the progress for denosumab and aflibercept in Europe specifically? And then also for Tyruko in the U.S., given the REMS program that you set up there, what do you expect in terms of the progress or the trajectory of the launch in the U.S.? Richard Saynor: Thank you, Harry. Perhaps I'll start with Tyruko first. Look, we're delighted to have brought that product to the market. I think it was the last piece of the CMD commitment. So very pleased that we delivered that. Our strategy is to -- at this phase to acquire new patients rather than go for convergent patients. I think that way, physicians, clinics really get to work with us on the product. And so that means really the pickup will be incremental rather than switching. So that's very much what we're seeing in the market that we're adopting new patients as they come on board, gaining the confidence. It's well accepted by the clinicians that we're working with. And so we just look forward to sort of a stepped growth over the next few years rather than sort of a rapid conversion of the market, which I think this way will be much more sustainable. Deno in Europe, performing extremely well. Again, I think the data, we've taken a leadership position, a strong response from payers and great acceptance of the product. Obviously, I think in the medium term, how we expand that market, not just in the oncology indication, but also for the osteoporosis indication where, I think, in Europe, because the price differentials are so great, is still an underserved population. So I think there's really nice opportunity to expand and grow that. And then aflibercept has been a very entertaining journey over the last few months. Not with -- also with German court, et cetera, but really delighted with the launch, probably running a little ahead of where we expected in terms of volumes. And then clearly pleased with the recent IP or PI injunction reversal in Germany, which, again, means that we are now back on the market and a number of our competitors are still blocked. So I think we're set up extremely well. I'm very pleased with the early positioning of those products. And then your broader shape, I think, is directionally right. I mean, look, ustekinumab, we're still seeing strong market gains in terms of penetration of the market. Adalimumab is still growing years after LOE. But clearly, the bulk of the growth, you rightly point out, is going to come from our new launches. And I think we almost get a bit complacent, but we've got a -- had a record number of launches into Europe last year with afli, with deno, with uste, again, we're the only one with the autoinjector. Obviously, we're just bringing out a Lucentis biosimilar later into this year. So a great set of positioning to set us up well for growth in '26 and into '27. So built on a solid foundation of the rest of our assets. Operator: Our next question is from Victor Floch from BNP Paribas. Victor Floch: Victor Floch, BNP Paribas. So my first question relates to the recent FTC elements with Express Scripts, which seems to have weakened rebate-driven preferences for highly priced brands and, to some extent, favor lower net cost products. So I just -- so I was wondering whether you see this as structurally affecting the biosimilar market in the U.S.? And is this directionally aligned with the PBM reforms you've been advocating for over the last few years? And my second question relates on to your long-term pipeline with some recent analysis suggesting that some certain originator might be able to delay biosimilar entry longer than expected, leveraging their complex IP situation, and I'm thinking about a Keytruda and semaglutide. So you've been quite vocal in the past regarding the unpredictability of the U.S. market on that front. So I was wondering whether you can discuss whether this impacts your long-term biosimilar plans in the U.S. and whether you continue to call for some reform on this front? Richard Saynor: Okay. Thank you so much, Victor. The technical question you brought up, I'm going to have to come back to you. I think in terms of the rebates and what that impact is. So rather than trying to answer that now and take time, we'll come back separately through Craig. I think the broader question, I mean, environmentally, I think we're moving in a positive direction in the U.S. I mean, clearly, having conversations around PBM reform, patent reform, clearly, the right moves with the FDA. So I think there is never one solution here, but I think certainly, I'm much more optimistic about the direction of travel in the U.S. And again, as I said before, our access to the administration in terms of having a sensible dialogue about delivering sustainable, affordable medicines in the U.S. continues. So I think that's clear. In terms of the long-term pipeline, I think it's a fair question. But as I've always said, in a sense, we define our biologics pipeline with a European lens to the very point that you make because there's so much uncertainty. Obviously, we filed against Amgen on Enbrel because they've managed to create a 31-year patent life. Now that case got overturned last week. We will look -- we're still judging whether we would appeal. And we're all interested now that actually a number of payers are now suing Amgen for abuse of their position as well. So I think there's an environmental shift in the U.S. that this lazy innovation from innovators, particularly in the U.S. market, to prolong and abuse patents is being challenged, both at a Congress and a Senate level, but also from the industry and the payer level. So I'm encouraged. But certainly it's a challenge, but it doesn't change our strategy because really, we define our pipeline from a European point of view, where we generally have a fairly clear sense of when we would bring a product to the market. And then the U.S. becomes a fantastic opportunity rather than the other way around because if we based everything on the U.S., you're always going to end up in court. It's part of the process and part of the system. And as you can see, whenever you go to court, there's a degree of uncertainty. So leveraging our foundations, leveraging Europe and then seizing the significant opportunity in the U.S. has always been our strategy. So hopefully, that answers your question. Remco Steenbergen: Yes. If I can just -- Remco here, just to add to it, correct. In the end of our press release, there's also a table where you see by region the split between generics and biosimilars. And just to reiterate, biosimilars, $3.3 billion out of our $11 billion. That $3.3 billion, 58% is from Europe, 17% is from International, which is 75% of the total, and 25% is from North America. And Europe grew 14% last year in bio. International grew 30%, right? And on a comparable basis, the U.S. was 19%. So just to reiterate the point of Richard, correct, in the approach, also when you look at the numbers and the materiality, the weight is clearly outside the U.S. 75% of our bio portfolio. Operator: Our next question is from Simon Baker from Rothschild & Co. Simon Baker: Two, if I may, please. A couple of big picture questions. Remco, you've given us a lot of quantification of the margin expansion through -- in '26. But I just wonder qualitatively, if you could just give us an update on what's being done, what's to come, the sort of split between mix and cost savings? Just a little bit of color on how things are moving on, that would be great. And then a question really for both of you, possibly. We can see, obviously, how the regulatory changes make development more attractive and cheaper for you. But I just wonder what it means for the in-licensing opportunity. With lower development costs, does that potentially mean others were more likely to go it alone? Or alternatively, does it mean that with those low development costs, more people are likely to try and use your global commercial infrastructure. So I just really want to see how the regulatory changes affect the in-licensing side of things. Richard Saynor: Thank you, Simon. Perhaps if I answer your second question first, I think you've answered it yourself in a way. I think that's certainly our view is, look, yes, it's a reduction in regulatory costs, but it's still significant. You're still talking probably $80 million to $100 million per asset, and you still need manufacturing capability. And then the bit that everybody forgets is you need a commercial footprint in tune with the market that can leverage its scale. And that is always the thing. And a lot of companies really struggle from that clinical to commercial setup and then commercial execution. So we're seeing a significant number of partners coming to us, approaching us, wanting to work with us as a global partner. One signature, they get Europe, international, Europe, strong capability and are the leader in this player. So there's a lot to be said for working with us. So I very much see it as you see it in terms of that opportunity. Remco, do you want to? Remco Steenbergen: Yes. I think with the margin, let's go through the different elements. You've seen the low price erosion are relatively low with minus 3%. We still believe low to mid-single-digit price erosion to remain. Of course, that also requires work. Clearly, the mix improvement with bio growing double digits and generics low single digits, which we expect to continue, but it has a mix improvement, but also within generics, we're looking at mix improvement, that is all on track. The thing within the margin, where we expect in the coming years to step-up is in our cost of goods sold, that the manufacturing savings should pick up versus what you have seen so far. And that is something which we're looking forward for this year. On the D&R expenses, yes, you saw a step up of 40 basis points higher expenses. So we are above $1 billion in '25, that you should expect to continue also in line with what Rich has said before, with the golden decade ahead of us, there's so much opportunity. We want to invest in that opportunity in the right way. And with SG&A, I think we have all the opportunity to keep the increases, as I also said at the beginning, very limited. It was a minus 2% increase in '25. It was something similar in '24. And we really target to keep that at very low single-digit increase also in the years to come and have that leverage with the top line moving along. We're also investing for the long term in our IT infrastructure in order to keep that SG&A and that infrastructure in place, which should also help significantly on the manufacturing side because that can also IT-wise, deliver also cost savings over the longer term. So all in all, I think we're on track, with the only thing you could -- you should expect to pick up are the cost of goods sold unit savings as of this year. I hope that answers your question, Simon. Operator: Our next question is from Urban Fritsche from ZKB. Urban Fritsche: Yes. Can you hear me? Richard Saynor: Yes, we can. Urban Fritsche: Yes. Congrats on the business progress. A couple of questions coming back to generic sema. So it seems like that we will see first generic sema launches in India. While you're not there, my question would be what can you learn from those first launches? What are you looking for in India specifically to then apply to other countries and your launches? And then a pretty open question relating to the new FDA guidance for the biosimilar approval. So how does that reshape some of those internally? What is already visible? And how will it shape going forward? Richard Saynor: First of all, thank you so much for the question. Thank you for the feedback, Urban. I guess, look, it's interesting. I mean, for me, from an India point of view, 2 things is, one, the dynamic -- so how are patients willing to prepare to pay to this product? So in a sense, it almost behaves like a consumer product rather than a classic pharma product. And how elastic is that at what price point? So it's more about trying to understand the volume dynamics and the willingness of patients to pay for our product in India. And it's certainly early days. Demand is significantly higher than the originator was selling to that market. And certainly, as the price points come down, and it's interesting talking to my sort of Indian colleagues who have friends and family in India, just how many people now are wanting or acquiring that drug. The other piece is this is a complicated product. It's a supply chain. It's a cold chain product. So trying to understand how you manage the logistics of managing a high volume cold chain supply product to manage that integrity. So those are really the things that I'm looking at from an Indian point of view. And certainly, it's fascinating. Regarding your second question, I don't think -- I mean, look, the FDA move, I don't think it's structurally changing Sandoz. It's really thinking about how we run clinical trials and what the right data is. We've always had a good relationship with the FDA and the European regulators. And really, it's all of the regulators moving in the same direction at the same time because if only one regulator moved, then it would be a real challenge for us, whereas we're seeing a degree of harmonization in terms of what's expected from Phase II trials, et cetera, and the low or no requirement for Phase III trials. So it's really more about how we phase our trials. And then question is it's an opportunity because clearly, now it's going to cost us less money to develop a biologic, which means we can now develop more biologics. And given as we're about to go into a decade with something like 140 biologics coming off patent, I'm incredibly excited that we can then potentially serve those millions of patients who today don't have a choice. Operator: Our next question is from Sophia Graeff Buhl Nielsen from JPMorgan. Sophia Graeff Buhl Nielsen: So firstly, how significant a growth contributor do you expect biosimilar Lucentis in Europe to be in both 2026 and beyond? Do you expect the dynamics will differ from what we've actually seen in the U.S. context? And then you've touched on this a bit in response to a prior question, but how should we think about the pace of the ramp for Wyost and Jubbonti in Europe this year relative to what we've seen in the U.S. so far? And how do your expectations differ between oncology and osteoporosis settings for this? Richard Saynor: Okay. So first of all, thank you so much for your question, Sophia. I mean, the Lucentis biosimilar, I mean, I guess, modest, it's not the biggest launch. I mean, it's clearly a nice addition. It is not in all markets across Europe. So I think we have rights to the majority of markets because this is a co-licensed product with another party. They have the rights to Germany, which is our largest market. So it's, I would say, modest. Certainly excited to be launching it for all sorts of reasons, but very pleased to be bringing it out to the market for the majority of Europe and a number of international markets. And then deno in Europe, I think it will convert quicker. Naturally, the adoption of biologics in Europe, we're extremely well established. We have the relationships. I think the difference between the U.S. and Europe is really the use in osteoporosis. Given pricing pressures in Europe, most patients were generally on things like bisphosphonates. I think the opportunity now, as the price points come down, to really expand and offer this for osteoporosis is a real opportunity over the next few years. So in short, I think a rapid uptake in the conversion and gain of the oncology market, and then a steady expansion and growth of the osteoporosis market. Whereas the U.S., I think, have a very different dynamic. Clearly there, the osteoporosis market is larger. We're taking a significant proportion very quickly. And again, we look to expand it. And again, perhaps a little better than we anticipated in the oncology indication in terms of the conversion. So different markets, different dynamics, but performing well in both. Thank you so much. And I think with that, we will close the session. Thank you so much for your questions, and look forward to interacting with you over the next few months, and have a great day.
Operator: Ladies and gentlemen, welcome to the Novonesis Full Year Financial Statement for 2025 and Annual Report for 2025. I'm Moritz, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Tobias Cornelius Bjorklund, Head of Investor Relations. Please go ahead, sir. Tobias Björklund: So thank you, operator, and good morning, everyone, and welcome to the Novonesis conference call for 2025. As mentioned, my name is Tobias Bjorklund, I'm heading up Investor Relations here at Novonesis. In this call, our CEO, Ester Baiget; and our CFO, Rainer Lehmann, will review our performance for the year as well as the outlook for 2026. Attending today's call, we also have Tina Fano, EVP of Planetary Health Biosolutions; Henrik Joerck Nielsen, EVP of Human Health Biosolutions; Andrew Taylor, EVP of Food & Beverages Biosolutions; and Claus Crone Fuglsang, Chief Scientific Officer. The conference call will take about 1 hour, including Q&A. Please change to the next slide. As usual, I would like to remind you that the information presented during the call is unaudited and that management may make forward-looking statements. These statements are based on current expectations and beliefs, and they involve risks and uncertainties that could cause actual results to differ materially from those described in any forward-looking statement. With that, I am now pleased to hand you over to our CEO, Ester Baiget. Ester, please. Ester Baiget: Thank you. Thank you, Tobias, and welcome, everyone. Thank you for joining us this morning. Could you please turn to Slide #3? Thank you. 2025 was another strong year, a year where we capitalize once more on the momentum from the increased relevance that our biosolutions bring to customers and consumers around the world. From an original guidance of 5% to 8%, we ended the year delivering a strong 7%, including the negative impact from exiting certain countries of around 1 percentage point. Sales growth was broad-based and mainly volume-driven with prices and sales synergies each contributing around 1 percentage point. We delivered an adjusted EBITDA margin of 37.1%, in line with our initial outlook of 37% to 38% and despite significant negative currency development during the year. Growth in developed markets reached 6% with solid performance in both Europe and North America. Emerging markets were particularly strong with 9% growth, driven by the increased local presence and tailored solutions. In 2025, we added around 400 people in commercial roles and customer-facing activities with 2/3 of them in emerging markets. The integration of the Feed Enzyme Alliance acquisition, which we closed in June last year, is progressing well, and we are starting to see the benefits for being closer to the customer and from the strength of the combined biosolutions portfolio. We launched 14 new biosolutions in the quarter, bringing the year to 33 in total. In Food & Beverages, we launched innovation that tap into higher consumer demand for healthier and high-protein solutions driven by GLP-1 users, among others. Another example of innovation tapping into growing consumer demands was the new enzyme solutions for quick and cold wash cycles in Household Care, saving both time and money for consumers while enabling superior wash performance. We continue to focus on driving our people, planet positive ambition. 80% of our sales are aligned with at least one Sustainable Development Goal. I am very pleased that we have delivered on all of the 6 2025 sustainability targets, including reaching 100% of electricity from renewable sources. Turning to 2026. With already good start to the year, we expect organic sales growth of 5% to 7%, mainly driven by volumes, with pricing and sales synergies each contributing around 1 percentage point. The outlook also includes close to a percentage point negative effect of exiting certain countries. For the adjusted EBITDA margin, we guide for 37% to 38% with an expected margin expansion, including currency headwinds. And with this, let us look at the divisional performance in more detail, starting with Food & Health Biosolutions. Could you please turn to Slide #4? Thank you. The Food & Health Biosolutions division delivered a strong 8% organic sales growth in the full year, including a negative impact from exiting certain countries of around 3 percentage points. The adjusted EBITDA margin was 35.8%, an increase of 60 basis points, including the impact of currency headwinds. In the fourth quarter, organic sales growth was strong at 7%, including the negative impact of around 5 percentage points from exiting certain countries and the margin improved as well. For 2026, we expect this division to deliver organic sales growth within the same range as for the group, driven by both Food & Beverages and Human Health. The exit of certain countries will impact in the first half of the year. Please turn to Slide #5. Thank you. Food & Beverages delivered a strong 8% organic sales growth for the full year and 7% in the quarter, including the impact of exiting certain countries of 3 percentage points for the year and 6% in the quarter. Growth was mainly driven by volume and pricing contributed positively in line with the group level. Growth for the full year as well as in the quarter was anchored across geographies and most industries with continued strong momentum in Dairy. Performance was mainly driven by market penetration, strong adoption of innovation and positive market development, driven by the increasing demand of cleaner label, high protein and healthier solutions. In fresh dairy, beyond the increase in demand for efficiency, yield and high protein, we continue to see a strong pull for our bioprotection solutions. In cheese, customer conversion to higher-yield solutions continued to be a strong driver of growth. Baking, Meat and Plant-based solutions also saw strong growth, mainly driven by innovation and increased penetration. The Beverage segment grew in the fourth quarter, showing the momentum of innovation still with decline for the full year, mainly impacted by lower end market beer volumes. Synergies contributed to growth in line with expectations, supported by cross-selling and increased commercial scale across both Food & Beverages. In the fourth quarter, we launched 9 new products in Food & Beverages across Dairy, Beverages and Plant-based, making it 19 for the year. One exciting example of our growth synergies is our launch of Galaya Smooth, a solution that combines a texture-enhancing enzyme with cultures, driving smoother, higher protein and cleaner label dairy products. Another exciting launch is the Javora Enhance for instant coffee. This drop-in solution helps coffee processors unlock up to 10% higher yield with improved quality, cost and sustainability benefits. For 2026, growth in Food & Beverages is expected to be broad based, including a positive impact from synergies and pricing. The exit from certain countries will impact in the first half of the year. Please turn to Slide #6. Thank you. Human Health delivered 10% organic sales growth both for the full year and in the fourth quarter. Growth was mainly volume driven and negatively impacted by the exit of certain countries by around 1 percentage point. The release of the full revenue contributed around 1 percentage point to growth both for the full year and for the quarter. The full year development was driven by strong performance in both Dietary Supplements and Advanced Health & Nutrition. Synergies contributed positively and in line with expectations. Dietary Supplements grew across regions and subcategories, led by solid momentum in North America. Performance in Advanced Health & Nutrition was driven by Advanced Protein Solutions as we continue to scale up supply with our anchor customer and HMO. In the fourth quarter, growth was led by strong performance in Dietary Supplements across all regions and subcategories. And in Advanced Health & Nutrition, growth was driven by Advanced Protein Solutions. In the fourth quarter, we launched one new product in Human Health, BioFresh Clean. It's a clinically proven liquid enzymatic formula that supports better oral hygiene. It can be applied in toothpaste and mouthwash applications as a natural and effective solution. This is yet another example of a solution where we leverage the impact of our innovation across -- through cross-selling. For 2026, growth in Human Health will be driven by a continued positive momentum in Dietary Supplements, supported by a positive impact from synergies as well as by Advanced Health & Nutrition led by HMO. Pricing is expected to impact positively and deferred revenue is expected to contribute around 1 percentage point to the growth for the sales area. The exit from certain countries will impact the first half of the year. And please turn to Slide #7 for a look at Planetary Health. Thank you. Planetary Health Biosolutions delivered a solid 6% organic sales growth for the full year. The adjusted EBITDA margin was 38.2%, an increase of 140 basis points including currency headwinds. In the fourth quarter, organic sales growth was 2%, driven by Household Care. Agricultural, Energy & Tech was flat in the quarter, with double-digit growth in Energy, offset by timing in Agricultural and a tough comparator in Tech. The EBITDA margin was 36.4% in the quarter and down 90 basis points compared to Q4 last year. This decline is primarily due to a one-off expense relating to the realignment of activities in plant, while currencies had a negative impact as well. The acquisition of the Feed Enzyme Alliance contributed positively and in line with expectations. For 2026, and with a good start of the year, we expect this division to deliver organic sales growth within the same range as for the group with relatively stronger growth in Agricultural, Energy & Tech and supported by pricing. Please turn to Slide #8. Thank you. Household Care delivered 7% organic sales growth for the full year and 5% in the quarter. Growth was mainly volume driven and with a positive contribution from price and in line with group level. The strong performance was led by increased market penetration and adaptation of new innovation. Increased enzyme penetration in Emerging Markets contributed to growth in both laundry and dish wash, and growth in Developed Markets was mainly from innovation and supported by increased penetration of local and regional customers. Growth in the fourth quarter benefited mainly from similar factors as the one of the full year as well as strong growth in professional and medical cleaning, easing the impact of end market normalization in developed markets. For 2026, we indicate solid performance in Household Care with key growth drivers continuing to be innovation, increased penetration in both Developed and Emerging Markets as well as continued support from pricing. Please turn to Slide #9. Thank you. Agricultural, Energy & Tech delivered organic sales growth of 6% for the year while the development in the fourth quarter was flat. The full year growth was driven by a strong performance in Energy, supported by Tech and Agricultural. Group was driven mainly by volume and pricing contributed positively, in line with the group. Energy was driven by Latin America and Asia Pacific, particularly India, reflecting increased corn ethanol production. Growth in North America was also supportive, driven by greater adoption of innovation and growing ethanol production volumes, supported by increasing exports. Further, a ramp-up in second-generation ethanol and penetration of biodiesel solutions also contributed positively. Performance in Agricultural was driven mainly by plant while the performance in animal was impacted by timing. Tech was driven by increased penetration of our solutions for biopharma processing aids. For the development of the fourth quarter was driven by double-digit growth in Energy, explained by similar factors as the one as the full year, while Agricultural and Tech declined due to high comparables and timing, especially in Agricultural. In the fourth quarter, we launched 4 new products. In Energy, we introduced a new yeast, increasing ethanol yield under tough fermentation conditions, driving further value creation for our customers. And in Tech, we launched an enzymatic solution that helps increase yields in vegetable oil production and reduce costs. For 2026, growth in Agricultural, Energy & Tech is expected across all industries led by Energy and supported by synergies and pricing. Now let me hand over to Rainer for a review on the financials and the outlook. Rainer, please? Rainer Lehmann: Thank you, Ester, and good morning, everyone, and welcome to today's call also from my side. Let's turn to Slide #10. Please note that for the year-on-year comparison figures presented today, we have used pro forma figures as our baseline comparison for full year numbers. The corresponding IFRS-based figures are available in the statement released this morning. Q4 year-on-year figures are IFRS based and fully comparable. In 2025, sales grew a strong [ 7% ] organically and 5% in reported euro. The exit from certain countries impacted organic sales growth negatively by around 1 percentage point. Currencies provided a 3% headwind while M&A impacted development positively was a good 1% as expected, following the Feed Enzyme Alliance acquisition that we finalized in June. In the fourth quarter, sales grew 4% organically and 2% in euro. The exit from certain countries impacted organic sales growth negatively by around 2 percentage points in the quarter. Currency headwinds continued to be significant and amounted to 4%, partly offset by a good 2% positive contribution from the Feed Enzyme Alliance acquisition in line with expectations. Turning to our profitability. The adjusted gross margin was strong at 59.1%, which is an improvement of 240 basis points year-on-year. Lower input costs, including cost of energy as well as economies of scale and productivity improvements, led to the strong development. Pricing and synergies also had a positive impact while currencies impacted negatively. Total operating expenses adjusted for PPA-related depreciation and amortization were 29.5% of sales. This is 1 percentage point higher than the 2024 level as we are reinvesting and strengthening our commercial presence across geographies, in line with our strategic direction. In addition, Q4 was impacted by one-off expenses related to the realignment of activities in plant as well as a write-down of assets as a result of the closure of one of our smaller sites. The adjusted EBITDA margin was 37.1%. This was 100 basis points higher than 2024 and driven by the improvement in gross margin and realizing 100% run rate of cost synergies 1 year ahead of time. The Feed Enzyme Alliance acquisition contributed 0.25 percentage point in line with our expectations. Currency headwinds impacted the margin negatively by around 0.5 percentage point year-on-year. Relative to the initial outlook we gave at the beginning of the year, currency headwinds amounted closer to 1 percentage point. Taking this into account, a currency-neutral margin would rather have been at the top of the initial outlook range of 37% to 38%. The adjusted EBITDA margin for the fourth quarter increased 40 basis points to 36.6%, driven by the same factors as for the full year. As I mentioned before, Q4 was impacted by one-offs, adding up to roughly 0.5 percentage point, mainly related to the realignment of activities in the plant business. Here, we are rightsizing the organization and activities as we continue to prioritize and ensure that there's an appropriate allocation of resources across geographies to support this growing business. The Feed Enzyme Alliance acquisition supported the margin by around 0.5 percentage point. Special items were EUR 66 million and primarily consisted of transaction costs related to the Feed Enzyme Alliance acquisition. It also included integration expenses related to the combination with Chr. Hansen as well as some initial expenses for the new global ERP system. The diluted adjusted earnings per share was EUR 1.49, an increase of 16% compared to last year. If we adjust for PPA amortization, the earnings per share was EUR 1.99, representing a 15% increase compared to 2024. Operating cash flow amounted to a strong EUR 1.22 billion in 2025, which is an increase of EUR 189 million compared to last year. This was mainly driven by the strong improvement in net profit, supported by a positive development of the net working capital. CapEx amounted to EUR 471 million, equal to 11.3% of sales, which is 2 percentage points up from last year as we increased investments into our production footprint to support our growth journey. Despite this increase, free cash flow before acquisitions increased by 15% to EUR 770 million, equaling 19% of sales. Adjusted return on invested capital, excluding goodwill, was 10.1%, an improvement of more than 20% versus previous year's pro forma return. The improvement was driven by higher profitability and PPA amortization. With this, let us now turn to Slide #11 to talk about the 2026 outlook. Please note that the outlook presented today is based on last year's levels of global trade tariffs and the current foreign exchange environment. Back in December 2022, we announced the combination and presented targets for the period towards 2025. We set out to deliver a CAGR of 6% to 8% and an EBIT margin before special items and PPA amortization of 29%, which we translated to an adjusted EBITDA margin of 37%. With an organic sales CAGR at the top end of the range and an adjusted EBITDA margin of 37.1%, including the absorption of currency headwinds, we have clearly delivered on our promises. We expect 2026 to be another solid year for Novonesis as demand for our biosolutions continues to increase. The outlook for organic sales growth is between 5% to 7%, which includes a negative impact of close to 1% from exiting certain countries. Organic sales growth will be mainly volume driven and include around 1 percentage point from sales synergies. Pricing is expected to contribute a good percentage point across both divisions. The outlook also includes some uncertainty of potential lower consumer sentiment for the year. We expect a good start to the year. This is mainly attributable to the sales momentum we are experiencing so far. Additionally, we expect a positive timing impact from the animal business in the first half of the year related to an inventory buildup of a key customer. For the year, this effect will be neutral. We expect the adjusted EBITDA margin to be between 37% to 38%, showing continued margin expansion. The increase is expected to be driven by a stronger gross margin, the full year effect of the Feed Enzyme Alliance acquisition as well as the benefit from synergies. We have also included currency headwinds of around 0.5 percentage point based on current spot rates compared to 2025. Novonesis' Board of Directors proposed a dividend of DKK 4.25 per share or EUR 0.57 to be approved at the Annual General Meeting. This will be equal to a total dividend payout for the year of DKK 6.5 or EUR 0.87 per share as we already paid an interim dividend of DKK 2.25 or EUR 0.30 on August 27 last year. This corresponds to a payout ratio of 58.4%, which is in line with our dividend payout policy, which suggests a ratio between 40% to 60% of adjusted net profit. For modeling purposes for 2026, current FX spot rates suggest euro sales to be negatively impacted by around 2 percentage points. In addition, the inorganic growth contribution from the Feed Enzyme Alliance acquisition is expected to add a good percentage point. We expect around EUR 40 million in special items in 2026 related to integration activities from the combination in line with expectations, integration activities from the Feed Enzyme Acquisition and continued expenses related to the implementation of the new ERP system. Net financials are expected between EUR 80 million to EUR 90 million, and an effective tax rate between 22% to 23% is a good assumption for 2026. As already highlighted at last year's strategy announcement, we will see a temporary step-up in CapEx in order to support our growth for the strategy period and beyond. The increase of the investments are to expand our production capacity, particularly for enzymes and, the finalization of the dairy culture expansion in the U.S. In addition, we'll invest in a setup of a new ERP system over the next years. For 2026, we expect, therefore, CapEx to be in the range of 12% to 14% of sales. Net debt to EBITDA is expected to be around 1.7 at year-end as our solid cash generation will allow for continued deleveraging despite the step-up in CapEx. We are in a good place and confident in the 2026 outlook. We make dedicated investments to support the short- and long-term growth, building an even stronger and more resilient Novonesis. With this, I'll hand back to you, Ester. Ester Baiget: Thank you, Rainer. Could you please turn to Slide #12? Thank you. Our investments in innovation are driving both near and long-term growth, and we see AI as a powerful tool that further strengthens our leadership in biosolutions. We invest more than EUR 400 million in R&D and they're focused purely on biology. This gives scale and sets our innovation pipeline as a differentiated engine, fueling our ability to outgrow the end markets we present. With around 10,000 patents, our portfolio is very well protected. 85% of our 2025 product launches are IP protected. This is significant. In 2025, around 25% of our sales came from products launched in the last 5 years, in line with our ambition of 20% or more. We consistently have around 200 innovation projects in the late-stage pipeline status. In 2025, we launched 33 new solutions, and we feel confident in our ambition of launching at least 30 per year going forward, continuing to provide new answer to consumer ask from cleaner label and high-protein foods to lower water and energy bills. Over the last years, we have increasingly integrated AI in our innovation processes. We have unmatched proprietary libraries of more than 100,000 strains, more than 15 million enzyme structures and extensive data collected over decades from biosolutions across applications, scaling productions and core R&D work. This property data that only we can access is the key reason why AI provides Novonesis a disproportional advantage compared to others, who are mainly able to access publicly available data. And this data is the one, our data, that puts us in a strong position to capitalize on the opportunities that AI offers. The most material impact so far from using AI has been moving from idea to lead candidates faster with much less experimental activity, shortening this part of the innovation cycle from years to months. The next areas where we're seeing real breakthroughs are on strain design, productivity and production of outcomes in real-world applications. To summarize, AI is a real differentiator for us as it amplifies the impact of our moat. AI enables us to develop new technologies and solutions faster and with high accuracy, bringing efficiencies that so far were impossible to achieve. The more data we generate, the more we increase the impact from AI, speeding up innovation and solving for increasing higher value generation. Novonesis is a pure biologics play with unique portfolio of biosolutions, broad market reach and scalable precision fermentation setup. With strong execution and focus on prioritization, we continue to deliver on our commitments. 2026 will further demonstrate our progress to our 2030 targets and beyond. And with that, we're now ready to open the Q&A. Operator, please. Operator: [Operator Instructions] And the first question comes from Matthew Yates from Bank of America. Matthew Yates: It relates to your outlook and this sort of concept of the uncertain lower consumer sentiment environment. And I guess if I look at your really amazing Q4 growth rates, it doesn't look like you are overly impacted there. You're talking about a strong start to the year. So when you referenced this consumer sentiment point, is that something you are already seeing in your results? And if so, in what part of the business? Or is that more of a forward-looking statement that it's something that could transpire and manifest itself in due course? And if I can squeeze in a second question, specifically about your sort of Human Health business. I think it grew 12% ex the currency exits, which again, very, very impressive. Can you just talk a little bit how you are managing to decouple from arguably an end market or an end category that looks a bit more lackluster based on what we've seen some of your sort of peers or customers report. Is this innovation? Is this the merger synergies coming through? Just interested how you're driving such strong growth on the human side. Ester Baiget: Thank you, Matthew, for these beautiful questions. Yes, we feel very pleased about how we finished the year, but especially about the momentum and how we're setting us for another good 2026. Let me answer your first question and then pass it to Henrik, who will enlight us on how we are decoupling through our innovation muscle and the places we play in the market from the dynamics that we see and how we continue to outgrow the market here in Human Health. Building on your question on our outlook, 5% to 7%, that's what we are aiming for the year within the range, including 1% of exiting certain countries. And as you indicated, Matthew, this is including a potential softness for consumer behavior, mainly in U.S. that we don't see yet. We're starting the year in a strong momentum across all areas. There's a little bit of effect of timing from Q1 -- from Q4 to Q1 on Ag and Tech, as we mentioned. But beyond that, the good start of the year that puts in a very good place of comfort. Then we live in the same world that you do, and we bring that potential scenario in place on quite some softness -- potential softness in the consumer behavior within the outlook of 5% to 7%. Henrik, please? Henrik Nielsen: Thanks, Matthew, for that question. One of the nice questions to get to answer. Indeed, we are growing very well, and we're doing very well in Human Health. 2025 was also a very strong year for Human Health, where both our dietary supplements business and the Advanced Health & Nutrition business really contributed nicely. It is true that there's a lot of talk about lowering consumer sentiment. In the Human Health business and especially in the supplements business, you do see consumers also switching around and shopping around a lot. So there is growth to capture if you're out there with the right customers. And we are locked in with some very, very successful customers, especially in the U.S., where we are growing very nicely despite others struggling a bit more. It's also -- it's much more dynamic. And it's also a more fragmented market. It's not unlike many other parts of Novonesis, where position may be more broad. There's much more room for us to grow not only with the market, but also growing with share and growing with our key customer. And that is the secret of the recipe. We actually see that also in the rest of the world, but particularly in the U.S. And then also, as I mentioned, we are just growing nicely across all geographies and across both supplements, B2B and Consumer Health and Advanced Health & Nutrition. Operator: And the next question comes from Thomas Lind from Nordea. Thomas Lind Petersen: Also 2 questions from my side here. The first one relates to Ester, what you said about the, I think, greater innovation adoption within energy that you see in North America. If you could perhaps elaborate a little bit on that. We've seen the average U.S. ethanol yield get very close to 3 gallons per bushel. So just maybe if you could elaborate a bit on what is required to go above the 3 gallons per bushel, so breaking down the fiber and how you sort of see that breakdown going on over the coming years and then what that means to growth in energy. And then the second question is on the very, very strong growth that you delivered in food and bev, 7% despite the strong headwind from the exit of Russia. So perhaps if you could just elaborate a little bit on this. I'm assuming that it's dairy, but is it high protein? Is it yogurts? And is it this new Galaya Smooth innovation that you launched last year? So that would be my questions. Ester Baiget: Excellent. Thank you. Very good questions also, Alex (sic) [ Thomas ]. I'll pass it to Andrew to share the details of the broad-based growth on Food & Beverages. It is across all areas where we see it and also very diversified from a geography's point of view and continue to outgrow the market that we present. And then Claus will further elaborate on the question of innovation. But let me bring a little bit of color here that it's a beautiful question, the one that you're making, and it shows about the untapped potential of biosolutions. And this is the key formula of success of who we are, being a pure biologic play and continue to bring nuances that show what it was not possible, it is possible. We've done it in bioenergy by being in the power of combining yeast and enzymes, and we continue to drive and enable a new value generation for our customers. And it is on higher yields, higher productivity, corn oil, value-added side streams that they make our solutions extremely strong. And coupled with a very strong presence in North America, we continue to outgrow the market. But Claus, what is the roof there? How we can continue to untap that? Claus Fuglsang: Yes, Thomas, a very good question. I mean, I guess you're alluding to there must be a mass balance gap or cap somewhere, but that's still not there. There's still potential to convert more fiber. There's still potential to decrease the waste in, let's say, the yeast fermentation of glucose to ethanol. There's still a potential to increase the protein fraction, if you will, of the DDG. So there's still innovation potential in the bioenergy business. Ester Baiget: And maybe, Claus, if you speak about not only corn, but also what we're seeing in other areas in bioenergy. Claus Fuglsang: Sure. It was already mentioned in growth due to biodiesel, where continue to innovate for higher yields. And then also on the biomass side, where [ Horizon ] in Brazil continues to build out the capacity or coming online with the plant, and then in India as well. Ester Baiget: Thank you, Claus. Andrew? Andrew Taylor: Thanks, Ester. Yes, we're very pleased with the growth momentum we have in Food & Beverage, both in Q4 and coming into this year. It is truly broad-based. So we are growing in both Dairy as well as Food & Beverage. The Dairy is similar to what we talked about in prior conversations around both the new innovations we're launching in this space, but then also productivity through things like DVS conversions, and we see that continuing to be a growth driver for us coming into this next year. On Food & Beverage, it is also we're seeing growth, and that is in -- mainly driven by innovation. And we've talked in prior calls about baking and food. So we are really excited about the progress that we're making. The growth is really driven by the expansion of the usage of biosolutions in those industries. And so that's what we're spending a lot of time doing. When you think about it from a regional perspective, we are seeing growth actually in all of our regions. And clearly, there are some pockets that are higher than lower, and a lot of what we're spending our time trying to do is making sure we have our sales resources deployed at the most attractive pockets for the next 3, 4, 5 years. So a lot of it comes down to making sure we have our people in the right spots. Operator: And the next question comes from Alex Sloane from Barclays. Alexander Sloane: Two questions from my side, if that's okay. The first one, could I just ask a little bit more around the Agricultural timing impact? If you can maybe quantify how big an impact that had in Q4 on the timing side, what growth maybe in Ag, Energy and Tech would have been without that? And how confident are you that, that fully reverses in Q1 or H1 of this year? And the second one was actually on innovation again. I mean, thank you, Ester, for the detail on AI, which sounds very exciting, obviously, shortening innovation cycles. You're talking about kind of months from years. How should we expect that to translate in terms of the innovation KPIs that you report over the next 5 years? Will we see more new product launches versus the 33 that you announced in '25? Or is there about launches that are just maybe more powerful, more useful for customers where you can derive more value? Ester Baiget: Thank you, Alex, for both of your questions. Regarding the timing, it was meaningful enough to make a change or the imprint that you see in Q4. And what we feel very confident is that we see already a strong momentum in Q1. So it is purely timing, and we see that reflected in as we're starting the year. Then on innovation, yes, we are bringing AI as a powerful tool. We've been using AI. We used to call it machine learning. Now it's embedded on the 100% on the way that we operate. And mainly it brings higher home runs per shot. It is leading to high efficiencies, but also untapping opportunities that we have not even seen yet the roof. It allows us to reach spaces that we could not dream. Yes, it brings efficiencies and speed. It took before 1 year of lab data to predict the surface of a protein, and now we can do that in 30 seconds or less than a minute. But it is because we have the right data, the relevant data on how we fit those models, on how we can capitalize on the momentum on R&D. So too early to talk about the new metrics, but for sure, comfort on the quality of the muscle that we have behind and then the capability to continue to be a partner of growth, a value-added enabler for our customers on bringing new solutions in. Operator: Then the next question comes from Lars Topholm from DNB Carnegie. Lars Topholm: I have 2. Continuing on Alex's questions to Agriculture. Can you give maybe a little bit of detail on the areas where you saw the timing and the tough comps? Are we talking in animal health? Are we talking plant health? And if it's plant health, are we talking bioyield or biocontrol? If it's animal, can you comment on what species? And then a second question, Rainer, when you went through the numbers, you mentioned a one-off effect in Q4 from a realignment of activities in plant. I think those were your words. I just wonder if you can put some comments on what that actually means. Ester Baiget: Very good. Thank you, Lars. I will pass the word to Rainer and Tina on the drivers of the -- not only timing, but also strong competitor on tech for Q4 and also the drivers of the reorganization behind that we always do. We hired 400 people in commercial roles and customer-facing activities this year. And at the same time, we always streamline on the way that we operate. That's a continuous momentum, and we saw the impact of this in the one-off on Ag to continue to set us more equipped for capitalizing on the growth momentum and the opportunities we see in the market. But Tina, first to you. Tina Fanø: Yes. So first of all, when we look at Ag, all 3 sub-elements, so Agriculture, Energy and Tech all grew in 2025 and delivered the 6% for the full year. And we are seeing good momentum here in 2026. We talked to strong growth, double digit in bioenergy also in Q4. And then we talk to some timing in Ag and Tech. I mean, Tech, we have talked about a couple of times, the biopharma processing aids that, that is more lumpy and bumpy starting out from the COVID-19 test kits. And that's also what we are seeing here in Q4. And we see a good start to -- here in '25, and we see a good start to 2026. If we then go specifically into Agriculture, we see -- if you look back at our 2024 numbers, we had a very strong Q4 in Agriculture, and we do expect a very strong also in Agriculture here in 2026. If you look at it -- if you look even more detailed at it, we had good performance on plant, while animal was a bit more subdued and a lot of it comes from emerging markets. But we do see, as we also call out, a strong also animal performance here in 2026. Then over to the restructure. Over the years, we have developed many strong solutions in the plant biosolutions space. And as you know, Lars, we have also talked about the need for prioritization and our focus on securing that we prioritize our cash in the best possible way. And now we want to focus on getting full benefit from what it is that we have. We have developed so many solutions, and we want to get them out and secure that we have the right footprint in the right places in order to deliver to that. So that's what it's about. It is about capitalizing on what we already have. Rainer Lehmann: Really nothing to add. I think Tina explained it wonderfully. It's making sure the business has the appropriate resources to grow. Operator: And the next question comes from Soren Samsoe from SEB. Soren Samsoe: Soren here. So first question is, you talk about a good start to the year. Just what areas are you more specifically referring to? And also, does this mean that we should see the year of '26 to be front-end loaded when it comes to organic growth and margins? And the second question is on CapEx to sales, which you guide for 12% to 14%, and similar level, I guess, in '27. Maybe you can elaborate a little bit on what this relates to? Are you going to build more capacity in other markets besides the expansion you're doing in the U.S.? Ester Baiget: Thank you, Soren, for the very good question. The good start of the year is broad-based. It's across all areas. Then there is the onetime effect of inventory that Rainer mentioned in his comments that, that we're pleased. I mean the earlier we have that in place, the better for us. And that's only -- but it's irrelevant for the -- or not impactful the overall year, it's simply a timing effect that we're going to see particularly in Ag for the beginning of the year in Q1. But then the growth that we see, it's across all segments. And then reading to CapEx, yes, it is built and made for support growth for the broad range of our guidance, including the high end. And I'm here, I'm passing the word to Rainer that can put a little bit more color. Rainer Lehmann: Yes. So of course, it's the continuation of the expansion in the U.S. basically for the food culture business, right? It's going to go online in beginning of Q4 of this year. But then it's also ensuring that for the enzyme business, we have enough capacity to really accompany our growth journey, and that will be outside of the U.S. It will be more in the emerging markets and in India in this regard. So that is, of course, also going to be a multi-journey. Important here is this is really a temporary elevation, this 12% to 14%. And it also includes the roughly basically percentage points of the capitalization of expenses related to the ERP. Soren Samsoe: Will it be dedicated to any specific segment like Energy or Dairy or whatever? Rainer Lehmann: Facilities, we're building multipurpose facilities. And these are investments not only in capacity but also in resilience overall so that we're able to really use these assets in a broad portfolio, of course, then across the enzyme portfolio. Operator: And the next question comes from Tom Wrigglesworth from Morgan Stanley. Thomas Wrigglesworth: A couple of questions. I wanted to talk a little bit around the margin, both environment and the outlook. So with regards to the environment, where are we on the kind of the cost dynamics in terms of inputs and raw materials? I think sugar prices have been coming down. I wondered if that was supportive. And secondly, in terms of the bridging elements for that margin midpoint, 37.5. Should we think about that as linear progression through the year? And what are you assuming around the SG&A investments that you're making and how that will trickle through into 2026, noting that, obviously, your ambition was to expand your sales force in emerging markets. So color around the margin would be very helpful. Ester Baiget: Thank you, Tom. Rainer, if you please could take this one. Rainer Lehmann: So regarding the timing of the margin, it's pretty much, I would say, fairly stable. It will be over the year. I would assume, as we said, like in 2025, we increased, for example, on the S&D side, 400 new colleagues that will, of course, be there from the beginning in this regard. We also do not expect actually any major growth rates from H1 to H2, right? We highlighted that the animal or in the agriculture space on the animal side, we see this onetime purchase, which for the year is neutral but will affect H1, right? We do not know if it's Q1 or Q2. That's what I'm saying here H1 in this regard. And so therefore, we do not -- therefore, the ratio should be fairly consistent, right? And for the mid guidance, we also said, keep in mind that while there are clearly positive impacts, as you know, and further increase on the Feed Enzyme Alliance that we're, of course, going to harvest more synergies that add another 20 basis points. But also keep in mind that here, we also continue to face currency headwinds, which is going to be approximately around 0.5 percentage point. So overall, I think it's an ambitious figure but it's going to be basically throughout the year fairly consistent. Operator: And the next question comes from Chetan Udeshi from JPMorgan. Chetan Udeshi: The first question was just on this timing issue that you referred to in your Ag business. I'm just curious, was that a surprise to you in the sense how it developed through the quarter? Because I was a bit puzzled, if this was known, why was this not flagged already in the last call? The second question related, and Rainer, to some extent, touched on it, you don't expect any major deviation between H1 and H2 organic growth. So is that meaning that in Q1, we should at least see a similar 6% growth, if not higher because of the timing issue, bearing in mind, you also have the impact from exit in Russia and Belarus being bigger? And third question, I was just looking at the slide, and I think, Ester, you mentioned about the new solution for oral care. Is this a completely new category for Novonesis? Or have you always been in that category? Because I don't seem to recollect having seen any offering for the oral care market. I'm just curious, is this something that is a new category for Novonesis? Ester Baiget: Thank you, Chetan. Very good questions regarding oral care, and I'll let Henrik further build on this. But mainly, this is not necessarily new solutions. What is new is the connectivity we can bring now, bringing a broader company with cross-fertilizing solutions that we have in the pipeline and then enhancing them and bringing them, truly meeting needs of the consumers and then enabling new maybe formats or spaces for our customers. So not 100% new, but just new for the customers, enabling new connections as part of bringing also a broader company with more arms and more faces and more legs in the market. Regarding the timing, no, it's not unexpected. It's mainly in Ag, where we know it's a bumpy market. These things happen. But we didn't see it in Q4, we see it Q1, it's there. And as I mentioned, and apologies, I'm repeating myself, we see a good start of the year across all areas but also here on Ag. With then the timing effect that Rainer mentioned on inventories on animal for the first half of the year that we're also going to see there. Do you want to build up on the timing, Rainer? Rainer Lehmann: Yes, and I can give some more color there. Chetan, basically, I do not expect a difference really between H1 and H2. They're both going to be within the range that we said 5% to 7%. Keep in mind, that specifically 2025, also the first quarter in 2025 really is strong comparable, right? I'm not guiding here any quarters. But for H1, H2, I expect similar growth rates. Operator: Then today's last question comes from Andre Thormann from Danske Bank. André Thormann: I just have 2. Just coming back to Agriculture, Energy & Tech. I just wanted to make sure here, it's correct that the growth, if you correct for timing is around 3% organic. And if that is true, then it's still a very meaningful deceleration in the growth rates. So what explains that other than timing? That's my first question. And then the second question is in terms of the tax rate. I just wanted to make sure it's 22% to 23%. Is that the run rate also longer term? Or is there some one-off effect in 2026? Rainer Lehmann: So I'm going to start with the tax rate and make it easy. No, this is basically around the 22% to 23% is a long term. It's basically a normalized rate, probably even to the lower end of this 22% of that range. Keep in mind the tax rate in '24 was really high due to the nontax deductible integration expenses, which were quite significant. So now we're actually in a more normalized way going forward. Ester Baiget: And Andre, building on the timing, it's good that we dwell on the quarter, and we don't look at our businesses from a quarter perspective. We delivered 6% growth in Agricultural, Energy & Tech. Particularly in this segment, there is volatility from one quarter to the other. We knew that there was a strong comparator in Tech in Q4, and Tina shared the drivers behind. And we're starting the year in a good place, and we see this segment as a driver of growth. We delivered double-digit growth in Q4 in bioenergy, and we continue to see growth across all areas in Q4 -- in 2026. We will -- it will be the same drivers. It's innovation, it's penetration, and it's continue capitalizing in the momentum and then translated into what you will see growth across the segment in 2026. André Thormann: Just to be sure, Ester, because I'm not sure I got that. So is it correct that it's around 3% if you correct for timing in Q4? Just to be sure of the numbers. Ester Baiget: And I heard you and that's your assumption. And now what we are saying is that there is an impact on timing. It is meaningful. You can make -- I mean, that's a fair assessment. But what's important for us is the 6% growth for the year and the comfort of Planetary Health Biosolutions, Agricultural, Energy & Tech to also be a driver of growth across the segments in 2026. So no more calls. And we thank you for -- no more questions, and thank you for all calling in today. Looking forward to continuing the conversations. We're pleased of where we are. We're proud of 2025. We have a strong start of 2026. And we're looking for continue the conversations with you and showing you also through the year on how we're delivering on our guidance that we put in place. Thank you so much. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Operator: Ladies and gentlemen, welcome to the Marqeta Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Maria Greiser, Director of Investor Relations. Please go ahead. Maria Greiser: Thanks, operator. Good afternoon, everyone, and welcome to Marqeta's Fourth Quarter 2025 Earnings Call. Hosting today's call are Mike Milotich, Marqeta's CEO; and Patti Kangwankij, Marqeta's CFO. Before we begin, I would like to remind everyone that today's call may contain forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including those set forth in our filings with the SEC, which are available on our Investor Relations website, including our annual report on Form 10-K and our subsequent periodic filings with the SEC. Actual results may differ materially from any forward-looking statements we make today. These forward-looking statements speak only as of the time of this call, and the company does not assume any obligation or intent to update them, except as required by law. In addition, today's call includes non-GAAP financial measures. These measures should be considered as a supplement to and not a substitute for GAAP financial measures. Reconciliations to the most directly comparable GAAP measures can be found in today's earnings press release or earnings release supplemental materials, which are available on our Investor Relations website. With that, I'd like to turn the call over for Mike to begin. Mike Milotich: Thank you, Maria, and thank you for joining us for Marqeta's Fourth Quarter 2025 Earnings Call. I'm excited to be joined on this call by Patti, our new CFO, who started on February 9. Patti is a proven finance executive with extensive experience across technology, financial services and payments, and we're excited about the value she will have at Marqeta. To start our call, I will briefly touch on our Q4 results, followed by a few Q4 highlights of the growth in our business across use cases, geographies and value-added services. I will then turn it over to Patti, who will cover the details of our Q4 financial results and our expectations for 2026. Our fourth quarter results were once again demonstrating our outstanding growth as we reached new levels of scale while continuing to increase our adjusted EBITDA as we trend towards GAAP profitability. Total processing volume, or TPV, was $109 billion in the fourth quarter, crossing the $100 billion threshold in a quarter for the first time in Marqeta's history. With a year-over-year increase of 36%, this was the third straight quarter in which our TPV growth has accelerated by 3 points from the previous quarter, demonstrating our strong business momentum as we exit 2025. Q4 net revenue of $172 million grew 27% year-over-year, driven by strong TPV growth across the use cases we enable. Q4 gross profit growth was $120 million, a 22% year-over-year increase, exceeding our expectations by several points. Our adjusted EBITDA was $31 million in the quarter, which was another all-time high, translating into an 18% margin and more than doubling the dollars on a year-over-year basis. This was fueled by strong gross profit growth and the benefit of our scale platform and efficiency initiatives. This quarter and throughout 2025, we drove significant growth by deepening our existing customer relationships through seamless geographic, use case and value-added service expansion while also successfully onboarding and ramping new customers. Our leadership and expertise powering innovative offerings continues to attract established brands seeking a proven partner to drive growth and user engagement by leveraging card programs. One area we highlighted throughout 2025 is the growth and traction we are seeing in Europe. TPV in Europe grew more than twice as fast as the overall company in the fourth quarter, which is the first quarter in nearly 2 years that the growth has been below 100% on a year-over-year basis due to the rapidly expanding base. As a testament to the scale we have achieved in Europe in a relatively short period of time, the TPV in Q4 2025 was nearly 40% higher than our annual TPV in 2023 and spans the breadth of the use cases we serve. In Q3 2025, we completed the acquisition of TransactPay, which enables us to deliver a complete offering in the U.K. and the EU across processing, program management and the EMI license comparable to what we offer in the U.S., Canada and Australia. The ability to offer an end-to-end solution across geographies is becoming increasingly important in serving enterprise customers, whether they are large fintechs or embedded finance multinationals. One such customer is Uber, a long-standing Marqeta customer. Our relationship started with enabling couriers for delivery in the U.S., which has since grown across many geographies. We then expanded into new use cases such as the Uber Pro card to support the financial needs of Uber drivers, which we are now helping to expand geographically to the U.K. Marqeta solution now live allows Uber drivers in the U.K. to access their funds immediately, get rewards and keep their money in a high-yield savings account with a partner bank, all within an Uber-branded app developed by Marqeta. Last year, we highlighted our work on a white label app designed to give customers a fully branded out-of-the-box solution managed by Marqeta that accelerates customer time to market. This program is the first to deploy the white label app, utilizing the preconfigured flows for onboarding, account setup, transaction monitoring and support, all of which reflect Uber's brand. This exemplifies the breadth and depth of the Marqeta offering by delivering the full spectrum of processing, program management and value-added services. This includes banking and money movement with seamless integration with our banking partner in the U.K., processing, fraud monitoring, real-time decisioning, risk management and our white label app. The holistic approach enables Uber to work with one partner to deliver a robust solution with full banking functionality. This expansion also highlights the confidence and trust that a discerning customer like Uber has in Marqeta to deliver a scalable and comprehensive product to their target market. This solution showcases our ability to offer a complete end-to-end solution, which is important for enterprise and embedded finance customers who are looking for a single best-in-class provider operating at scale with a full offering across geographies. Lending, including Buy Now, Pay Later, continues to be one of the most compelling and fastest-growing use cases. We continue to see strong growth in demand in Q4, which is driven by our ability to support customers with innovation at scale across many geographies. BNPL started with Marqeta enabling virtual cards for seamless payment experiences without costly and time-consuming back-end integrations. The category has continued to evolve, and we have been at the forefront of enabling seamless geographic expansion and newer innovative solutions such as the Visa Flexible Credential and Payanywhere cards, which allow our customers to deliver a better value proposition that is clearly resonating with their users. In a testament to our leadership in BNPL and the unique combination of capabilities we enable globally, in Q4, we added yet another BNPL customer who will be flipping an established program to our platform. For Technologies, a BNPL provider that allows shoppers to split online purchases into 4 payments, was looking for a tech-forward partner with a proven track record and the expertise to support their ambitious growth goals. As a result, they are moving their business to Marqeta. In addition to helping existing customers expand into geographies and use cases with new programs, we continue to strengthen our offering by delivering additional value-added services, which helps create more durable relationships and bolster the economics of our business. In Q4 2025, value-added services contributed over 7% of our gross profit with 18 of our top 20 customers utilizing at least one of our value-added services. As we have highlighted in the past, our real-time decisioning product within our suite of risk services was built to be issuer-centric and allow customers to create rules and controls to manage transaction fraud by leveraging actual transaction data. In Q4, we launched an enhanced version of this product with a long-standing customer using artificial intelligence and machine learning capabilities for real-time risk evaluation during the authorization process. Our enhanced model uses many transaction level attributes and historical behavior patterns to predict risk at the time of the transaction, all with millisecond level response times. We sought the input of several of our existing customers to create these models, which are self-learning and will work to continuously improve fraud detection and adapt to emerging threats. In Q4, we also signed 2 additional customers for this enhanced real-time decisioning capability. Both customers were looking for a flexible solution to help meet the different needs for neobanking and lending use cases across multiple geographies as they scale, appropriately balancing the expansion of their target audience and credit lines with fraud mitigation. By embedding AI-powered controls and advanced machine learning into the authorization process, we enable customers to expand confidently while also strengthening their fraud defense as they scale. To wrap up, as I reflect on our many accomplishments in 2025 and the efforts that are currently underway, I'm excited about our business momentum as we look forward into 2026 and beyond. First, given the long lead times in onboarding new business and the time it takes for new programs to ramp up, deal activity provides good insight into business momentum that takes time to impact the P&L. We are successfully shifting to targeting enterprise customers with embedded finance use cases, signing 3 Fortune 500 customers in 2025, and the average deal size increased over 20% year-over-year. We also executed a flip in each quarter, both credit and debit products, demonstrating our competitive differentiation. And over the past 2 years, we have signed approximately 40 new logos, while our top 15 customers are adding over 3 programs to our platform, with 14 of our top 15 customers adding at least 1. Second, our leadership in lending and Buy Now, Pay Later use cases continues to be a source of strength as commerce continues to shift toward these payment methods. Our success in lending and BNPL clearly illustrates what makes the Marqeta platform unique, modern, flexible processing that can support a wide range of value proposition from anywhere cards, distribution through wallets and virtual card solutions. We enable innovation for our customers, such as being the first to support flexible credentials in the U.S. and Europe, multinational reach that enables geographic expansion and reliability at scale to handle rapid growth even among very large programs. Third, our traction in Europe, where 2025 TPV was 8x the size of 2022 and should continue to be a source of strong growth. The addition of TransactPay significantly enhances our offering, enable us to deliver a full solution set in Europe aligned with U.S., Canada and Australia. The launch of the Uber U.K. program this past quarter is just the beginning. Lastly, we continue to expand and enhance the solutions we offer, both within program management and value-added services, increasing the value we deliver for customers and strengthening our customer relationships. This should continue to be a growth vector for us going forward, particularly value-added services, which are still only 7% of gross profit exiting 2025, but more than doubled year-over-year. Our financial performance in 2025 demonstrates what can be delivered when the business is firing on all cylinders. Our 24% gross profit growth and 26% adjusted EBITDA margin on gross profit has us on the cusp of GAAP profitability. We believe the market is evolving in favor of modern multinational processors operating at scale, which is reflected in our recent deals and our sales pipeline. Although we expected -- although we expect 2026 gross profit growth to be impacted by 2 specific factors whose timing really weighs on 2026, make no mistake that the structural components of our business remains strong as we look to reach larger milestones in the years to come. With that, I will turn the call over to Patti to discuss our Q4 financial results and 2026 guidance in more detail. Patti Kangwankij: Thank you, Mike, and good afternoon, everyone. I look forward to getting to know all of you moving forward. I'm excited to be stepping into this role at a time when Marqeta is building the business for scale and on the cusp of GAAP profitability. Our financial results for Q4 reflect another great quarter and an even stronger-than-expected finish to the year. Both net revenue and gross profit growth were approximately 4 percentage points higher than expected due to the business momentum reflected in our TPV growth. For the third straight quarter, TPV growth accelerated by 3 percentage points on a sequential basis, reaching 36% in Q4. With adjusted operating expenses roughly in line with our expectations, the higher gross profit led to another record quarter for adjusted EBITDA, and we approached GAAP net income breakeven for the third quarter in a row. Let me start by providing some color on our incredibly strong TPV, which was $109 billion in Q4, growing 36% year-over-year, with 3 of our 4 major use cases delivering accelerated growth. Non-Block TPV continues to grow over 2x faster than Block TPV. Growth within our financial services use case accelerated from last quarter, and the growth rate continued to be a little slower than the overall company. Lending, including Buy Now, Pay Later growth slowed from Q3, but remained very robust, growing just shy of 60% on a year-over-year basis, mostly due to the growth in flexible network credential usage and our customers' continued geographic expansion on our platform. The growth slowed versus Q3 because we lapped the Klarna migration in Europe, which was executed in October of 2024. Expense management growth accelerated several points from last quarter, with growth exceeding 40%. This performance is driven by customers continuing to acquire new end users as their platforms gain share while utilizing our uniquely configurable capabilities. On-demand delivery growth also accelerated and continues to be in the double digits, but below the company's overall growth rate. Q4 net revenue was $172 million, growing 27% year-over-year. Block net revenue concentration was 44% in Q4, in line with last quarter. Q4 gross profit was about $120 million. The 22% year-over-year growth was approximately 4 points higher than we expected, primarily driven by 2 factors. First, TPV growth outpaced expectations across all use cases. Second, the addition of TransactPay added 4 percentage points to gross profit growth, which was 1 percentage point higher than expected. TransactPay contribution can fluctuate from quarter-to-quarter based on implementation fees and several projects were delivered in Q4 ahead of expectations. As a reminder, we revised our accounting policy for estimating and recognizing card network incentives starting in Q2 of 2025. As a result, Q4 gross profit growth had a headwind of 5 percentage points due to the difference in methodologies for the year-over-year comparison. Our gross profit take rate was 11 basis points, a little bit more than 0.5 basis point lower than last quarter, largely due to the impact of the major renewal completed in the quarter. Q4 adjusted operating expenses was $89 million, growing 4% year-over-year, in line with our expectations. We continue to remain focused on operating efficiency and are realizing the benefit from the increased scale of our platform. Q4 adjusted EBITDA was $31 million, a margin of 18% based on net revenue. Adjusted EBITDA margin based on gross profit was 26% and illustrates the profitability potential of our business. Our Q4 GAAP net loss was just over $1 million, which included $7 million of interest income. We ended the quarter with approximately $770 million in cash and short-term investments. Our share repurchase activity remains ongoing as we continue to believe the current valuation does not fairly represent the company's value or the market opportunity ahead of us. In Q4, we repurchased 20.2 million shares at an average price of $4.76. For the full year 2025, we repurchased 84.8 million shares at an average price of $4.59, which is a reduction of nearly 17% of the outstanding shares as of 2024 year-end. As of December 31, we had over $91 million remaining on our latest buyback authorization. Let me briefly summarize our full year 2025 performance, which was a fantastic year. TPV growth was 31%, adding over $90 billion of volume versus 2024. Net revenue grew 23% and gross profit grew 24% on a year-over-year basis, fueled by strong TPV growth, the delay of 2 major contract renewals and a significant increase in adoption of our value-added services starting in Q1. Gross profit growth was 8 percentage points higher than the high end of our expectations at the start of the year, primarily for 3 reasons. First, we had spoken all year about 2 major renewals that we expected to be completed mid-2025. Both renewals were delayed as we engaged in discussions around additional opportunities as part of the contracts, which added 2 percentage points to gross profit growth. Ultimately, one was completed in Q4, while the other is shifting to 2026. Second, we had nonrecurring benefits in each quarter, except for Q4, which added approximately 1.5 percentage points of growth. The remaining upside was driven by stronger TPV growth across multiple use cases, particularly lending, including BNPL. Adjusted EBITDA was $110 million for the year, which is more than 3.5x what we delivered in 2024. Our strong gross profit growth was paired with adjusted operating expense growth of only 1.5% due to success in our efficiency initiatives, increased platform economies of scale and investment delays in the first half of the year following the CEO transition in Q1. Now let's transition to our expectations for 2026. I will start with our full year 2026 expectations before sharing more details on the quarterly cadence. Let's start with TPV. In 2026, we expect the growth to moderate into the high 20s due to increasingly tough comps, particularly in the second half. This growth is expected to add $100 billion in TPV. We expect 2026 gross profit growth between 10% to 12% with an implied gross profit dollar range of $481 million to $490 million. There are 2 specific factors that uniquely pressure gross profit growth by 7 percentage points combined with their impact amplified by their timing. First, the 2 large renewals we have been discussing for the last year are expected to reduce our growth by 4 percentage points in 2026. The delay in these renewals benefited 2025, but increases the grow-over impact in 2026. As a reminder, these are the last 2 renewals where we expect to meaningfully adjust our pricing coming out of the fintech boom a few years ago. Second, based on the level of Block TPV exiting 2025, we expect them to shift to the next pricing tier in their contract, reducing growth by 3 percentage points. At the time of the block contract renewal in the second half of 2023, we agreed on the next level of scale for their business on our platform. To incentivize their growth, we included a price tier that steps down 2x the size of other pricing tiers in the contract. Block just reached that tier in December 2025, and we expect them to remain there for all of 2026, creating an unfavorable year-over-year comparison. Those 2 factors weigh on 2026 growth because of their timing, but we don't expect them to be impactful to our growth trajectory in 2027 and beyond. In addition, Cash App's diversification of new issuance is expected to lower our 2026 gross profit growth by approximately 1.5 to 2 percentage points. This assumes we gradually lose new issuance in the first half of the year and receive no new issuance in the second half. Before moving on, let's take a step back. At the start of 2025, we expected gross profit growth to be 14% to 16% in 2025 and in the low 20s for 2026. We outperformed in 2025 with 24% gross profit growth. The key factors driving the outperformance in 2025, such as the TPV growth momentum and the timing of the renewals, onetime items and the jump in adoption of our value-based -- value-added services in Q1 2025 are some of the same reasons that gross profit growth in 2026 is lower. However, the 2-year expected CAGR from 2024 to 2026 of 17% to 18% and the absolute dollar amount of 2026 gross profit have not changed. Coupled with the strong execution of our efficiency efforts and platform scale, we now expect both adjusted EBITDA and GAAP net income to be ahead of our projections for the start of last year -- from the start of last year. Full year 2026 net revenue growth is expected to be 12% to 14%. 2026 adjusted operating expenses are expected to grow in the mid- to high-single digits. We remain disciplined with our investments in growth initiatives and continue to benefit from efficiency and platform scale. Investment delays that materially lowered our first half of 2025 expenses are lifting our growth rate in 2026. Therefore, we expect full year 2026 adjusted EBITDA to grow in the mid-20s, more than twice our gross profit growth rate. As a result, we now expect to generate a modest amount of GAAP net income in 2026, likely around $10 million. Let's now turn to the quarterly cadence. TPV growth is expected to be in the low 30s in the first half of 2026, then moderating and exiting Q4 2026 in the healthy mid-20s as we grow over strong year-over-year comps. For Q1, we expect gross profit to grow between 17% to 19%, representing approximately a 4 percentage point step down from Q4 2025. This is primarily driven by a 3 percentage point headwind from Block price tiering and a 1 percentage point lower contribution to growth from TransactPay. Q2 gross profit growth is expected to be approximately 3 percentage points lower than Q1, mostly due to the second major renewal going into effect. We expect gross profit growth in the second half of the year to moderate to the high single digits, slowing from Q2, primarily driven by 4 factors: Lapping the inclusion of TransactPay will lower growth by 3 points. Lapping the strong growth in our lending, including BNPL use cases in the second half of 2025 will lower growth by approximately 1 point. Incentive timing is benefiting the first half and decreasing second half growth by approximately 1 point. The assumed loss of Cash App new issuance will reduce growth by 2 to 3 points. Q1 net revenue growth is expected to be 17% to 19%. Q2 net revenue is expected to be approximately 3 percentage points lower than Q1, in line with gross profit and in the low double digits for the second half of the year. Our 2026 investments are primarily focused on technology and product innovation as well as increasing our go-to-market and compliance resources to meet growing demand. Q1 adjusted operating expenses are expected to grow in the low double digits before jumping into the high teens in Q2 due to a tough comparison from investment delayed in 2025. As you may recall, the Q2 2025 expenses were uncharacteristically low. Growth in the second half is expected to be in the low to mid-single digits as we grow over the inclusion of TransactPay and more typical investment levels. Q1 adjusted EBITDA growth is expected to be 45% to 50%. We expect Q2 growth to be approximately 10% to 15% due to the tough expense comparison, while the second half should grow 20% to 25%. Lastly, we expect to be approximately GAAP breakeven in the first 2 quarters of the year and then start generating net income in the second half. In conclusion, our achievements in 2025 have built a strong foundation for continued success in 2026 and beyond. Our ability to migrate customers in both credit and debit and flip several portfolios helps accelerate time to value and translates to gross profit and bottom line growth. We have great traction in Europe, and we are already seeing increased demand and bookings with the acquisition of TransactPay and our ability to now offer a full end-to-end solution in Europe. Not only does this increase our pipeline and opportunities for growth, but we expect this to help bolster our gross profit take rate. Lastly, the traction we are seeing with value-added services not only helps create stickier customer relationships, but also helps gross profit. As we head into 2026, we are excited about the momentum of our business. Our deep expertise and ability to enable innovation at scale are paying off and these growth areas, coupled with our scale, position us to achieve GAAP net income profitability in 2026, a pivotal milestone that launches our next phase of value creation. I will now turn it back over to the operator for questions. Operator: [Operator Instructions] our first question is from Timothy Chiodo with UBS. Timothy Chiodo: Patti, great to be on the call with you. The Cash App topic, so I apologize for just getting right at this, but I did notice a little bit of a change there. So gradual on the new issuance in first half and then turning off the new issuance in the second half. I was wondering if there was any update you could provide investors around maybe the longer-term messaging around to what extent this diversification might persist? Would it persist into 2027, '28, '29? Will there be some kind of a limit to it where we hit a happy medium across the various providers that Cash App is using? And then related to that, I also noticed that you mentioned the tiering that Block is hitting this year, and you expect them to be at that tier for the entirety of the year, which somewhat implies that the second half lack of new issuance isn't overly material to 2026 numbers as you've previously guided. But the follow-up question that if that lack of new issuance starts to catch up to the Block volumes next year, does Block potentially slip back into a lower tier and therefore, your take rate with Block returns to norms rather than the headwind that it sees this year? Mike Milotich: Thanks, Tim. I'll try to cover -- you covered a lot of ground there. So let me kind of dive in. So yes, we have changed our assumptions a little bit on the impact of them diversifying their new issuance. Up until this point, and we're almost at the end of February, we see no discernible impact on the new issuance we're receiving. So at this point, it's minimal to really not being able to see anything. And so -- but we do expect them to be getting started. So what we've assumed now is that through the first half, it will sort of gradually -- we'll be receiving less new issuance. But then by the second half, we will no longer see any new issuance. In terms of the second part of your question in terms of the longer-term impact of diversification. As you know, Tim, in payments, a lot of people have -- well, they see multiple providers, but they tend to have a primary provider, right, where you have 80% to 90% of your volume and then you have a second provider who you really use for diversification purposes. And how that plays out for us with Cash App remains to be seen, but we feel really good about our ability to remain their primary partner. One, we feel that our platform capabilities are quite differentiated in terms of what we can do and what we can provide them. The second thing is that our relationship goes very deep and goes back very many years. And so we have -- we're accustomed to working together and have just a very deep relationship and are quite responsive in terms of how we work with them. And then finally, and maybe most importantly, the -- there's a lot of very engaged users that remain on our platform and would be quite disruptive for them to look to maybe move those off of our platform. And when you look at the contribution to the spend from those users, we feel that's really going to benefit us to remain the primary partner. And we continue to also provide option value. So it'd be very easy for them to consider international expansion, for example, or move into more of a traditional credit card product on our platform that may be more difficult to do with the partners they're using for diversification purposes. So we -- it remains to be seen, Tim, but we feel good that we have a very strong relationship, and we continue to add value, and we'll just have to continue to assess it as we get through this year. In terms of your second question on the tiering, so yes, you're correct. I mean if you go back to the renewal 3 years ago, what really we set out to do at that time was with -- together with Cash App and the negotiation, we said, okay, when does the business hit sort of like the next level of scale, like truly get to even a completely different level of operating. And at that point, we should maybe have a little bit of a price adjustment to reflect that new kind of level of scale they've achieved. And they just moved into that in December. And so -- but the tiers are relatively big. So just given the size of the business, and there are more than 10 tiers in the contract, but the blocks of volume are relatively good size. So there's a lot of room in there for them to remain in that tier. But you're right that even with losing some new issuance, we still expect some growth and they would remain in that tier for the year. And if they were really to start diversifying away more significantly, then that's the benefit of price tiering. It would start to get more expensive, and that would be the cost of diversification on their side. So we'll see how it plays out, but we feel good about our relationship and our ability to continue to add value there. Operator: Our next question is from Connor Allen with JPMorgan. Connor Allen: Patti, congrats on your role. Maybe a question for you, if you don't mind. Can you talk a little bit more about your choice to join Marqeta? I'm curious, considering your background across cards and payments, just what stood out for you in your diligence? What makes you the most excited here? Patti Kangwankij: Yes. No. Well, thanks, Connor, and it's nice to meet you. So I've been in and around payments for over a decade now across -- as you mentioned, across acquiring, issuing and banking and across a bigger kind of like within a bank as well as kind of Stripe and then subsequently at Roofstock, which I was trying to implement embedded finance within that. So I've known about Marqeta for years, and I was at Stripe when they launched issuing and really recognized Marqeta as a category creator at that time. So when the call came in, I spent some time with Mike and the Board and the leadership team, and I got very excited about the combination of kind of the team I'd be working with, but also kind of listened to a lot of their track record in 2025 and kind of the growth they've been seeing and kind of all the opportunities ahead. And then also the customers that they worked with DoorDash, Klarna, Uber, Block, having worked with these customers across different organizations, they don't take these decisions lightly and really, it kind of validated what's been built here. And so -- and as you know, payment platforms are kind of complex and hard to build. So -- and they require deep relationships. And so I just felt like my experience was especially relevant at a time and place where there was just a lot of growth and investment ahead. And so I'm excited to be here today to join the team. Connor Allen: Great. Appreciate that and share the same view on our side. Maybe one for you, Mike, if you don't mind. I wanted to ask a little bit about competition. There's been some discussion in the market about newer entrants competing for larger deals. I mean we gather that it's not necessarily happening where Marqeta typically participates. But I'm just curious at a high level, if you've seen any shift in the competitive environment, new faces and RFPs, et cetera? Mike Milotich: We are not seeing any significant change in the competitive environment. I would say it's relatively stable. I think what is more changing from our perspective is a few years ago, in the fintech boom times, right, there were a lot more deals, a lot more uncertainty where you were making bets on customers and whether they would succeed. That was a big part of the sort of process. Not only are you bidding for the business, but you're also trying to assess the chances of success. What's now happening is there are fewer deals, but they're much more substantial in size. And there are customers who already have a user base and a brand. And so from our perspective, have a much higher likelihood of success because they're really just looking to insert a card value proposition into an existing user base. And so the fact that then there are more established companies has changed a little bit the dynamics of who we see because usually, they're only going to include players who have more substantial scale, and that's a much bigger part of the decision-making process because they're confident they're going to reach several billions of volume or maybe even to double-digit billions of volume annually and who has the platforms and the experience and track record of delivering on that kind of scale. And so it's mostly stable, but there is a slight change as we move upmarket, so to speak. Operator: Our next question is from Darrin Peller with Wolfe Research. Darrin Peller: Patti, nice to connect and congrats also, to connect again. I guess when I just think about the underlying trajectory of the business, Mike, I know we talked about 7 points of impact to your gross profit outlook really associated with the items that you discussed on Block as well as the renewals. And I guess there's another few points on pricing, which I think is a little bit more newer to us just given the scale of Cash App. And so the combination, you're really still growing your Cash App by somewhere over 20% when you look at your guide and those variables. A, is that how you want us to think about the trajectory? And, b, if that's true, maybe remind us of what you're seeing as the top drivers. I mean you're talking about flips in the business, where are you seeing the most strength? Just rank the top few strengths you're seeing driving that 20% plus algorithm. Mike Milotich: Sure. Yes. Thanks, Darrin. And you're exactly right. There is the 2 impacts we called out that are 7 points, the renewals and the Cash App tiering, those to us are very timing specific. It's almost like they're almost perfectly lining up to hit our 2026 growth in a way if they were -- the timing was a little different, these impacts would be spread it out and our growth wouldn't be kind of where it is in the lower double digits. So those 2 things, we really think are very specific to timing and therefore, go away. And then we have a little bit of 1.5 to 2 points of the Cash App diversification. And then just in general, the TPV growth is just moderating, right? The second half, our growth has really been particularly impressive given our scale, and we don't -- we still expect it to be strong, but not growing over 30%. And so you put all those things together, and there's sort of 7 points of timing and call it, 4 to 5 points of other factors. I think when we look at what is -- what's exciting to us, I would put it in a few different areas. Like there's 4 things where we really have strong momentum. Like the TPV growth, again, is very impressive, particularly Buy Now, Pay Later, and we just think that's going to be a growing use case that's just going to continue to get wider adoption. Europe is not only fast growing, but we've added capabilities there with TPL just in the last 6 months. Our value-added services, the size of that business doubled in 2025, and that tends to be a stickier, higher-margin business. And then the new cohorts, the new customers we're bringing on, as I mentioned, 40 new logos, 14 of our 15 top customers have done a new program with us in the last 2 years. So our existing customers are expanding with us. And so those are all the things that make us feel confident of just the underlying momentum in the business. And then when you combine that with some things that are more on the come, a pipeline that's full of enterprise customers who are looking to move into card payments and looking for established scale players. We have innovative new products that we're experimenting with and we're hoping we'll get some traction in 2026. And then, of course, credit is something that we've been taking our time with making sure we do it the right way, but we're going to start leaning in more and more in kind of the next year or 2. So those are all things that I consider to be on the come. And then the last piece I would just highlight is the beneficial mix as Europe and value-added services, which are growing much faster than the company, and we think will continue to do so, as they gain share of gross profit, it will lift the overall gross profit growth rate. So that's why I mentioned in my comments, I think the growth we're seeing in 2026 is very specific. We think that actually the underlying components and structural elements of the business are actually quite strong and on a good trajectory, and we feel good about the path that the business is on. Darrin Peller: Yes. Okay. Guys, just one quick follow-up would be to double check that you reviewed the portfolio and don't feel any risk of incremental renewals, large renewals. I just want to see if there's anything else we should just keep an eye out for, for the year that would impact maybe guidance even into the next year. It may be too early to know the end of the year, but anything you see where your transparency is? Patti Kangwankij: Yes. I think it's probably a little too early to be talking about 2027. But I think, yes, we do, on a normal way basis, have renewals all the time. But really, these 2 that we're highlighting here are the 2 remaining from coming out of the fintech boom. But I think you'll always see as we're kind of growing with these users and you would see -- you would naturally see some pricing step down as they grow with us, but that's, again, to incentivize them to grow with us. Mike Milotich: Yes, I would say, we have pretty good visibility. And I think we -- as Patti just said, I mean, we've included sort of the BAU things that we would expect to see. So we feel pretty good that we've incorporated everything. Patti Kangwankij: Yes. Operator: Our next question is from Sanjay Sakhrani with KBW. Sanjay Sakhrani: Welcome, Patti. I'm just curious, I know, Mike, you talked a little bit about the expectations for moderating TPV growth in the second half. Obviously, you're growing over some difficult comparisons. But curious, is that sort of conservative given you have the pipeline and then obviously, BNPL is doing well? Or do you feel like there will be a little bit of a scale back in terms of issuance there? Mike Milotich: Yes. It's a great question, Sanjay. I think the performance we're seeing in this past quarter, I would say, is just -- is pretty remarkable. Like when you -- just to step back a minute, our lending and Buy Now, Pay Later use case is growing almost 60%, and that's despite us lapping the conversion with Klarna that started -- that we executed in October of '24. So we're growing almost 60% with like a tougher comp. Expense management is growing over 40%. That's a pretty big use case for us. So that's the first time it's grown over 40% in 3 years. Financial services, which is by far our largest use case, is growing over 30% in Q4, and it hasn't -- that's the first time that's happened in 2025 on, again, a very large base. And even on-demand delivery, which for the last couple of years has been more of a single-digit grower, is now double digits the last couple of quarters and accelerated. So we really are seeing incredible performance. We've tried to be reasonable. As we said, we think in the first half, our growth will remain over 30% as there's just so much momentum. But as we get to the second half, it's just we have really tough comps. And if some of these things can keep rolling at that level, obviously, that would be great for the business, but that's not what we've assumed for now. We think those tougher comps will slow the growth a little bit, but growing in kind of the mid- to high 20s on a base of almost $400 billion of volume, we feel pretty good about the growth of the business. Sanjay Sakhrani: And then just a follow-up on value-added services and Europe. I guess when we think about the growth there, can you just maybe help us dimensionalize sort of what you're expecting this year versus last year? And what maybe the broader product rollouts are that could actually maybe accelerate the growth there as well? Mike Milotich: Sure. So let me start in Europe. Europe is now I don't know, about a little bit -- maybe a little bit more than mid-teens of our TPV. And this is the first quarter in a couple of years that it hasn't grown over 100% just as that base is growing. As I mentioned in my comments, 2025 is 8x the size of 2022 in terms of our business in Europe. So we have a lot of momentum there, and that was all done with a relatively limited value proposition of just our -- we have great processing. And of course, we're quite proud of our processing capabilities, but we didn't really have many other services around that capability. And with the TransactPay acquisition, we now have a much more robust value proposition to sell and market. And so we are expecting Europe to still meaningfully outpace the overall company, both in terms of TPV growth as well as gross profit growth. So we expect that to be a pretty major contributor. In terms of value-added services, we continue to add new capabilities and more and more customers are looking for scaled solutions. I would say the growth, we think, will moderate a little bit in 2026 only because we really had a pretty significant step-up in 2025. We had a few of our largest customers adopt offerings from us, which then meant that the gross profit doubled in 2025 versus 2024. And although we think it will keep growing at a nice clip faster than the company, it's not going to keep up that pace. But we do think it will be a meaningful contributor. And typically, those are higher-margin products and they increase the stickiness with the customer as well. So we're quite excited about kind of our expanding portfolio and the increased penetration that we have with those products into our customer base. Operator: Our next question is from Craig Maurer with FT Partners. Craig Maurer: Welcome, Patti. I wanted to put a finer point on Tim's question earlier considering a lot of what I had has already been asked and answered. Visa was pointed on their call to call out the win in cash for Cash App. They've been putting a lot of emphasis on their Issuer Services business. So I was wondering what you're seeing differently from them? Are they increasing their presence in the market in terms of what they're doing for fintechs? How is this changing how you're looking at the market, if at all? Mike Milotich: Sure. Obviously, I don't know exactly. I can only see what Visa says publicly. But in my view, what Visa DPS particularly offers is, obviously, they have a lot of credibility to say they can handle your business at scale with great reliability, right? So when you've gotten to that size, then they become an option, and they're used to managing customers of that size. And just because of the size of their platform and how long it's been around, my perception would be they're probably just not quite as flexible. So catching customers earlier in their life cycle is probably not kind of prime hunting ground for them. But talking to or talking to prospects who have already achieved a lot of scale and have a lot of maturity, that's a good match for them and where their strengths, it sort of plays into their strength, so to speak. So I would say I think they have made platform improvements. I have no doubt they have more capabilities than they did a few years ago. But I think there's still a relatively small group of people that kind of have that kind of scale that they would target. I think we would still have big advantages, I think, in terms of nimbleness and thinking of more creative solutions to solve very specific problems for customers as opposed to something that's pretty stable processing and they know what they want. And so we may see them a little bit more a couple of years ago, we didn't really see them much. And I think as we go after bigger and bigger business, then that would be maybe a competitor we'll see a little more frequently. But we still feel very good that our value proposition is that we also can support a lot of scale and have programs that are quite big, but we still have a lot of agility and a lot of unique capability and configurability that allows people to do things that are a little bit different and differentiate themselves in the market, and that's really what sets Marqeta apart. Operator: Our next question is from James Faucette with Morgan Stanley. Michael Infante: This is Michael Infante on for James. Mike, I'd be curious to hear how you're thinking about the mix shift we're seeing in BNPL broadly with respect to a larger percentage of volume originating on Flex Credential cards as well as within digital wallet. So as that mix shift continues, what's the impact on your unit economics, if at all? Mike Milotich: Yes. I would say not a big impact on our unit economics. I would say they're relatively similar. I would say, typically, more of a consumer value proposition is going to have a little bit of a premium versus a single-use virtual card. But at least at this point, the people -- the first movers with the flexible credentials are quite large players who have a lot of volume. So I would say the economics are relatively similar. But the big difference is the lack of -- I don't know, maybe I'll just say stickiness that comes when you shift from a virtual credential to a consumer credential. That's going to be a much more sticky relationship, harder to diversify because there isn't a lot of precedent for people trying to run a single program on multiple stacks. And versus in virtual card, every transaction that occurs, you could send it to a different platform if you wanted. And so I think the real benefit to us in addition to just having leadership in this space and being able to handle consumer value propositions, which some of our competitors don't have a lot of experience with. But in that shift to something that's more consumer-oriented, it also becomes a little bit of a stickier business for us and a little bit more challenging for customers to diversify, which should be good for us given our early leadership here. Michael Infante: That's helpful, Mike. And then maybe just secondly, any quick update you can share just on the nature of your conversations with some of the larger financial institutions and in the areas that they're diligent in? Mike Milotich: Sure. I would say we -- our conversations with financial institutions, I would say, are more frequent and substantive now than they were a couple of years ago. I think there's a real shift in the market towards people really looking at modernization. I think the -- as we've said before, the fintech winners have been crowned and they're becoming big businesses. And so what I think maybe a few years ago, maybe people saw as growing the pie are now starting to become real competitive threats and real competition for the banks for not only deposits, but also spending, both consumer and commercial. And so I think there's a broader recognition that to successfully compete with some of those value propositions, you're probably going to need a little bit more sophisticated technology and more ability to be flexible and configurable. And so we are having more and more conversations. We still believe, though, that these are inherently cautious organizations, and we're likely to break in still with a specific use case. And I would say the 2 probably at the top of the list from our standpoint would be something in commercial, just given our success and proven track record at supporting many of the disruptors and then also in some sort of lending Buy Now, Pay Later use case where a lot of banks also are interested in providing that kind of capability on their cards. And we clearly, again, have established leadership and track record and ability again to support big scale. So we're working to get our foot in the door. And I would say the conversations, there's a lot more promising than maybe a couple of years ago where it felt like it was still pretty far off. Operator: Our next question is from [ Andrew Schmidt ] with Citi. Unknown Analyst: Welcome, Patti. So I just wanted to dig in on the implementation time frames and partner bank diversification. Maybe you could just give us an update there. And then for the enterprise customers for embedded use cases, if you could just elaborate on what implementation time frame looks like for that type of customer, that would be helpful. Mike Milotich: Sure. So in terms of new bank partnerships, we added a new -- well, a new U.S. bank and then a U.K. bank last year. We're in the process of implementing another U.S. bank and a European bank in the first half of this year. So we are diversifying our bank offering. In Europe, it's purely because now we have the capability to sort of offer a combined value proposition. So those are new. And in the U.S., the diversification more is targeting 2 things. Either it's a use case, not all of the banks are comfortable with all the types of use cases that we can serve. So some of it is about -- as our business diversifies, we might need different partners. And then some of it is also capability, right? Some of these banks have been investing and have some unique capabilities that we think pairs well with ours to meet a customer need. So that's why we're expanding our bank kind of portfolio. In terms of the implementation time, I think we've gotten to a good place there, where we have solidified the processes. We've taken out a lot of the challenges we had with things moving slower. And I think also we've done a good job educating customers about the impact of changes that they make along the way and what that can do to time line. So I think we've stabilized that pretty well. But maybe what you're signaling in the second part of your question is true. As we're moving into more enterprise deals, they do move a little slower, right, than our previous customer base who -- a lot of times, our value proposition or the card they were doing with us was critical to their business and what they're trying to achieve. So they're ready and willing to move very fast, and it's one of the top priorities going on at the entire company. When you're dealing with a much larger organization, there's just more complex decision hierarchy, there -- even just the kind of scrutiny that we get in terms of tech and security and all these things, it just takes a little more time. So I would say, in general, they're moving a little slower. But as I mentioned earlier, we're okay with that trade-off because we feel the probability of success is much higher and their ability to hit the ground running is also much higher given they're going to be bringing this value proposition into an already established very large user base as opposed to a few years ago when it was a new fintech, they were going to be building it mostly from scratch. Unknown Analyst: Got it. I appreciate those comments. And then maybe we could just chat on value-add services for a moment. It's good to see the uptake on the enhanced risk product. Can you just talk about just expectations for attach there, monetization, that would be helpful. And then obviously, a more important point of all this is just the pipeline for other value-add services. It's important to keep iterating these. Maybe you can talk about kind of what you're sort of targeting, what types of areas in the future. Mike Milotich: Sure. I think the biggest change that we're seeing is that, again, with the fintech customer base, they almost prided themselves in piecing together kind of best-in-class solutions, right? They viewed it as their modern tech stack, they're going to take best-in-breed and pull it together to something that's quite unique in the market and best-in-class. And so they were a little bit willing to choose a la carte. I think as we're talking to more and more enterprise customers, if you've got a good solution, they're happy to take it from you. They don't want to connect to 5 different people to push -- pull together their value proposition. So if you have a good offering to make and you're going to be the process and program manager, they are -- I see what we see are more inclined to take that solution from you just to make their life a little bit easier and to be able to move faster. And so that's really the difference that we're seeing in the uptake. And in terms of the areas, I think our strength is clearly in tokenization. We have capabilities there that we think are very differentiated. And then in our risk services. Those are the 2 areas. Everyone in issuing is going to want -- is going to have to do some level of fraud management and fraud monitoring, right? And so those are the 2 areas that I think we're going to continue to invest and make sure we remain strong. But we are moving into new areas related to rewards, our white label app, more kind of data and analytics services as we continue to get bigger and have more scale. And so those are some of the things that are relatively small now, but we think have a lot of potential to be larger in the future. Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you again for your participation.
Operator: Thank you for standing by, and welcome to the FINEOS Corporation Holdings Plc Full-Year Results Briefing. [Operator Instructions] I would now like to hand the conference over to Mr. Michael Kelly, CEO. Please go ahead. Michael Kelly: Hello, and welcome, everybody, to the FINEOS' FY '25 Results Presentation. I'm joined here today by our CFO, Ian Lynagh. And between the 2 of us, we're going to give you an overview of the results presentation that we published on the ASX this morning. So, I'll kick on to Slide 2. And this slide really covers off our playbook, mission, vision and purpose. And it's what gives FINEOS the real clarity and alignment within our team in terms of our focus on life accident and health and in terms of our vision, in terms of protecting people from illness, injury and loss and making that accessible to everybody. And of course, our purpose, working with our carriers and employers to help them care for the people that they serve through the delivery of superior insurance technology. And more and more, we see in the life accident and health world, a move from just being insurance and protection and giving payments to more caring in terms of return to work and helping people recover from illness, but also prevention and trying to keep people healthy before the kind of the situation where they need protection even eventuates. So, we're seeing more and more of that trend of prevention in the marketplace from our own carriers. And indeed, we see that as a very positive situation. I'll turn now to Slide 3 and cover the highlights for FINEOS last year. So, subscription revenues have grown to EUR 75.6 million, and that's up 8.2% on FY '24, representing 54.6% of our total revenues. And our ARR coming into this year was EUR 78.3 million at the 31st of December, up 10% from the EUR 71.2 million on FY '24. And then total revenues was up 3.9% on FY '24, total revenue of EUR 138.4 million. But on a constant currency basis, it's up 6.3%, and it would have been EUR 141.7 million if we had reported on a constant currency basis. So, slightly above the midpoint of our guidance that we gave last year. And the gross profit of EUR 105 million. Again, gross margin, 76.2%, which is really healthy. Gross profit is up 5% on FY '24, and the gross margin is up from 75.4%. And really, we're operating at a really good gross margin level, and that's part of our target for next year, which I'll talk about at the end. Our EBITDA was EUR 30.4 million, and the EBITDA margin was 21.9%, again, representing a healthy jump of 50% up on FY '24 and the margin being up 15.2% in FY '24. And our cash position at the end of the year was EUR 27.8 million, and that was up again by over EUR 8 million. Positive free cash flow within that was EUR 6.4 million. And obviously, there's no debt in this company as well. On the EUR 6.4 million, there was an extra cash received from share options that had converted as well towards the end of last year. So, added to the EUR 6.4 million is the EUR 1.6 million in the note at the end of the page there, which brings us up to the EUR 27.8 million. Turning to the next slide, Slide 4. We're looking at the operational highlights. And of course, the free cash flow is something we promised the market in November 2024 when Ian and I came down and we did a roadshow. And we're delighted we've come through with that and a very healthy number it is, too. But we're also thrilled that we've hit a net profit as well. And we didn't promise that to the market in FY '25, but we're certainly very, very pleased with it. And really, what we're seeing in our business is we're demonstrating higher margins from the cost efficiencies and the growth that we're generating out of the business. So overall, very pleasing in terms of this business coming back into free cash flow and profitability as we move forward. Last year, we won 4 new name North American carriers, licensing the FINEOS AdminSuite for claims and Absence. I just want to stop here and point out that we have rebranded our products because as of 25.4 release of FINEOS, we actually released the full AdminSuite to all of our clients in the cloud. However, most of them are still only using claims and Absence. So, what we decided to do to make sure that our clients fully understood that underneath the water, you might say, even though they're using claims and Absence today, but underneath the covers, they have the full access to the full AdminSuite when they license the product, which is phenomenal really to be able to give them that opportunity with no pre-integrated or no big SI project that they can just switch on extra components of FINEOS. And their users and their IT people are seeing a multiplier effect out of that. So, we won 4 new names last year, albeit a little bit later than we would have liked. And certainly, the conservative nature of our industry and just what has been going on in the markets over the last 12 months or so, the deals were a little bit slower coming in. But again, we're delighted. And every deal we win is a very long-term contract. So, we signed our clients up for 5 years, and we end up doing business into the long term and actually expanding and cross-selling across the customer base. So, there's really growing evidence that FINEOS is market-leading in this employee benefit space. Group voluntary and Absence is our real key focus, and that's why we're winning the deals. Two existing U.S. clients also contracted to upgrade from the on-premise version, the old version of FINEOS Claims to the FINEOS AdminSuite for claims. And one of those was a top 10 group carrier. So again, a sizable deal for us in terms of the uplift and the momentum on both of those is going really, really well. So again, we're feeling our carriers really leaning in and increasing their commitments to us. And really, what we're doing is replacing very old infrastructure that they have with a modern core platform, cloud native, embedded AI and so on. And I'll talk about that as I go through. So, we're seeing that significant momentum growing into a lot of activity in terms of go-lives, upgrades and so on within our services and our product groups. And all of these things are moving much quicker for us as we drive the efficiency in our business and really deliver the benefits of that to our clients. So, we've also built the AI -- sorry, the SI partnerships. And we're increasingly seeing the SIs now coming up to speed and actually delivering customer success with us -- with our customers. So, you probably will see some publicity over the next few months where we'll try and bring our SIs into some of the [ PEA that ] audit we do on customer success with FINEOS and so on. So, that's going nicely. And again, we're looking to our SIs in North America now to give us the introductions and help us build relationships with our SI partners in other markets. So again, we've built that kind of confidence with our SIs, and they're very happy to lean in and work with us. You would have seen recently an announcement with PwC, where we work with EY, we work with Capgemini, and we work with other SIs as well, Deloitte's and so on. So, all of this is coming to fruition in terms of us moving more to becoming a product company. And then we're gaining a real multiplier effect from embedding AI in our product. So, we have a kind of a head start on anyone in terms of people in the industry doing proof-of-concepts and stuff like that with AI. We have a real system with a huge amount of data underneath it, which is kept real time. It's all compliant, it's secure. And therefore, when we put our agents to work on FINEOS, we're seeing the results very quickly. And our carriers don't have to spend any additional time and money looking around the corners or trying to build stuff themselves. So more and more, we feel that the embedded AI in FINEOS is going to help carriers kind of relax and go forward. But we are in a very regulated environment, and our carriers are quite concerned about AI as well in terms of not automating decisions and stuff that need to be taken by humans. And maybe causing any issues with the regulators or indeed with their clients. So, AI is definitely something that we are seeing as a huge asset for FINEOS, and we're going to basically grow the business off the back of that as we keep embedding. On the next slide, Slide 5, this one covers our people. And I won't go through this one too much, except to say that high numbers of utilization, very high employee retention rates and we're down to 1,009 people at the moment. And 16.9% of those are actually contracted in. So, we've kept flex in our workforce, which means we can cut back on our workforce or grow our workforce depending on how things go and so on. But we are in a very strong position with contractors and with partners who supply resources to us, and they've skilled up on FINEOS and are very dedicated to us. So, a good story there in terms of the people side. Slide 6 is the revenue breakdown. And again, no surprise really that North America is our biggest region. And indeed, 80% of our revenues are coming out of North America. We've had some nice wins at the end of the year, and our customers are increasingly doing more business with us in that region. However, we are very keen to look at other regions and to start the work around building ourselves up in the other regions. The EMEA region, we did lose a legacy customer, a smallish customer by U.S. standards, but still we lost that. So the revenue went down in the U.K. But again, that customer was non-strategic to us. They've been around for a long, long time with us. And services revenues, we're not aiming for a big growth in our services revenues. We're really aiming for the growth on the product side. So, they've kind of leveled off as well. So, that kind of concludes my section for the moment. I'm going to hand over to Ian, who will cover off the financial slides with you. Thank you. Ian Lynagh: Thank you, Michael, and welcome, everybody, to this full-year briefing of FINEOS. And what I'll do now is give you a bit more insight into the financial performance of the company. So if we move now to Page 8. With respect to the revenues, obviously, as Michael just said that our focus is very much on that product revenue subscription fees, growing that ARR. We've signaled to the market repeatedly over the last few years that we see services remaining reasonably flat. Didn't expect to be quite as flat as that EUR 62.2 million versus EUR 62.2 million. So, spot on the same. But the subscription revenue, what's driving that is those 4 new customers. We signed up 2 of them at the end of Q2. We signed up another 2 at the end of Q4. So, they didn't fully contribute to the growth, but they were a factor in terms of that growth. The 2 migrations, one of them was quite significant, as Michael said as well. That's going from on-premise to the cloud. And then we had the traditional upsell with customers, including indexation of pricing and some have moved up a level in terms of what they're consuming for us. So, we're very pleased with that growth in the subscription fee, which in turn gave us an ARR growth of 10%, which is very, very positive. As stated before, the initial license fee, you can see a year-on-year reduction in that. Initial license fees pertain singularly to our on-premise customers. So any time they require new licenses, then we charge a fee for that. But we have less and less of them. We have less and less activity there. So, you can see consequently the revenue going down. And as we move forward into FY '26, I don't see it getting any higher than that. I see it going down, snitching again, but it is progressively declining. So, that's the revenue side. Cost of sales, we've seen an improvement in that compared to FY '24. We did have some software costs increases. And we also had to make a provision for an estimated software spend. And just to explain what that actually means because that actually also impacted the NPAT number we gave within this presentation. And that's with our main platform provider, Amazon AWS. Back in December 2022, we signed a 5-year contract with them with a committed spend. Any of you that are familiar with the way they contract, the more you commit to, the bigger the discount you get. We made a commitment. But due to the efficiencies we've been driving over the last few years, we're spending less than that was originally anticipated. So, that's meant that when you look at the full duration of the spend, it means we're probably going to spend less in the 5 years than we originally estimated. So, we had to make a provision for that in the accounts, but the plan is we go back and renegotiate with Amazon AWS for another 5 years, sometime during the course of this year. But to comply with accounting practices, we just had to put that provision in. The full size of that provision is about EUR 2.7 million. And of that EUR 1.0 million is allocated against cost of sales. So really, that's what's impacted the cost being there. In terms of overall operating expense, our initiatives around driving efficiency, around labor being in lower-cost regions, looking at better automation through the application of AI as well as just getting economies of scale has seen the ongoing OpEx going down. So, you see a good positive outcome there year-on-year in terms of approximately EUR 5 million reduction, 6.3% reduction. And then EBITDA, very positive move on that, over EUR 10 million increase compared to the previous year. That brings us up to a margin of 21.9%. And as you know, we've committed to the market to achieve 25% in FY '27. So, we're well on track. If you go back to FY '23, that was around 9% last year, 15.2%, 21.9%. So, you can see we're really focused on trying to drive those numbers through. And as Michael said, ultimately, we've got a net profit after tax of EUR 1 million. We never signaled that to the market. We weren't targeting that directly. We were very, very focused on achieving the positive free cash flow. But needless to say, we're delighted with that and we only see that trajectory improving year-on-year. And that's a massive turnaround, obviously, from a EUR 5.8 million loss that we incurred in FY '24. Moving on to the next page. Another commitment that we made was to keep on increasing that annual subscription fee. You can see the CAGR now is at 12.3%. As I mentioned in the previous slide, we've increased our ARR by 10%. So, that's the key figure that we're looking at as well. And then, of course, we've got the big increase in terms of subscription fees. So, we increased the percentage of that. And to achieve the targets that we're talking about in '27 and '29, we need to keep on increasing that percentage. So again, we're extremely focused on that, whereas we're not as focused on revenue in terms of generating that. That's not because we don't want service revenues. It's because we want to work with the Sis. They will invoice directly. The more sophisticated we make the product, the less services are required for some of our very large customers who are going to generate even larger recurring revenue for us moving forward. They want to take on self-service capabilities rather than get the service from FINEOS for obvious reasons in terms of their cost management. So, all those things impact service fees, but for the right reasons. We had signaled back in November 2024, that kind of trajectory, that kind of scissor movement where revenues will go up and costs go down, and we flagged that we're going to see that crossing over. We're almost a touching point there in FY '24, but you can see the crossover in FY '25. And obviously, that's why we're able to relay a profit as well as a positive free cash flow situation. So, we expect to see that margin continue to increase. That trajectory is not going the opposite direction moving forward. It's going to keep going that direction. If we move on then to Slide 10, just looking at the OpEx, which you saw the headline, up above. If you look at all the line items there, excluding research and development, which I'll come back to in a moment, we can see a decrease in costs. Common theme is with respect to the headcount and where they are actually located. But there are some other elements there like on the G&A, we also see FX movement. There was a share option charge increasing it or decreasing the cost, but that was offset by an increase in software costs. And we had to get more software in the organization to run our business. And some restructuring costs that we incurred is another theme you've seen there, which is one of the consequences of moving some of the workforce to lower-cost regions. Our overall headcount year-on-year is reasonably consistent. It's just the work is getting done in different regions without degrading the quality of the work. That's been really important to us. So as we've said before, we've had overlap of resources to make sure handovers work pretty well. We have a high demand environment where customers expect an excellent service and excellent outcome. So, we've got to make sure we've been managing that very tightly, and we have. With respect to R&D, we've seen some higher software costs, which includes the provision. So, there's another EUR 0.8 million put against that in terms of that provision that I mentioned earlier on. Slightly lower capitalized R&D costs but only slightly lower, and we had restructuring costs. Most of the restructuring that we did in FY '25 related to our R&D teams. We have resources in higher cost regions, and we decided that we would look to relocate those roles into lower-cost regions. So consequently, the restructuring cost was also higher with respect to the R&D team. We, as always, reserve the right, and we will signal if events dictate that more investment is required in R&D. We are a technology company, then we will look to do that. But still in all, if we move on to the next slide, what you can see is that R&D as a proportion, and this excludes overhead costs. This is people costs. R&D as a percentage of the overall revenue is continuing to improve. We've signaled that in FY '27, we're looking to get that down to 30%. So, you can see the trajectory there is moving in the right direction. Last year was at 37% -- sorry, the year before last at 37%. And last year was at 34.7%. So, we see that continuing to improve and getting more into industry norms in terms of that percentage. We're still going to invest heavily in R&D. And as we've signaled before, we will continue to invest in the AdminSuite. There's always capabilities customers will require, particularly those customers that need to move off legacy may require some extra functionality to enable the FINEOS system to take on that business, which makes perfect sense for us in order to increase the annuity fee. But progressively, we're investing more in AI and digital capabilities and capabilities to enable better self-service and better onboarding onto our product set. So it's really exciting that we can actually switch that focus to allow customers to move on to our product set in a more effective way. So, I don't expect to decrease the amount of money we're spending in R&D, but certainly as a percentage of revenue will decrease as we've signaled and as has been evidenced here. We move on now to Slide 12. I don't want to dwell too much into the balance sheet. The next slide is going to talk about cash, and I'll talk about cash there. So, development expenditure, that's really the capitalized R&D spend is a little bit ahead of amortization. We expect that to balance out maybe in '27. It will be similar figures. There's a bit of catch-up taking place there. We've seen a slight increase as well in trade accruals, but that's really due to an increase in payroll, share option exercise gains, et cetera, and a little increase in deferred revenue, again, because of the fact that we're signing up subscription fees. So, we have some new name customers signed up towards the end of last year. So, they will be put in there along with other provisions. And there is a provision, EUR 2.4 million in relation to the software spend -- apologies, so EUR 2.7 million earlier on, I believe, it's EUR 2.4 million. So, moving on now to Slide 13. So the net cash generated from operation activities, a vast improvement there, EUR 38.6 million versus EUR 18.8 million due to the increased revenue, decreased costs. We're very, very positive. We've got some additional cash in from share options that are exercised at EUR 1.6 million. As Michael mentioned earlier on, if you add in the EUR 6.4 million, which is the positive free cash flow, we generated EUR 1.6 million on top gives you that EUR 8 million difference at the bottom line there, which is a 40.4% increase. So, we're very proud of that. We knew that, that was very important to the market. Very important to us, too. Prior to IPO, we were always a profitable company. It's very much in our DNA. We made the [Technical Difficulty] recurring revenues and getting back to a positive cash generative situation, which we plan to continue to improve on as the years go by. So, that's it from me. I'll pass back to Michael for the outlook and key priorities. Michael Kelly: Thank you, Ian. Okay. I'm going to switch over to Slide 15. And I'd just like to mention that we won a very prestigious award for our embedded AI in the FINEOS AdminSuite from the Irish Technology Association. This was an award, which was competed for by all comers. We have a lot of multinationals from the states, particularly in Ireland. It's a hub for EMEA, but also local companies. And we were really called out for the kind of thoughtful way we put the AI into the system and how it was agentic and assisted in terms of driving better outcomes and presenting users of FINEOS with an opportunity to really improve the -- I suppose, taking the CRUD out of the back office and driving more positive outcomes for customers and clients. So, we were delighted with that. That was towards the end of last year. In terms of key priorities, though, going forward, we're still very focused on Guardian who are ahead of schedule in terms of their own goals that they set for themselves. We'll continue to drive new business onto the system and make sure that everything goes on this year. But also, we're starting the migration from the middle of the year. And we're excited about that because we're in the business of legacy system retirement, and they have a multi-billion book that's going to come across to FINEOS. We're going to continue to scale and upsell large customers and again, with a focus on benefit realization of the product they have, but also looking at legacy migration and taking their legacy systems out, which with some of these carriers, the scale that they're at is a multi-year project. We've been at it now for 3 or 4 years, but we've still got some time to go. But as they grow their business on FINEOS, our fees increase. And I want to point that out in this call out, our fees are not based on per seat SaaS-type fees. Our fees are basically aligned with our customer success. So as our customers grow their business, we grow our business. And we're very much in partnership -- in a long-term relationship with these clients. We'll also increase new business sales. And our partners are starting to work with us now to identify opportunities where they think our product can fit. And so we're going to see more activities with the Sis. And as we progressively embed AI in the FINEOS platform, we're going to continue to see improved platform performance. And already, the feedback is very positive. And let's put it this way, we're in very early days in this. We're in a regulated environment, highly regulated with very conservative insurance carriers. They take years to make decisions. So, you can imagine when you bring something like this in that they're very, very keen to make sure that it's all compliant and it fits with the regulator. So again, this is going to take a few years over -- in the coming couple of years, but we're getting our customers more comfortable with this. And we have a couple of big customer meetings in March in Sydney and also in New York, and we'll be talking about this a lot more with them. We're going to continue to drive internal efficiencies through the usage of AI. And I think every company is adopting AI and taking advantage of that across the whole spectrum of the business. And then pipeline in terms of deal conversions of FINEOS Absence for employer. We have actually done a lot of work in this area in terms of making the product deployable with employers in a much simplified fashion. But we're also talking to some of our carriers about partnership around this and how we could work together because our primary goal is actually the carrier market and to make Absence a real part of the employee benefits industry. Turning to the last -- or the second last slide, I think it's Slide 17. So, revenue guidance for this year, we're going to put it out there at between EUR 147 million and EUR 152 million. And this is really supported by the strong pipeline we have in, albeit, as I said last year, we saw that pipeline. It just took a long time to get negotiations and decisions and so on done, but we're very optimistic about this year. We continue the strategy of driving operational efficiency within FINEOS, and we're going to continue to drive up that positive cash flow and profitability in the business for this year. We're also continuing to drive sales in North America, but we're actually looking to expand our product outside of our target market of North America. And we do see some opportunities to do that, particularly with the multinationals in different countries. And so we're looking at that as well at the moment. And the pipeline remains solid and very much FINEOS being the market leader in employee benefits in North America today. So switching to my last slide, Slide 18, Subscription fees. Ian and I put these guidelines out in 2024, and we're still confident we'll make these guidelines in terms of subscription fees moving up to 65% of the total revenues in FY '27 and 75% or thereabouts in 2029. R&D investment will decrease, as Ian said earlier, to 30% next year and 25% in 2029. And again, as Ian said, we reserve the right to expand that R&D if we see new opportunities. But that's the way things are trending in terms of percentage of total revenue for R&D spend. And then the gross margins and EBITDA. They're almost where we said they'd be back in 2024. They're almost there now, as you can see from last year's results, but we'll drive them on and we'll get them up to 80% for gross margin and 40% for the EBITDA. So, making FINEOS a very strong company in terms of future growth. I just lastly would like to point out the Slide 19. We have an investor roadshow, which we'll be hosting on the 25th in Sydney, and all the details are made available. And if you contact Howard or Jacque and Automic, you can get all the details. We're looking forward to it. So, that's it for me and from Ian. I think a positive year, looking forward with a very positive attitude in terms of the future. And we're open for questions now. Thank you. Operator: [Operator Instructions] Your first question comes from Tim Lawson with Macquarie. Tim Lawson: I just had one main question. With your subscription mix targets for FY '27, I won't worry about the '29 ones, just the FY '27 ones. If you look -- if you think about the sort of revenue guidance you've provided today for 2026, and I appreciate that's an overall revenue guidance rather than calling out any sort of subscription versus services number. It just seems to imply a very significant acceleration in the calendar year of '27 to hit those targets. Can you just sort of help us unpack your assumptions behind, both that near term and then the sort of medium-term number, please? Michael Kelly: Yes, Tim. Thanks for the question. I'll start off, Ian, on that one. But the way that this business is set up is, as I said, long-term contracts with milestone events in terms of things we have to do with customers as they grow their business with us. Our focus through '26 and '27 with our existing clients is going to be very much on migration and growth of their use of our product, plus the cross-selling as well. So, we've kind of got locked in revenues and foresight of events in the next year that should give us a nice lift in terms of our subscription fees into 2027. And we've got a nice pipeline as well, some of which we didn't convert in 2025, but we will convert in 2026 and beyond. So, we're feeling comfortable about the 65% revenue -- sorry, percentage next year. Do you want to add to that, Ian? Ian Lynagh: Yes. So what you're seeing there in terms of what we report in '25 was a higher contribution, almost a 5% increase year-on-year in terms of the recurring fee, subscription fee. So, we're looking to see steps continue to move as we move forward. We've also seen that the subscription fee percentage as a proportion of revenue has increased, and we expect that percentage to increase in terms of year-on-year growth on the annuity to grow in '26 as we move into '27. So, we definitely see '26 as being a stepping stone to achieve. It's not all going to be laid on '27, Tim. Secondly, to Michael's point there, we still see a significant contribution of that growth coming from existing customers. And as they upsell and a lot of them are getting very significantly through their programs of reducing legacy systems and some are really starting to get very engaged around and pushing us hard. Michael mentioned earlier on about Guardian starting halfway through the year. We have other very large customers out there pushing hard to make that happen. So, we see that as a big factor in terms of that growth. So, we do have line of sight. And the way we put our plans together is very much on a bottom-up basis as we look at the individual transactions for customers. So, we recognize that it is a significant growth, but we do have line of sight of it. It's not 100% guaranteed, but it's still there to be had. Tim Lawson: So, maybe just on that, are you sort of seeing across there for the '26 year an acceleration throughout the quarters? So, are we thinking that sort of -- obviously consistent with what you've given as guidance for in FY '26. But is the fourth quarter, for example, or second half even materially accelerated versus the first half? Ian Lynagh: I think the caveat you'd have to put in there is that these customers move at their own pace. We certainly have plans in place to close business in the first half of this year and we believe that will materialize. But it could get pushed out a bit. But firstly, if it closes in the first half, then that gives a lift to the second half automatically. And so if that second half, obviously, will get an automatic lift, and we do see more business closing in the second half as well. So, we see both halves contributing, but the first half contribution helps the second half. So just by mathematical calculation, the second half will have a better revenue outcome than the first half. Tim Lawson: Yes. I was trying to think that -- I'm trying to think about that split effectively. If you were to annualize the second half, are we going to be effectively materially -- well, I expect we will be, but like significantly above on an annualized second half, what your guidance range is because that's sort of the math that need to work to hit those '27 targets unless you have an acceleration in '27 itself, of course. Ian Lynagh: You want to? Michael Kelly: Yes. We do have both. I mean, we have big bumps in '27 as well, which we've already got locked in, in terms of our revenue forecast with existing customers, but we have them coming in, in the second half of '26 as well. And as Ian says, pipeline, we're closing now. So, you'll see more deals coming through in the first half as well. So, we're coming off the back of a good ARR, Tim. 10% growth on that, and we still see deals closing in the next couple of quarters. And then we see the second half getting even better in terms of the upside. But next year is going to be another opportunity for growth with existing customers. So, we don't make these forecasts, willy-nilly, based on a lot of new name wins and potential and so on. We're very much looking at our customer base. We're growing large chunks of business on FINEOS with these large carriers. So, we're able to be a bit more comfortable in terms of predicting. These guys are like oil tankers. They take their time to move. But once they get going, it's very hard to turn them. So you know where they're going. And we can predict that in terms of our numbers with that growth that we're seeing on our platform. Operator: Your next question comes from Richard Harrisberg with Canaccord Genuity. Richard Harrisberg: Michael and Ian, congratulations on really great result. I also just had a question on the revenue outlook. I was just curious you kind of touched on it before as sort of an existing growth in your customer, their own sort of book, which drives your revenue going forward as opposed to being on a per seat basis. How much of that sort of future revenue growth is underwritten by that, which I guess is a question on how much you expect general insurance premiums to increase on average based on historic? Michael Kelly: Yes. Well, we're expecting -- Richard, nice to talk to you again. Thanks for your question. But we're expecting by the volume of business that's coming across in terms of migrations we're working on, we're expecting their usage of the system to grow and their volume on FINEOS as in their premiums on FINEOS to grow. And that basically gives us a clip of the ticket every time we can crash through a milestone tier in our pricing. And so that's where -- that's what gives us that kind of stickiness and that long-term confidence. These are 5-year contracts with these carriers. So, they're really locked in. And to be honest, they put us under enormous pressure to get the product into shape so that they can get this migration done because their legacy systems are creaking and they know they're not going to carry them into the next world that we have with AI and so on. So, that's kind of given us the confidence in terms of the growth that we can see coming on the platform. And we also see cross-sell and up-sell to existing clients. And again, we have some of the biggest customers in the segment, the main we have in the States. So again, we'll see upside there. They won't buy a cross product until they feel that they're over the line on the products that they've already got as in it's already done and they've got everything over and so on. So, that's one thing that we've kind of been sitting patiently to kind of wait for. There's no point in selling or sending sales guys into them when they're in deep throes of migrating to FINEOS. So that kind of gives us, again, the confidence that, like, we're all positive in terms of the focus. So the system is a large system of record, very complex in terms of what it does, highly regulated. And these carriers need to get off the junk that they have in the back office, large 50-year-old mainframes wrapped up with a lot of technical debt. So, they're as motivated as we are to get them over to the cloud-native FINEOS platform. Richard Harrisberg: Yes. That makes a lot of sense. I guess maybe a different way to ask the question, just purely based on growth in volume of existing customers and excluding cross-sell, up-sell or sort of new customers signed. Is that growth what sort of gives you the confidence to get to the EUR 147 million on the lower end of the guidance? And then on top of that, the reason for the range in the guidance is the strong pipeline you guys are seeing there? Michael Kelly: Probably a good way to look at it. I'll let you answer that, Ian. But that's -- we've been conservative how we've managed expectations in the market. We don't want to upset anybody. So, we've left a range. And we are confident in terms of the projections and stuff like that, that we do put out. Do you want to answer that in any kind of other way, Ian? Ian Lynagh: Yes. I think, Richard, and Michael also, a large proportion of our confidence is derived from existing customers scaling on the system. 40%, 50%, our confidence will be around that singular element of those. So more we stay focused on those customers, the more we deliver the capabilities. We want more, we collaborate with them and Sis to help them migrate across, that provides a very strong bedrock for us in terms of how we move forward. In terms of the range, I mean, there are other factors in the range as well. We both alluded to the fact that opportunities can slide up and down. We see that. They don't often go away, by the way, but they do slide up and down in terms of time line. So, that's one of the reasons why we'll be giving a range. And another reason would be that when we look at the opportunity profile, sometimes you've got a small deal, a medium-sized deal or a large deal. And the size of those deals in terms of the revenue they can generate for FINEOS can be quite significantly different. So, that's another reason why you give a variance in terms of the range. I think the other area as well, the last one I'll mention is just around the services fees. We work on a particular deal with an SI, and they want to take on a much more expansive role. And we're looking at some of our SIs like PwC, for example, whose skill sets progressively growing so they can take on more work. So on particular day, they may take on more work than we had originally anticipated or may have performed last year. And then that can have an impact in terms of service revenues we obtain. But as long as that's contributing towards the growth in subscription revenues, we can work with that. So, all those factors contribute towards that range. Richard Harrisberg: Really appreciate all the extra color there. Maybe I'll just ask one more question. It was great seeing the operating leverage come through and especially with some of the cost efficiencies you've been putting through the business. Just looking forward to FY '26, do you think those costs are sort of expected to remain around these levels? Are there sort of further areas you can squeeze out there? Or what's the right way to think about that? Ian Lynagh: Yes. I'll take that one, Michael. I think for your planning, as you're doing you are modeling yourself and the rest of the analysts on the call and investors, I think you should be thinking about our cost overall, perhaps increasing in the range of 3% to 4%. I referred to Amazon AWS there earlier on in the conversation about driving efficiencies. We've driven a lot of those efficiencies through the product set at this point in time. So as we expand our footprint with customers, we will see the cost of sales going up with respect to that infrastructure bit. So, that's happening. Unfortunately, like everybody else, we're suffering from third parties increasing costs, and we've also put through some salary reviews. But I would plan out about 3% or 4% increase in overall costs. But internally, we're still looking at ways of driving even that down. But from a planning point of view, I'd look at it that way. Richard Harrisberg: Congrats again on an inflection year in the business. Ian Lynagh: Thank you. Michael Kelly: Thanks, Richard. Operator: Your next question comes from Siraj Ahmed with Citi. Siraj Ahmed: Can you hear me okay? Michael Kelly: Yes. Siraj Ahmed: Just first thing, maybe I missed this. Just the split between subscription and services that you're expecting next year. Can you just help us with that? I think the revenue guide that is. Yes. Michael Kelly: We guided next year. We set a set of targets for next year where revenues would -- or sorry, subscription revenues, product revenues would be 65% of the overall total revenue, meaning services is 35%. Siraj Ahmed: Sorry. For FY '26? Michael Kelly: For 2027. Siraj Ahmed: Yes. Sorry, I got that, Michael. Michael, just trying to think about next year, right? Can you give a split maybe just on the revenue next year, just between subscription and services? Ian Lynagh: I think if I could just jump in there, Michael. I think as I said, deal size can vary a bit. But I guess if you look back in time, we were approximately 50% in terms of subscription fee 2 years ago, last year, 55%. We've got to get to 65% by FY '27. You can kind of make your own assumptions of what we're trying to target as a stepping stone to get there. But we do see some variability about it. We've given guidance on total revenue, but we have to see what happens. But this year it has to be a stepping stone to getting towards FY '27. Siraj Ahmed: Okay. The reason I'm asking is maybe just a follow-up to that is, so ARR of EUR 78.3 million, right, at the end of the period. I'm guessing it's a bit lower now because of FX? Or is it still the case at EUR 78.3 million? Michael Kelly: Everything is lower, including the service. So, everything gets hit by FX. So it's kind of -- the percentages will still hold. But yes, revenues are going to go up and down in real terms based on FX. Siraj Ahmed: Sure. Yes. So the reason I'm asking is, let's say, EUR 78.3 million, it seems like -- so let's say, services is flat to slightly up. You sort of need to get closer to maybe EUR 85 million of subscription revenue, especially the step-up that you're talking about for next year, right? When you're starting at EUR 78 million, that will be like a 108% sort of conversion, right, above this versus EUR 105 million this year. So is that just confidence in the pipeline, Michael, like you mentioned that your pipeline is quite strong and you think quite a few of them will close? Or is it like you mentioned, quite a few customers are going live and so the volumes just organically picked up? Just keen to understand that conversion, right, from ARR to subscription revenue? Michael Kelly: I think it's mostly growth that we see on the platform in terms of volumes, which will lead to subscription thresholds increasing. That combined with some cross-sell is mainly what we see in front of us in existing clients, Siraj. And then, obviously, the new business, new names are kind of gravy on top as they start converting. Now, we're hoping to see a better kind of uptick in terms of new name as well, particularly in our domain market in North America. I think I have flagged in the past that because of some disastrous attempts for core system replacement from some competitive core systems vendors who came in from other domains, carriers really got burned and it kind of caused a lot of angst in the market and made it difficult for carriers to come back out again and to look to do a major migration of their legacy. We have just taken the brunt of that in terms of the backlash of that is that the carriers will freeze because they have to reset. A lot of them have gone back to legacy, those carriers that had those disasters. But they've learned a lot. And I think the next time they come out, they'll recognize a vendor that is purpose-built and ready to go for them. And of course, as we keep doing things with our own carriers, we're proving out the product and proving out that our carriers are getting good efficiencies on the product. So again, it's a slow-moving industry. It's a very big product. These projects are big. But it's very sticky on long term. And that's what's, I suppose, something that we want to call out as well. It moves slow, but it's very solid. Siraj Ahmed: Got it. Last one, just on gross margin. So, you're just clarifying, so the full year gross margin this year had a negative impact from the provision, right, which sort of unwinds next to next year from sounds of it. So, you're already at 76%. FY '27, you've retained 75%. I think that should be going up, isn't it? Just trying to understand whether there's something I'm missing. Ian Lynagh: We would expect a slight improvement in gross margin as we go through this year. But we don't want to go ahead of the target we set for FY '27, albeit we've already achieved it. But keeping around about that mark for this year, we expect it to be reasonably consistent with last year with perhaps a slight improvement. Operator: Your next question comes from Jules Cooper with Shaw and Partners. Jules Cooper: Michael and Ian, can you hear me? Michael Kelly: Yes. Jules Cooper: Yes. Absolutely. And great set of results and outlook. Michael, I just wanted to sort of dive into -- I think it was on Slide 16, the third tick mark there where you talk about a focus on legacy system migration. Now, there's a huge opportunity in the industry and particularly with your customers given their scale and I suppose, the small footprint today that you've got with those customers and you're making good progress. As we think about AI, we are hearing from lots of different vendors and customers that the improvements in velocity that they're seeing in real time, and it's only going to get faster. Do you think that -- and I know when you're migrating a book, it's not just about the speed of coding, there is all the people side and the project, the change management, et cetera. But do you sort of see this as a real moment where you can kind of unlock those legacy books that before the cost and the risk was just prohibitive and held people back? Just like to sort of get your perspective on that, if I could. Michael Kelly: Thanks, Jules. Yes, I do actually see it as a kind of moment of truth for these carriers. For years and years, they've been reluctant to take those big back-end systems out of those systems of record that they have. They've gone through the dot-com. You would have imagined they would have wanted to reinvent them so that they were totally Internet-type systems, but they did. They built front end. They've gone through the mobile phone and they built front-ends to do mobile phone transactions and a lot of technical debt around the old back-end systems. They've gone through the cloud, and some of them have been innovative enough to port from a mainframe to a cloud, Amazon or Microsoft or whatever they've done, but it's still the same old system. But the AI revolution is basically going to really threaten those old systems because AI performs on data and having the data in a real-time full kind of rich sense is what AI will drive on. And also having a modern system with the kind of workflow automation that you would expect in a modern system really gives AI all the tools that it needs to perform and move on. So in the future, we see the back office. The work in back offices is being reduced, all that paperwork and all that kind of CRUD work, I call it, that's going to be reduced. And it's going to give people more time to focus on the customer and more time to do other services as well for the clients. So over the next few years, I think AI is really going to change the industry. And being a system of record that we have today as a modern cloud-native one, we're ready to go in terms of the AI operating with us. We are in a regulated environment. So, we'll have to go as quickly or as slowly as the regulators allow, and also what's comfortable with carriers because a lot of them are very ethical and they don't want to mess around with customers. We will not be making decisions about claims. We will not be turning down underwriting opportunities for any kind of bias reasons, and we have to be really careful in terms of how things are done in FINEOS. But we're at one with our carriers. They all feel the same about this, but they all do realize that the world doesn't stand still. And those old workhorse systems that they've had for many years, they've basically gone past their sell-by date. Those who still think that they should keep them and work away are probably the ones that will disappear in the future. And the others that modernize and go forward will actually have the revenues and margins and so on to be able to buy those books of business. That's my own opinion. So, I just want to put that out there for how we think about it. Jules Cooper: Yes, you painted a really good picture there of like the pressure to migrate and move those books of business. I guess my question was more in the mechanics of it, the things that have held them back in the past as they've gone through all these. Michael Kelly: Okay. Yes. Okay. Jules Cooper: Is it sort of making it easier -- mission at the Board table to go, hey, we could actually do this now half the cost and half the time and with half the risk? Michael Kelly: So like, we've introduced AI, believe it or not, on to the back-end books of business that they've got and our SIs are working on that. So, we're using LLMs to basically stack and get ready, employers that are going to come across to FINEOS. We've been building out then on our side, tooling to allow us to validate and read all of that in. So, that will make it easier as well. And we've been working with one of our big carriers on that in partnership, and that is going well as I said of tooling. And then last but not least, you know we put a lot of money into building out the full suite and making it easy to onboard on FINEOS. In other words, that it's purpose-built and the carriers can easily put business over. We don't have a huge big project at the front end of every time we do an implementation, which is what those carriers who failed ended up doing, having to build software with those vendors. We don't have that. So, we're making it much easier to onboard, upgrade, integrate and migrate to FINEOS. And so the time has never been more crucial for them to move, but it's also never been easier in terms of our industry and the domain we focus on. Is that what you were getting at? Jules Cooper: Yes. Operator: Your next question comes from Sinclair Currie with MA Moelis Australia. Sinclair Currie: Just had a question about competition. There's been some movements among your competitors in the M&A. And I was interested maybe a little bit of an overview of how you see the competitive environment? And if you could throw in any statistics maybe around what percentage of RFPs you've been successful with or something like that, just to bring that to light, that would be really interesting? Michael Kelly: Yes. Sinclair, so look, the competitive environment within the employee benefit space, core system space in North America, it's kind of leveled off a little bit in terms of the core vendors. You would have seen that Vitech was acquired by Majesco. Majesco has kind of multiple systems that they've acquired over the last several years, addressing multiple variants of the markets across all kinds of insurance, P&C and whatever. Now, they've added pensions and the pensions book to their business. Vitech has largely retreated from the group benefits market over the past 12, 18 months, and they're really trying to focus in on their pensions portfolio. So that Vitech-Majesco, it was a merger rather than an acquisition, I believe, and purely kind of at an agreement between the 2 PEs that own the business that they would basically collaborate. So, obviously, that takes one competitor out when it comes to RFPs and stuff like that. But we kind of had seen Vitech. We hadn't seen them in the market much anyway. And look, 5 years ago, they would have been the guys that were up and coming because they're coming out of the pension space and into the group space with their admin system. And 5 years ago, we weren't ready because we were still hard at it with New York Life. Going back to what I said to Jules. We migrated 6 books of business of old systems for New York Life to give them a EUR 4.5 billion book of business on FINEOS AdminSuite for group, and they went live with voluntary this year as well. And Absence, that's the only carrier that has fully eliminated legacy. And they're still standing on the FINEOS platform for the last 3 years running that full book. So when we talk to clients, they kind of get great confidence out of that, and they do talk to New York Life and so on. And they're a good reference for us and a good client, a good partner. But a lot of our other carriers on the big end of the market are also in the process of migrating as well, and they're moving quickly to the platform. So, I think momentum is building. So, we're not seeing other vendors really of any significance in the space. But again, we see tool set P&C type vendors coming in and out, and it depends. It depends on the carrier. Some carriers get very excited about really techy, techy type software. But that tends then to be a big project build, and that's going to cost them a lot of money. So it's not necessarily the best outcome for them. But look, everybody makes their own decisions. So, I think as a mainstream vendor now in our space, we've got market dominance in terms of a big slug of the employee benefits market, and we're kind of getting the new business deals as well, and we're getting the cross-sells. But we still see several years ahead of us, where we really want to become that true partner to the employee benefits industry, that big system of record. But like with the AI and everything else, that's going to change into much more intelligent and automated system for the future carriers that will go on our system. Operator: We have a follow-up question from Siraj Ahmed with Citi. Siraj Ahmed: Michael, somewhat linked, can you just touch on the whole agentic stuff that you're trying to demo in late March? How do you think about pricing this thing? What's the economic model you're thinking in terms of this? Michael Kelly: Sorry, Siraj, I'm finding it very difficult to hear you. Can you hear that, Ian? If you can, go ahead and answer. Ian Lynagh: Is it the economic model with regards to AI? Is that what you're referring to, Siraj? Siraj Ahmed: Yes. For the agentic features you're rolling out, right, in late March that you're announcing? Ian Lynagh: Yes. I mean, the pricing model we have for our core systems is based on the premium income that the customer has with regards to all core systems, except for apps, which is based on the number of employees. The agentic AI is bolt-on add-ons that's sitting on top. Depending on the nature of it, it will be charged in different ways. So for example, we do document intelligence, document summarization. So the pricing of that is based on the number of documents that you summarize and provide intelligence on. So it's going to be very much on a unit price volume based. We're giving customers the opportunity as well to decide, for example, if I just talk about documents, which documents types, which cases they apply it against? So, they can pull the lever up and down and decide to what extent they want to use that AI capability. We also have case intelligence. So, that will be the agentic AI capability. And again, they can decide the cases or the customers, et cetera. But it will be very much on a volume basis with the opportunity for the customer to pull the lever up and down, a bit like a fuel pump. You decide how much petrol you want to put in the tank. Michael Kelly: Yes. And just to mention, we're not putting a huge emphasis on charging for all of this because we see it as built in. It's embedded. And so we really will -- it's a usage-based model, but we're not looking -- like we have to keep modernizing and keep bringing a more compelling platform to our clients. They're already paying us good money for the product. So, we'll continue to look at opportunity to increase our fees by cross-selling and up-selling. But we'll also deliver modernization within the platform continuously. And that goes back to the R&D program that we have. So, we're looking to really make a sticky long-term relationship with these carriers so that they feel very comfortable with us as partners. Operator: There are no further questions at this time. I'll now hand back to Mr. Kelly for closing remarks. Michael Kelly: Thank you, Darcy, and thanks, Ian, as well for today and coming along on this call. I appreciate all the questions from the analysts and indeed, everybody who's listened to us today. As I said, we're feeling pretty positive about this year and next year. And we're looking forward to the opportunity to present to everybody at the end of March. I think it's the 24th of March. So, please come along to that if you can, and there will be a few of us down there at the time. So it's an opportunity to meet some of us as well in-person. Thanks, Darcy. Ian Lynagh: Thank you. Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Glanbia 2025 Full Year Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I will now hand over to Liam Hennigan, Group Secretary and Head of Investor Relations, to open the presentation. Please go ahead. Liam Hennigan: Thank you. Good morning, and welcome to the Glanbia Full Year 2025 Results Call. During today's call, the directors may make forward-looking statements. These statements have been made by the directors in good faith based on the information available to them up to the time of their approval of the full year 2025 results. Due to the inherent uncertainties, including both economic and business risk factors underlying such forward-looking information, actual results may differ materially from those expressed or implied by these forward-looking statements. The directors undertake no obligation to update any forward-looking information made on today's call, whether as a result of new information, future events or otherwise. I'm now handing the call over to Hugh McGuire, CEO of Glanbia plc. Hugh McGuire: Thank you, Liam. Good morning, everybody, and welcome to the Glanbia Full Year 2025 Results Call and Presentation. I'm joined on today's call by Mark Garvey. I will provide an overview of our performance for the year, and Mark will then cover the financials and outlook. At the end of the call, we will be happy to take your questions. Overall, we delivered a robust performance in 2025 with like-for-like revenue and volume growth across all 3 segments, driven by strong consumer demand for our Better Nutrition brands and ingredients, with adjusted earnings per share of $1.3493. The group delivered pre-exceptional EBITDA of $499.1 million, representing a decrease of 9.4% and EBITDA margins of 12.6% in representing a decrease of 170 basis points on a constant currency basis. With margin expansion in Health & Nutrition, offset by our contraction in margin and performance attrition as a result of elevated whey input costs. We continued our strong track record of delivering returns to shareholders by raising the interim dividend by 10% and returning approximately EUR 197 million to shareholders via our share buyback programs. The Board has authorized a further EUR 100 million share buyback program, and we will commence an initial EUR 50 million tranche of this program today. As well as delivering a strong operational and financial performance, we continue to progress our strategic agenda and we made significant progress on our group-wide transformation program, with our new operating model implemented to simplify our business and bring greater focus on high-growth opportunities. We continue to make good progress on our portfolio with the sale of noncore brands completed during the year. We also acquired Sweetmix, a Brazil-based nutritional premix and Ingredient Solutions business within our Health & Nutrition division and agreed to acquire Scicore, a manufacturing facility in India, which provides in-market manufacturing for both Performance Nutrition and Health & Nutrition with the acquisition completing post year-end. We hosted our Capital Markets Day on the 19th of November in London, where we outlined the group's growth strategy for the next 3 years, focused on 5 key drivers and our financial ambition for the period 2026 to 2028 and our confidence in driving continued shareholder return. We are pleased with the positive response and interest from attendees and look forward to delivering on our medium-term ambitions. For Performance Nutrition, like-for-like revenue increased by 4.5%, excluding the impact of noncore brands, which is driven by our 2 priority growth brands, Optimum Nutrition and Isopure and was a combination of strong category growth increased distribution and innovation. The volume increase was driven by strong growth in the online and food drug mass channels as well as continued growth in international markets across both protein and energy categories, somewhat offset by lower revenues in the U.S. club and specialty channels. We implemented price increases in our international markets in quarter 2 and in the U.S. in quarter 4 to offset record whey inflation. During the year, we also implemented some tactical price reductions and higher-margin products in the energy category, which delivered a strong volume uplift. From a regional perspective, Performance Nutrition Americas which represented 63% of revenue was down 0.5% versus last year due to the aforementioned club channel headwinds. Excluding noncore brands, Performance Nutrition Americas revenue increased by 1.3%. We are pleased with the trajectory in our flagship brand, Optimum Nutrition, which showed a sequential improvement through the period, delivering double-digit like-for-like revenue growth in the second half of the year, but continued momentum in the protein powders and energy category. Our international business, which represents 37% of revenue, performed strongly, delivering like-for-like revenue growth of 8.8% or 10.5%, excluding the impact of noncore brands, driven by volume and pricing growth in the Optimum Nutrition brand, particularly in China, India, Oceania and the U.K. Growth was supported by our global supply chain footprint, enabling in-market supply and local innovation in key regions. EBITDA for the year declined by 23.2% with an EBITDA margin of 13%. The contraction in margin is entirely as a result of record whey input costs as previously disclosed, with an improvement in EBITDA margins in the second half of the year. In terms of brand performance, Optimum Nutrition, our largest brand at 75% Performance Nutrition revenue, excluding noncore brands, delivered like-for-like revenue growth of 6.4%, comprising volume growth of 5% and pricing growth of 1.4%. ON delivered double-digit like-for-like revenue growth in the second half of the year, led by a combination of strong velocities, distribution gains, lapping of a weaker comparative in the U.S. club channels and innovation. We continue to see strong momentum in the category with an acceleration of the growth of the protein powder category in the last 12 months. U.S. consumption grew by 3.4% in the last 52 weeks, with double-digit growth in the food drug mass channel, growing ahead of the category and continued strong growth in the online channel. In the last 13 weeks, U.S. consumption accelerated to 4.6%, and ON continues to be a top driver of retail dollar consumption growth for protein powder and creatine in measured channels in the U.S. We're also seeing strong consumption growth across many international regions, and we'll continue to increase our retail distribution with distribution gains for ON across retailers in Europe and Asia Pacific and double-digit growth in e-commerce channels in China. I'm pleased to see ON deliver double-digit growth in household penetration and TDP in the U.S., reflecting strong recruitment and retention. We have an uncompromising dedication to product quality and we are operating in high-growth categories with the most trusted brands in Sports Nutrition, driven by powerful consumer megatrends. From a marketing perspective, our focus continues to be on driving recruitment and conversion and broadening the brand's appeal through increased campaign reach and education. We just launched the Optimum Advantage campaign, a disruptive campaign rolling out globally where the concept involves elite athletes revealing one thing they never want to share, the marginal gains to give them their edge. The launch features McLaren Formula 1 star Lando Norris, Rugby International's Dan Sheehan from Ireland and Mark Smith from England and U.S. Women's NBA star Cameron Brink. Early results show that the optimal advantage athlete strategy is driving both scalable media efficiency and authentic cultural relevance across channels. The AI-powered coach Optimum went live in several markets during 2025, with results showing excellent engagement rates. The protein calculator has been going from strength to strength, help the consumer realize how Optimum Nutrition can help them fulfill their daily nutrition needs with trusted high-quality products. We've also seen strong growth being driven by online channels and the success of the quick-commerce channel in India. We have a world-class portfolio of high-quality products within the Optimum Nutrition brand, and we continue to focus on innovation, in particular by expanding our usage occasions. We launched a number of products during the year across our protein and energy offerings, including multiple creating offerings, whey collagen blends, protein RTD shakes and additional smaller pack sizes, including stick packs addressing affordability through opening price points. We're particularly pleased with the performance of ON creatine, which delivered strong growth globally as we continue to cement our #1 position in this fast-growing segment. Isopure, our premium high protein, low-carb brand grounded in purity continues to do well, delivering double-digit like-for-like revenue growth in the year. This brand allows us to target an incremental consumer from Optimum Nutrition with the consumer affluent and predominantly female that values high quality and great testing solutions that they can incorporate into their daily nutrition regime. During 2025, we rolled out more of What Matters campaign with strong engagement rates, reaching more than 20 million consumers through our digital channels, educating consumers on how to integrate Isopure into their daily routines with influencers such as celebrity, Tiffani Thiessen, sharing simple baking hacks, highlighting the mixability into things like sauces and soups. Our partnership with Top Bolly with Celebrity Rashmika and Mandana, has helped deliver a reach of over 50 million plus for the brand in India. We've been expanding our distribution of Isopure across food, drug, mass and online retailers, elevating display execution and shelf placement, targeting aisles outside of Performance Nutrition to capture a broader consumer set. I'm pleased to see continued good growth in our core brand metrics with double-digit growth in ACV, TDP and household penetration. Innovation continues to be a core focus across our portfolio, and we launched several products under the Isopure brand, including protein water, stick packs, colostrum and collagen peptides in the U.K. Moving to our second growth platform of Health & Nutrition, which comprises nutritional premix solutions and flavors and focuses on priority high-growth end-use markets of active lifestyle nutrition, functional beverages and vitamin mineral supplements. This segment delivered a strong performance of 2025, delivering like-for-like revenue growth of 6.8%. This was driven by a 7.4% increase in volume and a 0.6% decrease in price. Total revenue increased by 11.5% as a result of 6.5% increase from the acquisitions of Flavor Producers and Sweetmix, which were completed in April 2024 and August 2025, respectively. And the negative impact of the 53rd week in the prior year of 1.8%. We're pleased with the strong volume performance, which was driven by good growth across both premix and flavors, underpinned by strong demand across our end-use markets. We saw particularly good growth in Europe and Asia. Pricing was slightly negative due to certain pass-through pricing of customers. Health & Nutrition EBITDA was $115.8 million, up 16.7% constant currency. EBITDA margins were 18.4%, an increase of 80 basis points versus 2024 on a constant currency basis. Margin expansion was driven by the full year impact of Flavor Producers and strong volume growth from existing customers, somewhat offset by the impact of tariffs in the second half of the year. We have a strong global footprint in Health & Nutrition with a range of technologies and solutions, targeting functional nutrition in end-use markets across a broad range of customers. We have deep customer relationships and co-development capabilities to help our customers win in their markets. We hold the #2 global position in customized premix solutions and have a strong position in natural and organic flavor systems, operating in attractive end-use markets such as active nutrition, functional beverages and vitamins, minerals and supplements. We continue to invest in innovation, capacity and new capabilities to ensure we have the best solutions to meet the growing demand for functional taste and macro nutrient needs across a broad range of formats. During the year, we announced the acquisition of Sweetmix and Scicore. Sweetmix is a high-quality Brazil-based nutritional premix and ingredient solutions business, which will allow continued expansion in the Latin America region. Scicore is a fully operational manufacturing facility in India, which provides us with our own in-market manufacturing for both Performance Nutrition and Health & Nutrition. In terms of capacity, we're substantially expanding our spray drying capabilities in the U.S. which will enable us to capture a larger opportunity in powdered flavor applications. We have also approved plans to more than double our Asian nutritional premium capacity and are also expanding our capacity in Europe. Dairy Nutrition combines our U.S. cheese and dairy proteins portfolios. This platform consists of a highly integrated manufacturing footprint with a high supply and operational interdependency and is also the route to market for our joint venture partner supply of whey and cheese ingredients. This business underpins our scale, leadership position in dairy as a leading producer of whey protein isolate and American style cheddar cheese in the U.S. We also hold exciting positions in dairy bioactives with strong demand, particularly for colostrum, targeting gut health and immunity trends. In 2025, Dairy Nutrition delivered like-for-like revenue growth of 5% in the period, driven by a 4.2% increase in volume and a 0.8% increase in pricing. The increase in volume is across cheese and protein solutions and the price increase was driven by strong high-protein solutions category demand somewhat offset by negative dairy market pricing in the second half of the year. We're seeing sustained demand for high-quality whey and non-whey protein solutions, driven by global trends in Performance Nutrition and everyday wellness. Our expertise in protein chemistry and our unique assets, combined with the ability to deliver consistent functionality and nutritional density positions us as a partner of choice for customers seeking premium, science-led protein solutions. We saw good growth in existing and new customer wins in 2025. An example of this momentum includes our novel protein solutions such as the Oven Pro series, targeting high protein breakfast and other snacking usage occasions. These solutions exemplify pleasure with purpose, indulgent products with protein content that taste good, meeting end consumer demand for great taste without compromise. Turning to whey and whey volatility. We're one of the largest suppliers and the largest buyer of whey protein Isopure globally, and we have a clear ongoing strategy on whey procurement. As consumer demand for protein continues to grow, which is driving growth in our priority brands, we also continue to see whey pricing hit record levels, driven by this strong demand. We have a lot of experience across dairy complex, but there's currently no way to effectively hedge whey protein, but we have a robust program using all available levers to manage it. As you can imagine, there will always be a lag impact on margin as we implement consumer price increases and navigate this input volatility. We have now contracted supply into early quarter 4, providing certainty on our cost base for 2026, with prudent assumptions for the remainder of the year. New global supply of high-end whey of approximately 15% to 20% has started to come on stream and is expected to expand across 2026. We continue to engage with our suppliers for longer-term supply investment. And as mentioned previously, we're also investing in our own WPI capacity within our joint ventures, which will come on stream in early 2027. We continue to take decisive action to mitigate the impact as much as possible, and we're very thoughtful on this to ensure we do it in a measured way to maintain revenue growth and protect share. In 2025, we increased prices in international markets in quarter 2 and in the U.S. in quarter 4, and we are currently implementing price increases globally for execution in quarter 2, which is supported by promotional efficiency and product mix. To date, we've seen limited elasticity from price increases in 2025, but we'll continue to monitor demand carefully, particularly as we move through the second round of price increases. We continue to review the possibility of further revenue growth management initiatives later in the year, depending on consumer reaction and the evolution of whey prices. In addition, we also carefully manage our cost base to ensure we're efficient and adjust our marketing investment appropriately to ensure we prioritize spend on brand building initiatives. We will also be pricing across our protein solutions business in Dairy Nutrition. And lastly, with innovation, we're looking to broaden our product mix from whey protein to include other protein sources, such as collagen, milk and plant proteins, while also driving non-whey innovation, as you've seen at our energy platform. We made good progress on our group-wide transformation program during the year, which is focused on driving efficiencies across our new operating model and supporting the next phase of growth through 3 focus segments. The program is expected to generate annual cost savings of at least $60 million by 2027, and we are on track to deliver approximately 40% of savings in 2026. Of these savings, we expect to reinvest approximately 50% to drive growth across our Performance Nutrition and Health & Nutrition segments. Significant progress has been made across 4 key pillars to give us confidence in delivering on the targets. New operating model is now established, simplifying our structure with Dairy Nutrition and Health & Nutrition established as new Dedicated segments and the reorganized performance of Nutrition in Americas, injecting new capabilities into the business. The second pillar is to unlock efficiencies, and we're centralizing and streamlining key activities and capabilities across procurement, engineering, planning and quality and driving operational efficiency through a mixture of automation and continuous improvement. We're also accelerating our procurement savings and leveraging our global manufacturing footprint for capacity. The third pillar is about accelerating our digital transformation, and we've expedited the transformation of our back-office functions and continues to focus on automation and the implementation of AI and analytics to enable front office growth initiatives. We are leveraging Agentic AI across the group, which is supporting marketing campaigns and new product innovation and performance attrition and analyzing customer interactions in Health & Nutrition and Dairy Nutrition, providing us with both the intelligence and the infrastructure to drive growth and improve our efficiency. The final pillar is our ongoing portfolio evaluation. We're focused on simplifying our group structure and optimizing our overall margins. And in 2025, we completed the sale of 2 noncore brands, and we also completed the acquisition of Sweetmix and Scicore, further expanding our global scale. As we outlined at our Capital Markets Day, we have a clear strategy in place to drive the next stage of growth, and we've shown evidence of this model throughout 2025. Firstly, we're focused on driving Optimum Nutrition globally and growing our portfolio of lifestyle brands. Optimum Nutrition delivered double-digit like-for-like revenue growth in the second half of 2025, and we continue to see strong momentum for the brand. We're ambitious to scale our Health & Nutrition segment as a leading solutions partner in our end-use markets and the acquisitions we've made and a commitment to capacity expansions we've outlined are core to this growth strategy. We are focused on optimizing Dairy Nutrition to maximize profits across our scale dairy operations while growing our protein solutions and bioactives business. We continue to expand internationally, leveraging our scale and global supply chain footprint. And lastly, investing in innovation to stay at the forefront of our growing categories is vital to us and the savings from our transformation program will allow us to continue to reinvest in innovation. Delivery against each of these requires focus on execution excellence enabled by our group-wide transformation program, our teams, talent and culture as well as our strong financial discipline. And with that, I will hand over to Mark to take you through the financials. Mark Garvey: Thanks, Hugh, and good morning to everyone on the call. 2025 Group revenue was $3.95 billion, up 2.3% on a constant currency basis. At the group level, volumes were up 3.7%, driven by good performance across all 3 divisions and a particular strong demand for our protein brands and ingredient solutions. Price was up 0.5%, driven primarily by positive dairy market pricing and positive pricing in Performance Nutrition. 53rd week in the 2024 comparison negatively impacted revenues by 2% and the net impact of acquisitions and disposals added 0.1% of group revenues as a result of the acquisition of Sweetmix offset by the disposals of SlimFast and Body & Fit. 2025 group EBITDA pre exceptional charges was $499.1 million, down 9.4% in constant currency, primarily as a result of higher whey input costs impacting Performance Nutrition EBITDA, somewhat offset by strong EBITDA growth in Health & Nutrition in the year. PN EBITDA was down 23.2%. H&N EBITDA was up 16.7% and DN EBITDA was up 1.7%. Group EBITDA margin was 12.6% compared to 14.4% in the prior year. PN EBITDA margins were 13%, down 380 basis points constant currency. And in Health & Nutrition, we saw good progression in EBITDA margin to 18.4%, an increase of 80 basis points constant currency on the prior year. Adjusted earnings per share for the year was $1.3493 down 2.4% constant currency on the prior year and ahead of the previously guided range of $1.30 to $1.33. The group generated operating cash flow of just over $454 million with a strong operating cash flow conversion of 91%, well ahead of our 80% target. Return on capital employed for the year was 11.3%, in line with our target range of 10% to 13%. Cash flow generation was strong in 2025 with operating cash flow of just over $454 million. Operating cash conversion was 91% compared to 88% in the prior year. Operating cash flow was enhanced by another year of disciplined working capital management. Net working capital balances at year-end were broadly in line with prior year, and net working capital outflows for the year amounted to $11 million. Free cash flow for the year was $360 million compared to $403 million in the prior year. At year-end, the group's net debt position was $526 million compared to $436 million at the prior year-end. The closing net debt balance represented a net debt to adjusted EBITDA ratio of 1.08x. Interest cover in 2025 was 13.7x. Both metrics are well within the group's financing covenants. The group has $1.4 billion in committed debt facilities with a weighted average maturity of 2.7 years with no facility due for renewal prior to late 2027. Now let me turn to our capital allocation framework. Of the $437 million deployed in 2025, we returned the majority of this capital to shareholders. In respect of dividends, the group returned EUR 102.5 million to shareholders during 2025, related to the final 2024 dividend and the interim '25 dividend. Today, we announced that we are increasing the 2025 final dividend by 10%, so that the total dividend for 2025 will be EUR 0.4287 per share representing a payout ratio of 35.9% of adjusted earnings per share, which is within our updated target payout range of 30% to 40%. As we stated at our recent Capital Markets Day, the group is committed to a progressive dividend policy. The group also returned EUR 197 million to shareholders via share buyback programs during 2025, acquiring and canceling 15 million shares at an average price of EUR 13.10 per share. In addition, the Board has authorized a further EUR 100 million share buyback program for 2026 and we are launching an initial EUR 50 million tranche of this today. In 2025, the group spent just over $51 million on strategic capital expenditure with investments in ongoing capacity enhancements, business integrations and IT investments to drive further efficiencies. In the second half of 2025, we acquired Sweetmix, a Brazil-based nutritional premix and Ingredient Solutions business for an initial consideration of $41 million that enabled Health & Nutrition to continue to expand in Latin America. Post year-end, we completed the acquisition of Scicore, manufacturing facility in India providing in-market manufacturing for both PN and H&N for consideration of approximately $16 million. We will continue to look for organic and acquisition opportunities to scale our Health & Nutrition business supported by our strong balance sheet and financing facilities. The group incurred exceptional charges after tax of just over $100 million during the year. These primarily related to a group-wide transformation program and losses on disposals of noncore brands. The multiyear transformation program was announced in late 2024 to drive efficiencies across the group's new operating model and to support the next phase of growth. In 2025, cost of this program amounted to $55 million, which are primarily people-related costs and advisory fees associated with outsourcing certain back-office functions and establishing the new Health & Nutrition and Dairy Nutrition businesses. The program is on track to deliver $60 million of annual savings during 2027, of which 40% are expected to be achieved by the end of 2026. Total cost of the program is expected to be $100 million. The noncore brands, SlimFast and Body & Fit were divested during the year, and we have recognized the loss of disposal of these businesses of $45.7 million in the current year. We've also taken a noncash impairment charge of $16.5 million related to the level of direct-to-consumer retail business. As part of the decision to exit our dedicated European D2C retail strategy, and following the sale of the Body & Fit business, we are exiting the level of D2C retail business as it no longer aligns with our strategy. Net finance costs were $29.4 million, up approximately $2.6 million compared to prior year due to the acquisition of Flavor Producers in 2024. The average interest rate for the year was 4.2% compared to 4.6% in '24. The effective tax rate for the year was 15%, down from 16% in the prior year. And for 2026, we expect the group's effective tax rate to be between 14% and 16%. Joint venture performance increased by $11 million versus prior year, primarily related to improved dairy market dynamics, including the implementation of the U.S. Federal Milk Marketing Orders program from June 1. For 2026, capital expenditure, both strategic and sustaining is expected to be between $100 million and $110 million, which includes initial spend related to the expansion of our Health & Nutrition facilities in Asia, U.S. and Europe, as Hugh has referenced earlier. These projects, which are expected to be substantially completed by the end of '26, will have a total investment of approximately $40 million and will enhance our ability to service customers in growing end markets. We are ambitious for growth and we outlined our medium-term growth algorithm at our Capital Markets Day in November. Over the medium term, we are targeting 5% to 7% annual organic revenue growth in Performance Nutrition and 4% to 6% annual organic revenue growth in Health & Nutrition. We expect to grow earnings ahead of revenue in PN and H&N supported by our transformation program that will deliver $60 million of savings annually by 2027. EBITDA margins in PN are expected to improve by 250 basis points by 2028, and EBITDA margins in H&N are expected to be in the range of 17% to 19%. Dairy Nutrition EBITDA is expected to be in the range of $150 million to $160 million. From a group perspective, over the medium term, we are targeting annual earnings per share growth of 7% to 11%, with 85% cash conversion. And we will continue to invest for growth and returns, targeting a dividend payout ratio between 30% and 40%. Our 2026 outlook is aligned with these medium-term targets. Performance Nutrition like-for-like organic revenue growth, excluding dispositions, is expected to be between 5% and 7% in 2026 and will be pricing led. As we enter '26, we continue to see strong demand for our protein products, and we are currently implementing price increases, which will be effective in Q2 to offset whey inflation. Volume trends have remained broadly resilient following prior year pricing actions, and we will continue to monitor these trends and demand responses closely as the year progresses. As whey input costs are expected to remain elevated this year, we will continue to assess the need for further revenue growth management actions in the second half of the year. We continue to utilize all levers within our revenue growth balance from playbook including disciplined pricing actions, promotional efficiency and product mix management, allowing us to manage the cost environment while maintaining competitiveness and supporting the long-term health of our brands. We have very good visibility in our cost base this year as we have contracted whey supply needs into early Q4, and we have made prudent assumptions and whey costs for the remainder of the year. New global whey supply of 15% to 20% have started to come onstream, and we expect this to continue through 2026, albeit strong demand is taking up this supply. We expect to see EBITDA margin progression and Performance Nutrition in 2026 as a result of price increases, the sale of noncore brands and our group-wide observation program. Progression is expected to be second half weighted as a result of the phasing of price increases and timing of marketing investments. Revenue in Health & Nutrition is expected to grow between 4% and 6% and will be volume-led across both premix and flavor solutions businesses, with strong growth expected across our core end-use markets of active nutrition, functional beverages and vitamins and supplements. H&N EBITDA margins are expected to be in line with our medium-term guidance of 17% to 19%. We continue to expect profitability growth across Dairy Nutrition and the group's U.S. joint venture. In Dairy Nutrition, we expect EBITDA to be in line with our medium-term guidance of $150 million to $160 million with continued strong demand for whey protein. And our U.S. joint venture will see profit after tax growth given the full year impact of the U.S. Federal Milk Marketing Order, which was implemented on June 2025. We expect to deliver adjusted constant currency earnings per share growth in the range of 7% to 11%, in line with our medium-term guidance. We also expect operating cash conversion to be over 85%, and returning capital employed to be in the range of 10% to 13%. And with that, I will hand it back to Hugh. Hugh McGuire: Our purpose is better nutrition, and we're ambitious for growth. We're operating in exciting high-growth categories with leading brands and ingredients driven by consumer megatrends. We have transformed our business, sharpening our focus to capture growth in our primary engines of Performance Nutrition and Health & Nutrition. And finally, we believe we have the right people, the right capabilities, the right portfolio and balance sheet firepower to deliver on our growth algorithm and drive strong shareholder return. And now I'd like to hand over to the operator for questions. Operator: [Operator Instructions] Our first question today comes from the line of Patrick Higgins from Goodbody. Patrick Higgins: My first question is just on whey cost, a very clear commentary there. And in terms of how you've hedged on your outlook. But maybe just to ask a little bit more color. So at the Q3 point, I think you said you hedged for H1 marginally ahead of H2 '25 levels. given the level of hedging you have in place now for this year, how should we think about year-on-year impact for your whey cost bill for '26 versus '25? And I guess the second question around this is just you flagged more new supply coming on stream as we speak today, what is your base case assumption in terms of whey prices over the course of the next year? Like are you still anticipating a normalization? Or has that changed just given how strong demand has been over the last kind of year or so? And then my last question, if I can sneak it in, is just around innovation for GPN clearly dialed up and kind of took more of a focus at your CMD in November, maybe you could just talk us through the success of some of the recent launches in H2 and some of the plans for the year ahead. Mark Garvey: Thanks, Patty. Just, I'll answer the cost question, and he will talk innovation. Yes, look, we've been managing our whey fairly closely, as you can imagine. That's why we are procured out to Q4. We've been layering in that procurement since last summer, Frankly, as you sort of look at what we're doing for this year. Costs continue to be elevated. There's obviously a 90 to 80 element to whey, and those have 80 have rising a bit more recently, I would say, 90 a bit more stable, but certainly have continued to elevate as the year has gone on. So when we look at year-on-year, we'd expect to see double-digit increase in cost of whey versus the prior year. And that, of course, will feed into the pricing conversation, as you can imagine as well. And in terms of your question on new whey supply coming on stream, as I said right now, it's been taken up in terms of the strong demand we're seeing for protein in all different formats. Clearly, we're benefiting from as in our Dairy Nutrition business and our Performance Nutrition business. But certainly, right now, that supply has been taken up. So as we look to '26, I don't think we expect to see any significant change in terms of significant reduction in whey prices. So we've assumed they'll stay at an elevated rate for the year in terms of our overall guidance to you. Hugh McGuire: Yes. Thanks, Mark. Apologies to all of you, fighting a bit of a cold that you might hear in my voice. Yes, just to add actually to what Mark said on whey at a more strategic level, we see it in Dairy Nutrition, demand is exceptionally strong at the moment across multiple formats. And we're seeing the benefit of that in Dairy Nutrition. So clearly, new supply is coming, and I can assure you that every dairy company out there is figuring out how to make more WPC and WPI given these prices. But fundamentally, it's driven by demand. I think you're going to see all categories price increase over the course of 2026 and figuring out the impact that may or may not have. But the fundamentals remain very strong for demand of whey protein. If you look at innovation, Patrick, what I'd say is what we shared with you in our -- at our Capital Markets was only coming online at quarter 4 and into this year. So we spoke to you about we're moving into blends of whey and collagen, targeting hydration and recovery so [indiscernible] The U.S. [ Clearway ] In Europe, good start there, very early. A lot of new flavor, variants of creatine. We just launched our new creatine gummies actually in the TikTok shop in the U.S. I'd be interested to see how that does. The foreground shape that we present here has just launched amino energy stick packs and we just launched new AMP preworkout as well in January in the U.S. So a lot of activity, but very early to say. But obviously, a key focus for us in Optimum Nutrition as we extend usage occasion. And lastly, just to say we are very focused on value to the consumer. So, we've launched 10 -- a lot of new opening price points, whether it be the sachets or 10-server, 14-server, and we continue to invest and support those new pack sizes to support consumer. Operator: Your next question today comes from the line of David Roux from Morgan Stanley. David Roux: Just 2 questions from my side. Just to go back to your comments on the Performance Nutrition margin for this year, you pointed out we should expect some margin progression. Now there's obviously the 50 basis points net benefit to margin in '26 from the disposals, which you had previously flagged. So should we expect margin progression beyond that? Or is this only going to be driven by that? That's my first question. And then my second is on the club channel. Can you just give us some more color here? I see there was a noticeable acceleration in like-for-likes in the second half of your food, drug, mass and club sort of segments. There's obviously the lapping of the club private label issues from summer of 2024. But our sales in the club channel specifically now above levels prior to these issues. I think any and or color on the club channel would be appreciated. Mark Garvey: David, I'll take the margin question, and Hugh will update you on the club channel. A number of moving pieces, as you can imagine, as we look to margin in 2026, and we are confident in getting margin progression in '26. You're correct, we'll expect to see a 50 basis point improvement from the dispositions. In the full year, actually, that will be 80 basis points, but we've got some dissynergies as we enter the year that are impacting that as well. But of course, the big thing for us this year as we see costs increase, we also have the pricing coming through. So we'll have double-digit pricing coming through in quarter 2. As you know, there can be a lag as pricing catches up with increases in whey cost. So we'll see that move as we go through the year. So that will have a negative impact. A positive impact then will be the transformation savings. We said we get $60 million by '27%. 40% of that will come in, in '26 and about half of that will hit the bottom line, quite a bit of that in PN. So that will help us in terms of mitigating some of the lag on the pricing side. And in the first half, you'd expect to see some more marketing investment relative to the year as we normally do that, sort of how will be second half weighted. So overall, when you put this together, I'd expect about a 50 basis point progression as we work through the year here, second half weighted. Hugh McGuire: Thanks, Mark. I suppose the first thing I'd say is very happy with performance in Optimum Nutrition, and I secure with double-digit growth in half 2 last year, particularly in -- and a reminder that we're an omnichannel business are focused across all our channels of distribution. And so I wouldn't pick out one in particular. Our Food, Drug, Mass data is very strong categories growing very well. We're growing in both categories, both our brands. So look, the club channel will always have puts and takes, just given the nature of products that go in and out as part of their test and as part of kind of their innovation focus. But from our perspective, we're confident in our revenue guide for the year, particularly driven by Optimum Nutrition and Isopure. Operator: Your next question comes from the line of Alex Sloane from Barclays. Alexander Sloane: A few questions from my side, if that's okay. I mean firstly, on Health & Nutrition, very strong organic performance in quarter 4 and really notably ahead of quite a lot of larger B2B ingredient peers. Can you give a bit more color in terms of what you think your weighted sort of end market growth was against that organic delivery in Q4? I guess what I'm trying to get is this outperformance really driven by structural mix of categories? And do you see kind of growth being sustainable in 2026? And secondly, on just to come back to whey, thanks for all the color already, just a couple of questions. Firstly, I guess, have you seen the broader peer set take similar pricing that you put through in November in the U.S. so that your kind of relative price points are unchanged. And secondly, thinking a bit longer term, so you're not assuming that whey costs come down or whey prices come down in '26 because of the strong demand regarding the sort of 250 basis point improvement target out to '28, are you embedding a normalization in whey prices in that assumption? Or can most of that be driven by organic means? Hugh McGuire: Alex, very pleased with Health & Nutrition performance, as you said, a strong quarter 4 after a strong quarter 3, I suppose, we highlighted this in our Capital Markets again, we're targeting 3 end-use segments, Active Nutrition Functional Beverage and Vitamin Supplements and they're all doing well for us. We're seeing the same benefits in Health & Nutrition in terms of the end consumer we target that we're seeing in Performance Nutrition. So I think that's the first thing I'd say. Second is that we're focused and agile business as well. It would be smaller than a lot of the peers you referenced, but we're very focused on those segments. We invest in deep customer relationships, good to see continued progress in international. So very positive there. And we're also then leveraging cross-sell opportunities across the broader group, which is an opportunity for us as well. And Clearly, Mark called out as well and as did I, we're investing in capacity expansions in Asia, Europe and the U.S., which is a positive as well. So as we laid out in our Capital Markets, we are ambitious to scale this business. Mark Garvey: And in terms of your question on whey in terms of the 250 basis points, Alex, I would say that we are expecting that we'll have a normalization or a stabilization of cost versus pricing at some point here as we get through the 3 years because this year, clearly, there's still some catch-up on lag, as I spoke to. At some point, this should normalize and not necessarily expecting a significant reduction given how sort of popular protein is, and we expect to see that in the medium term. Of course, I also have significant transformation work going on, which I know will give me margin improvement as well. So we're still confident in the 250 basis points over the period, but we are assuming that we get to a point where we have some stabilization of cost increases on pricing. Hugh McGuire: And lastly, just on your question, Alex, on whey and competition. I think I'm comfortable in saying that everybody is going to have to move on price and are moving in price given the whey price inflation we've seen over the last 24 months. We saw it first in international, we would have moved in quarter 2. We saw a little bit of elasticity for a quarter until all the competition moved. And now in fact, in international markets, some of our competition are moving ahead of us. And in the U.S. as well, we're starting to see competition move. Just given the scale of these prices. As Mark said, we're not planning for stabilization in a way at this point until we see what happens to demand and what happens to elasticity and what happens additional volume supply. So yes, we are seeing the market move. Operator: Your next question comes from the line of Matthew Abraham from Berenberg. Matthew Abraham: First on the Optimum Nutrition. Just wondering if you could provide a view as to how you see the volume outlook for Optimum Nutrition in FY '26 just relative to the positive volume momentum that, that brand reflected in the second half of the year? And then just one more question, in reference to some of the color you provided on whey costs are higher, the longer dynamic you've outlined. Can you just provide a bit of detail as to what impact you're seeing that have on the breadth of brands that compete with you? And if that's having a more adverse impact on some of the smaller, not vertically integrated brands on shelves? Hugh McGuire: Matthew, the line wasn't great there, but I think I got the first question, which is just continued ON volume momentum into 2027. Clearly, we're very happy with performance in half 2 last year. The year started well for the brand. You can see that consumption numbers as well, we'll be pricing in quarter 2. That's in train now as well. So figuring out the potential level of elasticity versus the level of price, et cetera, it's just all a hard one to call. We've seen limited elasticity to date and the price increase in November in the U.S., and we've been -- we worked through any small elasticity we saw in international earlier in 2025. So overall, positive, what I'd say is, look, our revenue guidance for PN is across the entire portfolio. So we would be ambitious for ON to be a little bit higher than that. So overall, positive as we go into 2026. And look, you can see it in the category data as well. Category growth is accelerated in powders. We spoke at our capital markets on how powders are mainstream and the different consumer benefits, mixability, higher protein content, versatility. So not just price but affordability is actually -- these are very affordable, even post price increase on a cost per serve versus other formats of high-protein products. It's a great question on whey. Look, we are effectively vertically integrated. We have a dairy business where we create insights on the protein markets and protein solutions, we manufacture on our powder. So that gives us probably we have good foresight on how the markets are moving. Like the rest of the industry, we want to always get it right, but we are -- we will have good foresight earlier than a lot of competitors. I would think the smaller competitors, if they weren't locked into some of these prices or if they weren't locked into supply, will struggle to get supply and will struggle with pricing. But I don't know anything for fact there, but just to say that it is likely if they're working to [indiscernible] And they weren't brought forward, they could struggle. Operator: Our next question comes from the line of Damian McNeela from Deutsche Numis. Damian McNeela: First one is just on the indicated CapEx increase. And can you just clarify that the increase is going towards H&N and that the planned expansion will complete this year, i.e. you'll be able to sort of start driving that factory growth or factories growth from next year? Second question is on online revenue momentum. It looked like you delivered pretty strong growth in the year, just over 10%. Can you sort of provide what are the key sort of market drivers behind that? And whether the sort of -- we should expect that to continue through '26? And then just one last one, just on marketing. Are you in a position to sort of quantify what the step-up year-on-year is likely to be in 2026, please? Mark Garvey: Damian, I'll take the CapEx question. We're a little bit ahead, you probably noticed of our CMD guidance. We said $80 million to $100 million in CMD, We're a bit ahead of that. And the reason for that, frankly, is the strength we're seeing in the Health & Nutrition business, we're just -- the volume numbers are strong. We expect to see that sustain quarter-by-quarter into 2026. So as a result, we do require increased capacity. So to your question, most of that will be done by the end of 2026. So we should be having production in 2027 in terms of our Chinese and U.S. and European expansion. So we should all -- most of that [ $40 billion ] will be spent by the end of 2026 based on our current plans. I'll pass it over to Hugh for... Hugh McGuire: Yes, maybe start with the marketing first. Damian. Yes. So look, one of the things we are -- Mark laid it out, we're pulling all levers, as you can well imagine, across the business given the current inflationary environment on whey particularly. So that will include marketing spend as per last year, but also our transformation project or cost base, our mix -- our revenue mix. In terms of marketing spend, though, to be mid- to high single digits, it will be higher than last year, but all of that increased spend will go behind the Optimum Nutrition brand. In terms of e-commerce, obviously, as I said it earlier on, we're an omnichannel business so we're pushing for growth across all our channels that we compete in. But e-commerce channel as always, an online channel is always a key channel for us as we can engage so well with the consumer there in terms of information, in terms of content, et cetera. So we continue to expand that. You can expect as well -- that's where a lot of our innovation will go online first because we can move quickest on it. So you could -- we would absolutely be ambitious for continued growth in that channel. Operator: Your next question comes from the line of Cathal Kenny from Davy. Cathal Kenny: Two quick questions. Firstly, Hugh, just on the affordability piece within PN. Obviously, you mentioned 10-server, 14-server and stick any early evidence on the performance of those formats? That's my first question. And my second question just relates to the guide for PN. I'm assuming that you're -- within that, the assumption is a high degree of elasticity on the second price increase and the price increase in Q2. They are my 2 questions. Mark Garvey: Yes, A little bit early in some the sachets were just really launching. But our 10-serve, 14 serve we launched last year and really pleased with the performance there. And in fact, what we're seeing there is it's bringing in a lot of new consumers, particularly the 10-serve online. So affordability hitting the right price point, it's a $20 price point in some instances has been important. So we continue to do that. And we see that in the U.S. and internationally as well. In terms of the guide for PN, yes, we debate this a lot, and we discussed this a bit in our quarter 3 results as well, particularly internationally, when we price increase. We saw a little bit of elasticity for a quarter. It's hard to call. We have built elasticity into our assumptions. In saying that, demand for whey protein continues to be exceptionally strong. Our categories are going very strong. Our brands are outperforming the categories in this space as well. So calling what the elasticity will be is a difficult thing to do. As you can imagine, we're very thoughtful in this and careful as we move through the year because our goal here is to continue to start to go to the brands and ahead of category. So there's lots of debates internally, but simply put, yes, you can assume we have elasticity built into our assumptions for the year. We'll keep you updated as we go through the year, how we're thinking about that. Cathal Kenny: Just a quick follow-up on creatine, obviously, you called it out in terms of very good growth. One is, is there much opportunity to scale that further and I think beyond North America? And secondly, just in terms of the pricing environment you're on creatine, could we get a little bit of color on that, please? Mark Garvey: Yes, I think I can be quite clear. When we're talking about price increases, actually, we're just talking about price increases on our protein category. It's all driven, which is a fair 65%, 70% for business. We won't be price increasing on our energy or creatine products. Two, I'd actually say, the creatine growth is low. It's across all of our markets. it was a significant double-digit growth in 2025 over 2024. We've launched a lot of new innovation, different format sizes, different flavors, but continues to do well, and the teams will continue to be -- they are the 2 that kind of energy creatine and protein or what's going well for us. Operator: Your next question comes from the line of David Roux from Morgan Stanley. David Roux: Some follow-up questions. I appreciate that is another dairy 101. But just going back to whey, supply is obviously going to react to price, right? I mean can you give us an idea how quickly producers can react to adding new WPC 80 or 90 capacity from brownfield conversions? Or does this all need to be greenfields given that, I guess, there's not been much investment into cheese over the last few years? And then the other question is on marketing. And Hugh, I promise this is a generally serious question, but can you confirm if Optimum Nutrition renewed its partnership with England Rugby, they previously had or is it only Ireland rugby that it now has like a main rugby team in the 6 nations? Hugh McGuire: I have to kind of start with that last question given the weekend, it's winner David. We sponsor a number of -- we sponsor Marcus Smith, the English rugby player but not the English rugby team. And yes, we do sponsor the Irish rugby team and a number of athletes within there as well. So the -- yes, like you know what, we could give you a thesis on this, and I know it wouldn't be fully accurate because there's so many variants in this. So the first thing I would say is we know from our own dairy plants that every dairy business is looking at efficiency initiatives to increase the output of high-end whey proteins, whether it be 80 or 90. I think a lot of dairy plants can switch between the 2. So depending on economics, they can switch between WPI and WPC 80. I think if it was an add-on, the best example I'd give you is probably our own facility where we've approved the CapEx at late next year, and that will be in place for early '27. So probably from approval of CapEx implementation kind of that probably a 15-month period, and that will be leveraging existing whey stream and they're concentrating upto 90%. If you were to build a new facility, I would obviously take that a little bit longer probably 2 years plus. I suspect everybody is running the rules over whether they build new facilities or not. The challenge always will be in the cheese whey markets as the cheese market is effectively flat. So can you sell the cheese because that's -- and then cheese prices. I think the difference now what you'll probably see is businesses -- dairy businesses start looking at kind of produce whey casing rather than just whey cheese. So not produce cheese at all, which is a different plant configuration. But given the demand we're seeing in the prices, the returns -- the returns will work. So there'll be a lot of work going on at the moment around at these prices. And with this demand, even if prices were to drop, my sense is the dairy industry be quite confident the demand will remain strong. So even if there were a drop back a little 20%, 30% for a period, they will -- that will still be enough premium there to incentivize new capacity over the next number of years. Operator: Thank you. That concludes the Q&A. I will now hand the call back to Hugh McGuire for closing remarks. Hugh McGuire: Thank you, operator. Look, just to briefly close, just reinforce our conviction from the team here that Glanbia remains well positioned for growth. We're moving at pace as we laid out at our Capital Markets Day. And just thank you for your time and look forward to connecting with you all individually over the next few days. Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good afternoon, and welcome to Huron Consulting Group's webcast to discuss the financial results for the fourth quarter and full year of 2025. [Operator Instructions] As a reminder, this conference call is being recorded. Before we begin, I'd like to point all of you to the disclosure at the end of the company's news release for information about any forward-looking statements that may be made or discussed on this call. The news release is posted on Huron's website. Please review that information along with the filings with the SEC for a disclosure of factors that may impact subjects discussed in this afternoon's webcast. The company will be discussing one or more non-GAAP financial measures. Please look at the earnings release on Huron's website for all of the disclosures required by the SEC, including reconciliation to the most comparable GAAP numbers. And now I'd like to turn the call over to Mark Hussey, Chief Executive Officer and President of Huron Consulting Group. Mr. Hussey, please go ahead. C. Hussey: Good afternoon, and welcome to Huron Consulting Group's Fourth Quarter and Full Year 2025 Earnings Call. With me today are John Kelly, our Chief Financial Officer; and Ronnie Dail, our Chief Operating Officer. We finished 2025 with strong fourth quarter results. Revenues before reimbursable expenses, or RBR, grew 11% in the fourth quarter of 2025, driven by record RBR in the Healthcare and Commercial segments. We also continued our trajectory of margin expansion, achieving 15.7% adjusted EBITDA margins in the quarter. Full year RBR grew 12% over 2024, resulting in record RBR and a fifth consecutive year of growth. We're also pleased with our progress increasing our margins in 2025, which marked our fifth consecutive year of adjusted EBITDA margin expansion. In addition, we achieved record adjusted diluted earnings per share in 2025, which grew 21% over 2024. Momentum we achieved in 2025 has carried forward into 2026 as we start the year with strong backlog and a pipeline at near record levels, even after strong sales conversions. Our market-tested strategy, balanced portfolio of offerings and strong execution by our highly talented team has delivered strong multiyear financial performance for Huron and its shareholders, consistent with the financial goals outlined at our Investor Day. I'll now share some additional insight into the progress we've made since last year's Investor Day while providing color into our fourth quarter and full year 2025 performance, along with our expectations for 2026. Please note, we placed supplemental materials on the Investor Relations page of our website with additional detail around our 2026 outlook as well as information about our AI strategy and the evolving opportunity that AI presents to drive impact for our clients and grow our business. We demonstrated that our growth strategy continues to deliver financial performance that has met or exceeded our publicly shared growth goals since 2022, and we remain committed to our 5 strategic pillars of that strategy. First pillar of our strategy is to sustain strong growth in our largest industries, healthcare and education, in which we have leading market positions. In the fourth quarter of 2025, Healthcare segment RBR grew 10% over the prior year quarter, reflecting strong demand for performance improvement, strategy and innovation, financial advisory and revenue cycle managed services offerings as well as incremental RBR growth from our acquisitions. Excluding the impact of the acquisitions and the disposition of the Studer Education business, which was divested on December 31, 2024, organic growth for the Healthcare segment was 8% on top of 18% growth in Q4 2024 over 2023. On a full year basis, the Healthcare segment achieved record RBR of $838 million, growing 11% over 2024. The increase in RBR in 2025 was driven by continued strong demand for our performance improvement, financial advisory, revenue cycle managed services and strategy and innovation offerings. The momentum we built in 2025 has extended into 2026 as market tailwinds continue for financial health transformation offerings. The increase in bookings in the second half of 2025 exceeded the same period in 2024 by more than 20%. We've also seen strong sales conversions continuing into January, extending the momentum of our recent sales activity. Across the healthcare industry, financial performance among health systems remains uneven as reimbursements remain under increased pressure, operating costs increase and workforce constraints continue to pressure provider economics. Even organizations that return to modest profitability are increasingly focused on scenario planning and balance sheet resilience, recognizing that shifts in payer mix, Medicaid and Medicare funding levels or further cost increases could quickly erode gains. As a result, health systems are prioritizing initiatives that deliver near-term financial impact while positioning their organizations for longer-term sustainability. These dynamics continue to drive demand for our healthcare offerings. Provider clients are seeking partners that can help them move beyond incremental cost actions to integrated solutions that drive growth, margin performance and liquidity, support strategic repositioning and enable care delivery and operational transformation. In parallel, health systems are accelerating the adoption of AI and automation. We're working closely with our consulting and managed services clients in this area. For example, to date, we deployed over 100 AI and automation solutions to help health systems drive speed to value, revenue growth and cost savings. In addition, we've entered into strategic collaborations with select healthcare-focused AI companies to help improve the value that our joint clients derive from deploying the new technologies. We believe our deep industry expertise, breadth of offerings and proven track record of delivering tangible results position us well to maintain our strong competitive leadership position and serve our clients across our core provider business. As we shared at our Investor Day last year, we're also focused on growing our addressable market by expanding into adjacent markets and innovating new offerings. In support of our payer strategy, during the fourth quarter, we acquired the consulting services division of AXIOM Systems, a leading IT services firm that specializes in core administration systems and digital transformation for payers and payer provider organizations. This acquisition broadens payer-focused digital offerings and enables us to better serve our clients seeking to modernize their claims platforms while leveraging connected data to improve operational performance and member outcomes. Turning next to the Education segment. In the fourth quarter of 2025, Education segment RBR was flat compared to the fourth quarter of 2024, which I will note was a tough comparison in light of the 15% RBR growth in Q4 2024 over the fourth quarter of 2023. Annual RBR in the segment grew 5% compared to 2024. For the full year, the increase in RBR was primarily driven by strong demand for our strategy and operations, research and digital offerings as well as incremental RBR from our acquisitions. Despite the more challenging operating environment for our higher education clients in 2025, we saw a 10% plus increase in bookings in the second half of 2025 over the second half of 2024. The sales momentum has accelerated into January of 2026. Higher education institutions continue to face significant pressures on revenues and costs. Many university presidents and their boards are having strategic discussions about the sustainability of their business models in light of the dynamic regulatory environment, increasing financial pressures and declining perception of the value of a 4-year degree. We believe the breadth of our client relationships, industry expertise and broad portfolio of offerings position us as one of the leading trusted advisers to senior leaders as they navigate these pressing issues. We continue to leverage our unified go-to-market approach of serving the top 200 public and private universities and systems, building upon our strong credentials and breadth of offerings to win and deliver on some of the most complex engagements in the industry. For example, we're working with a leading research university to deliver a meaningful people-enabled business transformation and the modernization of their core processes and associated technologies, including leveraging AI to position them for a more resilient future. Another client, we were selected to explore performance improvement initiatives to drive near-term financial benefit while redesigning system and campus level operating models and operations, including implementing new core administrative systems and enabling change management, positioning the institution for longer-term sustainability and reinvestment in their mission. We are confident in our outlook for sustained growth in both Healthcare and Education, anchored in our deep client relationships and our leading competitive positions in end markets that are facing ongoing financial pressure amidst disruption that's been exacerbated by the current regulatory environment. These are large, favorable end markets facing structural challenges that we believe will continue to drive strong demand for our offerings and serve as the foundation of Huron's long-term growth strategy. Our second strategic pillar is focused on growing our business in the commercial industries. The fourth quarter of 2025 Commercial segment RBR grew 37% over the prior year quarter, driven by incremental revenue from our acquisitions and strong demand for our financial advisory offerings. Excluding the impact of acquisitions, RBR in Q4 2025 grew 9% organically over the fourth quarter of 2025 (sic) [ 2024 ]. Full year 2025 Commercial segment RBR grew 27% to a record $325 million, resulting in the scaling of our Commercial business to approximately 20% of total company RBR. The increase in full year RBR was primarily driven by incremental RBR from our acquisitions as well as strong demand for our digital offerings, partially offset by declines in our strategy and innovation and financial advisory offerings. In the Commercial segment, we saw a 20% plus increase in bookings in the second half of 2025 over the second half of 2024. Similar to Healthcare and Education, we've also seen continuing strong sales conversions in January in our Commercial business, which again highlights our momentum and the strength of our offerings in the market. Commercial industries are navigating heightened complexity driven by regulatory change, cost pressure and accelerating adoption of AI-enabled operating models, driving the need for more integrated strategy and operations, financial advisory, digital and people-focused solutions. Continued organic investment and targeted tuck-in acquisitions, we strengthened our industry expertise and broadened our capabilities to deliver more integrated differentiated offerings to our clients, which has increased our win rates in this segment year-over-year. While we remain in the early stages of executing our fully integrated commercial strategy, we believe our expanding set of offerings, combined with our increasing ability to deliver measurable ROI for our clients through our performance improvement capabilities added by our Wilson Perumal acquisition and the ongoing integration of AI, data and automation capabilities into our offerings will prove to be a meaningful competitive advantage and position us for continued growth. We've demonstrated that commercial industries represent a significant new avenue of growth for Huron. Through our integrated and focused approach to investing in areas in which we have a demonstrated right to win, we believe the Commercial segment will continue to help us achieve our growth goals. Now let me turn to our third strategic pillar, advancing our integrated digital platform. Digital capability RBR grew 4% in the fourth quarter and 10% in the full year of 2025. The increase in RBR in the fourth quarter and the full year is driven by growth in commercial and education industries. Our digital capability, which represented 41% of total company RBR in 2025 remains a differentiated partner to our clients in a large growing market. Rapid evolution of advanced technologies, our clients' challenges remain, identifying opportunities for revenue growth, driving operational efficiencies and making better, faster decisions to propel their businesses forward in increasingly competitive landscapes. Our deep industry and functional knowledge, coupled with the breadth of our technology, data and analytics and change management capabilities sits at the heart of our differentiation. As technology continues to rapidly advance, we strive to shape the best solutions for the clients, whether that requires modernizing their data foundation, designing and deploying a strategy that embeds AI in their core platforms with native AI applications or custom development. It's important to highlight that AI does not create value on its own. It requires a focus on process reengineering and in nearly all cases, we focus on people to effectuate the change needed to sustain the benefits delivered by AI. We believe our ability to bring together our strategy, operations, technology and people-related offerings to reimagine operating models and redesign core business functions and processes while integrating advanced technologies will continue to position us for long-term growth. The success of our 2024 acquisition of AXIA is a terrific example of this. With the combination of our manufacturing and supply chain expertise, coupled with a broader solution set of technology and people-related capabilities to draw upon, we grew the RBR of the active business 20% in 2025 compared to 2024. Expanding digital capabilities will continue to be an important driver of growth across our business in future years as our clients continue their focus on driving growth and productivity in their own highly competitive markets. We are innovating new offerings, expanding our technology partner ecosystem as the market and technology landscape evolves. For example, our data management, analytics and AI business within digital grew RBR over 40% in 2025 over 2024, and we were recognized by one of our technology partners as an AI agent partner challenge winner for our innovative supplier AI agent use cases. Looking ahead, we'll further invest organically and inorganically to strengthen and broaden our portfolio of offerings to continue digital's growth trajectory. Our 2 final strategic pillars reinforce our focus on growing our margins and maintaining a strong balance sheet and cash flows, which continue to be a key contributor to our growth algorithm to drive shareholder value. Now let me highlight the foundation of our success, our people. I want to recognize the significant contributions of our highly talented global team. Throughout the year, our team delivered exceptional outcomes for our clients by bringing deep industry, functional and technical expertise and innovation at a time of significant disruption and regulatory change. As importantly, our team advanced our business with discipline, supported one another and further fostered our strong collaborative culture. This combination of client impact, business performance and teamwork is what continues to differentiate Huron and has fostered one of the strongest and most attractive cultures among professional services firms, which reinforces our ability to attract and retain top talent. I'm deeply grateful for the dedication to our clients, our company and to one another. Now let me turn to our expectations and guidance for 2026. As noted earlier, we placed supplemental materials on the Investor Relations page of our website that includes additional detail around the 2026 outlook as well as information about our AI opportunity. Our RBR guidance for the year is $1.78 billion to $1.86 billion. We also expect adjusted EBITDA margin in a range of 14.5% to 15% of RBR and adjusted diluted earnings per share of $8.35 to $9.15. [indiscernible], we're projecting a 9.5% RBR growth at the midpoint in 2026. Looking at our recent momentum, we're starting 2026 with the strongest hard backlog coverage of our initial annual RBR guidance in the last 5 years, reflective of strong sales growth in the second half of 2025 and early 2026. Perhaps most encouraging, our pipeline remains at near record levels even after the strong sales conversion. In terms of margins, the midpoint for 2026 guidance, we expect an approximate 50 basis point improvement over 2025, building upon the cumulative 400 basis point improvement achieved since 2020. We remain committed to achieving 15% to 17% adjusted EBITDA margins by 2029, consistent with our long-term financial objectives. We believe we will continue to drive improved profitability in our business, further building on margin enhancement levers outlined at our Investor Day, inclusive of AI and automation-driven productivity gains over time. We'll also continue to invest in areas of our business with the greatest growth potential. Midpoint of our guidance for adjusted earnings per share is $8.75, a 12% increase over 2025, which would be on top of a 21% increase achieved in 2025 over 2024. The expected increase continues our multiyear double-digit percentage EPS growth trajectory, which reflects the compounding impact of our revenue growth, margin expansion and return of capital to shareholders via share repurchases. Our focus has and continues to be on serving blue-chip clients in mission-critical, highly regulated industries for those facing significant disruption. Being a trusted adviser requires a distinct understanding of our clients' industries and business models, deep functional and operational knowledge and a people-first, client-centric approach to deliver sustainable transformation. In light of the market's increased focus on AI, let me touch upon the evolving opportunities that we see for AI in our business. We believe AI provides us with transformational solutions that strengthen our ability to address the complex issues facing our clients. Cost of failure in the execution of AI for our clients in our core industries is high, especially when those processes or use cases sit at the heart of our clients' businesses, which is patient care, student experience or the supply chain. We believe AI will strengthen our competitive advantage and expand our wallet share by integrating advanced technologies into our offerings and building accelerators, leveraging our distinct domain knowledge and IP. In addition, we'll continue to leverage AI to help drive even faster speed to value and realization of greater financial benefit for consulting, digital and managed services clients, further strengthening the ROI for clients' investments. We also see AI as an opportunity to grow our addressable market as we continue to invest in and sell our AI-focused services and solutions, which range from AI strategy and data modernization to implementation, orchestration and change management. The human element of implementing change is paramount to the success of organizations in AI-enabled transformation, especially as they redesign the way work is completed and operating models that must evolve to enable execution. We also expect to expand our technology partner ecosystem to meet our clients where they are, combining AI within core systems, native AI applications and custom development to achieve the strategic, operational and technical objectives while maximizing the return on investment. The newly formed collaboration with Hippocratic AI is a good example of how we are expanding our partner ecosystem, broadening our go-to-market reach and expanding our portfolio of offerings to serve our clients. Finally, like every organization, we're deploying AI, intelligent automation and advanced analytics to increase productivity across our client-facing and internal teams. We have and will continue to develop and scale use cases across the organization to drive efficiency gains. Let me highlight one additional point. In 2025, 67% of total company RBR was derived from outcomes-based fixed fee and recurring revenue models. That's an increase from 57% in 2022, which was when at our Investor Day, we shared our focus on expanding our margins, including the new pricing initiatives that we put in place at that time. We have a long-standing history of leveraging outcomes-based fixed fee and recurring revenue pricing models to deliver our work to clients, which we believe positions us well to capitalize on the value that AI can bring for our clients and for Huron. We believe we're well positioned to take advantage of AI and the transformation it enables. The AI capabilities alone are not enough for success. AI's impact and value are optimized when combined with our deep industry, functional and technical expertise, broad digital portfolio, demonstrable workforce transformation experience and proven track record of agility. We continue to act as a client's trusted adviser in an AI-driven world as they evolve their business models and organizations to succeed in this rapidly changing environment. Let me close by reiterating that we're off to a strong start in 2026, and we're building on the momentum that led to strong financial performance in 2025. We're excited about our prospects for achieving our revenue and profitability goals for the year as we continue to execute against the market tailwinds for our business, further strengthen our competitive position and capitalize on the market and performance-enhancing opportunities that AI offers. And with that, let me now turn it over to John for a more detailed discussion of our financial results. John? John Kelly: Thank you, Mark, and good afternoon, everyone. Before I begin, please note that I will be discussing non-GAAP financial measures such as EBITDA, adjusted EBITDA, adjusted net income, adjusted EPS and free cash flow. Our press release, 10-K and Investor Relations page on the Huron website have reconciliations of these non-GAAP measures to the most comparable GAAP measures, along with the discussion of why management uses these non-GAAP measures and why management believes they provide useful information to investors regarding our financial condition and operating results. Before discussing our financial results, I'd like to discuss several housekeeping items. First, our fourth quarter 2025 results in the Healthcare segment exclude the operating results from the Studer Education business, which was divested on December 31, 2024. Second, our Commercial segment results do include a full quarter of operating results from our acquisition of Wilson Perumal, which closed in September of 2025. And finally, our Healthcare segment results do include a partial quarter of operating results from our acquisition of the Consulting Services division of AXIOM Systems, which closed on November 1. Now I'll share some of the key financial results for the fourth quarter and full year 2025. Fourth quarter of 2025 produced RBR of $432.3 million, up 11.3% from $388.4 million in the same quarter of 2024, driven by record RBR in the Healthcare and Commercial segments. For the full year 2025, RBR was $1.66 billion, up 11.9% from $1.49 billion in 2024. Excluding the impact of acquisitions and the Studer Education divestiture, full year 2025 RBR was 7.1% over 2024. Driven by growth across all 3 operating segments, we achieved record RBR in 2025, which also marked our fifth consecutive year of achieving high single-digit percentage or better RBR growth. Net income for the fourth quarter of 2025 was $30.7 million, or $1.72 per diluted share, compared to net income of $34 million, or $1.84 per diluted share in the fourth quarter of 2024. As a percentage of total revenues, net income declined to 6.9% in the fourth quarter of 2025 compared to 8.5% in the fourth quarter of 2024. Results for the fourth quarter of 2025 include $2.2 million of acquisition-related contingent consideration charges, net of tax, as our projections for certain acquisitions have outperformed our original expectations. Results for the fourth quarter of 2024 include a $2.4 million gain, net of tax, recognized upon the divestiture of our Studer Education business. For full year 2025, net income was $105 million, or $5.84 per diluted share. This compares to net income of $116.6 million, or $6.27 per diluted share in 2024. As a percentage of total revenues, net income declined to 6.2% for full year 2025 compared to 7.7% in 2024. Net income for 2025 includes $7.7 million of noncash impairment charges, net of tax, related to the company's convertible debt investment in a third party. Net income for full year 2024 includes an $11.1 million litigation settlement gain, net of tax, related to a legal matter in which Huron was a plaintiff. Our effective income tax rate in the fourth quarter of 2025 was 29.2%, which was less favorable than the statutory rate, inclusive of state income taxes, primarily due to certain nondeductible expense items. On a full year basis, our effective tax rate for 2025 was 22.2%, which is more favorable than the statutory rate, inclusive of state income taxes, primarily due to a discrete tax benefit for share-based compensation awards vested during the year. This favorable item was partially offset by certain nondeductible expense items. Adjusted EBITDA was $68 million in Q4 2025, or 15.7% of RBR compared to $56.8 million in Q4 2024, 14.6% of RBR. For full year 2025, adjusted EBITDA was $237.5 million, or 14.3% of RBR compared to $201.2 million, or 13.5% of RBR in 2024. The increase in full year adjusted EBITDA was primarily attributable to the increase in segment operating income in all 3 operating segments, excluding the impact of segment depreciation and amortization and segment restructuring charges, partially offset by increased unallocated corporate expenses to support the growth of our business. 2025 was the fifth consecutive year of expanded adjusted EBITDA margin percentage, growing our adjusted EBITDA margins 400 basis points since 2020. This multiyear margin expansion demonstrates our continued progress towards the goals shared at our 2025 Investor Day. Adjusted net income was $38.7 million, $2.17 per diluted share in the fourth quarter of 2025 compared to $35.2 million, or $1.90 per diluted share in the fourth quarter of 2024. For the full year 2025 adjusted net income was $140.8 million, or a record $7.83 per share compared with $120.4 million, or $6.47 per share in 2024, representing a 21% increase in adjusted diluted earnings per share year-over-year. Now I'll discuss the performance of each of our operating segments. The Healthcare segment generated 51% of total company RBR during the fourth quarter of 2025. This segment posted record RBR of $221.7 million, up $19.4 million, or 9.6% from the fourth quarter of 2024. The increase in RBR in the quarter was driven by strong demand for our performance improvement, strategy and innovation, financial advisory and revenue cycle managed services offerings as well as $7.3 million of incremental RBR from our acquisitions of Eclipse Insights, AXIA and the Consulting Services division of AXIOM Systems. Excluding the impact of acquisitions and the disposition of the Studer Education business, organic growth for the Healthcare segment was 7.8% against a difficult 2024 comparison. On a full year basis, Healthcare RBR increased to 10.7% to a record $837.5 million compared to $756.3 million in 2024, which was on top of strong growth of 12.2% in 2024 over 2023. RBR in 2025 included $14.5 million from our acquisitions of Eclipse Insights, AXIA and the Consulting Services division of AXIOM Systems. These increases were partially offset by a decrease in RBR from the divestiture of our Studer Education business, which generated $13.7 million of RBR in 2024. Excluding the impact of acquisitions and the Studer Education divestiture, Healthcare segment RBR in 2025 grew 10.8% compared to 2024. The increase in RBR in 2025 was driven by continued strong demand for our performance improvement, financial advisory, revenue cycle managed services and strategy and innovation offerings. Operating income margin for Healthcare was 32.4% in Q4 2025 compared to 30.3% in Q4 2024. The increase in operating income margin was largely driven by decreases in performance bonus, salaries and related expenses for our support personnel and contractor expenses, partially offset by an increase in salaries and related expenses for our revenue-generating professionals as a percentage of RBR. On a full year basis, operating income margin was 30.5% in 2025 compared to 27.6% in 2024. The increase in operating income margin year-over-year was primarily due to decreases in salaries and related expenses for our support personnel, bad debt expense, practice administration and meeting expenses as well as revenue growth that outpaced the increase in salaries and related expenses for our revenue-generating professionals. The Education segment generated 28% of total company RBR during the fourth quarter of 2025. Education segment RBR in the fourth quarter of 2025 was flat compared to the fourth quarter of 2024. RBR in the fourth quarter of 2025 included $1.5 million from our acquisitions of Advancement Resources, AXIA and Halpin. On a full year basis, Education segment RBR grew 5.5% year-over-year to a record $500.2 million compared to $474.2 million in 2024. The increase in full year RBR was primarily driven by strong demand for our strategy and operations, research and digital offerings as well as $9.9 million of incremental RBR from our acquisitions of Advancement Resources, GG+A, AXIA and Halpin. The operating income margin for Education was 20.7% for Q4 2025 compared to 22.4% for the same quarter in 2024. The decline in segment -- the decline in operating income margin in the quarter was primarily driven by increases in salaries and related expenses for our revenue-generating professionals, third-party professional fees, restructuring charges and capitalized software expense amortization related to the development of our next-generation research suite software, all as percentages of RBR. These increases were partially offset by a decrease in performance bonus expense. On a full year basis, operating income margin was relatively flat at 22.6% compared to 22.9% in 2024. The Commercial segment generated 21% of total company RBR during the fourth quarter of 2025 and grew 36.6% over the prior year period, posting RBR of $91.9 million compared to $67.3 million in the fourth quarter of 2024. The increase in RBR in the fourth quarter of 2025 included $18.5 million of incremental revenue from our acquisitions of AXIA, Treliant and Wilson Perumal and strong demand for our financial advisory offerings. Excluding the impact of acquisitions, RBR in Q4 2025 grew 9.1% organically over Q4 2024. On a full year basis, Commercial RBR increased 27.2% to $325.1 million compared to $255.6 million in 2024. The increase in full year RBR was primarily driven by $61.6 million of incremental RBR from our acquisitions of AXIA, Treliant and Wilson Perumal as well as strong demand for our digital offerings, partially offset by declines in our strategy and innovation and financial advisory offerings. Operating income margin for the Commercial segment was 20% for Q4 2025 compared to 17.8% for the same quarter in 2024. The increase in operating income margin in the quarter primarily driven by RBR that outpaced increases in performance bonus expense and contractor expenses, partially offset by increases in salaries and related expenses for our revenue-generating professionals and restructuring charges as percentages of RBR. On a full year basis, Commercial segment operating income margin decreased to 17.2% compared to 20% in 2024, reflecting increases in salaries and related expenses for our revenue-generating professionals and contractor expenses as percentages of RBR, partially offset by revenue growth that outpaced the increase in performance bonus expense for our revenue-generating professionals. Our 2025 Commercial segment operating income margin reflected increased revenue mix shift to our digital offerings as compared to 2024 as well as certain integration expenses related to our acquisition activity during the year. Corporate expenses not allocated at the segment level and excluding restructuring charges, were $54.4 million in Q4 2025 compared to $47.8 million in Q4 2024. Unallocated corporate expenses in the fourth quarter of 2025 and 2024 included a loss of $800,000 and a gain of $200,000, respectively, related to changes in the liability of our deferred compensation plan, which is offset by the change in fair value of the investment assets used to fund that plan reflected in other expense. Excluding the impact of the deferred compensation plan in both periods, unallocated corporate expenses increased $5.6 million, primarily due to increases in salaries and related expenses for our support personnel and software and data hosting expenses. On a full year basis, corporate expenses not allocated at the segment level increased to $217.6 million, which included $6.2 million of expense related to the deferred compensation plan compared to $191.2 million in 2024, which included $5.2 million of expense related to the deferred compensation plan. Excluding the impact of the deferred compensation plan in both periods, unallocated corporate expenses increased $25.4 million, primarily driven by an increase in salaries and related expenses for our support personnel, software and data hosting expenses and third-party professional fees primarily related to our M&A activity during the year, partially offset by a decrease in legal expenses. Now turning to the balance sheet and cash flows. Cash flow generated from operations for 2025 was $193.4 million. We used $31.1 million to invest in capital expenditures, inclusive of internally developed software costs, resulting in free cash flow of $162.3 million. DSO came in at 73 days for the fourth quarter of 2025 compared to 76 days for both the third quarter of 2025 and the fourth quarter of 2024. The decrease in DSO during the fourth quarter when compared to both periods reflects the impact of collections on certain larger Healthcare and Education projects in alignment with our contractual payment schedules. Total debt as of December 31, 2025, was $511 million, consisting entirely of our senior bank debt, and we finished the year with cash of $24.5 million for net debt of $486.5 million. This was a $100.6 million decrease in net debt compared to Q3 2025. During 2025, we used $166 million to repurchase approximately 1.2 million shares, representing 6.6% of our outstanding shares as of the beginning of the year, and we used $112 million for strategic tuck-in acquisitions. Inclusive of this deployment of capital and consistent with the capital allocation objectives we discussed at our 2025 Investor Day, our leverage ratio, as defined in our senior bank agreement, was 1.9x adjusted EBITDA as of December 31, 2025. In addition, during the first quarter of 2026 through February 20, we have used $70 million to repurchase approximately 500,000 shares. Also during the first quarter, Huron's Board of Directors authorized an additional $200 million under our current share repurchase program. Inclusive of this additional authorization, we have $229 million remaining under our share repurchase program. Let me remind everyone that we have placed supplemental materials on the Investor Relations page of our website with additional detail around our 2026 outlook as well as information about our AI strategy and the evolving opportunity that AI presents for Huron. Now let me turn to our expectations and guidance for 2026. For the full year 2026, we anticipate RBR in a range of $1.78 billion to $1.86 billion, reflecting 9.5% year-over-year growth at the midpoint. Adjusted EBITDA in a range of 14.5% to 15% of RBR, reflecting an approximate 50 basis point improvement over 2025 at the midpoint. And adjusted non-GAAP EPS in the range of $8.35 to $9.15, reflecting a 12% increase over 2025 at the midpoint. We expect cash flows from operations to be in the range of $220 million to $260 million. Capital expenditures are expected to be approximately $30 million to $40 million, inclusive of cost to develop our market-facing products and analytical tools. And free cash flows are expected to be in a range of $180 million to $220 million, net of cash taxes and interest and excluding noncash stock compensation. Weighted average diluted share count for 2026 is expected to be in a range of 17.2 million to 17.8 million shares. Finally, with respect to taxes. For the full year 2026, we expect an effective tax rate in the range of 28% to 30%, which comprises the federal tax rate of 21%, a blended state tax rate of 5% to 6% and incremental tax expense related to certain nondeductible expense items, partially offset by certain deductions and tax credits. Let me add some color to our guidance, starting with RBR. The midpoint of the RBR range reflects nearly 10% growth over 2025. As Mark mentioned, because of the market demand for our offerings across all 3 operating segments, we have the strongest backlog coverage of our initial annual RBR guidance in the last 5 years. While our pipeline remains at record levels despite the recent strong sales activity, we believe we are well positioned to achieve growth in 2026, consistent with our financial objectives. With regard to our Healthcare segment, we expect low double-digit percentage RBR growth for the full year 2026, driven by high single-digit percentage organic RBR growth. We expect operating margins will be in a range of approximately 29% to 33%. In the Education segment, we expect mid-single-digit percentage RBR growth for the full year 2026, nearly all organic, and we expect operating margins will be in a range of approximately 22% to 26%. In the Commercial segment, we expect to see RBR growth in the low teen percentage range for 2026, driven by high single-digit percentage organic RBR growth. We expect our operating margins in this segment to be in a range of approximately 18% to 22% which reflects an anticipated modest mix shift back towards our consulting offerings as well as lower M&A integration expenses. We expect unallocated corporate SG&A, excluding the impact of the deferred compensation plan to increase in the mid- to upper single-digit percentage range year-over-year. Also in the first quarter, consistent with prior years, we note the following items as it relates to expenses. The reset of wage basis for FICA and our 401(k) match, our annual merit and promotion wage increases go into effect on January 1, an increase in stock compensation expense for restricted stock awards that will be granted in March to retirement-eligible employees and an increase in practice administration and meeting expenses driven by several larger team meetings that take place in the quarter. In addition, we expect an effective tax rate during the first quarter of 2026 in the 15% to 20% range. This increase in effective tax rate when compared to the first quarter of 2025 reflects an anticipated lower tax deduction for shares vesting in March of 2026. Based on these factors, we anticipate approximately 15% to 20% of our full year adjusted EBITDA and full year adjusted EPS to be generated during the first quarter. As a closing reminder, with respect to 2025 adjusted EBITDA, adjusted net income and adjusted EPS, there are several items that you will need to consider when reconciling these non-GAAP measures to comparable GAAP measures. Reconciliation schedules that we included in our press release will help walk you through these reconciliations. Thanks, everyone. I would now like to open the call to questions. Operator? Operator: [Operator Instructions] Our first question comes from Andrew Nicholas with William Blair. Andrew Nicholas: First one I wanted to ask was on Commercial. Strong quarter, total revenue growth and organic revenue growth. It looks to me like C&MS revenue was especially strong. So I was hoping you could flesh that out a little bit. Was there anything onetime in the quarter or lumpy? And what at the industry level is particularly strong in that segment? John Kelly: Yes, Andrew, no, you're right. It was a good quarter for our Commercial team. And as we noted, it was a strong quarter for our distressed financial advisory team, as you suggested. Nothing that I would call out is lumpy there during the quarter. There were some low to mid-single-digit million success fees during the quarter, but that's reflective of the size of such fees that we get in any given quarter. So I wouldn't necessarily call it out. But I think overall, we saw good momentum in that part of the business, a lot of strength from our AXIA business, which really speaks to some of the supply chain challenges that our clients are seeing in the digital area and momentum from a strategy and innovation perspective, too, both in terms of the actual results during the quarter, but then when we look at the sale -- bookings conversions during the quarter and the backlog heading into next year. So it was a strong quarter from a Commercial perspective. Andrew Nicholas: All right. And then on guidance, I guess I want to ask a question about the conservatism of guidance. It sounds like from looking at the slide deck in your prepared remarks here, that's the strongest hard backlog coverage in the last 5 years. So does that mean you just have a little bit more wiggle room to either side? Are you expecting maybe -- or giving yourself some room in the back half of the year? Just help me piece that comment together a little bit more, if you could. John Kelly: Sure, Andrew. I can start there. I wouldn't say that there's really any change in our guidance approach than we have in any given year. I think when we're at this call in February at the beginning of the year, we're always a little bit cautious because we still have a full year to project out. And so we don't like to get ahead of ourselves. So I think there was kind of the normal amount of caution from us in terms of the range, just reflecting the fact that we have to execute through the rest of the year. But certainly, based on the backlog coverage that you cited, the bookings conversions that we saw during the back half of last year as well as the start that we've had this year, plus just the overall size of the pipeline, those are all things that give us confidence in being able to achieve that guidance. And to the extent that we're able to execute as we expect, it's the type of stuff that could have the potential to push us towards the upper end of the guidance as the year goes on. Andrew Nicholas: Understood. And if I could just squeeze one more in, just on the AI topic. Is there any way to kind of quantify the number of projects or the revenue that is currently tied to or incorporates AI in some fashion? And then relatedly, anything from an economics perspective or a pricing perspective or even like a duration perspective that you've seen AI projects be different from your traditional work to the extent that more work is tied to AI or implementing AI or helping your clients with AI? Just wondering how that evolves the model, if at all? John Kelly: Sure, Andrew. Yes, happy to provide some color there. It's difficult to quantify across the entire business because we are deploying AI really across the business and in different areas. There's -- at this point, the large majority of our projects have some element of AI embedded in them. And this is not just speaking of digital projects, this is consulting projects as well as digital projects. As we look at sales conversions, thinking about it comparatively this year versus last year, there's been a noticeable shift in terms of projects that do have either how we would characterize a high component or a moderate component of AI-related delivery. And maybe the way to think about that is if you go back towards the first part of last year, maybe that was 25% of projects or something in that neighborhood that was around that size. This year, that's closer to 50%. If you look within our digital business and our data analysis business and our AI offerings specifically, that's up about 40% at this point year-over-year, which is one of the drivers of our confidence in digital growth as we head into 2026. Operator: Our next question comes from Tobey Sommer with Truist. Tobey Sommer: I was interested by your comment about having the highest backlog coverage of initial RBR guidance in 5 years. Could you frame that? I understand it's a high watermark, but I don't know what would be typical or an average and how this recent snapshot would compare to what those -- what would be typical? John Kelly: Tobey, yes, I can start there from a quantification perspective. So as you're familiar, typically at the beginning of the year, during the first quarter, you've got really high visibility. By the time you get out of the quarter into the second quarter, you've got significant visibility, but we still have work to do to close out the year. And then when you get to the back half of the year is typically when you're more in that, call it, 40% visibility range of the guidance. I would say this year, it's several percentage points higher than that really across the board. And one characteristic of some of the work that we've sold over the back half of last year are larger sorts of projects that span over multiple quarters. So it's not only giving us better visibility for the immediate quarters, that's kind of the first half of this year, but it also meaningfully improves our visibility as we get towards the back half of the year. So that's how I would quantify it, Tobey. C. Hussey: Yes. The only point I would add to what John said is just the breadth of the businesses and the coverage that it applies to, it's not that we have it equally across the board every single year, but in this particular year, it is actually quite solid across all 3 segments. Tobey Sommer: What are the areas in your portfolio where you're anticipating adding headcount the fastest here in 2026? John Kelly: Well, Tobey, I think the first thing I'd comment on is, from a Healthcare perspective, we actually made a lot of that investment in headcount in the back half of last year, and you'll see that come through in the metrics. So I think we really kind of set the stage for growth in Healthcare for next year, the guidance that we talked about with primarily the headcount that we added in the back half of last year, which doesn't mean that we won't have some additional adds, but I think a lot of that was already accomplished by the end of the year. I'd say outside of that area, two areas I'd look at would be our strategy and innovation business. We're both in the Healthcare segment as well as the Commercial segment. Right now, we're seeing a significant amount of pipeline as well as recent bookings in both of those areas where we're actively hiring to bring people in, to help support our growth there as well as within our digital capability. And I think that within digital, probably no surprise to hear, but I think employees with skills in advanced technologies and AI continue to be an area that we're investing in and to help both grow our digital business, but also to support the consulting business. And then another one that you'd see in the metrics is our managed services business, where we've added significant managed services heads towards the back half of last year and where I think you're going to see that trend continue into 2026 based on some of our recent sales in that area. Tobey Sommer: When you're talking to hospital customers, particularly those maybe in the pipeline for PI projects, what are they most focused on over the next 6, 12, 18 months to -- that influences their decision to go down that path with you or sort of hold off? C. Hussey: Yes. I think probably the best way to summarize it would be the descriptor of financial health transformation, which is a pretty broad encompassing description of a full range of things that we do, and we kind of outlined them in some of the areas of the script, but it ranges from performance improvement across all the various sub elements of performance improvement as well as the balance sheet and financial advisory, bringing better liquidity, visibility to decisions, around those kinds of things. It can lead into managed services as well as the strategy for growth aspects as well. So it's pretty all-encompassing. And I think we made a comment pretty clear that the time of incremental change to solve the bigger challenges they have, we're well past those days. We are now seeing a lot more transformational-type thinking that it spans across the full enterprise or the full institution. Tobey Sommer: If I could sneak in one housekeeping question. What do you expect performance fees to look like this year compared to last? John Kelly: I expect a little bit of an uptick there, Tobey. And so by way of providing some historical context, if you look over the past 2 years, 2024, if you look at our Healthcare segment revenues, the component of those revenues that was contingent based, was in the mid-20% range, a little bit north of 25%. This past year, in 2025, it skewed a little bit lower. It was in the low 20% range. I think our expectation at this point, which is still subject to the types of projects that we sell as the year goes on is that, that's going to probably return to more of the levels that we saw in 2024, more in that mid-20% range. Operator: [Operator Instructions] Our next question comes from Kevin Steinke with Barrington Research Associates. Kevin Steinke: Great. I wanted to follow up about your comment of selling larger projects and ask about specifically within Healthcare. I know you noted greater demand for integrated solutions. So when we're talking about larger projects in Healthcare, is it just that the performance improvement piece is larger upfront? Or are you selling more integrated work upfront? And if it's just performance improvement upfront, is the demand for integrated solutions then creating kind of a longer tail at clients as you maybe do follow-on projects in other areas with them? C. Hussey: It's a good question, Kevin. The typical way we start is we're just presented with a challenge or a business problem that we're looking for our thoughts on how we can solve it. And when we start off, sometimes they start with single areas of solution because that's what the client is bringing into focus and they can lead to other opportunities that are adjacent over time. That's very typical of what we see is that we expand as we gain relationships and understanding of their business and bring our expertise and suggestions to other areas of focus that can be impactful to them. Occasionally started on a more integrated full-scale basis, but it is really, as I said, a combination of full range of things that we do, pretty much we cover every element of their operation today. And so we're -- that I think is one of the things that makes us distinct in the market versus our competitors that we have just so many levers in multiple dimensions that we can help them, which is effective what leads to larger engagement sizes and candidly probably extend a little bit over time for longer stays at those clients. Kevin Steinke: All right. Great. John, you mentioned just the acquisition contingent consideration adjustment in the quarter. I believe you mentioned due to outperformance of certain acquisitions. Are there any particular that you would highlight there that have been outperforming expectations? John Kelly: What we've talked about, this isn't -- I probably won't get into specifics, Tobey (sic) [ Kevin ], of the earn-out considerations for those acquisitions. But certainly, we talked a lot about AXIA, which was in the fourth quarter of 2024, which has been one of the business units that -- or one of the areas of the business that's been really hot. Eclipse Insights, which we closed in June of 2025. That's been a really strong performer for us. I think as we talked about at the time, that -- the capabilities of that team in the middle revenue cycle area was just a perfect fit with what we do from a performance improvement consulting perspective. And we worked with them previously, so we knew it would be a good cultural fit. So that one is off to a great start. And then Wilson Perumal would be one more that I would highlight, and that was in September of last year, but they really bring some great strategy and performance improvement capabilities to our commercial team that together with Innosight, their capabilities and IP has really been resonating with clients together along with our digital capabilities that we have in the Commercial segment. So I think that -- if you think about that vertically from strategy to performance improvement to digital, we're seeing a lot of demand for those integrated capabilities right now in the Commercial segment. Kevin Steinke: Okay. Yes, sounds good. That's helpful. Appreciate that. And just lastly, given the recent dislocation you've seen in your stock price, I know it's your target to return about 50% of annual free cash flow to shareholders that's being accomplished through share repurchases. Is that -- are there any thoughts to maybe even accelerating the pace of repurchase based on recent movements in the stock? Or do you just kind of stick to that formula you've laid out? John Kelly: Kevin, it is dynamic. And so we do look at valuation considerations, quite frankly, both on the share repurchase and the M&A side. And certainly, when you do see the dislocation in the stock price, from our expectations, that does make it an attractive entry point for us, from our perspective, to buy shares. So I think I would expect to see more aggressive buybacks of shares at this price, and that's consistent with both what we've already done in the first quarter, but then as well as the Board authorization that we discussed in my remarks. Operator: Seeing no further questions in the queue. I'd like to turn the call back over to Mr. Hussey. C. Hussey: Thanks for spending time with us this afternoon, and we look forward to speaking with you again in May when we announce our first quarter results. Good evening. Operator: This concludes today's conference call. Thank you, everyone, for participation. You may now disconnect.
Operator: Thank you for standing by, and welcome to the Woolworths Group FY '26 Half Year Earnings Announcement. [Operator Instructions] I would now like to hand the conference over to Amanda Bardwell, Managing Director and CEO of Woolworths Group. Please go ahead. Amanda Bardwell: Good morning, everyone. Thank you for joining us today for Woolworths Group's half year results for the 2026 financial year. I'd like to acknowledge the traditional custodians of the land on which we meet today, Dharug Country and pay my respects to Elders past and present. Joining me this morning are Stephen Harrison, our Chief Financial Officer; Annette Karantoni, Managing Director of Woolworths Retail; Amitabh Mall, Managing Director of Group eComX; Sally Copland, Managing Director of Woolworths New Zealand and Dan Hake, Managing Director of BIG W. I will start with an overview of the group's performance in the first half and then provide an update on our medium-term strategic priorities. Steve will then cover our financial performance before I conclude with an update on current trading and the outlook for H2. Turning to Slide 4. We took deliberate action to rebuild customer momentum during the half through investment in the areas that matter most to our customers, including value, fresh and convenience. We are seeing greater stability across the group following key leadership changes and structure changes that are better aligned to our priorities and our execution in the half has progressively improved. However, we know we have more to do to deliver the best experiences for our customers. Turning to our financial performance for the half. Group sales in H1 increased 3.4% with all businesses growing sales on the prior year. Group EBIT, excluding significant items, increased 14.4% with solid EBIT growth from all of our reporting segments, supported by CODB reductions. Excluding the impact of industrial action in Australian Food in the prior year and supply chain transition costs, group EBIT would have increased by 7.9%. In August, we spoke about taking action to reposition the group for long-term sustainable growth, and we laid out our strategic priorities. While the key focus in the half has been on rebuilding momentum in the short term, we have clear strategic agenda and have made good progress on these priorities. We also said that we expected to deliver mid- to high single-digit reported EBIT growth in Australian Food for the year and an improved result in New Zealand Food and BIG W. We remain on track to deliver this in F '26. Turning to Slide 5. Customers remain value focused. We have seen value-seeking behaviors continue in an increasingly competitive retail environment. Broader cost of living pressures continue to weigh heavily on our customers' household budgets. Price remains the top priority for Australian customers when choosing where to shop with quality and freshness and range also critical. After signs of tentative improvement in customer sentiment towards the end of last year, persistent inflation and the prospects of interest rate rises have seen customers again prioritizing ways to save. They are telling us that compared to last quarter and a year ago, they are buying more products on special comparing prices across supermarkets and cooking more at home. Turning to Slide 6. We're clear in quarter 1 that the sales momentum in Australian Food was below our aspirations. And in response, we invested to improve our offer in value, fresh, availability and convenience. We upweighted our rewards and eCommerce offers as well as increased weekly promotions on key family lines like bananas, nappies and chicken breasts, to provide customers with more value and more reasons to choose Woolworths first. We also added more than 350 new products to our lower shelf price program with over 800 products now part of the range. We know that fresh is the gateway to the supermarket shop, and we invested more team hours across key fresh categories to ensure the best offer was consistently onshore and to improve freshness and the customer experience. We also remained focused on improving our retail execution. We held more stock weight on key promotional lines to improve availability for customers and increase the number of store deliveries over the weekends, helping to support an improvement in out-of-stocks voice of customer, which is up 10 points compared to the prior year. In December, we unlocked $1 million more online and delivery pickup slots to provide our customers with even more flexibility and convenience in the lead up to Christmas. We also provided highly competitive offers to new customers. Turning to Slide 7. The actions that we've taken have seen improved momentum in quarter 2 relative to Q1, with a stabilization in market share. Excluding the impact of industrial action in tobacco, Woolworths Food retail sales increased 4.7% in Q2, driven primarily by item growth, and we have seen this momentum continue into H2. Woolworths Food Retail VOC NPS ended up 10 points compared to the prior year, showing a strong recovery from the impacts of industrial action in the year. In addition to out-of-stocks, which I've mentioned, values the money scores have also improved consistently over the last 12 months, up 8 points on the prior year. Turning to Slide 8. We're also transforming our digital experience to deliver the best shopping experiences for our customers. The number of customers using our digital tools to improve their shopping experience is increasing, whether this is to make the shopping experience more seamless, get the best value or track their spending. We already have over 1 million customers using digital lists to shop each week in store and online. During the half, we launched Snap & Shop, which converts handwritten shopping list into digital list. It uses AI technology to match the items to the product the customer has bought before. I'm also delighted that Olive our much-loved digital shopping assistance is set to take a major step forward over the coming months through our extended partnership with Google. As part of this, Olive will transform into a market-leading conversational shopping companion, moving beyond the search and Q&A tool. Through agentic AI, Olive will bring together the shopping journey for customers, making the weekly shop easier in-store and online. Olive will be able to tailor menus based on customer preferences, identify specials and boost products as well as build faster, more predictive baskets. Customers can interact with Olive in different ways like sharing a photo of a handwritten recipe or using voice to build your shopping list. Turning to Slide 9. As convenience continues to increase in importance for our customers. Our large store network and leading eCommerce business remains a key differentiator. A modern, well-located store network is critical to maintaining our lead in an increasingly competitive space. During the half, we continued to invest in our store network to provide the best experience for our customers looking to shop in store, pick up via Direct to Boot or order a Woolworths on-demand or MILKRUN rapid delivery. Direct to Boot is now available in around 70% of our stores in under 2 hours and has rolled out to a further 60 stores in the half and MILKRUN to a further 135 stores. We also finalized a new partnership with DoorDash, which will be rolled out in H2. On-demand options are our fastest-growing propositions as customers seek more convenience with under 2-hour eCommerce sales growing at a compound rate of over 80% over the last 2 years. Moving to the next slide. While our primary focus has been on rebuilding momentum in the short term, we have also continued to progress our longer-term strategic priorities. We know we have world-class assets across the group, which give us a unique enduring competitive advantage and significant potential. If we deliver our strategic potential, I have great confidence in our ability to deliver long-term sustainable growth for shareholders. By delivering sustainable growth in Woolworths retail, ongoing improvements in New Zealand Food and BIG W, supplemented by higher growth from our complementary businesses and services. Our ambition is to deliver mid- to high single-digit EBIT growth over the medium term, supporting our double-digit total shareholder return aspiration. Turning to our first strategic priority in Australian Food. Our ambition is to be the first choice for customers in our cornerstone food business. Food is what we're famous for and a thriving food business provides a strong platform for the group's long-term success. We're making meaningful shifts for our customers to put us first and we're determined to win in fresh, convenience and range while delivering meaningful value and executing consistently well. We've made good progress during the half, but there is more to do, and this work will continue in H2. I will call out a few highlights from the half across 5 key areas. The fresh food people promise means delivering the best quality and fresh varieties for our customers. During the half, we progressed our strategic sourcing program to increase our direct supply of Fruit & Vegetables from our best quality producers with a review complete for around half of our Fruit & Vegetable sales volume. We know we need to improve our range and value across our Everyday Needs categories like pets and baby and we have been slower than we should have been to respond to this Heightened competitive environment. In response, we've already taken action to address range and pricing gaps as well as enhanced promotional activity to provide more value to customers. We are relaunching our Little Ones, nappies and wipes in baby. And in Pets, we've refreshed our own brand pet food ranges, including Baxter's, Smitten and Petstock's owned Billie's Bowl, which will be rolled out to stores. We have progressed our long-term strategy refresh in these categories with more to come in H2, and we remain committed to improving performance across our broader Everyday Needs category. I have already spoken about our progress in expanding our eCommerce network and increasing our capacity to meet customers' demand. However, we've also made good progress on eCommerce productivity agenda, helping to deliver a 93% increase in eComX directly attributable profit. These initiatives include team picking algorithms and the rollout of improved temperature zones in vehicles with the increase in profitability also supported by mix benefits from strong growth in higher-margin on-demand propositions. Value remains critical for customers, and we remain committed to lower prices for customers and restoring a more balanced net of everyday low prices and specials. We also rewarded our customers' loyalty by providing more value through Everyday Rewards with new campaigns to drive member sales and a high single-digit increase in value returned to customers through points earned. Our retail execution has continued to strengthen, with solid improvements in productivity delivered in the half. As of today, exit gates have been added to over half of our store network, supporting improved stock loss rates relative to H2 F '25. We also remain focused on managing costs through the delivery of our productivity agenda and our commitment to becoming a lower-cost retailer. Moving to the next slide in New Zealand Food and BIG W. On our second strategic priority and is to improve the returns in New Zealand Food and BIG W. Both businesses reported solid growth during the half, supported by their transformation agendas but this momentum needs to be sustained to return to double-digit returns over the medium term. In New Zealand, we completed the rebranding of the New Zealand floor network to Woolworths and rolled out a new store team operating structure to improve the team and customer experience. We have continued to improve our own brand range to differentiate our offer and launched over 280 new products across a number of key categories, which are resonating well with our customers. In H2, we're focused on building customer momentum in a challenging and highly competitive market while continuing to progress our transformation over the medium term. We know that we can further differentiate our offer for our customers through our focus on fresh, range, convenience and everyday value. In BIG W, a more favorable sales mix supported by better execution of seasonal ranges and availability in Clothing led to margin improvements in the half through a higher mix of full price sales. New and improved ranges have supported own brand growth of 8% in H1, which gives us confidence we're taking the right steps to reposition our range to provide better quality and more affordable options. The rollout of RFID technology will also deliver improvements in stock loan and availability. BIG W Markets expanded range continues to resonate with customers, with sales more than doubling compared to the prior year. As BIG W's gross transaction value, including the BIG W Market, increased by 5.8%. We are confident the performance of BIG W can continue to improve, but we will also ensure that BIG W has the appropriate foundation to be successful. Work has begun to separate the business from the group systems, which will enable BIG W to operate on a platform appropriate for a discount department store as well as providing the group with strategic optionality. Moving to Slide 13. Moving to our final strategic priority, which is to grow our complementary businesses and services. These include PFD and Petstock as well as group-wide service businesses such as Cartology, Everyday and Primary Connect. Collectively, these businesses contributed around 1/3 of the group's EBIT growth in the half, with PFD, Petstock and Rewards & Services, making the strongest contribution. In H1, we saw strong sales of double-digit underlying EBIT growth in Petstock and PFD. Petstock completed a value reset during the half investing in key products to improve customer value perception as well as launching a new pet cash loyalty program to complement its Everyday Rewards membership. While PFD growth remain strong, a highlight was the retention of key customer contracts in the QSR channel to support continued growth. We also secured 3 new sites and commenced construction of a new facility in WA to expand our national network. Rewards & Services sales increased by 8.6%, with mobile and insurance combined customers up 6% on the prior year. Cartology also continued to drive margin accretive growth for the group. PC+ delivered double-digit earnings in the half through higher customer volumes and better utilization of warehouse facilities. Turning to Slide 14. To deliver our strategy, we know we need to get the basics right by providing the retail excellence our customers expect from us. We also need to be a simpler business and increase accountability. Last year, we made significant management changes with a more consolidated and focused leadership structure. We now have key leadership in place and embedded a new Australian food leadership team, including in key commercial roles. We are committed to retail excellence and making every dollar count. We have delivered our $400 million run rate cost savings target by December. This has helped us to deliver a reduction in CODB as a percentage of sales in the half as well as fund investment in customer value. Key areas of savings included support office roles, goods for not resale and marketing and IT spend. This has helped us reset our cost culture as we restore and always on low cost discipline across the group. However, we recognize that for productivity improvements to be sustainable, they need to be driven by improving our processes and reducing work for our teams. And our leading AI foundations are already helping us do this, which I'll talk about more on the next slide. On Slide 15, over the past decade, we've established strong foundations to leverage AI through significant investments in digital and data capabilities. We have integrated capability into every part of our business and are now focused on unlocking the next phase of AI to deliver better experiences to customers, team members and to transform our operations and internal processes. This slide shows some of the areas where AI is already making a difference. We're delivering market-leading customer experiences through customer chatbots, which has helped us to automate over 60% of customer service contacts freeing up our team to focus on more complex customer inquiries. Our personalization engine is already delivering millions of tailored offers to our customers every week and I've spoken a not our extended partnership with Google to transform Olive, our digital shopping assistant. In our operations, we've leveraged AI to optimize eCommerce fulfillment for over 0.5 million weekly orders including shortening pick paths for our team members and optimizing last mile delivery routing. We rolled out Gemini for Workspace to our support of the team almost 2 years ago, and the adoption has been incredible. Today, 2 in 3 of our support office team members are using AI tools multiple times a day to unlock greater efficiencies. But what excites me most is how AI is helping our store team. Tools like Quick Assist are already being used by over 6,000 store team members every week, helping them to prioritize the most critical actions for their upcoming Fortnight, delivering a better experience for our teams and our customers. And finally, moving to progress against our sustainability initiatives. Last year, we celebrated a decade of partnership with OzHarvest and we've reached an incredible milestone during the half, providing 100 million meals to Australians in need over the last 10 years. In December, we achieved 100% renewable electricity across our operations in support of our net zero goals. We are also on track to achieve our Scope 1 and 2 emissions reduction targets by 2030. Finally, restoring soft plastic recycling services to our stores has continued with a market-leading 600-plus stores across the network, now offering this service again for our customers. I will now hand over to Steve who will cover our financial results in more detail. Thank you. Stephen Harrison: Thanks, Amanda, and good morning, everyone. I'll start today on Slide 19 with the half 1 '26 results summary for the group. As a reminder, these results are for the 27 weeks ended the fourth of January 2026. The Group sales for half 1 increased 3.4% to $37.1 billion with all trading segments reporting growth. Group's eCommerce sales increased by 14.6% with Australian Food, New Zealand Food, BIG W and Petstock eCommerce sales, all growing in the double digits compared to the prior year. Group EBIT before significant items was $1.7 billion, up 14.4% with the group's EBIT margin increasing by 43 basis points. EBIT margin for all trading segments were up on the prior year. There are some one-off impacts that impact the comparability versus last year, primarily the impact of industrial action in the prior year, which we estimate had a $240 million impact on sales and approximately a $95 million impact on EBIT in half 1 F '25 in Australian Food and supply chain transition costs. Normalizing for both these impacts, group EBIT growth would have been 7.9%, which includes the benefits from our strong cost and productivity focus in the half. Group NPAT attributable to equity holders the parent entity before significant items was $859 million, which was up 16.4%. This reflects higher EBIT, a modest increase in net interest costs in the half, somewhat offset by higher income tax. Group basic EPS before significant items was $0.704 per share, also up 16.4%. Including significant items, NPAT attributable to equity holders of the parent entity declined by 49.4% to $374 million, with EPS also down 49.4%. Turning to Slide 20 and our group trading performance. In Australian Food, total sales for half 1 were $27.6 billion, an increase of 3.6%. Excluding the impact of the industrial action in the prior year, Australian food sales growth in the half would have been 2.6%. In Woolworths Food Group Retail, which incorporates stores and eCommerce, Sales momentum improved in Q2 with growth of 3.2%, excluding industrial action compared to 2.1% in Q1. This was driven by an improved customer offer and strong execution, particularly over the key Christmas trading period, leading to improved in-store item growth and strong eCommerce growth. WooliesX sales increased 14.2%, driven by eCommerce growth of 15.3% and 8.6% growth from media words and services. Australian Food EBIT increased by 9.9% in the half. Excluding the estimated impact of industrial action of $95 million in the prior year and incremental supply chain commissioning and dual running costs. Normalized EBIT would have increased by 3.5% in the half. Gross margins rose 8 basis points to 28.6%, primarily reflecting the mix impact of an ongoing decline in Tobacco sales. Excluding Tobacco, the gross margin declined by 14 basis points on the prior year with growth in our higher-margin complementary businesses, offset by investments in lower shelf prices, while stock inflation not fully passed on and supply chain transition costs. CODB as a percentage of sales declined by 24 basis points with productivity initiatives and above-store cost savings helping to offset wage inflation and higher online mix. There was also a rate benefit due to the impact of industrial action in the prior year. While ex DAP and EBIT was up 78.8% in half 1 with eCommerce and media Rewards & Services delivering improved profit. The increase in eCommerce DAP of 93% reflected solid customer growth, double-digit sales growth, mix benefits from growth in higher-margin propositions, efficiency benefits and cycling both the industrial action and cold chain investments in the prior year. In Australian B2B, half 1 sales increased 4.9%, driven by strong PFD, PC+ and export meat sales. EBIT increased by 14.6% with double-digit growth from both PFD and PC+, the latter benefiting from increased volumes and better utilization of warehouses. New Zealand Food sales for half 1 increased 2.8% in New Zealand dollars, driven by eCommerce growth of 13.9%. Sales in Q2 were more subdued as market growth slowed. EBIT increased by 22.4% benefiting from a combination of higher sales, supply chain efficiencies and productivity and cost-saving issues, partially offset by store wages and D&A growth. Total W Living sales increased 2.7% in half 1 and EBIT was up 186%. BIG W sales increased 1.8% with BIG W GTV, including BIG W Market, up 5.8%. And BIG W EBITDA increased by 12%, driven by the higher mix of full price sales and strong cost control. EBIT increased by 122% with depreciation below the prior year following the F '25 impairment. Petstock sales increased 13.1% and EBIT increased by 49.6% supported by the inclusion of pet food and accessory businesses acquired in half 2 last year and network expansion. Underlying performance was solid with comparable sales growth of 5.8%, eCom sales growth of 24% and double-digit EBIT growth. The other segment includes group functions such as property, group overheads and Woolworths Group's investment in Quantium. The segment recorded a loss before interest and tax of $124 million, an increase of 16.3% on the prior year, largely driven by lower gains from property disposals and a rebuild of the short-term incentive provision. In the half, the group recorded significant items before tax of $698 million, largely related to a one-off cost associated with the remediation of award covered salary team members following the Federal Court decision on the 5th of September. This includes interest, superannuation and payroll tax and is within the previously disclosed range of $450 million to $750 million. Moving to Slide 21 and our key balance sheet metrics. Average inventory days of 31.2 were in line with the prior year. Australian and New Zealand Food and Australian BIG W were down on the prior year, offset by growth in Petstock and high average inventory holdings in BIG W, which pleasingly ended the half below last year. Average payables declined by 2.4 days to 41 days, reflecting lower Tobacco purchases in Australian Food, a reduction in BIG W purchases as we reduced stock levels over the half and payment timing impacts. ROFE, which is a 12-month rolling measure, was 15.2%, up on the prior year and F '25 largely reflecting group EBIT growth in the half. Australian food ROFE declined by 80 basis points, reflecting the decline in half 2 F '25 EBIT last year and a modest increase in funds employed due to the acquisition of The Kitchenary and our investment in supply chain automation. Moving to Slide 22 and our capital management framework. The group generated strong operating cash flows in the half, which were invested in sustaining our assets, funding our dividend and investing in growth and I'll provide some more color on the following pages. The group generated on Page 23, operating cash flow before interest and tax of $3.2 billion for half 1 F '26, an increase of 4.5%. This was driven by solid EBITDA growth before significant items of 8.5%, offset by a modest working capital outflow. The net working capital outflow was largely driven by payables timing in New Zealand Food with an additional payment run prior at the end of the half and reduction in nontrade purchases reflecting our above-store cost saving initiatives. Compared to the prior year, there was also an outflow related to the cash settlement of provisions for redundancies in team member remediation. Net interest increased by 2.7% with nonlease interest up 13.3%, driven by higher average debt, partially offset by lower floating interest rates. Tax paid declined by 35% due to lower F '25 tax paid in the first half of F '26 and lower tax installments in the current year. Cash used in investing activities of $1.2 billion primarily reflects the group's CapEx spend, which I'll talk to on the next slide. The prior year number was a lot lower as it included $383 million of proceeds from the sale of our final tranche of Endeavour Group shares. Group also paid $92 million for the purchase of equity interest in subsidiaries principally reflecting the acquisition of the remaining interest in MyDeal to facilitate its restructuring and closure. Dividends of $553 million declined by 53.5% with the prior year including a $0.40 per share special dividend, reflecting a return of capital to shareholders related to the sale of Endeavour Group shares. Finally, our cash realization ratio was 95%, modestly below our ambition of over 100% due to the working capital outflow and cash tax exceeding the income tax expense in the P&L. Moving to Slide 24. Operating CapEx for half 1 F '26 was $913 million, $88 million lower than the prior year. A reduction in sustaining capital reflected lower spending on store renewals due to initiatives to lower the cost per store in the half. This was partially offset by an increase in new store investment as reflected in the 13 net new stores opened in the half. Investment in digital and eCommerce, which includes our investment in automated CFCs. Gross CapEx increased by $97 million, reflecting higher property development spend, which can be lumpy. For the full year, we still expect operating CapEx to be approximately $2 billion, stable with spend over the last couple of years. Moving to Slide 25, and covering dividends and funding. The Board today approved a final dividend of $0.45 per share, an increase of 15.4% on the prior year, broadly in line with the increase in earnings. After payment of the interim dividend, our franking credit balance will be approximately $1.2 billion. Turning to our balance sheet settings. The net debt-to-EBITDA ratio was 2.7x, modestly lower than F '25 and are remaining well within our leverage threshold. We remain committed to solid investment-grade credit ratings and have significant headroom under our current ratings of BBB from S&P and Baa2 from Moody's. In half 1 F '26, the group completed $1.2 billion of debt financing with transactions focused on extending debt tenor and reducing refinancing risk for the group. And with that, I will now hand back to Amanda. Amanda Bardwell: Thanks, Steve. On Slide 27. In summary, as we look ahead, our focus remains on continuing to provide value to our customers, rebuilding customer trust and maintaining sales momentum while making further progress on our strategic priorities. I'd like to thank and recognize our team for their incredible efforts and in particular, for helping us deliver a fantastic festive season for our customers during the half. We are determined to get back to the level of retail excellence and performance our customers and our shareholders expect of us. And I'm confident the steps we're taking will lead to an improved performance. I look forward to sharing further progress on our strategy at our upcoming Investor Day in May. I will now turn the call over to the operator for questions. [Operator Instructions] Operator: [Operator Instructions] The first question today comes from Shaun Cousins from UBS. Shaun Cousins: My question is around price trust. You noted in August that, that was the greatest priority for Woolworths. Just curious around how that's improved during the half. And maybe if you could discuss that with reference to some of the activity you've done on pricing, the more of the rolling EDLPs under lower shelf prices and then you've been quite active with more impulse at gondolas and off locations. And then what you've done with ranging. We've noticed you've introduced a sort of a black and white entry level private label offering sort of there as well. So just curious where price trust is at and how you've improved that in the first half, please? Amanda Bardwell: Yes. Thank you. Thanks, Shaun. So certainly, let me just say that we totally understand and are extremely focused on this question of price trust. It's so fundamental to customers choosing Woolworths as a place to shop regularly, and we have put a lot of focus on that rightly so in the half. If I just start by talking about the action that we've taken. First and foremost, if you look at our performance when it relates to the value for money scores. If you look at that this time last year versus where we are now, they're up 8 points and have progressively improved across quarter-to-quarter. And so whilst I would say we still have more work to do there. We've certainly seen a progressive improvement. And there's things that we've adjusted during that period, as you know, like the introduction of lower shelf prices. Now that program is very much focused on recognizing that customers are looking for good value, that they also want reliable value each and every week that they're shopping. And what we've seen with that program is it's on the big products that really matter to families baskets. And we've seen that customers have really engaged with that lower shelf price program very strongly. And we're pleased to see unit growth is a good way of, of course, measuring that engagement, continue to increase, both across our own brand products, but also in the branded products that have participated. In own brand, for example, in lower shelf prices, it's sitting in that sort of mid- to high single-digit unit growth. But for branded products, it's actually in the lower double-digit numbers. And so strong participation there, and we see that, that has certainly matched an increase in customer perception on value. And then across the half, as you know, we did adjust our promotional programs as well to reflect that what we're seeing from customers is certainly a search for even more value. So an uptick from what we've seen in previous period prior to that. And so when we look at value in that regard, promotional participation has increased, customers adding more specials to their baskets and participating more in those programs. And one of the big shifts that we made there was, again, it relates to trust making sure that when customers visit our stores, those products are on the shelf. And as you had highlighted to us as many others had, we had an opportunity in that space. And so that's a mix of having the right promotions but also making sure it's available. So I think that's contributed to an improved perception. And then when we look at Everyday Rewards, we adjusted the program across the half there, just to give more members more value actually and recognize their loyalty, which has resulted in an even stickier member and some greater uplift that we've seen in member sales across that period. And so I don't think there's any one thing that we've done there. I would say there's a mix of value levers that we've been really focused on that each one of them play an important role. And together, that's created an improved momentum for us, both in terms of sales, but also in terms of items in baskets and transactions through Woolies. Now we've got more work to do. And the more work is particularly in the Everyday Needs category. And then of course, when we're looking at range. We have made some changes on range, but there's certainly more to come. Thanks, Shaun. Operator: The next question comes from Adrian Lemme from Citi. Adrian Lemme: Amanda and Steve, congrats on the result. I was interested in the turnaround in the GP momentum within Australian Food. So this half, up 8 basis points year-on-year while last year, we saw it down about 30 basis points. I know you've broken down the factors, but the Tobacco benefit was about 20 basis points benefit in both periods, and you also talked to Cartology and services income, but that also helped last year. So I was just interested if you could kind of talk to the actual delta, I assume stock loss was a positive factor this half, but were there also a better buying terms or other factors, please? Amanda Bardwell: Yes. Thanks, Adrian. I'll give an overview, and then Steve will add to it. So yes, the 8-basis point improvement in GP, as you rightly say, the cigarettes decline does have that sort of mechanical adjustment that you need to apply as you've called out. We're really pleased when we look at the GP results, the contribution from the complementary businesses. So it's Cartology, Everyday Rewards, really contributing substantially to our performance in Australian Food from a profit perspective. So that certainly assisted in the half. And yes, it has been a very promotionally intense period and the team from a commercial perspective on balance managed that very well. When we look at how that plays through. There's some pressure in the red meat categories, which no doubt will come to later in the discussions that we've had to absorb there. So that includes the absorption of that. And then from a supply chain perspective, I didn't call it out in the opening comments, but supply chain delivered a really strong result for us in the half. Yes, we had obviously strong volume uplift but aside from that volume uplift the productivity that the supply chain team delivered is very strong. So that was helpful. And then on the stock loss numbers, yet again, pretty relatively flat on last year. So we had that increase in H2. And certainly, we've seen an improvement on those exit rates across the half. So that were the sort of big drivers. I'm just going to check with Steve, any other things you'd add to that, Steve? Stephen Harrison: No, I think they're the main ones. On stock loss, actually, we were largely stable this year on last year in the half, but certainly an improvement on our second half performance of last year. But overall, it is an underlying reduction in GP reflecting the investments that we've made, but the team has worked hard to balance the levers within margin so that it isn't a bigger impact on earnings as it was the same last year. Operator: The next question comes from Tom Kierath from Barrenjoey. Thomas Kierath: A pretty strong cost result, which is great to see. I assume that's from the cost initiatives that you've announced kind of a year ago, just thinking about whether there's any extension of that and whether as you kind of, I guess, look more closely at the cost base, whether there might be another target or just how you're kind of thinking about the cost base more broadly going forward, please? Amanda Bardwell: Yes. Thanks, Tom. As we called out, as you say, a year ago, we're really determined to build a low-cost culture across lease. And so that was why we came out last year, and we're really clear both internally and externally on the need to reduce our costs. We want to be a lower-cost retailer. That is what's helped us in the half, certainly deliver better value for customers, but also see an improved result for the business overall. So you should expect to see from us an always-on focus. We haven't called out anything particular in terms of a new program per se, but it is our strong focus going forward to continue to look for ways to reduce costs. What was pleasing in the half was we saw strong productivity as we usually do from our stores and from supply chain, but it was complemented with the improved cost performance out of our support areas, no doubt. And within our cost lines, of course, need to take into account, we've also seen a substantial increase in eCommerce, which just from a mix perspective, does put an extra pressure into the cost lines. But I'll just hand to Steve because he does like to talk about cost a lot. Any other add, Steve? Stephen Harrison: I think going back to Tom's first point, it was a strong performance on cost in the half. If we look at the group costs grew by 2% across the group. And we've got a business that's growing volume, where we've got inflation that we need to cover. We've got mixed headwinds. The ongoing focus on frontline productivity is incredibly important, and we saw that delivered in each one of the businesses. But equally, we talked to the cost-saving initiative to try to take out $400 million of above store and support costs on a 12-month run rate basis. Actually, the team -- we announced that a year ago, and the team worked very hard on that actually at the back end of last fiscal and really front-loaded a lot of initiatives to the end of '25 and the first quarter of F '26. So we delivered roughly half of that $400 million in the half across the group. So clearly, a key contribution to being able to have cost growth below sales growth, actually, in each one of the trading businesses across the group. So a good result, but it needs to be always on, and that's really where we're shifting our focus. Operator: The next question comes from Michael Simotas from Jefferies. Michael Simotas: I've got a related question to the one on costs and particularly around in-store labor. I mean your execution has improved. A lot of the feedback in the industry is that you put labor into the stores, it's not obvious when we look at the P&L, the labor investment because your branch expense growth was much lower than your admin expense growth, and I would have thought the cost out program was reducing admin expense to fund the in-store. So can you give us a little bit of color around your store labor as well as how those costs are moving through the P&L, please? Amanda Bardwell: Yes. Thanks, Michael. I'll kick off and then I'll hand to Steve. If I just start with store labor as the starting point there. Yes, we did invest more in store labor, but we were also very targeted in terms of where would it make the most difference. And so when we looked at improving availability, for example, there were targeted adjustments that we made in terms of time of day across particular days of the week. And so it wasn't across our entire network. And then just looking at -- and then we also invested in Fresh in particular. And we continue to assess that across both the quarter and, of course, into this year as well as to what is making the most difference in terms of customer experience. Ultimately, that's how we're measuring the performance. And so yes, we did invest, but we invested in a way that was quite targeted and then continue to monitor that as we move through. I'll hand to Steve and then Annette, if there's anything you want to build on. Stephen Harrison: I think, Michael, just part of your question on the change in admin expenses. That does include the significant item expense in the half. And so that's why you see that cost growing. If you actually strip that back on an underlying basis, admin expenses went backwards, which is consistent with what we would have expected given the focus on that area of our cost base. Operator: The next question comes from David Errington from Bank of America. David Errington: It really is a good morning so I'm really happy to give that greeting. Amanda, what really pleases me with this result is it's been a fantastic result with cost savings, you've really driven productivity, which is fantastic. But what really stands out for me is that you've nailed the execution. Slide 6 and Slide 5 of the slides, please, if we could refer to. Slide 6 is just phenomenally positive. And it seems to me, and where my question is, I remember talking to you at the end of August. And one thing that concerned me is that you were very slow to respond to changes in the marketplace. You were very slow, whether it be picking up trends or you're on -- you picked up the trends, but you're too slow to execute. You seem to have been able to turn that around, whether the data is better. Look, I was really encouraged to see that you seem to be on top of what the customers really want. So whether your data input is better, but you seem to be responding better and quicker into the stores, can you spell out what you've done there? Is it the supply chain benefits that you've done that's coming through? Because it's just a wonderful achievement to get such an improvement in the voice of the customer when you've driven productivity and following Michael's point, when you've driven labor harder, when you've driven your costs and your efficiencies yet to still get such a great pickup in your voice of customer, it's just a great result. Can you go into how you've been able to achieve that? Because last August, I was a bit concern because you were talking about how you were too slow to respond. So it just seems to a phenomenal turnaround. Can you go into those details, please? That would be really appreciated. Amanda Bardwell: Yes. Thank you. And thanks, David. As you know, we're always focused on what we can do better as well. But if we just go back to that period. I'd start by saying that we made very significant people and leadership changes at multiple levels across Australian Food during that period and just prior to that trading period. And so the level of disruption, which was a combination of the work that we were doing to reduce our costs, but also our focus on how do we consolidate and simplify the structures within the group and then appoint the right leaders into those critical roles, whether that's the leadership roles across Australian Food, where we have Annette leading Woolworths Retail and Amitabh leading eCommerce or the commercial roles that sit across each one of our key categories and areas. At multiple levels, we made changes and there's no doubt that there was a high level of disruption and distraction. And I in no way want to make any excuses for that. But I do think that, that was the biggest determining factor around our performance during that period. And so what I've been very pleased to see is how the team now once they enroll, focused and they're focused on delivering across multiple horizons. And so yes, we put a lot of focus, as you say, on addressing what is it that customers are needing and wanting from us right now, how do we improve transaction growth and item growth, items in particular. And so there's very much that focus on trading the business today. But also on building the future and getting clearer around how we want to evolve the proposition of our supermarkets and our retail propositions in eCommerce going forward, whilst also being really clear with the team that we do need to be a lower-cost retailer and that we should be proud about that, and we should be focused on it because it enables us to deliver better value to customers and build a better business together. And so it was a disruptive period. We've got a highly focused team right now. We're very pleased to see improving momentum. We still think there's more for us to do in terms of work across our categories and our offers. But we're focused on building now on the momentum that we have. David Errington: You're doing very well. So well done, as I said, that you seem to be using data a lot better than what you were. So really pleasing to see them with AI coming in. Yes, it's promising. Thank you. Amanda Bardwell: Thanks, David. Operator: The next question comes from Bryan Raymond from JPMorgan. Bryan Raymond: One just to follow on actually from David's question just around -- and you mentioned Amanda, some personnel changes there. I just want to focus in on Australian Food, Annette appointed Peter McNamara to lead the long-life part of the business from a buying perspective at the start of the financial year. That preceded from what we've heard from the supply base, a strategic pivot towards impulse categories in store, particularly on promotion in gondola ends, et cetera, at the start of the second quarter. I'd just be interested as to how much that's impacted your sales results that you're seeing better uplift maybe in some of those impulse areas where you've been a bit underweight in the past from a store positioning perspective? And now that's really come back to the floor from what we've heard. I'd just be interested as to how much that's important and whether that's got a bit further to run going forward? Amanda Bardwell: Yes. Thanks, Bryan. Look, what I would say is that we focus on what is it that will make the most difference to customers. And how is it that we drive item growth. We knew that we had customers still shopping in our stores. And so I just want to come back and say this, yes, we've seen a substantial improvement in our grocery performance and across, as you say, some of those impulse categories. That's, I would say, primarily driven by a more disciplined execution. We've also seen strong fresh growth, which we're very pleased to see because it's a key part of our strategy overall. And then we have a team that's very focused on one customer plan. And so we talked about a lot of the structural changes that we've made and leadership changes. That's also been about bringing together a much more disciplined approach to the way that we go to market with our one customer plan across commercial customer loyalty operations and into the supply chain. And so we're just seeing now the start of the team getting into the right rhythm and flow, which really matters in retail, as you know. We have run sharper promotions, no doubt. I'm just looking at Annette, and I know you've been deeply involved in activating a lot of these. Do you want to add some color there? Annette Karantoni: Yes. Thanks, Amanda. I think that's right. We've done a lot really focusing back on listening to the customer, listening to our store teams and really building that momentum through great offers, great lower shelf prices and a very strong focus on planning right from planning right through to execution. What that's helped really shape is some of the things we just talked about, which is good availability in stores, particularly on some of the categories that you just mentioned in categories like impulse through promotional activities, where customers may not have thought they were going in to buy something but saw something on the shelf that they were interested in, but it was broader than impulse. I mean we have seen great growth in our drinks categories. The team has been doing a fantastic job, particularly through some of the hot weather that we've had through the half, but also through pantry essentials, through our meat business. So it really has been a really strong focus on retail discipline end-to-end that has really driven those opportunities. I would say, and I think, Amanda, you've called it, there is still a lot more to do. And so we're seeing some slightly better results in some of our Everyday Needs categories. But that is, of course, another area of focus. And so I would say we have a lot of work to do to make sure we're getting consistent delivery across the business. So more to see in the next half. Operator: The next question comes from Nicole Penny from Rimor Equity Research. Nicole Penny: In light of the previous comments regarding the cost of doing business reductions in the Australian Food business, could you perhaps comment on the time frame over which any potential benefits of consolidating the New South Wales operations at Moorebank will provide further benefits, please? And just another one, Australian B2B showed some encouraging operating leverage there. How much capacity has this business got to continue to grow earnings ahead of revenue, please? Amanda Bardwell: Great. Thanks, Nicole. Yes, we've been very focused on the work to transform our New South Wales supply chain. And I'll just hand to Steve to talk through the implications of that as that flows through. Stephen Harrison: Yes. Thanks, Nicole. So we have really been spending most of the last 12 months ramping up the NDC. And so we're now doing around 2 million cartons a week. We're not fully transitioned all the volume in there, but actually, we're starting to see results in line with what we'd expect out of the national distribution center. We are very much still in ramp-up mode in the RDC. So nice to be able to take many of you through that facility pre-Christmas. I think we are at 60-odd stores pre-Christmas, I think we have about 120 stores now last couple of weeks, we've been doing about 1 million cartons bearing in mind, we anticipate at maturity getting that to 2.5 million to 2.8 million cartons. So there's still quite a bit of ramp-up to go. So I think when we've talked about this in the past, we still do expect commissioning and dual running costs to continue from -- through F '26 at similar levels to F '25 and equally into F '27 as we start to go live with the Sydney chilled and fresh RDC, which will go live in actually F '28. And so -- we do, though, expect some of those commissioning and dual running costs to start to be offset by benefits. They will progressively ramp up over the next couple of years. So -- and really be at maturity. I think we talked about this in December when we had many of you at Moorebank around '28, '29 when they start to reach maturity. So we are -- but we are encouraged by what we're seeing, but we do recognize that are going to take some time to flow through the P&L. And then on B2B, I'm happy to take that question actually because within there, the 2 main businesses are PFD and PC+. Actually, both had strong results in the half. It is just worth being clear that the PFD results does include an extra week in the current year that's not in the comparative as we've just lined PFD's reporting periods up with the rest of group, but we have disclosed in the notes the adjustment that, that would have made to earnings in the half, if you just normalize it. And in fact, both delivered strong double-digit earnings growth in the half. we would consider there being a lot more runway in both those businesses to continue to grow earnings above sales through the medium term. Operator: The next question comes from Craig Woolford from MST Marquee. Craig Woolford: Amanda, great to see the momentum improving across the group. Can I just ask a question about that sales momentum, particularly on the food segment. I guess there's 2 parts to it. One is, is there any guidance you can give on what the strike impacts may have been in the first 7 weeks from a year ago? Is that still having an effect on reported results. But more fundamentally, I'm interested in what you see going forward on price and volume. The price inflation is dropping away a little bit, which is good news for consumers, but might make it harder to maintain sales momentum? Amanda Bardwell: Yes, yes, yes. Thanks, Craig. Just when we look at those first 7 weeks, it is important to know, as you point out, that we were recovering from the industrial action last year. And when we certainly look at the 7 weeks, we didn't last year call out a specific number. And we didn't do that for 2 reasons. One is supply chain was back up and running, and we were in flow in terms of delivering to our stores and to customers. And then we also didn't want to create, to be frank, just excuses for ourselves. We're very focused on just building the momentum as we move forward. So we don't have a number to specifically call out, but it is important to note that, that is a fact. And particularly, if we look at to give you a sense, Victoria. Victoria for us, was and continue to be very softer and lagged the rest of the states across really the last 12 months. And certainly, as we've come into now the first 7 weeks, you can see that Victoria is performing particularly strongly. So there's no doubt there's some cycling benefit there. When it comes to your second part of the question around just this price and volumes, we've been and we've been really clear that for us, it's about driving unit volume, and that's what we're focused on doing. You'll see from the average selling prices that we've shared that, yes, there has been a moderation in that. But I'll just hand to Annette to talk a little bit more because there's some color as we just look at the different categories within that, Annette, that might be just worth talking through. Annette Karantoni: Yes. Thanks, Amanda. Just from a general perspective, yes, the number of price increases coming through from suppliers have slowed since the peak in July and August. There's still a course coming through, but they have a different shape and a different ask and it is category specific. So yes, we're still seeing some come through in some of the food categories. But as you alluded to earlier, Amanda, that some significant shifts in the livestock, particularly in red meat. And of course, weather impacted in fruit and veg, so it's a little bit difficult to kind of pinpoint but we are still seeing some inflation in certain categories within food and veg, like capsicums and strawberries that are all very weather-dependent. So yes, it's slow, it definitely slowed from Q1 into Q2. And so I think it will be a strong watch out for us as we get into this half. Operator: The next question comes from Ben Gilbert from Jarden. Ben Gilbert: Just wanted to sort of dig into the 7 weeks and then a little bit more on how you think about the rest of the year, notwithstanding sort of the guidance. But it feels like you've just traded the business a lot harder and you have a lot more locations and impulse, et cetera, which is great. It seems like it's really resonating. I suppose 2 parts to the question, one is how profitable is that growth? If you have to dip into your own pockets. Your run rate obviously would suggest you can print an EBIT number higher than what you sort of tightened that range up to? And then the second part is, I'm just interested in how you're going to capitalize to try and drive a broader halo of that across the rest of the business, and particularly into those Everyday Needs categories and interested in the anecdotal comment you made that you are seeing some improvement in that as well? Amanda Bardwell: Yes. Thank you. I think we've demonstrated in the half that through a really strong commercial discipline that we've been able to deliver a solid GP result in the half. And certainly, as we move forward, we would see it being broadly consistent as we move into the second half now, in terms of that question, I just want to come back and say it hasn't -- this result has been driven by a series of factors. Yes, we've been more competitive than we said we would be. But it's also being driven by improved availability, genuinely better experiences in our stores and our customers are telling us that with the ratings and the feedback that they're providing to us. And so certainly, we've been more competitive. But this result is not primarily driven just by that. And we see it as being something that is sustainable on the go forward. And that's because it's a balance of levers that we've been using. Our lower shelf price program is absolutely delivering value back to customers in a way that is good for customers, consistency, reliability, but also good for us in terms of our supply chain and the efficiencies and the way in which we manage that, the promotional program, we have been more competitive and have certainly had more market-leading offers over the last 6 months, but we've managed that within the right commercial frameworks through both ourselves and our suppliers working with us. And then when we think about the role Everyday Rewards plays, we just broadened that out to have a lot more above the line or visible opportunities for customers to earn value, and that's something that is sticky. And that's not about a short-term sales or sugar hit. That's about building long-term growth with our customers and rewarding their loyalty. And we've really been very thoughtful about how it is that we manage all of that so that we can deliver more value for customers. We can manage our responsibilities around profitability of the business and the sustainability of it going forward. When we look at your question around Everyday Needs, again, Fresh was very strong for us. Grocery was strong and Everyday Needs, we saw a gradual improvement. And I'll throw it to Annette to talk more about this, but particularly in those key categories of baby and Pet, where we needed to see improvements. We took a series of actions there. We've still got more work to do in the personal care category, I would say, the one that we haven't seen as much traction. But Annette, do you want to just add a little bit of color of what are we seeing on Everyday Needs and what some of the actions that we've taken there? Annette Karantoni: Yes, I think you've called out the key categories, Amanda. In Pet, again, it's very much looking at multiple horizons. So in the near term, just holding that competitiveness in an incredibly and growingly competitive market unit price is very important, bulk packs are very important. So you saw some changes in the way that we approached some of those items within the Pet category. We also introduced a new range in Pet food in the dog category, 95 new products came in to the range with a real focus on the balance between branded products. Again, the bulk items where we thought it was required, and of course, some really good own brand products leveraging the relationship and the partnership we have with Petstock. So Billie's Bowl, Baxter, some great things came in, in the Pet category. So you'll start to see some shifts as that rolls through. It's actually rolling through right now. So Pets starting to see some -- they're minor. We've got a lot of work to do in the category, but we're starting to see some very small shifts. In baby, again, multiple horizons, working short term on making sure we've got the right value offers for our customers. We've done some work to reset quality of our own brand, Little One's products, they will start to come through, the wipes have come through now, but the nappies will start to come through over the course of the next couple of months. And earlier in the half, we introduced Millie Moon, which was a fabulous own brand product that now has a high single-digit share of that category. So again, you're seeing shifts within the baby category. Beauty, again, very different to the previous 2. It's all about being on trend. We launched some very good products during the half. BOOIE got a lot of attention, the video that launched BOOIE had 20 million views, which is extraordinary and just shows the nature of how customers are interacting with innovation and new categories, 50% of the customers that came in to buy BOOIE were new to the category. So we're seeing new customers come in, and there were a lot of new brands that launched through that beauty category in the half. So we're seeing very different in these 3 categories, in Everyday Needs. Different plans, but on multiple horizons. Amanda, if you don't mind, I would also say just back to the start of the question, we're also seeing a lot of growth in the way our customers are eating and what they're serving at home. So at-home consumption has been a very strong trend that we've seen continue to grow. So yes, impulse has been very important for the quarter, but so has some of the biggest moves in things like coffee. And so we've seen growth in coffee from, in particular, Cafe brands like Campos and grinders coming into that category, and we're seeing some really strong, very positive double-digit growth. So yes, it's in some of those impulse categories, but it's actually right across, whether it's protein, yogurts, it's actually -- it's going -- it's more broad than just the impulse category for sure. Amanda Bardwell: Yes, great. And then just to come back to the top of your question, Ben, when we look at the guidance that we've provided and that move to an upper single digit profit growth, important just to look at that in the context of everything that we've shared today in terms of customers are looking for more value, it is a very, very competitive market. And so we're very mindful as we look forward, that we expect customers to continue to seek value, competition to continue to increase. And so we've provided the update that we have with that context as well. Operator: The next question comes from Caleb Wheatley from Macquarie. Caleb Wheatley: Congratulations on the results. I just wanted to come back to this price trust discussion, particularly revisiting some of the prior comments you've made on sort of price perception issues rather than actual pricing problem. Are you able to just talk through sort of the quantum of reinvestment that's gone into price to manage that price perception issue? And then sort of looking forward, how much more work, if any, do you think sort of needs to go into focusing or resolving that price perception issue, please? Amanda Bardwell: Yes. Thanks. And price trust, price perception has been important as we've talked about one of the ways in which we measure that is to look at our voice of customer and the value for money scores that we are receiving. And importantly, we know that customers look at that at an individual item level and are making decisions around where they shop at an item level, but also at a total basket level. And so that's also informed our decisions around how do we make sure that customers are realizing the maximum value. Again, we've used multiple levers across our promotions, our lower shelf price and everyday rewards to make sure that we create the right value for customers we know they're looking for it. But price trust is something that builds over time. And so we certainly know that we've still got work to do to improve trust in Woolworths and trust in our prices, and that will remain a focus for the next 12 months ahead. Importantly for us, this is why we committed to the lower shelf price program because that's about reliability. Customers want to be able to count on us. And so that's been an important element of the offer that we have in place, alongside reaching customers across probably a broader mix of media than we have in the prior 12 months as well. So we have adjusted the way in which we talk to our customers and reach them as well across the period, which is important when everyone is looking for value. So I would just -- there's no number that I would particularly call out. We're always investing in price, not just in lower shelf prices, but in specials as well. We'll continue to do that, and we expect to continue the need to focus on building price trust over the next 12 and 18 months. Operator: The next question comes from Richard Barwick from CLSA. Richard Barwick: Amanda, I wanted to talk about BIG W. That was a strong -- much stronger result than I think many were expecting. And you've talked about -- it's on track to be EBIT and cash flow positive. Not surprisingly, you're talking about the profitability being weighted to the first half. I think everyone would expect that. What does that mean, though, in terms of profitability for the second half? Are you flagging that you can actually turn a profit from BIG W in the second half? Or should we be expecting another loss? Amanda Bardwell: Yes. Thanks, Richard. Look, we're not giving out specific numbers -- the profit number for BIG W, but we were wanting to reinforce and just help everyone understand, as you know, it is heavily weighted due to Christmas and seasonal sales in that first half but that we are remaining committed to the commitment we gave in August around being EBIT and cash flow positive. Dan, is there anything you wanted to add in that context? We're not going to be talking about the specific numbers in terms of profit, but any other context? Daniel Hake: The only other context I would give is that the health of our sales have been much stronger in the first half, especially in categories like Clothing and Home where we flowed seasonal stock a lot better. We got in and out of inventory a lot better and those processes are maturing. And so we do expect half 2 and half 2, the improvement of the health of sales and the improvement of the shape to continue. In absence of a specific EBIT number, we do expect improvements year-on-year. Richard Barwick: So improvement second half and second half, that's helpful. Daniel Hake: Yes. We're comfortable with that. Operator: The next question comes from Phil Kimber from E&P Capital. Phillip Kimber: Amanda, just a question on -- there was a specific comment you made in the actual announcement that said heightened competitive intensity in food eCommerce. I was just wondering if you could provide a bit more color around that. Is that being led by sales being more aggressive? Or is something else going on there? Amanda Bardwell: Yes. Thanks, Phil. Yes, that was really a reference to the fact that as we know Coles launched the Ocado partnership some time ago and have been very focused in the market in eCommerce, driving a lot of activity in that space. And then as we look at the on-demand space, in particular, with different platforms, whether that's Uber or DoorDash or our own. And customers are now really focused on that on-demand to our opportunity. Certainly, we're seeing competition increase, in particular around customer acquisition. So just looking at Amitabh, can you just build in terms of some of the intense competition we are seeing, particularly in Sydney and Melbourne? Amitabh Mall: Both to add to what you said, Amanda, one is from traditional competitors, where with Coles, with our stepped-up performance and their focus with their carton boxes is actually -- they have definitely sped up in terms of competitive intensity. But I think what's more interesting in the more recent times is the growth with what I would say are formidable, global retailers, whether it is Costco already with strong presence in Australia and for the first time, offering their products online, or whether it is with Amazon having entered the fray as well. So that is -- we're clearly seeing, a lot more competitive action in the eCommerce space and we are obviously quite determined to stay competitive and to make sure that we deliver -- we are the first choice for our customers. Operator: The next question comes from Peter Marks from Goldman Sachs. Peter Marks: My question is just on Australian Food business, interested in hearing about the launch of the customer offset -- sorry, offer reset program that you've launched. And I guess the details around that, what's involved? Is it a range review program? And I guess what you're looking to achieve with that and the timing of any benefit we should expect? Amanda Bardwell: Yes. Thank you. Thanks, Peter. So the customer offer reset is something we're running across the group. So that includes Australian Food, our New Zealand food business and BIG W and particularly relates to the relationship that we have with our major suppliers that connect with us across those 3 businesses and across the 2 countries. We really wanted to first and foremost simplify the connection with Woolworths, and that's important for us and important for our supply partners and also engage in the right strategic conversations around how we reset those categories for the future so that we grow together. And so it is a new way of us engaging with our supply partners, but it is very much -- and hence the name, customer offer reset. It is very focused on what is it that customers are looking for across individual categories. and how do we work with those larger suppliers across our 3 businesses to unlock the full potential of those categories with customers in mind. And so it's a program that will progressively roll out across the next 12 and 18 months. We've started with a series of 4 key categories that are underway now. And as we've shared with our supply partners, we want to partner together with them on this. And so we will take the learnings from those first 4 categories as we then roll that out across the rest of our categories. And so it does align broadly with range reviews so that we can give everyone the appropriate time, but it's a new way of us working. Peter Marks: So the new way is, I guess, you're buying across the 3 different businesses now. Is that the right way to think about it? Amanda Bardwell: I would say that we're looking collectively together with our supply partners on the opportunities that exist in each one of the categories. Each one of those businesses has a slightly different customer base, slightly different need, but we're bringing together a shared conversation with our supply partners as to how we do business and how that plays out in each one of those businesses and categories will look and feel a little bit different. And we'll learn more across this year. Operator: The next question is a follow-up from Michael Simotas from Jefferies. Michael Simotas: One on eCommerce profitability. Your margin effectively were close to double year-on-year. And I know the first half of last year was pretty tough for the business. But the way we calculate it, it's about 3.5%, which looks like a very good outcome given that competitive dynamic and customer acquisition costs that you talked to. Can that business continue to scale and deliver leverage from here? Or do the costs become more variable? Amanda Bardwell: Yes. It was a strong performance from the eCommerce business in the half. And importantly, as we know, our eCommerce business is primarily fulfilled from stores. And so it's a really important part of our offer overall. The short answer is, yes, we do think we can continue to improve the profitability and performance of eCommerce. And there are a number of things that drove that in the half. And I'll just hand to Amitabh to add a little bit more in terms of the key drivers of that eCommerce results. Amitabh Mall: Thank you, Amanda. So the 3 things that we think have really made a difference in our profitability performance in the half. First is the proposition mix itself, where we've consistently invested in our direct-to-put capacity that has driven growth in our collections. Collections have grown at more than 20% compared to the rest of the business having grown at 15% in eCommerce. And the second is continued growth on demand, which is also margin accretive as a proposition for us. So both the propositions which are margin accretive have grown faster based on the investments that we've made both over the years as well as more recently. Second driver is the fractionalization of the fixed cost itself, which we have reached a scale in the business where with continued growth in the business, we continue to fractionalize our fixed costs, and we expect to see that benefit coming through. And finally, operational discipline in terms of just the productivity pipeline that we've had driving both our picking costs and Amanda referenced in different conversation some of the AI tools that are in place or to drive better picking -- to optimize our picking as well as in the last mile delivery cost. So all 3 have driven, and we expect all 3 to be sustained going forward as well. Stephen Harrison: Just one build, Michael, I think, in that growth in the half, there are some cycling benefits both the industrial action, but we did make a material investment in cold chain integrity last year, which we've now structurally found ways to reduce that cost and retain that integrity. So the profit growth moving forward, I wouldn't necessarily be baking in that type of expansion each half. Operator: The next question is a follow-up from Adrian Lemme from Citi. Adrian Lemme: I had a question actually on New Zealand. I understand the implemented changes in the store operating model partway through the half that significantly reduce the number of managers. Just wanted to know, is this a key driver of the lower CB margin. But then I guess, more importantly, can you talk about how the new model compares to Australia? And if it's not already on that kind of model, could Australia sort of follow down the line, please? Amanda Bardwell: Yes. Thanks, Adrian. So we did implement in quarter 2. We've been testing this in New Zealand for quite some time, a new operating model. which moved from really having that department focus to more of a functional focus in terms of the way that the operating model itself works. And during the period, it was really about implementing quite a substantial change and if anything, to be perfectly frank, it probably impacted a little bit of our performance in quarter 2. Just as we made such a large scale change across the entire New Zealand business. We think it's a great model, certainly for the future, but we want to see that continue to improve performance across New Zealand first. And so when you're looking at the implications of that from a cost perspective, certainly, we hadn't yet seen any substantial benefit from that flow through in the first half. And right now, as we ramp up that operating model, we've also got more focus. And so it will take some time for the benefits of that to materialize. I'll hand to Sally in a moment to see if there's anything else you wanted to add to that. On your question of Australia, look, right now, what we're focused on is let's see how this performs in New Zealand for us. As I say, we've been testing it for some time anyway. But when you release things out at scale, you always learn more and so we'll be focused on learning from our New Zealand business first and then determining whether or not that's the right model for us in Australia. Sally, any other reflections in terms of operating model? Sally Copland: Thank you, Amanda. Yes, absolutely. I think the model is predicated on us being able to deliver a better customer experience and actually building stronger momentum in retail and careers for the team. It was a very significant change in the New Zealand context. So 2,500 new team members, that's 13% of our frontline workforce who are new to our business, and so supporting them to onboard and be part of our team has been a very big focus. And we actually have 300 team members who are in new leadership roles for the very first time. And that's about helping really build a strong pipeline for us all the way through to store managers and beyond. So we are in the throes of embedding this model and really focused on how do we get back to basics, make sure we've got the fundamentals of our routines right and that we're in a stronger position going forward. Operator: The next question comes from Craig Woolford from MST Marquee. Craig Woolford: This might be for Steve. Just is that -- in the full year results, just about the outlook for FY '26, there was specific items called out around the Tobacco headwind. It was supposed to be $80 million to $100 million across the year, the workforce system, $60 million and then the lower shelf price of $100 million. Can you just clarify how those factors impacted the first half results? Stephen Harrison: Yes. So from a Tobacco perspective we called out $80 million to $100 million estimate. We think that's still the right estimate for the full year, but it's slightly weighted to the first half. So there's a disproportionate component in the first half. In terms of the technology investment, so there's multiple systems that were end-of-life systems that we're replacing, not just the time and attendance. We called out a $60 million estimate roughly 50-50 across the 2 halves. And LSP, we haven't specifically called out the number, but we said it would be a minimum investment of $100 million in our own brands. But obviously, we been able to get a scale that program and to get a lot more suppliers on board. So -- but broadly, if you think about we launched it in May last year, you expect roughly, it would split 50-50, maybe slightly less given the cycling impact in the second half. Operator: The next question is a follow-up from Bryan Raymond from JPMorgan. Bryan Raymond: Earlier, I think, Amanda, you might have mentioned some strategic optionality with BIG W. I'd just like to elaborate on that a little bit, if we can. Profitability has improved, would a potential exit or sale of this business beyond possible or one that you'd consider? Or did you mean something else by that strategic optionality comment? Amanda Bardwell: Yes. Thanks, Bryan. Firstly, I just want to acknowledge that it is very good to see an improved performance from BIG W and the transformation plan that the team has put in place that they've been very focused on delivering is showing some good improved performance. And so we're very pleased as is the BIG W team to see that. When we're talking about BIG W, we want to make sure that, that business and that team is super focused on their transformation. They've done a great job, and there's more to do there. We talk about the IT separation primarily because giving BIG W the independence to be able to build the right platforms that are fit for purpose is really important for a discount department store. BIG W has been deeply integrated across the Woolworths technology systems and as a result, has drawn on a lot of the food technology. We want to make sure that as the business moves forward, particularly when we look at areas like eCommerce, which is driving a lot of positive growth for BIG W that they've got the right tools and the right technologies to be able to drive that forward. So there's nothing that we would further update with regards to BIG W other than what we've already shared. Thank you. Operator: Thank you. That does conclude the question-and-answer session for today as well as today's call. Thank you for participating. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and welcome to the Sandoz call today. I will now hand over to Craig Marks, Head of Investor Relations, for his opening remarks. Craig Marks: Thank you, and welcome to the Sandoz Full Year Results Call for 2025. Earlier today, we published the press release and an accompanying presentation on our website, which we'll follow on today's call. You can find these documents at sandoz.com/investors. Joining me on today's call are Richard Saynor, Chief Executive Officer; and Remco Steenbergen, Chief Financial Officer. Please turn to Slide 2. Our results announcement presentation and discussion include forward-looking statements. Please see our disclaimer here. Please turn to Slide 3. Richard will begin today's presentation with the highlights of 2025, followed by an update on the business. Remco will cover the financial performance as well as the guidance for 2026. Following the wrap-up of the presentation, we'll be happy to take your questions. And with that, I will now hand over to Richard. Please turn to Slide 4. Richard Saynor: Thank you, Craig, and hello, everyone. It is a pleasure to welcome you all on the call today. Our second full year as an independent company was a very successful one, and I'm proud to share our achievements. 2026 is a significant year for us as we celebrate some very special anniversaries that reflect our legacy and our future. 20 years ago, Sandoz pioneered the world's first biosimilar, opening the door to advance treatments for more patients and setting new standards for access and affordability. 80 years ago, we transformed a brewery into a penicillin factory, making antibiotics more accessible and saving millions of lives. Kundl remains Europe's last major end-to-end producer of penicillins, a legacy of reliability and innovation. And I'm delighted that we're also celebrating 140 years of Sandoz. These milestones are more than history. They are a source of pride and inspiration as we build our future that remind us of the impact that we have made and the responsibility we carry to continue expanding access for patients everywhere. Please turn to Slide 5. I am proud of the progress that we made last year when we cemented the fundamentals of our long-term growth potential. Let me take you through the 4 key areas where we made meaningful steps forward. We advanced our deep, diversified and industry-leading pipeline last year. Crucially, this pipeline already includes 27 biosimilars. 2025 was also a year of successful launches. We rolled out a number of important medicines like Pyzchiva in the U.S., Afqlir in Europe and Australia and Wyost and Jubbonti in the U.S., Europe, Brazil and Australia. And as the last of our Capital Market Day commitments, I was delighted that we launched Tyruko in the U.S. On the development supply side, we completed the acquisition of Just-Evotec Biologics Europe at the end of the year, which strengthens our technology base and accelerates our ability to scale next-generation biosimilar development and manufacturing. The construction of our biosimilar hub in Slovenia is also progressing very well. And finally, it was a year of strong results across the P&L, cash flow and balance sheet. Net sales grew by 5% at constant currencies to $11.1 billion. Our core EBITDA margin expanded by 160 basis points to 21.7%, driven by improving mix of sales, cost control and operating leverage. The return on our invested capital increased to 14.5%, reflecting growth of 2 percentage points. And finally, we're proposing to increase the dividend per share by 1/3 to CHF 0.80 a share. Now let's move to more details of the growth in net sales, starting with Slide 6. Looking firstly at the full year, net sales surpassed $11 billion for the first time, supported by biosimilar growth of 13% at constant exchange rates. Whilst generics provided a strong foundation for our business, the overall performance reflected the increasing contribution from biosimilars and strong execution across our organization. Biosimilars now represent 30% of total net sales, marking a significant milestone for our business and one we have proudly achieved earlier than expected. I am proud to say that quarter 4 represented our 17th quarter of consecutive growth. Underlying sales up by 7% and biosimilars representing 31% of the total. Please turn to Slide 7. Generics remain a core growth engine for Sandoz. Here, you can see some examples of the many launches last year, such as iron sucrose, rivaroxaban and enoxaparin sodium. We have more than 400 generic assets in development, targeting an originator market worth around $220 billion. Moreover, we're focused on a significant number of LOE opportunities, particularly in oral solids and injectables. Lastly, our global generic footprint includes 4 development centers and 15 in-house manufacturing sites, ensuring agility and reliability in supply. It is worth noting that the adverse impact last year on penicillin B2B business. Asian suppliers engaged in significant price dumping for key penicillin APIs, including some that we sell to other businesses. This impacted the sales value of this part of our business in the second half, and we expect it to continue impacting our generic performance in the first half of 2026. Furthermore, the recently announced introduction of minimum import prices in India for some penicillin APIs may well divert low-priced supply towards Europe, which continues to depend on Asia for key intermediates. Europe's growing dependency on a handful of global suppliers underpins our call for a fundamental shift in how Europe thinks about antibiotics, the backbone of modern medicine, especially given that they're a key part of the continent's security infrastructure. Please turn to Slide 8. Now turning to biosimilars. 2025 was a great year for this key part of our future. We delivered multiple successful launches that reinforced our leadership and execution capabilities. There were 2 major launches for Pyzchiva. Firstly, we launched in the U.S. earlier in the year, which included private label options. Secondly, we introduced the first commercially available auto-injector for ustekinumab in Europe, a major step forward in patient convenience. Next, Tyruko saw strong uptake in Europe and was rolled out across the U.S. in November. We also achieved a significant milestone with Wyost and Jubbonti, the first denosumab biosimilars in the U.S., followed by the launch in Europe in quarter 4. And finally, Afqlir entered the European market at the end of 2025, with the U.S. launch anticipated by quarter 4 this year. And you probably saw the great news last week that the FDA has approved an expanded label for Enzeevu to include multiple retinal indications. I fully expect these launches to perform strongly and contribute meaningful growth for Sandoz. Please turn to Slide 9. Let me now walk you through the continued performance of Pyzchiva and Hyrimoz across our key markets. Starting on the left, Pyzchiva in Europe, we see very solid trajectory. What's particularly encouraging is the sustained increase in biosimilar participation, which continues to expand quarter-after-quarter. This reflects not only strong underlying market growth, but also the faster uptake of ustekinumab biosimilars compared to what we saw with adalimumab. Alongside the auto-injector rollout last year, we're getting ready for more Pyzchiva launches in Europe and international in 2026. Hyrimoz continues to demonstrate strong global growth. Our market share remains stable, and we continue to see strong increases in biosimilar participation. We are very well positioned to benefit from this trend. Please turn to Slide 10. Now let me turn to Tyruko and Omnitrope. Starting with Tyruko, we are very pleased with the continued rate of adoption in Europe. Since launch, our market share has grown steadily, reflecting the strong clinical and economic value proposition of Tyruko as the only biosimilar approved in Europe for relapsing remitting multiple sclerosis. Alongside the recent launch in the U.S. in quarter 4 and additional launches are planned across other markets, we expect uptake to further expand as awareness and familiarity grow. Omnitrope continues to demonstrate exceptional stability and resilience in a highly competitive category. We've maintained the leading global market share, and we're delighted with the performance, especially in the international region. Overall, both medicines showcase the strength and diversity of our portfolio, Tyruko as a high potential launch with accelerating adoption, and Omnitrope as a reliable, long-standing leader in the class. Please turn to Slide 11. Let me now highlight the strong progress that we're making with Wyost and Jubbonti. Firstly, in the U.S., our launch execution has been highly effective. We were able to rapidly leverage our commercial footprint that covers more than 80% of the denosumab market volume to ensure broad visibility and accessibility from day one. We also successfully established average selling pricing, a critical milestone for provider confidence and reimbursement stability. And I want to call out the performance of Wyost and Jubbonti in Canada, where we've taken extremely high levels of share across the denosumab biosimilars. Turning to Europe. The launch at quarter 4 has been progressing well. Our leadership across both hospital and retail channels has helped us execute with speed and precision. This strong on-the-ground presence is enabling us to secure access, build awareness and support physicians as they integrate Wyost and Jubbonti into clinical practice. Overall, being first to market with these medicines has given us a powerful head start, and the early update confirms that our strategy is working. We're well positioned to continue building momentum as access, adoption and payer coverage expand across the regions. Please turn to Slide 12. Our pipeline is where the next wave of growth begins and is designed for high impact. We're advancing targeted development in key biologics and therapies with a clear focus on access areas that matter most to patients and health care systems. In the nearer term, we have several assets already in regulatory review. Looking further ahead, our clinical development portfolio includes major immunology and oncology assets such as Opdivo, Keytruda, Ocrevus and Tecentriq, biosimilars to some of the most widely used biologics today. Finally, we have a significant number of assets in early development. This pipeline positions Sandoz to lead in biosimilars for years to come, delivering scale, innovation and access to patients. Please turn to Slide 13. I am delighted by our sustainability progress in the year. In 2025, we served over 1 billion patients across more than 100 countries, a scale that underscores our global responsibility. Through our portfolio and partnerships, we've delivered $26 billion in savings to health care systems. This is a meaningful relief at a time when affordability pressures continue to rise. We've delivered measurable reductions across our emissions footprint, down 18% in Scope 1, 15% in Scope 2 and 1% in Scope 3. We've also submitted our SBTi targets for validation, covering all emission scopes, reinforcing our commitment to transparent climate action. Finally, on governance and integrity, we strengthened oversight and risk-based controls to ensure swift information decision-making without compromising compliance, and we continue to lead in transparency with open, compliant transfer of value disclosures across more than 36 markets aligned with global codes and standards. Altogether, these achievements reflect who we are as a company driven by purpose, committed to access, anchored in strong values and focused on delivering long-term impact for patients, partners and our people as well as society. Please turn to Slide 14. To secure long-term leadership in biosimilars, we're expanding our pipeline and commercial presence have been accompanied by significant investment in strategic integration and the expansion of in-house capabilities. I'm excited to say that this year, we'll begin to complete building of our end-to-end European biosimilars hub in Slovenia that includes a state-of-the-art technical development center in Ljubljana, a high-tech drug substance production site in Lendava and an aseptic production center in Brnik. These facilities will give us full control over development and manufacturing, ensuring quality and scalability. Secondly, our acquisition of Just-Evotec Biologics in Europe at the end of 2025 marks a major step forward. This brought us more capacity for growth as well as proprietary platform for integrated development and indefinite license to use Just-Evotec's continuous manufacturing technology. Finally, our overall European biosimilar manufacturing network will position us as a unique leader of in-house development and production, strengthening supply security, enabling us to respond quickly to market needs. Together, these investments will allow us to capitalize on the overwhelming biosimilar market opportunities that lie ahead. And with that, I hand over to Remco on Slide 15. Remco Steenbergen: Thank you, Richard, and hello to everyone. Please turn to Slide 16. We delivered strong underlying net sales growth of 6% in 2025, driven by another year of double-digit expansions in biosimilars. Importantly, this momentum was broad-based, with all regions contributing, underscoring the resilience and diversification of our business. Core EBITDA increased by 14%, with a margin expanding by 160 basis points to 21.7%, driven by a favorable mix shift, disciplined cost management and continued operating leverage. On cash generation, we increased management free cash flow by USD 435 million to USD 1.5 billion, reflecting a strong underlying EBITDA performance. We improved core ROIC by 220 basis points, reaching 14.5%. This uplift reflected an improved operating performance and disciplined capital deployment. It's an important indicator that our strategy is delivering not only earnings growth, but equally also high-quality returns. Finally, core diluted EPS grew by 33%, benefiting from the increase in operating profit, reduced financial expenses and a lower effective tax rate. Please turn to Slide 17. Turning to our top line performance in more detail. Our generics business accounted for 70% of the total. The main growth engine, however, continues to be biosimilars, with the results reflecting successful launches and sustained adoption. Regionally, the performance last year was well balanced. Europe remains our largest market, representing 54% of total net sales and delivering on strong underlying demand across both generics and biosimilars. International markets net sales were USD 2.7 billion or 24% of sales, supported by a robust performance in emerging markets and continued expansion of access-driven programs. North America contributed 22% of total net sales. Please turn to Slide 18. Over the full year, the 18% underlying biosimilars growth included encouraging contributions from Pyzchiva and Hyrimoz in Europe and Omnitrope and Hyrimoz in International. In North America, Wyost and Jubbonti got off to a flying start. Generics growth of 2% for the full year reflected many successful recent launches, including paclitaxel in North America, with International performance benefiting from price accretion. In Q4, biosimilars delivered an even stronger underlying growth of 20%, with generic sales up by 2%. Now let's have a look at the performance of our 3 regions on Slide 19. Europe sales grew by 6% in the year and in the quarter. Strong growth in biosimilars continued, partly reflecting successful launches over the past 2 years, including Hyrimoz, Pyzchiva and Tyruko. International sales were up by an underlying 9% in the year and even by 14% in the quarter, with strong contributions from Hyrimoz and Omnitrope. North America sales grew by 5% in the year on an underlying basis and 2% in the quarter, with the latter period adversely affected by the impact of a onetime gross to net generics adjustment in Q4 2024. Please turn to Slide 20. In breaking down the sales performance for 2025, you can see that volumes contributed 8% while price erosion remained at a moderate 3%. Foreign exchange had a positive impact of 2%. Let's now move to the P&L overview on Slide 21. Core gross profit increased by 5%, reaching USD 5.6 billion. A broadly stable gross profit margin of 50.6%, mainly reflected the favorable movement in the mix of sales, offset by price erosion. Core EBITDA growth of 14% at constant currencies was primarily driven by our growth while keeping our SG&A costs in U.S. dollars stable. Going forward, our ambition remains to limit SG&A cost increases to the absolute minimum, while we will support our pipeline through focused and increased D&R investments. Finally, core EPS grew by 1/3. Overall, 2025 was a year of strong profitability, underpinned by biosimilars growth and disciplined execution across the business. This positions us well for continued margin expansion and long-term value creation. Please turn to Slide 22. Moving to the core EBITDA margin performance. This increased by 1.6 percentage points from 20.1% to 21.7%. The favorable mix of sales benefited the margin by 1.3 percentage points, while price erosion had a 1.1 percentage points adverse impact. We reduced the ratio of OpEx to net sales, led by SG&A, reflecting disciplined cost management and the success of our transformation program. This illustrates the progress we are making in leveraging our cost base. From the P&L, now let's move to cash on Slide 23. I was really delighted with the USD 1.5 billion of cash we generated last year, which represented the $435 million increase over the previous year. While we exclude one-off items when focusing on management free cash flow, the performance reflected both the strong uplift in core EBITDA and continued discipline in how we manage working capital, particularly inventory. As Richard mentioned, we have continued to invest in our future, with CapEx in 2025 focused on the biosimilar hub in Slovenia. Please turn to Slide 24. Last year, we successfully further strengthened our balance sheet and improved our maturity profile. A substantially stronger euro and Swiss franc against the U.S. dollar had an adverse impact on net debt, which ended the period at USD 3.6 billion. When excluding the impact of foreign exchange, however, underlying net debt decreased by USD 200 million to USD 3.1 billion. Our strong balance sheet, improved liquidity and investment-grade ratings place Sandoz in a unique and excellent financial position to support our ambitions. Our net debt to core EBITDA ratio improved to 1.5x, reflecting continued balance sheet strengthening. Please turn to Slide 25. Turning to CapEx. We invested around USD 700 million in 2025 with the majority directed towards manufacturing. This reflects our continued build-out of our development and manufacturing vertically integrated biosimilar capabilities. Looking ahead to 2026, our peak year for CapEx investments, we expect an outlay of around USD 1.1 billion. The largest allocation will again be for strengthening our biosimilars capabilities. As Richard stated before, we expect our development in API biosimilar sites to be completed at the end of 2026 before we move to the tech transfer process. We anticipate completing the construction of our biosimilar fill-finish site next year, i.e., 2027. We expect to enhance our biosimilar pipeline through BD&L investments, and we will continue our path to bring our IT infrastructure at a required level. The uplift in IT will enable system upgrades that are designed to drive efficiency, streamline our operations globally and create a more scalable digital backbone. Please turn to Slide 26. One-off cost continue to decline. In 2024, this cost peaked as we completed the bulk of the work related to separation, transformation and the manufacturing footprint. In 2025, one-off cost declined to around USD 0.4 billion, reflecting a lower level of separation-related spending and reduced transformation activities. For 2026, we currently estimate the one-off cost to further decline to around USD 0.3 billion. This means that the one-off cost of USD 0.7 billion for '25 and '26 combined are fully in line with our prior expectations. Please be aware that one-off costs exclude software implementation cost accounting impacts. We're in the process of implementing new future-ready IT systems for Sandoz. Due to the nature of software licenses meeting the accounting definition of Software-as-a-Service, the related implementation costs do not meet the criteria for capitalization as intangible assets under IFRS. We have not guided for these costs historically as the assumption has been that such costs can normally be capitalized. These costs were around $50 million in 2025 and are likely to be similar this year. Please turn to Slide 27. This year, we expect net sales to grow by a mid- to high single-digit percentage in constant currencies, supported by the impact of our recent launches. The core EBITDA margin is targeted to increase by around 100 basis points. We expect price erosion of a low to mid-single-digit percentage. We also anticipate that the adverse dynamics of our penicillin B2B business will unfortunately persist in the first half of 2026. And as a one-off, we'll incur some costs related to the integration of the Just-Evotec business in France. Outside of guidance, we expect a 2 percentage points tailwind to net sales from currency movements. Based on recent spot rates and average rates in January 2026, we do not expect a material impact from currency movements on the core EBITDA margin. Please turn to Slide 28. Our hard work since the spin has led to strong results to date, which position us really well to reach our midterm outlook for 2028, which is unchanged. We have strong momentum, supported by numerous launches across key markets, and there is a clear visibility on the drivers of our margin expansion. And on that happy note, I will hand back to Richard. Please turn to Slide 29. Richard Saynor: Thank you so much, Remco. I'd now like to wrap up the presentation on Slide 30 before we go to questions. I'd like to remind everyone of the huge number of opportunities that lie ahead. The next golden decade presents a tremendous opportunity for Sandoz in both biosimilars and generics. On the biosimilar side, we're targeting more than $320 billion in LOE opportunities, with 27 assets currently in development. These represent approximately $200 billion of originator sales, covering nearly 60% of upcoming LOEs. Combined with the game-changing impact of recent regulatory streamlining, this positions us extremely well to accelerate access and capture more market share. On the generic side, the potential is equally compelling, around $340 billion in LOE opportunities, supported by a pipeline of more than 400 assets. These represent another $220 billion of originator sales or approximately 65% of LOEs over the next decade. And beyond that, we see GLP-1s as a long-term growth driver. Together, these pipelines create a powerful foundation for sustainable growth. Please turn to Slide 31. In 2026, we will continue to strengthen our leadership in affordable medicines by advancing our network, our portfolio and our pipeline. We'll complete the construction of key new biosimilar facilities in Slovenia. And with the strategic acquisition of Just-Evotec Biologics, I am confident that we will consolidate our position as the undisputed leader in biosimilars. Vertical integration will give us clearer control over our pipeline development and underscore our unwavering commitment to expanding access to high-quality, affordable biologics for millions of patients worldwide. At the same time, we will continue to focus on accelerating access for patients. One example will be the launch of Enzeevu in the U.S. by quarter 4, which represents another key addition to our ophthalmology portfolio. And finally, flawless execution remains central to how we operate. Across the organization, we're reinforcing capabilities, executing consistently against our strategic priorities and continue to embed our pioneering culture in everything we do. I am delighted by our progress and by the strong momentum in the business as we move into 2026. I want to express my heartfelt thanks to our colleagues for their dedication and passion which makes such a difference for patients around the world. Thank you so much for listening. Please turn to Slide 32, and I'll ask the operator to open the lines for Q&A. Thank you. Operator: [Operator Instructions] Our first question is from Charlie Haywood from Bank of America. Charlie Haywood: Charlie Haywood, Bank of America. It's on the denosumab flying start that you called out. I think data suggests fourth quarter U.S. denosumab sales trending to around the mid double-digit million dollars per month level. So is that ballpark sensible? And then does your guide reflects an annualization of those fourth quarter levels into '26? Or is there anything we should consider on competition or pricing dynamics that might change that? Richard Saynor: Charlie, thank you. And to answer your question, yes, we were delighted with the launch of denosumab. Obviously, we launched alone in the market. We set our ASP and executed well. I think, look, clearly, we expect volume gains to continue pretty much to that level, if not a little bit higher. But clearly, you've got a significant number of competitors coming in, which will naturally push down the pricing. So I think the net will probably balance out. But clearly, we're delighted where we've started. We're still seeing strong growth and expect a good performance during 2026. Operator: Our next question is from James Gordon from Barclays. James Gordon: James Gordon from Barclays. First one would just be GLP-1s. I heard you talk about it being a longer-term growth driver, but no material contribution in '26. So when do you think you now could resolve and launch in Canada? And what's the plan in Brazil? Is the plan still that you could launch with a vial? And longer term, so Novo's oral Wegovy launch is going well, which is also semaglutide. But will you do oral sema, so it's got the SNAC technology, and it needs more API? Is that also something that's in your plans? Or is a product like that not really attractive for a generic company and the GLP-1 plans you have are just to do injectable? And then second question was just, one other quick one, which is just -- so you have got one ADC, you've got Enhertu in development. And your cost to develop ADCs and bispecific biosimilars, should we think that, that's just a start, and you're going to do quite a lot of ADCs and bispecifics? Or are they still significantly more complicated to develop and more expensive? So Enhertu is a bit of a one-off? Richard Saynor: Great. James, thank you so much, and thank you for getting the GLP question in early. So look, we've not guided because I guess there's so many variables at the moment. We filed in Canada, Brazil and a number of other markets with one or more partners because when we get an approval and we launch a product, we will launch it. I've still said, look, we would look to anticipate to launch it probably in the latter half of this year in Canada, but we're very much dependent on the regulators. And at this point, nobody has got an approved file. Similarly with Brazil. I think in the medium term, yes, it's a very attractive market. But I've never -- I think I commented before, I've never known a product where I don't really understand how the volume dynamics are really going to play out, given that demand is far greater than the market can supply. So I think it's just prudent that we sort of learn as we go a little bit. And I always said I see Canada and Brazil to a lesser or greater extent as sort of a bit of an experiment in terms of how market dynamics will grow. As a generic company, yes, we will focus on bringing any product that we think is an attractive market opportunity, whether it's an injectable asset or in the medium term, an oral presentation of semaglutide. We've not disclosed our pipeline in small molecules, but naturally, we want to cover ideally about 80% of LOE for any product certainly in Europe. And that logic, I can't see would also -- or that logic should also apply to GLPs. But I think we're quite some way from the patent expiring from an oral GLP. And then there's still a dynamic of what that's going to play with the Lilly asset over the next couple of years. So this is really a long journey. We're going to be in it, and we'll make -- we'll share our journey with you as we do it. In terms of ADCs, I think it's less a cost of the development, to be brutally honest. Surprisingly, it's not that technically difficult. You've got to remember, we are a small molecule company and a large molecule company. So our technical ability to link those 2 things is already embedded, whether it's ADCs, bispecifics or even trispecifics. I think the question is more about the regulatory framework. You've got to remember 20 years ago, when we launched the first biosimilar, there wasn't really a regulatory framework about filing and launching biosimilar. That now has radically changed from monoclonals, and you're seeing that progressing quite quickly. We're working closely with the regulators to find the right path. So we do a reasonable amount of study work, but not an excessive amount of study work. And I think at the moment, that's where the cost is. It's not really the technical development. It's more the studies to satisfy the requirements of the regulators. We've not disclosed the quantum. But certainly, look, it's going to be more expensive than a classic monoclonal, but yes, we would expect to expand to that pipeline over the coming years. Operator: Our next question is from Harry Sephton from UBS. Harry Sephton: So I just wanted to touch on Slides 9 and 10 of the presentation. So given the progress on some of those biosimilars, it looks like that you're hitting more peak market share for those. So I would have implied that the strong guidance for the year is more for the more recent launches of denosumab, Tyruko and aflibercept. So would love for you to touch on the progress for denosumab and aflibercept in Europe specifically? And then also for Tyruko in the U.S., given the REMS program that you set up there, what do you expect in terms of the progress or the trajectory of the launch in the U.S.? Richard Saynor: Thank you, Harry. Perhaps I'll start with Tyruko first. Look, we're delighted to have brought that product to the market. I think it was the last piece of the CMD commitment. So very pleased that we delivered that. Our strategy is to -- at this phase to acquire new patients rather than go for convergent patients. I think that way, physicians, clinics really get to work with us on the product. And so that means really the pickup will be incremental rather than switching. So that's very much what we're seeing in the market that we're adopting new patients as they come on board, gaining the confidence. It's well accepted by the clinicians that we're working with. And so we just look forward to sort of a stepped growth over the next few years rather than sort of a rapid conversion of the market, which I think this way will be much more sustainable. Deno in Europe, performing extremely well. Again, I think the data, we've taken a leadership position, a strong response from payers and great acceptance of the product. Obviously, I think in the medium term, how we expand that market, not just in the oncology indication, but also for the osteoporosis indication where, I think, in Europe, because the price differentials are so great, is still an underserved population. So I think there's really nice opportunity to expand and grow that. And then aflibercept has been a very entertaining journey over the last few months. Not with -- also with German court, et cetera, but really delighted with the launch, probably running a little ahead of where we expected in terms of volumes. And then clearly pleased with the recent IP or PI injunction reversal in Germany, which, again, means that we are now back on the market and a number of our competitors are still blocked. So I think we're set up extremely well. I'm very pleased with the early positioning of those products. And then your broader shape, I think, is directionally right. I mean, look, ustekinumab, we're still seeing strong market gains in terms of penetration of the market. Adalimumab is still growing years after LOE. But clearly, the bulk of the growth, you rightly point out, is going to come from our new launches. And I think we almost get a bit complacent, but we've got a -- had a record number of launches into Europe last year with afli, with deno, with uste, again, we're the only one with the autoinjector. Obviously, we're just bringing out a Lucentis biosimilar later into this year. So a great set of positioning to set us up well for growth in '26 and into '27. So built on a solid foundation of the rest of our assets. Operator: Our next question is from Victor Floch from BNP Paribas. Victor Floch: Victor Floch, BNP Paribas. So my first question relates to the recent FTC elements with Express Scripts, which seems to have weakened rebate-driven preferences for highly priced brands and, to some extent, favor lower net cost products. So I just -- so I was wondering whether you see this as structurally affecting the biosimilar market in the U.S.? And is this directionally aligned with the PBM reforms you've been advocating for over the last few years? And my second question relates on to your long-term pipeline with some recent analysis suggesting that some certain originator might be able to delay biosimilar entry longer than expected, leveraging their complex IP situation, and I'm thinking about a Keytruda and semaglutide. So you've been quite vocal in the past regarding the unpredictability of the U.S. market on that front. So I was wondering whether you can discuss whether this impacts your long-term biosimilar plans in the U.S. and whether you continue to call for some reform on this front? Richard Saynor: Okay. Thank you so much, Victor. The technical question you brought up, I'm going to have to come back to you. I think in terms of the rebates and what that impact is. So rather than trying to answer that now and take time, we'll come back separately through Craig. I think the broader question, I mean, environmentally, I think we're moving in a positive direction in the U.S. I mean, clearly, having conversations around PBM reform, patent reform, clearly, the right moves with the FDA. So I think there is never one solution here, but I think certainly, I'm much more optimistic about the direction of travel in the U.S. And again, as I said before, our access to the administration in terms of having a sensible dialogue about delivering sustainable, affordable medicines in the U.S. continues. So I think that's clear. In terms of the long-term pipeline, I think it's a fair question. But as I've always said, in a sense, we define our biologics pipeline with a European lens to the very point that you make because there's so much uncertainty. Obviously, we filed against Amgen on Enbrel because they've managed to create a 31-year patent life. Now that case got overturned last week. We will look -- we're still judging whether we would appeal. And we're all interested now that actually a number of payers are now suing Amgen for abuse of their position as well. So I think there's an environmental shift in the U.S. that this lazy innovation from innovators, particularly in the U.S. market, to prolong and abuse patents is being challenged, both at a Congress and a Senate level, but also from the industry and the payer level. So I'm encouraged. But certainly it's a challenge, but it doesn't change our strategy because really, we define our pipeline from a European point of view, where we generally have a fairly clear sense of when we would bring a product to the market. And then the U.S. becomes a fantastic opportunity rather than the other way around because if we based everything on the U.S., you're always going to end up in court. It's part of the process and part of the system. And as you can see, whenever you go to court, there's a degree of uncertainty. So leveraging our foundations, leveraging Europe and then seizing the significant opportunity in the U.S. has always been our strategy. So hopefully, that answers your question. Remco Steenbergen: Yes. If I can just -- Remco here, just to add to it, correct. In the end of our press release, there's also a table where you see by region the split between generics and biosimilars. And just to reiterate, biosimilars, $3.3 billion out of our $11 billion. That $3.3 billion, 58% is from Europe, 17% is from International, which is 75% of the total, and 25% is from North America. And Europe grew 14% last year in bio. International grew 30%, right? And on a comparable basis, the U.S. was 19%. So just to reiterate the point of Richard, correct, in the approach, also when you look at the numbers and the materiality, the weight is clearly outside the U.S. 75% of our bio portfolio. Operator: Our next question is from Simon Baker from Rothschild & Co. Simon Baker: Two, if I may, please. A couple of big picture questions. Remco, you've given us a lot of quantification of the margin expansion through -- in '26. But I just wonder qualitatively, if you could just give us an update on what's being done, what's to come, the sort of split between mix and cost savings? Just a little bit of color on how things are moving on, that would be great. And then a question really for both of you, possibly. We can see, obviously, how the regulatory changes make development more attractive and cheaper for you. But I just wonder what it means for the in-licensing opportunity. With lower development costs, does that potentially mean others were more likely to go it alone? Or alternatively, does it mean that with those low development costs, more people are likely to try and use your global commercial infrastructure. So I just really want to see how the regulatory changes affect the in-licensing side of things. Richard Saynor: Thank you, Simon. Perhaps if I answer your second question first, I think you've answered it yourself in a way. I think that's certainly our view is, look, yes, it's a reduction in regulatory costs, but it's still significant. You're still talking probably $80 million to $100 million per asset, and you still need manufacturing capability. And then the bit that everybody forgets is you need a commercial footprint in tune with the market that can leverage its scale. And that is always the thing. And a lot of companies really struggle from that clinical to commercial setup and then commercial execution. So we're seeing a significant number of partners coming to us, approaching us, wanting to work with us as a global partner. One signature, they get Europe, international, Europe, strong capability and are the leader in this player. So there's a lot to be said for working with us. So I very much see it as you see it in terms of that opportunity. Remco, do you want to? Remco Steenbergen: Yes. I think with the margin, let's go through the different elements. You've seen the low price erosion are relatively low with minus 3%. We still believe low to mid-single-digit price erosion to remain. Of course, that also requires work. Clearly, the mix improvement with bio growing double digits and generics low single digits, which we expect to continue, but it has a mix improvement, but also within generics, we're looking at mix improvement, that is all on track. The thing within the margin, where we expect in the coming years to step-up is in our cost of goods sold, that the manufacturing savings should pick up versus what you have seen so far. And that is something which we're looking forward for this year. On the D&R expenses, yes, you saw a step up of 40 basis points higher expenses. So we are above $1 billion in '25, that you should expect to continue also in line with what Rich has said before, with the golden decade ahead of us, there's so much opportunity. We want to invest in that opportunity in the right way. And with SG&A, I think we have all the opportunity to keep the increases, as I also said at the beginning, very limited. It was a minus 2% increase in '25. It was something similar in '24. And we really target to keep that at very low single-digit increase also in the years to come and have that leverage with the top line moving along. We're also investing for the long term in our IT infrastructure in order to keep that SG&A and that infrastructure in place, which should also help significantly on the manufacturing side because that can also IT-wise, deliver also cost savings over the longer term. So all in all, I think we're on track, with the only thing you could -- you should expect to pick up are the cost of goods sold unit savings as of this year. I hope that answers your question, Simon. Operator: Our next question is from Urban Fritsche from ZKB. Urban Fritsche: Yes. Can you hear me? Richard Saynor: Yes, we can. Urban Fritsche: Yes. Congrats on the business progress. A couple of questions coming back to generic sema. So it seems like that we will see first generic sema launches in India. While you're not there, my question would be what can you learn from those first launches? What are you looking for in India specifically to then apply to other countries and your launches? And then a pretty open question relating to the new FDA guidance for the biosimilar approval. So how does that reshape some of those internally? What is already visible? And how will it shape going forward? Richard Saynor: First of all, thank you so much for the question. Thank you for the feedback, Urban. I guess, look, it's interesting. I mean, for me, from an India point of view, 2 things is, one, the dynamic -- so how are patients willing to prepare to pay to this product? So in a sense, it almost behaves like a consumer product rather than a classic pharma product. And how elastic is that at what price point? So it's more about trying to understand the volume dynamics and the willingness of patients to pay for our product in India. And it's certainly early days. Demand is significantly higher than the originator was selling to that market. And certainly, as the price points come down, and it's interesting talking to my sort of Indian colleagues who have friends and family in India, just how many people now are wanting or acquiring that drug. The other piece is this is a complicated product. It's a supply chain. It's a cold chain product. So trying to understand how you manage the logistics of managing a high volume cold chain supply product to manage that integrity. So those are really the things that I'm looking at from an Indian point of view. And certainly, it's fascinating. Regarding your second question, I don't think -- I mean, look, the FDA move, I don't think it's structurally changing Sandoz. It's really thinking about how we run clinical trials and what the right data is. We've always had a good relationship with the FDA and the European regulators. And really, it's all of the regulators moving in the same direction at the same time because if only one regulator moved, then it would be a real challenge for us, whereas we're seeing a degree of harmonization in terms of what's expected from Phase II trials, et cetera, and the low or no requirement for Phase III trials. So it's really more about how we phase our trials. And then question is it's an opportunity because clearly, now it's going to cost us less money to develop a biologic, which means we can now develop more biologics. And given as we're about to go into a decade with something like 140 biologics coming off patent, I'm incredibly excited that we can then potentially serve those millions of patients who today don't have a choice. Operator: Our next question is from Sophia Graeff Buhl Nielsen from JPMorgan. Sophia Graeff Buhl Nielsen: So firstly, how significant a growth contributor do you expect biosimilar Lucentis in Europe to be in both 2026 and beyond? Do you expect the dynamics will differ from what we've actually seen in the U.S. context? And then you've touched on this a bit in response to a prior question, but how should we think about the pace of the ramp for Wyost and Jubbonti in Europe this year relative to what we've seen in the U.S. so far? And how do your expectations differ between oncology and osteoporosis settings for this? Richard Saynor: Okay. So first of all, thank you so much for your question, Sophia. I mean, the Lucentis biosimilar, I mean, I guess, modest, it's not the biggest launch. I mean, it's clearly a nice addition. It is not in all markets across Europe. So I think we have rights to the majority of markets because this is a co-licensed product with another party. They have the rights to Germany, which is our largest market. So it's, I would say, modest. Certainly excited to be launching it for all sorts of reasons, but very pleased to be bringing it out to the market for the majority of Europe and a number of international markets. And then deno in Europe, I think it will convert quicker. Naturally, the adoption of biologics in Europe, we're extremely well established. We have the relationships. I think the difference between the U.S. and Europe is really the use in osteoporosis. Given pricing pressures in Europe, most patients were generally on things like bisphosphonates. I think the opportunity now, as the price points come down, to really expand and offer this for osteoporosis is a real opportunity over the next few years. So in short, I think a rapid uptake in the conversion and gain of the oncology market, and then a steady expansion and growth of the osteoporosis market. Whereas the U.S., I think, have a very different dynamic. Clearly there, the osteoporosis market is larger. We're taking a significant proportion very quickly. And again, we look to expand it. And again, perhaps a little better than we anticipated in the oncology indication in terms of the conversion. So different markets, different dynamics, but performing well in both. Thank you so much. And I think with that, we will close the session. Thank you so much for your questions, and look forward to interacting with you over the next few months, and have a great day.
Operator: Thank you for standing by, and welcome to the Woolworths Group FY '26 Half Year Earnings Announcement. [Operator Instructions] I would now like to hand the conference over to Amanda Bardwell, Managing Director and CEO of Woolworths Group. Please go ahead. Amanda Bardwell: Good morning, everyone. Thank you for joining us today for Woolworths Group's half year results for the 2026 financial year. I'd like to acknowledge the traditional custodians of the land on which we meet today, Dharug Country and pay my respects to Elders past and present. Joining me this morning are Stephen Harrison, our Chief Financial Officer; Annette Karantoni, Managing Director of Woolworths Retail; Amitabh Mall, Managing Director of Group eComX; Sally Copland, Managing Director of Woolworths New Zealand and Dan Hake, Managing Director of BIG W. I will start with an overview of the group's performance in the first half and then provide an update on our medium-term strategic priorities. Steve will then cover our financial performance before I conclude with an update on current trading and the outlook for H2. Turning to Slide 4. We took deliberate action to rebuild customer momentum during the half through investment in the areas that matter most to our customers, including value, fresh and convenience. We are seeing greater stability across the group following key leadership changes and structure changes that are better aligned to our priorities and our execution in the half has progressively improved. However, we know we have more to do to deliver the best experiences for our customers. Turning to our financial performance for the half. Group sales in H1 increased 3.4% with all businesses growing sales on the prior year. Group EBIT, excluding significant items, increased 14.4% with solid EBIT growth from all of our reporting segments, supported by CODB reductions. Excluding the impact of industrial action in Australian Food in the prior year and supply chain transition costs, group EBIT would have increased by 7.9%. In August, we spoke about taking action to reposition the group for long-term sustainable growth, and we laid out our strategic priorities. While the key focus in the half has been on rebuilding momentum in the short term, we have clear strategic agenda and have made good progress on these priorities. We also said that we expected to deliver mid- to high single-digit reported EBIT growth in Australian Food for the year and an improved result in New Zealand Food and BIG W. We remain on track to deliver this in F '26. Turning to Slide 5. Customers remain value focused. We have seen value-seeking behaviors continue in an increasingly competitive retail environment. Broader cost of living pressures continue to weigh heavily on our customers' household budgets. Price remains the top priority for Australian customers when choosing where to shop with quality and freshness and range also critical. After signs of tentative improvement in customer sentiment towards the end of last year, persistent inflation and the prospects of interest rate rises have seen customers again prioritizing ways to save. They are telling us that compared to last quarter and a year ago, they are buying more products on special comparing prices across supermarkets and cooking more at home. Turning to Slide 6. We're clear in quarter 1 that the sales momentum in Australian Food was below our aspirations. And in response, we invested to improve our offer in value, fresh, availability and convenience. We upweighted our rewards and eCommerce offers as well as increased weekly promotions on key family lines like bananas, nappies and chicken breasts, to provide customers with more value and more reasons to choose Woolworths first. We also added more than 350 new products to our lower shelf price program with over 800 products now part of the range. We know that fresh is the gateway to the supermarket shop, and we invested more team hours across key fresh categories to ensure the best offer was consistently onshore and to improve freshness and the customer experience. We also remained focused on improving our retail execution. We held more stock weight on key promotional lines to improve availability for customers and increase the number of store deliveries over the weekends, helping to support an improvement in out-of-stocks voice of customer, which is up 10 points compared to the prior year. In December, we unlocked $1 million more online and delivery pickup slots to provide our customers with even more flexibility and convenience in the lead up to Christmas. We also provided highly competitive offers to new customers. Turning to Slide 7. The actions that we've taken have seen improved momentum in quarter 2 relative to Q1, with a stabilization in market share. Excluding the impact of industrial action in tobacco, Woolworths Food retail sales increased 4.7% in Q2, driven primarily by item growth, and we have seen this momentum continue into H2. Woolworths Food Retail VOC NPS ended up 10 points compared to the prior year, showing a strong recovery from the impacts of industrial action in the year. In addition to out-of-stocks, which I've mentioned, values the money scores have also improved consistently over the last 12 months, up 8 points on the prior year. Turning to Slide 8. We're also transforming our digital experience to deliver the best shopping experiences for our customers. The number of customers using our digital tools to improve their shopping experience is increasing, whether this is to make the shopping experience more seamless, get the best value or track their spending. We already have over 1 million customers using digital lists to shop each week in store and online. During the half, we launched Snap & Shop, which converts handwritten shopping list into digital list. It uses AI technology to match the items to the product the customer has bought before. I'm also delighted that Olive our much-loved digital shopping assistance is set to take a major step forward over the coming months through our extended partnership with Google. As part of this, Olive will transform into a market-leading conversational shopping companion, moving beyond the search and Q&A tool. Through agentic AI, Olive will bring together the shopping journey for customers, making the weekly shop easier in-store and online. Olive will be able to tailor menus based on customer preferences, identify specials and boost products as well as build faster, more predictive baskets. Customers can interact with Olive in different ways like sharing a photo of a handwritten recipe or using voice to build your shopping list. Turning to Slide 9. As convenience continues to increase in importance for our customers. Our large store network and leading eCommerce business remains a key differentiator. A modern, well-located store network is critical to maintaining our lead in an increasingly competitive space. During the half, we continued to invest in our store network to provide the best experience for our customers looking to shop in store, pick up via Direct to Boot or order a Woolworths on-demand or MILKRUN rapid delivery. Direct to Boot is now available in around 70% of our stores in under 2 hours and has rolled out to a further 60 stores in the half and MILKRUN to a further 135 stores. We also finalized a new partnership with DoorDash, which will be rolled out in H2. On-demand options are our fastest-growing propositions as customers seek more convenience with under 2-hour eCommerce sales growing at a compound rate of over 80% over the last 2 years. Moving to the next slide. While our primary focus has been on rebuilding momentum in the short term, we have also continued to progress our longer-term strategic priorities. We know we have world-class assets across the group, which give us a unique enduring competitive advantage and significant potential. If we deliver our strategic potential, I have great confidence in our ability to deliver long-term sustainable growth for shareholders. By delivering sustainable growth in Woolworths retail, ongoing improvements in New Zealand Food and BIG W, supplemented by higher growth from our complementary businesses and services. Our ambition is to deliver mid- to high single-digit EBIT growth over the medium term, supporting our double-digit total shareholder return aspiration. Turning to our first strategic priority in Australian Food. Our ambition is to be the first choice for customers in our cornerstone food business. Food is what we're famous for and a thriving food business provides a strong platform for the group's long-term success. We're making meaningful shifts for our customers to put us first and we're determined to win in fresh, convenience and range while delivering meaningful value and executing consistently well. We've made good progress during the half, but there is more to do, and this work will continue in H2. I will call out a few highlights from the half across 5 key areas. The fresh food people promise means delivering the best quality and fresh varieties for our customers. During the half, we progressed our strategic sourcing program to increase our direct supply of Fruit & Vegetables from our best quality producers with a review complete for around half of our Fruit & Vegetable sales volume. We know we need to improve our range and value across our Everyday Needs categories like pets and baby and we have been slower than we should have been to respond to this Heightened competitive environment. In response, we've already taken action to address range and pricing gaps as well as enhanced promotional activity to provide more value to customers. We are relaunching our Little Ones, nappies and wipes in baby. And in Pets, we've refreshed our own brand pet food ranges, including Baxter's, Smitten and Petstock's owned Billie's Bowl, which will be rolled out to stores. We have progressed our long-term strategy refresh in these categories with more to come in H2, and we remain committed to improving performance across our broader Everyday Needs category. I have already spoken about our progress in expanding our eCommerce network and increasing our capacity to meet customers' demand. However, we've also made good progress on eCommerce productivity agenda, helping to deliver a 93% increase in eComX directly attributable profit. These initiatives include team picking algorithms and the rollout of improved temperature zones in vehicles with the increase in profitability also supported by mix benefits from strong growth in higher-margin on-demand propositions. Value remains critical for customers, and we remain committed to lower prices for customers and restoring a more balanced net of everyday low prices and specials. We also rewarded our customers' loyalty by providing more value through Everyday Rewards with new campaigns to drive member sales and a high single-digit increase in value returned to customers through points earned. Our retail execution has continued to strengthen, with solid improvements in productivity delivered in the half. As of today, exit gates have been added to over half of our store network, supporting improved stock loss rates relative to H2 F '25. We also remain focused on managing costs through the delivery of our productivity agenda and our commitment to becoming a lower-cost retailer. Moving to the next slide in New Zealand Food and BIG W. On our second strategic priority and is to improve the returns in New Zealand Food and BIG W. Both businesses reported solid growth during the half, supported by their transformation agendas but this momentum needs to be sustained to return to double-digit returns over the medium term. In New Zealand, we completed the rebranding of the New Zealand floor network to Woolworths and rolled out a new store team operating structure to improve the team and customer experience. We have continued to improve our own brand range to differentiate our offer and launched over 280 new products across a number of key categories, which are resonating well with our customers. In H2, we're focused on building customer momentum in a challenging and highly competitive market while continuing to progress our transformation over the medium term. We know that we can further differentiate our offer for our customers through our focus on fresh, range, convenience and everyday value. In BIG W, a more favorable sales mix supported by better execution of seasonal ranges and availability in Clothing led to margin improvements in the half through a higher mix of full price sales. New and improved ranges have supported own brand growth of 8% in H1, which gives us confidence we're taking the right steps to reposition our range to provide better quality and more affordable options. The rollout of RFID technology will also deliver improvements in stock loan and availability. BIG W Markets expanded range continues to resonate with customers, with sales more than doubling compared to the prior year. As BIG W's gross transaction value, including the BIG W Market, increased by 5.8%. We are confident the performance of BIG W can continue to improve, but we will also ensure that BIG W has the appropriate foundation to be successful. Work has begun to separate the business from the group systems, which will enable BIG W to operate on a platform appropriate for a discount department store as well as providing the group with strategic optionality. Moving to Slide 13. Moving to our final strategic priority, which is to grow our complementary businesses and services. These include PFD and Petstock as well as group-wide service businesses such as Cartology, Everyday and Primary Connect. Collectively, these businesses contributed around 1/3 of the group's EBIT growth in the half, with PFD, Petstock and Rewards & Services, making the strongest contribution. In H1, we saw strong sales of double-digit underlying EBIT growth in Petstock and PFD. Petstock completed a value reset during the half investing in key products to improve customer value perception as well as launching a new pet cash loyalty program to complement its Everyday Rewards membership. While PFD growth remain strong, a highlight was the retention of key customer contracts in the QSR channel to support continued growth. We also secured 3 new sites and commenced construction of a new facility in WA to expand our national network. Rewards & Services sales increased by 8.6%, with mobile and insurance combined customers up 6% on the prior year. Cartology also continued to drive margin accretive growth for the group. PC+ delivered double-digit earnings in the half through higher customer volumes and better utilization of warehouse facilities. Turning to Slide 14. To deliver our strategy, we know we need to get the basics right by providing the retail excellence our customers expect from us. We also need to be a simpler business and increase accountability. Last year, we made significant management changes with a more consolidated and focused leadership structure. We now have key leadership in place and embedded a new Australian food leadership team, including in key commercial roles. We are committed to retail excellence and making every dollar count. We have delivered our $400 million run rate cost savings target by December. This has helped us to deliver a reduction in CODB as a percentage of sales in the half as well as fund investment in customer value. Key areas of savings included support office roles, goods for not resale and marketing and IT spend. This has helped us reset our cost culture as we restore and always on low cost discipline across the group. However, we recognize that for productivity improvements to be sustainable, they need to be driven by improving our processes and reducing work for our teams. And our leading AI foundations are already helping us do this, which I'll talk about more on the next slide. On Slide 15, over the past decade, we've established strong foundations to leverage AI through significant investments in digital and data capabilities. We have integrated capability into every part of our business and are now focused on unlocking the next phase of AI to deliver better experiences to customers, team members and to transform our operations and internal processes. This slide shows some of the areas where AI is already making a difference. We're delivering market-leading customer experiences through customer chatbots, which has helped us to automate over 60% of customer service contacts freeing up our team to focus on more complex customer inquiries. Our personalization engine is already delivering millions of tailored offers to our customers every week and I've spoken a not our extended partnership with Google to transform Olive, our digital shopping assistant. In our operations, we've leveraged AI to optimize eCommerce fulfillment for over 0.5 million weekly orders including shortening pick paths for our team members and optimizing last mile delivery routing. We rolled out Gemini for Workspace to our support of the team almost 2 years ago, and the adoption has been incredible. Today, 2 in 3 of our support office team members are using AI tools multiple times a day to unlock greater efficiencies. But what excites me most is how AI is helping our store team. Tools like Quick Assist are already being used by over 6,000 store team members every week, helping them to prioritize the most critical actions for their upcoming Fortnight, delivering a better experience for our teams and our customers. And finally, moving to progress against our sustainability initiatives. Last year, we celebrated a decade of partnership with OzHarvest and we've reached an incredible milestone during the half, providing 100 million meals to Australians in need over the last 10 years. In December, we achieved 100% renewable electricity across our operations in support of our net zero goals. We are also on track to achieve our Scope 1 and 2 emissions reduction targets by 2030. Finally, restoring soft plastic recycling services to our stores has continued with a market-leading 600-plus stores across the network, now offering this service again for our customers. I will now hand over to Steve who will cover our financial results in more detail. Thank you. Stephen Harrison: Thanks, Amanda, and good morning, everyone. I'll start today on Slide 19 with the half 1 '26 results summary for the group. As a reminder, these results are for the 27 weeks ended the fourth of January 2026. The Group sales for half 1 increased 3.4% to $37.1 billion with all trading segments reporting growth. Group's eCommerce sales increased by 14.6% with Australian Food, New Zealand Food, BIG W and Petstock eCommerce sales, all growing in the double digits compared to the prior year. Group EBIT before significant items was $1.7 billion, up 14.4% with the group's EBIT margin increasing by 43 basis points. EBIT margin for all trading segments were up on the prior year. There are some one-off impacts that impact the comparability versus last year, primarily the impact of industrial action in the prior year, which we estimate had a $240 million impact on sales and approximately a $95 million impact on EBIT in half 1 F '25 in Australian Food and supply chain transition costs. Normalizing for both these impacts, group EBIT growth would have been 7.9%, which includes the benefits from our strong cost and productivity focus in the half. Group NPAT attributable to equity holders the parent entity before significant items was $859 million, which was up 16.4%. This reflects higher EBIT, a modest increase in net interest costs in the half, somewhat offset by higher income tax. Group basic EPS before significant items was $0.704 per share, also up 16.4%. Including significant items, NPAT attributable to equity holders of the parent entity declined by 49.4% to $374 million, with EPS also down 49.4%. Turning to Slide 20 and our group trading performance. In Australian Food, total sales for half 1 were $27.6 billion, an increase of 3.6%. Excluding the impact of the industrial action in the prior year, Australian food sales growth in the half would have been 2.6%. In Woolworths Food Group Retail, which incorporates stores and eCommerce, Sales momentum improved in Q2 with growth of 3.2%, excluding industrial action compared to 2.1% in Q1. This was driven by an improved customer offer and strong execution, particularly over the key Christmas trading period, leading to improved in-store item growth and strong eCommerce growth. WooliesX sales increased 14.2%, driven by eCommerce growth of 15.3% and 8.6% growth from media words and services. Australian Food EBIT increased by 9.9% in the half. Excluding the estimated impact of industrial action of $95 million in the prior year and incremental supply chain commissioning and dual running costs. Normalized EBIT would have increased by 3.5% in the half. Gross margins rose 8 basis points to 28.6%, primarily reflecting the mix impact of an ongoing decline in Tobacco sales. Excluding Tobacco, the gross margin declined by 14 basis points on the prior year with growth in our higher-margin complementary businesses, offset by investments in lower shelf prices, while stock inflation not fully passed on and supply chain transition costs. CODB as a percentage of sales declined by 24 basis points with productivity initiatives and above-store cost savings helping to offset wage inflation and higher online mix. There was also a rate benefit due to the impact of industrial action in the prior year. While ex DAP and EBIT was up 78.8% in half 1 with eCommerce and media Rewards & Services delivering improved profit. The increase in eCommerce DAP of 93% reflected solid customer growth, double-digit sales growth, mix benefits from growth in higher-margin propositions, efficiency benefits and cycling both the industrial action and cold chain investments in the prior year. In Australian B2B, half 1 sales increased 4.9%, driven by strong PFD, PC+ and export meat sales. EBIT increased by 14.6% with double-digit growth from both PFD and PC+, the latter benefiting from increased volumes and better utilization of warehouses. New Zealand Food sales for half 1 increased 2.8% in New Zealand dollars, driven by eCommerce growth of 13.9%. Sales in Q2 were more subdued as market growth slowed. EBIT increased by 22.4% benefiting from a combination of higher sales, supply chain efficiencies and productivity and cost-saving issues, partially offset by store wages and D&A growth. Total W Living sales increased 2.7% in half 1 and EBIT was up 186%. BIG W sales increased 1.8% with BIG W GTV, including BIG W Market, up 5.8%. And BIG W EBITDA increased by 12%, driven by the higher mix of full price sales and strong cost control. EBIT increased by 122% with depreciation below the prior year following the F '25 impairment. Petstock sales increased 13.1% and EBIT increased by 49.6% supported by the inclusion of pet food and accessory businesses acquired in half 2 last year and network expansion. Underlying performance was solid with comparable sales growth of 5.8%, eCom sales growth of 24% and double-digit EBIT growth. The other segment includes group functions such as property, group overheads and Woolworths Group's investment in Quantium. The segment recorded a loss before interest and tax of $124 million, an increase of 16.3% on the prior year, largely driven by lower gains from property disposals and a rebuild of the short-term incentive provision. In the half, the group recorded significant items before tax of $698 million, largely related to a one-off cost associated with the remediation of award covered salary team members following the Federal Court decision on the 5th of September. This includes interest, superannuation and payroll tax and is within the previously disclosed range of $450 million to $750 million. Moving to Slide 21 and our key balance sheet metrics. Average inventory days of 31.2 were in line with the prior year. Australian and New Zealand Food and Australian BIG W were down on the prior year, offset by growth in Petstock and high average inventory holdings in BIG W, which pleasingly ended the half below last year. Average payables declined by 2.4 days to 41 days, reflecting lower Tobacco purchases in Australian Food, a reduction in BIG W purchases as we reduced stock levels over the half and payment timing impacts. ROFE, which is a 12-month rolling measure, was 15.2%, up on the prior year and F '25 largely reflecting group EBIT growth in the half. Australian food ROFE declined by 80 basis points, reflecting the decline in half 2 F '25 EBIT last year and a modest increase in funds employed due to the acquisition of The Kitchenary and our investment in supply chain automation. Moving to Slide 22 and our capital management framework. The group generated strong operating cash flows in the half, which were invested in sustaining our assets, funding our dividend and investing in growth and I'll provide some more color on the following pages. The group generated on Page 23, operating cash flow before interest and tax of $3.2 billion for half 1 F '26, an increase of 4.5%. This was driven by solid EBITDA growth before significant items of 8.5%, offset by a modest working capital outflow. The net working capital outflow was largely driven by payables timing in New Zealand Food with an additional payment run prior at the end of the half and reduction in nontrade purchases reflecting our above-store cost saving initiatives. Compared to the prior year, there was also an outflow related to the cash settlement of provisions for redundancies in team member remediation. Net interest increased by 2.7% with nonlease interest up 13.3%, driven by higher average debt, partially offset by lower floating interest rates. Tax paid declined by 35% due to lower F '25 tax paid in the first half of F '26 and lower tax installments in the current year. Cash used in investing activities of $1.2 billion primarily reflects the group's CapEx spend, which I'll talk to on the next slide. The prior year number was a lot lower as it included $383 million of proceeds from the sale of our final tranche of Endeavour Group shares. Group also paid $92 million for the purchase of equity interest in subsidiaries principally reflecting the acquisition of the remaining interest in MyDeal to facilitate its restructuring and closure. Dividends of $553 million declined by 53.5% with the prior year including a $0.40 per share special dividend, reflecting a return of capital to shareholders related to the sale of Endeavour Group shares. Finally, our cash realization ratio was 95%, modestly below our ambition of over 100% due to the working capital outflow and cash tax exceeding the income tax expense in the P&L. Moving to Slide 24. Operating CapEx for half 1 F '26 was $913 million, $88 million lower than the prior year. A reduction in sustaining capital reflected lower spending on store renewals due to initiatives to lower the cost per store in the half. This was partially offset by an increase in new store investment as reflected in the 13 net new stores opened in the half. Investment in digital and eCommerce, which includes our investment in automated CFCs. Gross CapEx increased by $97 million, reflecting higher property development spend, which can be lumpy. For the full year, we still expect operating CapEx to be approximately $2 billion, stable with spend over the last couple of years. Moving to Slide 25, and covering dividends and funding. The Board today approved a final dividend of $0.45 per share, an increase of 15.4% on the prior year, broadly in line with the increase in earnings. After payment of the interim dividend, our franking credit balance will be approximately $1.2 billion. Turning to our balance sheet settings. The net debt-to-EBITDA ratio was 2.7x, modestly lower than F '25 and are remaining well within our leverage threshold. We remain committed to solid investment-grade credit ratings and have significant headroom under our current ratings of BBB from S&P and Baa2 from Moody's. In half 1 F '26, the group completed $1.2 billion of debt financing with transactions focused on extending debt tenor and reducing refinancing risk for the group. And with that, I will now hand back to Amanda. Amanda Bardwell: Thanks, Steve. On Slide 27. In summary, as we look ahead, our focus remains on continuing to provide value to our customers, rebuilding customer trust and maintaining sales momentum while making further progress on our strategic priorities. I'd like to thank and recognize our team for their incredible efforts and in particular, for helping us deliver a fantastic festive season for our customers during the half. We are determined to get back to the level of retail excellence and performance our customers and our shareholders expect of us. And I'm confident the steps we're taking will lead to an improved performance. I look forward to sharing further progress on our strategy at our upcoming Investor Day in May. I will now turn the call over to the operator for questions. [Operator Instructions] Operator: [Operator Instructions] The first question today comes from Shaun Cousins from UBS. Shaun Cousins: My question is around price trust. You noted in August that, that was the greatest priority for Woolworths. Just curious around how that's improved during the half. And maybe if you could discuss that with reference to some of the activity you've done on pricing, the more of the rolling EDLPs under lower shelf prices and then you've been quite active with more impulse at gondolas and off locations. And then what you've done with ranging. We've noticed you've introduced a sort of a black and white entry level private label offering sort of there as well. So just curious where price trust is at and how you've improved that in the first half, please? Amanda Bardwell: Yes. Thank you. Thanks, Shaun. So certainly, let me just say that we totally understand and are extremely focused on this question of price trust. It's so fundamental to customers choosing Woolworths as a place to shop regularly, and we have put a lot of focus on that rightly so in the half. If I just start by talking about the action that we've taken. First and foremost, if you look at our performance when it relates to the value for money scores. If you look at that this time last year versus where we are now, they're up 8 points and have progressively improved across quarter-to-quarter. And so whilst I would say we still have more work to do there. We've certainly seen a progressive improvement. And there's things that we've adjusted during that period, as you know, like the introduction of lower shelf prices. Now that program is very much focused on recognizing that customers are looking for good value, that they also want reliable value each and every week that they're shopping. And what we've seen with that program is it's on the big products that really matter to families baskets. And we've seen that customers have really engaged with that lower shelf price program very strongly. And we're pleased to see unit growth is a good way of, of course, measuring that engagement, continue to increase, both across our own brand products, but also in the branded products that have participated. In own brand, for example, in lower shelf prices, it's sitting in that sort of mid- to high single-digit unit growth. But for branded products, it's actually in the lower double-digit numbers. And so strong participation there, and we see that, that has certainly matched an increase in customer perception on value. And then across the half, as you know, we did adjust our promotional programs as well to reflect that what we're seeing from customers is certainly a search for even more value. So an uptick from what we've seen in previous period prior to that. And so when we look at value in that regard, promotional participation has increased, customers adding more specials to their baskets and participating more in those programs. And one of the big shifts that we made there was, again, it relates to trust making sure that when customers visit our stores, those products are on the shelf. And as you had highlighted to us as many others had, we had an opportunity in that space. And so that's a mix of having the right promotions but also making sure it's available. So I think that's contributed to an improved perception. And then when we look at Everyday Rewards, we adjusted the program across the half there, just to give more members more value actually and recognize their loyalty, which has resulted in an even stickier member and some greater uplift that we've seen in member sales across that period. And so I don't think there's any one thing that we've done there. I would say there's a mix of value levers that we've been really focused on that each one of them play an important role. And together, that's created an improved momentum for us, both in terms of sales, but also in terms of items in baskets and transactions through Woolies. Now we've got more work to do. And the more work is particularly in the Everyday Needs category. And then of course, when we're looking at range. We have made some changes on range, but there's certainly more to come. Thanks, Shaun. Operator: The next question comes from Adrian Lemme from Citi. Adrian Lemme: Amanda and Steve, congrats on the result. I was interested in the turnaround in the GP momentum within Australian Food. So this half, up 8 basis points year-on-year while last year, we saw it down about 30 basis points. I know you've broken down the factors, but the Tobacco benefit was about 20 basis points benefit in both periods, and you also talked to Cartology and services income, but that also helped last year. So I was just interested if you could kind of talk to the actual delta, I assume stock loss was a positive factor this half, but were there also a better buying terms or other factors, please? Amanda Bardwell: Yes. Thanks, Adrian. I'll give an overview, and then Steve will add to it. So yes, the 8-basis point improvement in GP, as you rightly say, the cigarettes decline does have that sort of mechanical adjustment that you need to apply as you've called out. We're really pleased when we look at the GP results, the contribution from the complementary businesses. So it's Cartology, Everyday Rewards, really contributing substantially to our performance in Australian Food from a profit perspective. So that certainly assisted in the half. And yes, it has been a very promotionally intense period and the team from a commercial perspective on balance managed that very well. When we look at how that plays through. There's some pressure in the red meat categories, which no doubt will come to later in the discussions that we've had to absorb there. So that includes the absorption of that. And then from a supply chain perspective, I didn't call it out in the opening comments, but supply chain delivered a really strong result for us in the half. Yes, we had obviously strong volume uplift but aside from that volume uplift the productivity that the supply chain team delivered is very strong. So that was helpful. And then on the stock loss numbers, yet again, pretty relatively flat on last year. So we had that increase in H2. And certainly, we've seen an improvement on those exit rates across the half. So that were the sort of big drivers. I'm just going to check with Steve, any other things you'd add to that, Steve? Stephen Harrison: No, I think they're the main ones. On stock loss, actually, we were largely stable this year on last year in the half, but certainly an improvement on our second half performance of last year. But overall, it is an underlying reduction in GP reflecting the investments that we've made, but the team has worked hard to balance the levers within margin so that it isn't a bigger impact on earnings as it was the same last year. Operator: The next question comes from Tom Kierath from Barrenjoey. Thomas Kierath: A pretty strong cost result, which is great to see. I assume that's from the cost initiatives that you've announced kind of a year ago, just thinking about whether there's any extension of that and whether as you kind of, I guess, look more closely at the cost base, whether there might be another target or just how you're kind of thinking about the cost base more broadly going forward, please? Amanda Bardwell: Yes. Thanks, Tom. As we called out, as you say, a year ago, we're really determined to build a low-cost culture across lease. And so that was why we came out last year, and we're really clear both internally and externally on the need to reduce our costs. We want to be a lower-cost retailer. That is what's helped us in the half, certainly deliver better value for customers, but also see an improved result for the business overall. So you should expect to see from us an always-on focus. We haven't called out anything particular in terms of a new program per se, but it is our strong focus going forward to continue to look for ways to reduce costs. What was pleasing in the half was we saw strong productivity as we usually do from our stores and from supply chain, but it was complemented with the improved cost performance out of our support areas, no doubt. And within our cost lines, of course, need to take into account, we've also seen a substantial increase in eCommerce, which just from a mix perspective, does put an extra pressure into the cost lines. But I'll just hand to Steve because he does like to talk about cost a lot. Any other add, Steve? Stephen Harrison: I think going back to Tom's first point, it was a strong performance on cost in the half. If we look at the group costs grew by 2% across the group. And we've got a business that's growing volume, where we've got inflation that we need to cover. We've got mixed headwinds. The ongoing focus on frontline productivity is incredibly important, and we saw that delivered in each one of the businesses. But equally, we talked to the cost-saving initiative to try to take out $400 million of above store and support costs on a 12-month run rate basis. Actually, the team -- we announced that a year ago, and the team worked very hard on that actually at the back end of last fiscal and really front-loaded a lot of initiatives to the end of '25 and the first quarter of F '26. So we delivered roughly half of that $400 million in the half across the group. So clearly, a key contribution to being able to have cost growth below sales growth, actually, in each one of the trading businesses across the group. So a good result, but it needs to be always on, and that's really where we're shifting our focus. Operator: The next question comes from Michael Simotas from Jefferies. Michael Simotas: I've got a related question to the one on costs and particularly around in-store labor. I mean your execution has improved. A lot of the feedback in the industry is that you put labor into the stores, it's not obvious when we look at the P&L, the labor investment because your branch expense growth was much lower than your admin expense growth, and I would have thought the cost out program was reducing admin expense to fund the in-store. So can you give us a little bit of color around your store labor as well as how those costs are moving through the P&L, please? Amanda Bardwell: Yes. Thanks, Michael. I'll kick off and then I'll hand to Steve. If I just start with store labor as the starting point there. Yes, we did invest more in store labor, but we were also very targeted in terms of where would it make the most difference. And so when we looked at improving availability, for example, there were targeted adjustments that we made in terms of time of day across particular days of the week. And so it wasn't across our entire network. And then just looking at -- and then we also invested in Fresh in particular. And we continue to assess that across both the quarter and, of course, into this year as well as to what is making the most difference in terms of customer experience. Ultimately, that's how we're measuring the performance. And so yes, we did invest, but we invested in a way that was quite targeted and then continue to monitor that as we move through. I'll hand to Steve and then Annette, if there's anything you want to build on. Stephen Harrison: I think, Michael, just part of your question on the change in admin expenses. That does include the significant item expense in the half. And so that's why you see that cost growing. If you actually strip that back on an underlying basis, admin expenses went backwards, which is consistent with what we would have expected given the focus on that area of our cost base. Operator: The next question comes from David Errington from Bank of America. David Errington: It really is a good morning so I'm really happy to give that greeting. Amanda, what really pleases me with this result is it's been a fantastic result with cost savings, you've really driven productivity, which is fantastic. But what really stands out for me is that you've nailed the execution. Slide 6 and Slide 5 of the slides, please, if we could refer to. Slide 6 is just phenomenally positive. And it seems to me, and where my question is, I remember talking to you at the end of August. And one thing that concerned me is that you were very slow to respond to changes in the marketplace. You were very slow, whether it be picking up trends or you're on -- you picked up the trends, but you're too slow to execute. You seem to have been able to turn that around, whether the data is better. Look, I was really encouraged to see that you seem to be on top of what the customers really want. So whether your data input is better, but you seem to be responding better and quicker into the stores, can you spell out what you've done there? Is it the supply chain benefits that you've done that's coming through? Because it's just a wonderful achievement to get such an improvement in the voice of the customer when you've driven productivity and following Michael's point, when you've driven labor harder, when you've driven your costs and your efficiencies yet to still get such a great pickup in your voice of customer, it's just a great result. Can you go into how you've been able to achieve that? Because last August, I was a bit concern because you were talking about how you were too slow to respond. So it just seems to a phenomenal turnaround. Can you go into those details, please? That would be really appreciated. Amanda Bardwell: Yes. Thank you. And thanks, David. As you know, we're always focused on what we can do better as well. But if we just go back to that period. I'd start by saying that we made very significant people and leadership changes at multiple levels across Australian Food during that period and just prior to that trading period. And so the level of disruption, which was a combination of the work that we were doing to reduce our costs, but also our focus on how do we consolidate and simplify the structures within the group and then appoint the right leaders into those critical roles, whether that's the leadership roles across Australian Food, where we have Annette leading Woolworths Retail and Amitabh leading eCommerce or the commercial roles that sit across each one of our key categories and areas. At multiple levels, we made changes and there's no doubt that there was a high level of disruption and distraction. And I in no way want to make any excuses for that. But I do think that, that was the biggest determining factor around our performance during that period. And so what I've been very pleased to see is how the team now once they enroll, focused and they're focused on delivering across multiple horizons. And so yes, we put a lot of focus, as you say, on addressing what is it that customers are needing and wanting from us right now, how do we improve transaction growth and item growth, items in particular. And so there's very much that focus on trading the business today. But also on building the future and getting clearer around how we want to evolve the proposition of our supermarkets and our retail propositions in eCommerce going forward, whilst also being really clear with the team that we do need to be a lower-cost retailer and that we should be proud about that, and we should be focused on it because it enables us to deliver better value to customers and build a better business together. And so it was a disruptive period. We've got a highly focused team right now. We're very pleased to see improving momentum. We still think there's more for us to do in terms of work across our categories and our offers. But we're focused on building now on the momentum that we have. David Errington: You're doing very well. So well done, as I said, that you seem to be using data a lot better than what you were. So really pleasing to see them with AI coming in. Yes, it's promising. Thank you. Amanda Bardwell: Thanks, David. Operator: The next question comes from Bryan Raymond from JPMorgan. Bryan Raymond: One just to follow on actually from David's question just around -- and you mentioned Amanda, some personnel changes there. I just want to focus in on Australian Food, Annette appointed Peter McNamara to lead the long-life part of the business from a buying perspective at the start of the financial year. That preceded from what we've heard from the supply base, a strategic pivot towards impulse categories in store, particularly on promotion in gondola ends, et cetera, at the start of the second quarter. I'd just be interested as to how much that's impacted your sales results that you're seeing better uplift maybe in some of those impulse areas where you've been a bit underweight in the past from a store positioning perspective? And now that's really come back to the floor from what we've heard. I'd just be interested as to how much that's important and whether that's got a bit further to run going forward? Amanda Bardwell: Yes. Thanks, Bryan. Look, what I would say is that we focus on what is it that will make the most difference to customers. And how is it that we drive item growth. We knew that we had customers still shopping in our stores. And so I just want to come back and say this, yes, we've seen a substantial improvement in our grocery performance and across, as you say, some of those impulse categories. That's, I would say, primarily driven by a more disciplined execution. We've also seen strong fresh growth, which we're very pleased to see because it's a key part of our strategy overall. And then we have a team that's very focused on one customer plan. And so we talked about a lot of the structural changes that we've made and leadership changes. That's also been about bringing together a much more disciplined approach to the way that we go to market with our one customer plan across commercial customer loyalty operations and into the supply chain. And so we're just seeing now the start of the team getting into the right rhythm and flow, which really matters in retail, as you know. We have run sharper promotions, no doubt. I'm just looking at Annette, and I know you've been deeply involved in activating a lot of these. Do you want to add some color there? Annette Karantoni: Yes. Thanks, Amanda. I think that's right. We've done a lot really focusing back on listening to the customer, listening to our store teams and really building that momentum through great offers, great lower shelf prices and a very strong focus on planning right from planning right through to execution. What that's helped really shape is some of the things we just talked about, which is good availability in stores, particularly on some of the categories that you just mentioned in categories like impulse through promotional activities, where customers may not have thought they were going in to buy something but saw something on the shelf that they were interested in, but it was broader than impulse. I mean we have seen great growth in our drinks categories. The team has been doing a fantastic job, particularly through some of the hot weather that we've had through the half, but also through pantry essentials, through our meat business. So it really has been a really strong focus on retail discipline end-to-end that has really driven those opportunities. I would say, and I think, Amanda, you've called it, there is still a lot more to do. And so we're seeing some slightly better results in some of our Everyday Needs categories. But that is, of course, another area of focus. And so I would say we have a lot of work to do to make sure we're getting consistent delivery across the business. So more to see in the next half. Operator: The next question comes from Nicole Penny from Rimor Equity Research. Nicole Penny: In light of the previous comments regarding the cost of doing business reductions in the Australian Food business, could you perhaps comment on the time frame over which any potential benefits of consolidating the New South Wales operations at Moorebank will provide further benefits, please? And just another one, Australian B2B showed some encouraging operating leverage there. How much capacity has this business got to continue to grow earnings ahead of revenue, please? Amanda Bardwell: Great. Thanks, Nicole. Yes, we've been very focused on the work to transform our New South Wales supply chain. And I'll just hand to Steve to talk through the implications of that as that flows through. Stephen Harrison: Yes. Thanks, Nicole. So we have really been spending most of the last 12 months ramping up the NDC. And so we're now doing around 2 million cartons a week. We're not fully transitioned all the volume in there, but actually, we're starting to see results in line with what we'd expect out of the national distribution center. We are very much still in ramp-up mode in the RDC. So nice to be able to take many of you through that facility pre-Christmas. I think we are at 60-odd stores pre-Christmas, I think we have about 120 stores now last couple of weeks, we've been doing about 1 million cartons bearing in mind, we anticipate at maturity getting that to 2.5 million to 2.8 million cartons. So there's still quite a bit of ramp-up to go. So I think when we've talked about this in the past, we still do expect commissioning and dual running costs to continue from -- through F '26 at similar levels to F '25 and equally into F '27 as we start to go live with the Sydney chilled and fresh RDC, which will go live in actually F '28. And so -- we do, though, expect some of those commissioning and dual running costs to start to be offset by benefits. They will progressively ramp up over the next couple of years. So -- and really be at maturity. I think we talked about this in December when we had many of you at Moorebank around '28, '29 when they start to reach maturity. So we are -- but we are encouraged by what we're seeing, but we do recognize that are going to take some time to flow through the P&L. And then on B2B, I'm happy to take that question actually because within there, the 2 main businesses are PFD and PC+. Actually, both had strong results in the half. It is just worth being clear that the PFD results does include an extra week in the current year that's not in the comparative as we've just lined PFD's reporting periods up with the rest of group, but we have disclosed in the notes the adjustment that, that would have made to earnings in the half, if you just normalize it. And in fact, both delivered strong double-digit earnings growth in the half. we would consider there being a lot more runway in both those businesses to continue to grow earnings above sales through the medium term. Operator: The next question comes from Craig Woolford from MST Marquee. Craig Woolford: Amanda, great to see the momentum improving across the group. Can I just ask a question about that sales momentum, particularly on the food segment. I guess there's 2 parts to it. One is, is there any guidance you can give on what the strike impacts may have been in the first 7 weeks from a year ago? Is that still having an effect on reported results. But more fundamentally, I'm interested in what you see going forward on price and volume. The price inflation is dropping away a little bit, which is good news for consumers, but might make it harder to maintain sales momentum? Amanda Bardwell: Yes, yes, yes. Thanks, Craig. Just when we look at those first 7 weeks, it is important to know, as you point out, that we were recovering from the industrial action last year. And when we certainly look at the 7 weeks, we didn't last year call out a specific number. And we didn't do that for 2 reasons. One is supply chain was back up and running, and we were in flow in terms of delivering to our stores and to customers. And then we also didn't want to create, to be frank, just excuses for ourselves. We're very focused on just building the momentum as we move forward. So we don't have a number to specifically call out, but it is important to note that, that is a fact. And particularly, if we look at to give you a sense, Victoria. Victoria for us, was and continue to be very softer and lagged the rest of the states across really the last 12 months. And certainly, as we've come into now the first 7 weeks, you can see that Victoria is performing particularly strongly. So there's no doubt there's some cycling benefit there. When it comes to your second part of the question around just this price and volumes, we've been and we've been really clear that for us, it's about driving unit volume, and that's what we're focused on doing. You'll see from the average selling prices that we've shared that, yes, there has been a moderation in that. But I'll just hand to Annette to talk a little bit more because there's some color as we just look at the different categories within that, Annette, that might be just worth talking through. Annette Karantoni: Yes. Thanks, Amanda. Just from a general perspective, yes, the number of price increases coming through from suppliers have slowed since the peak in July and August. There's still a course coming through, but they have a different shape and a different ask and it is category specific. So yes, we're still seeing some come through in some of the food categories. But as you alluded to earlier, Amanda, that some significant shifts in the livestock, particularly in red meat. And of course, weather impacted in fruit and veg, so it's a little bit difficult to kind of pinpoint but we are still seeing some inflation in certain categories within food and veg, like capsicums and strawberries that are all very weather-dependent. So yes, it's slow, it definitely slowed from Q1 into Q2. And so I think it will be a strong watch out for us as we get into this half. Operator: The next question comes from Ben Gilbert from Jarden. Ben Gilbert: Just wanted to sort of dig into the 7 weeks and then a little bit more on how you think about the rest of the year, notwithstanding sort of the guidance. But it feels like you've just traded the business a lot harder and you have a lot more locations and impulse, et cetera, which is great. It seems like it's really resonating. I suppose 2 parts to the question, one is how profitable is that growth? If you have to dip into your own pockets. Your run rate obviously would suggest you can print an EBIT number higher than what you sort of tightened that range up to? And then the second part is, I'm just interested in how you're going to capitalize to try and drive a broader halo of that across the rest of the business, and particularly into those Everyday Needs categories and interested in the anecdotal comment you made that you are seeing some improvement in that as well? Amanda Bardwell: Yes. Thank you. I think we've demonstrated in the half that through a really strong commercial discipline that we've been able to deliver a solid GP result in the half. And certainly, as we move forward, we would see it being broadly consistent as we move into the second half now, in terms of that question, I just want to come back and say it hasn't -- this result has been driven by a series of factors. Yes, we've been more competitive than we said we would be. But it's also being driven by improved availability, genuinely better experiences in our stores and our customers are telling us that with the ratings and the feedback that they're providing to us. And so certainly, we've been more competitive. But this result is not primarily driven just by that. And we see it as being something that is sustainable on the go forward. And that's because it's a balance of levers that we've been using. Our lower shelf price program is absolutely delivering value back to customers in a way that is good for customers, consistency, reliability, but also good for us in terms of our supply chain and the efficiencies and the way in which we manage that, the promotional program, we have been more competitive and have certainly had more market-leading offers over the last 6 months, but we've managed that within the right commercial frameworks through both ourselves and our suppliers working with us. And then when we think about the role Everyday Rewards plays, we just broadened that out to have a lot more above the line or visible opportunities for customers to earn value, and that's something that is sticky. And that's not about a short-term sales or sugar hit. That's about building long-term growth with our customers and rewarding their loyalty. And we've really been very thoughtful about how it is that we manage all of that so that we can deliver more value for customers. We can manage our responsibilities around profitability of the business and the sustainability of it going forward. When we look at your question around Everyday Needs, again, Fresh was very strong for us. Grocery was strong and Everyday Needs, we saw a gradual improvement. And I'll throw it to Annette to talk more about this, but particularly in those key categories of baby and Pet, where we needed to see improvements. We took a series of actions there. We've still got more work to do in the personal care category, I would say, the one that we haven't seen as much traction. But Annette, do you want to just add a little bit of color of what are we seeing on Everyday Needs and what some of the actions that we've taken there? Annette Karantoni: Yes, I think you've called out the key categories, Amanda. In Pet, again, it's very much looking at multiple horizons. So in the near term, just holding that competitiveness in an incredibly and growingly competitive market unit price is very important, bulk packs are very important. So you saw some changes in the way that we approached some of those items within the Pet category. We also introduced a new range in Pet food in the dog category, 95 new products came in to the range with a real focus on the balance between branded products. Again, the bulk items where we thought it was required, and of course, some really good own brand products leveraging the relationship and the partnership we have with Petstock. So Billie's Bowl, Baxter, some great things came in, in the Pet category. So you'll start to see some shifts as that rolls through. It's actually rolling through right now. So Pets starting to see some -- they're minor. We've got a lot of work to do in the category, but we're starting to see some very small shifts. In baby, again, multiple horizons, working short term on making sure we've got the right value offers for our customers. We've done some work to reset quality of our own brand, Little One's products, they will start to come through, the wipes have come through now, but the nappies will start to come through over the course of the next couple of months. And earlier in the half, we introduced Millie Moon, which was a fabulous own brand product that now has a high single-digit share of that category. So again, you're seeing shifts within the baby category. Beauty, again, very different to the previous 2. It's all about being on trend. We launched some very good products during the half. BOOIE got a lot of attention, the video that launched BOOIE had 20 million views, which is extraordinary and just shows the nature of how customers are interacting with innovation and new categories, 50% of the customers that came in to buy BOOIE were new to the category. So we're seeing new customers come in, and there were a lot of new brands that launched through that beauty category in the half. So we're seeing very different in these 3 categories, in Everyday Needs. Different plans, but on multiple horizons. Amanda, if you don't mind, I would also say just back to the start of the question, we're also seeing a lot of growth in the way our customers are eating and what they're serving at home. So at-home consumption has been a very strong trend that we've seen continue to grow. So yes, impulse has been very important for the quarter, but so has some of the biggest moves in things like coffee. And so we've seen growth in coffee from, in particular, Cafe brands like Campos and grinders coming into that category, and we're seeing some really strong, very positive double-digit growth. So yes, it's in some of those impulse categories, but it's actually right across, whether it's protein, yogurts, it's actually -- it's going -- it's more broad than just the impulse category for sure. Amanda Bardwell: Yes, great. And then just to come back to the top of your question, Ben, when we look at the guidance that we've provided and that move to an upper single digit profit growth, important just to look at that in the context of everything that we've shared today in terms of customers are looking for more value, it is a very, very competitive market. And so we're very mindful as we look forward, that we expect customers to continue to seek value, competition to continue to increase. And so we've provided the update that we have with that context as well. Operator: The next question comes from Caleb Wheatley from Macquarie. Caleb Wheatley: Congratulations on the results. I just wanted to come back to this price trust discussion, particularly revisiting some of the prior comments you've made on sort of price perception issues rather than actual pricing problem. Are you able to just talk through sort of the quantum of reinvestment that's gone into price to manage that price perception issue? And then sort of looking forward, how much more work, if any, do you think sort of needs to go into focusing or resolving that price perception issue, please? Amanda Bardwell: Yes. Thanks. And price trust, price perception has been important as we've talked about one of the ways in which we measure that is to look at our voice of customer and the value for money scores that we are receiving. And importantly, we know that customers look at that at an individual item level and are making decisions around where they shop at an item level, but also at a total basket level. And so that's also informed our decisions around how do we make sure that customers are realizing the maximum value. Again, we've used multiple levers across our promotions, our lower shelf price and everyday rewards to make sure that we create the right value for customers we know they're looking for it. But price trust is something that builds over time. And so we certainly know that we've still got work to do to improve trust in Woolworths and trust in our prices, and that will remain a focus for the next 12 months ahead. Importantly for us, this is why we committed to the lower shelf price program because that's about reliability. Customers want to be able to count on us. And so that's been an important element of the offer that we have in place, alongside reaching customers across probably a broader mix of media than we have in the prior 12 months as well. So we have adjusted the way in which we talk to our customers and reach them as well across the period, which is important when everyone is looking for value. So I would just -- there's no number that I would particularly call out. We're always investing in price, not just in lower shelf prices, but in specials as well. We'll continue to do that, and we expect to continue the need to focus on building price trust over the next 12 and 18 months. Operator: The next question comes from Richard Barwick from CLSA. Richard Barwick: Amanda, I wanted to talk about BIG W. That was a strong -- much stronger result than I think many were expecting. And you've talked about -- it's on track to be EBIT and cash flow positive. Not surprisingly, you're talking about the profitability being weighted to the first half. I think everyone would expect that. What does that mean, though, in terms of profitability for the second half? Are you flagging that you can actually turn a profit from BIG W in the second half? Or should we be expecting another loss? Amanda Bardwell: Yes. Thanks, Richard. Look, we're not giving out specific numbers -- the profit number for BIG W, but we were wanting to reinforce and just help everyone understand, as you know, it is heavily weighted due to Christmas and seasonal sales in that first half but that we are remaining committed to the commitment we gave in August around being EBIT and cash flow positive. Dan, is there anything you wanted to add in that context? We're not going to be talking about the specific numbers in terms of profit, but any other context? Daniel Hake: The only other context I would give is that the health of our sales have been much stronger in the first half, especially in categories like Clothing and Home where we flowed seasonal stock a lot better. We got in and out of inventory a lot better and those processes are maturing. And so we do expect half 2 and half 2, the improvement of the health of sales and the improvement of the shape to continue. In absence of a specific EBIT number, we do expect improvements year-on-year. Richard Barwick: So improvement second half and second half, that's helpful. Daniel Hake: Yes. We're comfortable with that. Operator: The next question comes from Phil Kimber from E&P Capital. Phillip Kimber: Amanda, just a question on -- there was a specific comment you made in the actual announcement that said heightened competitive intensity in food eCommerce. I was just wondering if you could provide a bit more color around that. Is that being led by sales being more aggressive? Or is something else going on there? Amanda Bardwell: Yes. Thanks, Phil. Yes, that was really a reference to the fact that as we know Coles launched the Ocado partnership some time ago and have been very focused in the market in eCommerce, driving a lot of activity in that space. And then as we look at the on-demand space, in particular, with different platforms, whether that's Uber or DoorDash or our own. And customers are now really focused on that on-demand to our opportunity. Certainly, we're seeing competition increase, in particular around customer acquisition. So just looking at Amitabh, can you just build in terms of some of the intense competition we are seeing, particularly in Sydney and Melbourne? Amitabh Mall: Both to add to what you said, Amanda, one is from traditional competitors, where with Coles, with our stepped-up performance and their focus with their carton boxes is actually -- they have definitely sped up in terms of competitive intensity. But I think what's more interesting in the more recent times is the growth with what I would say are formidable, global retailers, whether it is Costco already with strong presence in Australia and for the first time, offering their products online, or whether it is with Amazon having entered the fray as well. So that is -- we're clearly seeing, a lot more competitive action in the eCommerce space and we are obviously quite determined to stay competitive and to make sure that we deliver -- we are the first choice for our customers. Operator: The next question comes from Peter Marks from Goldman Sachs. Peter Marks: My question is just on Australian Food business, interested in hearing about the launch of the customer offset -- sorry, offer reset program that you've launched. And I guess the details around that, what's involved? Is it a range review program? And I guess what you're looking to achieve with that and the timing of any benefit we should expect? Amanda Bardwell: Yes. Thank you. Thanks, Peter. So the customer offer reset is something we're running across the group. So that includes Australian Food, our New Zealand food business and BIG W and particularly relates to the relationship that we have with our major suppliers that connect with us across those 3 businesses and across the 2 countries. We really wanted to first and foremost simplify the connection with Woolworths, and that's important for us and important for our supply partners and also engage in the right strategic conversations around how we reset those categories for the future so that we grow together. And so it is a new way of us engaging with our supply partners, but it is very much -- and hence the name, customer offer reset. It is very focused on what is it that customers are looking for across individual categories. and how do we work with those larger suppliers across our 3 businesses to unlock the full potential of those categories with customers in mind. And so it's a program that will progressively roll out across the next 12 and 18 months. We've started with a series of 4 key categories that are underway now. And as we've shared with our supply partners, we want to partner together with them on this. And so we will take the learnings from those first 4 categories as we then roll that out across the rest of our categories. And so it does align broadly with range reviews so that we can give everyone the appropriate time, but it's a new way of us working. Peter Marks: So the new way is, I guess, you're buying across the 3 different businesses now. Is that the right way to think about it? Amanda Bardwell: I would say that we're looking collectively together with our supply partners on the opportunities that exist in each one of the categories. Each one of those businesses has a slightly different customer base, slightly different need, but we're bringing together a shared conversation with our supply partners as to how we do business and how that plays out in each one of those businesses and categories will look and feel a little bit different. And we'll learn more across this year. Operator: The next question is a follow-up from Michael Simotas from Jefferies. Michael Simotas: One on eCommerce profitability. Your margin effectively were close to double year-on-year. And I know the first half of last year was pretty tough for the business. But the way we calculate it, it's about 3.5%, which looks like a very good outcome given that competitive dynamic and customer acquisition costs that you talked to. Can that business continue to scale and deliver leverage from here? Or do the costs become more variable? Amanda Bardwell: Yes. It was a strong performance from the eCommerce business in the half. And importantly, as we know, our eCommerce business is primarily fulfilled from stores. And so it's a really important part of our offer overall. The short answer is, yes, we do think we can continue to improve the profitability and performance of eCommerce. And there are a number of things that drove that in the half. And I'll just hand to Amitabh to add a little bit more in terms of the key drivers of that eCommerce results. Amitabh Mall: Thank you, Amanda. So the 3 things that we think have really made a difference in our profitability performance in the half. First is the proposition mix itself, where we've consistently invested in our direct-to-put capacity that has driven growth in our collections. Collections have grown at more than 20% compared to the rest of the business having grown at 15% in eCommerce. And the second is continued growth on demand, which is also margin accretive as a proposition for us. So both the propositions which are margin accretive have grown faster based on the investments that we've made both over the years as well as more recently. Second driver is the fractionalization of the fixed cost itself, which we have reached a scale in the business where with continued growth in the business, we continue to fractionalize our fixed costs, and we expect to see that benefit coming through. And finally, operational discipline in terms of just the productivity pipeline that we've had driving both our picking costs and Amanda referenced in different conversation some of the AI tools that are in place or to drive better picking -- to optimize our picking as well as in the last mile delivery cost. So all 3 have driven, and we expect all 3 to be sustained going forward as well. Stephen Harrison: Just one build, Michael, I think, in that growth in the half, there are some cycling benefits both the industrial action, but we did make a material investment in cold chain integrity last year, which we've now structurally found ways to reduce that cost and retain that integrity. So the profit growth moving forward, I wouldn't necessarily be baking in that type of expansion each half. Operator: The next question is a follow-up from Adrian Lemme from Citi. Adrian Lemme: I had a question actually on New Zealand. I understand the implemented changes in the store operating model partway through the half that significantly reduce the number of managers. Just wanted to know, is this a key driver of the lower CB margin. But then I guess, more importantly, can you talk about how the new model compares to Australia? And if it's not already on that kind of model, could Australia sort of follow down the line, please? Amanda Bardwell: Yes. Thanks, Adrian. So we did implement in quarter 2. We've been testing this in New Zealand for quite some time, a new operating model. which moved from really having that department focus to more of a functional focus in terms of the way that the operating model itself works. And during the period, it was really about implementing quite a substantial change and if anything, to be perfectly frank, it probably impacted a little bit of our performance in quarter 2. Just as we made such a large scale change across the entire New Zealand business. We think it's a great model, certainly for the future, but we want to see that continue to improve performance across New Zealand first. And so when you're looking at the implications of that from a cost perspective, certainly, we hadn't yet seen any substantial benefit from that flow through in the first half. And right now, as we ramp up that operating model, we've also got more focus. And so it will take some time for the benefits of that to materialize. I'll hand to Sally in a moment to see if there's anything else you wanted to add to that. On your question of Australia, look, right now, what we're focused on is let's see how this performs in New Zealand for us. As I say, we've been testing it for some time anyway. But when you release things out at scale, you always learn more and so we'll be focused on learning from our New Zealand business first and then determining whether or not that's the right model for us in Australia. Sally, any other reflections in terms of operating model? Sally Copland: Thank you, Amanda. Yes, absolutely. I think the model is predicated on us being able to deliver a better customer experience and actually building stronger momentum in retail and careers for the team. It was a very significant change in the New Zealand context. So 2,500 new team members, that's 13% of our frontline workforce who are new to our business, and so supporting them to onboard and be part of our team has been a very big focus. And we actually have 300 team members who are in new leadership roles for the very first time. And that's about helping really build a strong pipeline for us all the way through to store managers and beyond. So we are in the throes of embedding this model and really focused on how do we get back to basics, make sure we've got the fundamentals of our routines right and that we're in a stronger position going forward. Operator: The next question comes from Craig Woolford from MST Marquee. Craig Woolford: This might be for Steve. Just is that -- in the full year results, just about the outlook for FY '26, there was specific items called out around the Tobacco headwind. It was supposed to be $80 million to $100 million across the year, the workforce system, $60 million and then the lower shelf price of $100 million. Can you just clarify how those factors impacted the first half results? Stephen Harrison: Yes. So from a Tobacco perspective we called out $80 million to $100 million estimate. We think that's still the right estimate for the full year, but it's slightly weighted to the first half. So there's a disproportionate component in the first half. In terms of the technology investment, so there's multiple systems that were end-of-life systems that we're replacing, not just the time and attendance. We called out a $60 million estimate roughly 50-50 across the 2 halves. And LSP, we haven't specifically called out the number, but we said it would be a minimum investment of $100 million in our own brands. But obviously, we been able to get a scale that program and to get a lot more suppliers on board. So -- but broadly, if you think about we launched it in May last year, you expect roughly, it would split 50-50, maybe slightly less given the cycling impact in the second half. Operator: The next question is a follow-up from Bryan Raymond from JPMorgan. Bryan Raymond: Earlier, I think, Amanda, you might have mentioned some strategic optionality with BIG W. I'd just like to elaborate on that a little bit, if we can. Profitability has improved, would a potential exit or sale of this business beyond possible or one that you'd consider? Or did you mean something else by that strategic optionality comment? Amanda Bardwell: Yes. Thanks, Bryan. Firstly, I just want to acknowledge that it is very good to see an improved performance from BIG W and the transformation plan that the team has put in place that they've been very focused on delivering is showing some good improved performance. And so we're very pleased as is the BIG W team to see that. When we're talking about BIG W, we want to make sure that, that business and that team is super focused on their transformation. They've done a great job, and there's more to do there. We talk about the IT separation primarily because giving BIG W the independence to be able to build the right platforms that are fit for purpose is really important for a discount department store. BIG W has been deeply integrated across the Woolworths technology systems and as a result, has drawn on a lot of the food technology. We want to make sure that as the business moves forward, particularly when we look at areas like eCommerce, which is driving a lot of positive growth for BIG W that they've got the right tools and the right technologies to be able to drive that forward. So there's nothing that we would further update with regards to BIG W other than what we've already shared. Thank you. Operator: Thank you. That does conclude the question-and-answer session for today as well as today's call. Thank you for participating. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Glanbia 2025 Full Year Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I will now hand over to Liam Hennigan, Group Secretary and Head of Investor Relations, to open the presentation. Please go ahead. Liam Hennigan: Thank you. Good morning, and welcome to the Glanbia Full Year 2025 Results Call. During today's call, the directors may make forward-looking statements. These statements have been made by the directors in good faith based on the information available to them up to the time of their approval of the full year 2025 results. Due to the inherent uncertainties, including both economic and business risk factors underlying such forward-looking information, actual results may differ materially from those expressed or implied by these forward-looking statements. The directors undertake no obligation to update any forward-looking information made on today's call, whether as a result of new information, future events or otherwise. I'm now handing the call over to Hugh McGuire, CEO of Glanbia plc. Hugh McGuire: Thank you, Liam. Good morning, everybody, and welcome to the Glanbia Full Year 2025 Results Call and Presentation. I'm joined on today's call by Mark Garvey. I will provide an overview of our performance for the year, and Mark will then cover the financials and outlook. At the end of the call, we will be happy to take your questions. Overall, we delivered a robust performance in 2025 with like-for-like revenue and volume growth across all 3 segments, driven by strong consumer demand for our Better Nutrition brands and ingredients, with adjusted earnings per share of $1.3493. The group delivered pre-exceptional EBITDA of $499.1 million, representing a decrease of 9.4% and EBITDA margins of 12.6% in representing a decrease of 170 basis points on a constant currency basis. With margin expansion in Health & Nutrition, offset by our contraction in margin and performance attrition as a result of elevated whey input costs. We continued our strong track record of delivering returns to shareholders by raising the interim dividend by 10% and returning approximately EUR 197 million to shareholders via our share buyback programs. The Board has authorized a further EUR 100 million share buyback program, and we will commence an initial EUR 50 million tranche of this program today. As well as delivering a strong operational and financial performance, we continue to progress our strategic agenda and we made significant progress on our group-wide transformation program, with our new operating model implemented to simplify our business and bring greater focus on high-growth opportunities. We continue to make good progress on our portfolio with the sale of noncore brands completed during the year. We also acquired Sweetmix, a Brazil-based nutritional premix and Ingredient Solutions business within our Health & Nutrition division and agreed to acquire Scicore, a manufacturing facility in India, which provides in-market manufacturing for both Performance Nutrition and Health & Nutrition with the acquisition completing post year-end. We hosted our Capital Markets Day on the 19th of November in London, where we outlined the group's growth strategy for the next 3 years, focused on 5 key drivers and our financial ambition for the period 2026 to 2028 and our confidence in driving continued shareholder return. We are pleased with the positive response and interest from attendees and look forward to delivering on our medium-term ambitions. For Performance Nutrition, like-for-like revenue increased by 4.5%, excluding the impact of noncore brands, which is driven by our 2 priority growth brands, Optimum Nutrition and Isopure and was a combination of strong category growth increased distribution and innovation. The volume increase was driven by strong growth in the online and food drug mass channels as well as continued growth in international markets across both protein and energy categories, somewhat offset by lower revenues in the U.S. club and specialty channels. We implemented price increases in our international markets in quarter 2 and in the U.S. in quarter 4 to offset record whey inflation. During the year, we also implemented some tactical price reductions and higher-margin products in the energy category, which delivered a strong volume uplift. From a regional perspective, Performance Nutrition Americas which represented 63% of revenue was down 0.5% versus last year due to the aforementioned club channel headwinds. Excluding noncore brands, Performance Nutrition Americas revenue increased by 1.3%. We are pleased with the trajectory in our flagship brand, Optimum Nutrition, which showed a sequential improvement through the period, delivering double-digit like-for-like revenue growth in the second half of the year, but continued momentum in the protein powders and energy category. Our international business, which represents 37% of revenue, performed strongly, delivering like-for-like revenue growth of 8.8% or 10.5%, excluding the impact of noncore brands, driven by volume and pricing growth in the Optimum Nutrition brand, particularly in China, India, Oceania and the U.K. Growth was supported by our global supply chain footprint, enabling in-market supply and local innovation in key regions. EBITDA for the year declined by 23.2% with an EBITDA margin of 13%. The contraction in margin is entirely as a result of record whey input costs as previously disclosed, with an improvement in EBITDA margins in the second half of the year. In terms of brand performance, Optimum Nutrition, our largest brand at 75% Performance Nutrition revenue, excluding noncore brands, delivered like-for-like revenue growth of 6.4%, comprising volume growth of 5% and pricing growth of 1.4%. ON delivered double-digit like-for-like revenue growth in the second half of the year, led by a combination of strong velocities, distribution gains, lapping of a weaker comparative in the U.S. club channels and innovation. We continue to see strong momentum in the category with an acceleration of the growth of the protein powder category in the last 12 months. U.S. consumption grew by 3.4% in the last 52 weeks, with double-digit growth in the food drug mass channel, growing ahead of the category and continued strong growth in the online channel. In the last 13 weeks, U.S. consumption accelerated to 4.6%, and ON continues to be a top driver of retail dollar consumption growth for protein powder and creatine in measured channels in the U.S. We're also seeing strong consumption growth across many international regions, and we'll continue to increase our retail distribution with distribution gains for ON across retailers in Europe and Asia Pacific and double-digit growth in e-commerce channels in China. I'm pleased to see ON deliver double-digit growth in household penetration and TDP in the U.S., reflecting strong recruitment and retention. We have an uncompromising dedication to product quality and we are operating in high-growth categories with the most trusted brands in Sports Nutrition, driven by powerful consumer megatrends. From a marketing perspective, our focus continues to be on driving recruitment and conversion and broadening the brand's appeal through increased campaign reach and education. We just launched the Optimum Advantage campaign, a disruptive campaign rolling out globally where the concept involves elite athletes revealing one thing they never want to share, the marginal gains to give them their edge. The launch features McLaren Formula 1 star Lando Norris, Rugby International's Dan Sheehan from Ireland and Mark Smith from England and U.S. Women's NBA star Cameron Brink. Early results show that the optimal advantage athlete strategy is driving both scalable media efficiency and authentic cultural relevance across channels. The AI-powered coach Optimum went live in several markets during 2025, with results showing excellent engagement rates. The protein calculator has been going from strength to strength, help the consumer realize how Optimum Nutrition can help them fulfill their daily nutrition needs with trusted high-quality products. We've also seen strong growth being driven by online channels and the success of the quick-commerce channel in India. We have a world-class portfolio of high-quality products within the Optimum Nutrition brand, and we continue to focus on innovation, in particular by expanding our usage occasions. We launched a number of products during the year across our protein and energy offerings, including multiple creating offerings, whey collagen blends, protein RTD shakes and additional smaller pack sizes, including stick packs addressing affordability through opening price points. We're particularly pleased with the performance of ON creatine, which delivered strong growth globally as we continue to cement our #1 position in this fast-growing segment. Isopure, our premium high protein, low-carb brand grounded in purity continues to do well, delivering double-digit like-for-like revenue growth in the year. This brand allows us to target an incremental consumer from Optimum Nutrition with the consumer affluent and predominantly female that values high quality and great testing solutions that they can incorporate into their daily nutrition regime. During 2025, we rolled out more of What Matters campaign with strong engagement rates, reaching more than 20 million consumers through our digital channels, educating consumers on how to integrate Isopure into their daily routines with influencers such as celebrity, Tiffani Thiessen, sharing simple baking hacks, highlighting the mixability into things like sauces and soups. Our partnership with Top Bolly with Celebrity Rashmika and Mandana, has helped deliver a reach of over 50 million plus for the brand in India. We've been expanding our distribution of Isopure across food, drug, mass and online retailers, elevating display execution and shelf placement, targeting aisles outside of Performance Nutrition to capture a broader consumer set. I'm pleased to see continued good growth in our core brand metrics with double-digit growth in ACV, TDP and household penetration. Innovation continues to be a core focus across our portfolio, and we launched several products under the Isopure brand, including protein water, stick packs, colostrum and collagen peptides in the U.K. Moving to our second growth platform of Health & Nutrition, which comprises nutritional premix solutions and flavors and focuses on priority high-growth end-use markets of active lifestyle nutrition, functional beverages and vitamin mineral supplements. This segment delivered a strong performance of 2025, delivering like-for-like revenue growth of 6.8%. This was driven by a 7.4% increase in volume and a 0.6% decrease in price. Total revenue increased by 11.5% as a result of 6.5% increase from the acquisitions of Flavor Producers and Sweetmix, which were completed in April 2024 and August 2025, respectively. And the negative impact of the 53rd week in the prior year of 1.8%. We're pleased with the strong volume performance, which was driven by good growth across both premix and flavors, underpinned by strong demand across our end-use markets. We saw particularly good growth in Europe and Asia. Pricing was slightly negative due to certain pass-through pricing of customers. Health & Nutrition EBITDA was $115.8 million, up 16.7% constant currency. EBITDA margins were 18.4%, an increase of 80 basis points versus 2024 on a constant currency basis. Margin expansion was driven by the full year impact of Flavor Producers and strong volume growth from existing customers, somewhat offset by the impact of tariffs in the second half of the year. We have a strong global footprint in Health & Nutrition with a range of technologies and solutions, targeting functional nutrition in end-use markets across a broad range of customers. We have deep customer relationships and co-development capabilities to help our customers win in their markets. We hold the #2 global position in customized premix solutions and have a strong position in natural and organic flavor systems, operating in attractive end-use markets such as active nutrition, functional beverages and vitamins, minerals and supplements. We continue to invest in innovation, capacity and new capabilities to ensure we have the best solutions to meet the growing demand for functional taste and macro nutrient needs across a broad range of formats. During the year, we announced the acquisition of Sweetmix and Scicore. Sweetmix is a high-quality Brazil-based nutritional premix and ingredient solutions business, which will allow continued expansion in the Latin America region. Scicore is a fully operational manufacturing facility in India, which provides us with our own in-market manufacturing for both Performance Nutrition and Health & Nutrition. In terms of capacity, we're substantially expanding our spray drying capabilities in the U.S. which will enable us to capture a larger opportunity in powdered flavor applications. We have also approved plans to more than double our Asian nutritional premium capacity and are also expanding our capacity in Europe. Dairy Nutrition combines our U.S. cheese and dairy proteins portfolios. This platform consists of a highly integrated manufacturing footprint with a high supply and operational interdependency and is also the route to market for our joint venture partner supply of whey and cheese ingredients. This business underpins our scale, leadership position in dairy as a leading producer of whey protein isolate and American style cheddar cheese in the U.S. We also hold exciting positions in dairy bioactives with strong demand, particularly for colostrum, targeting gut health and immunity trends. In 2025, Dairy Nutrition delivered like-for-like revenue growth of 5% in the period, driven by a 4.2% increase in volume and a 0.8% increase in pricing. The increase in volume is across cheese and protein solutions and the price increase was driven by strong high-protein solutions category demand somewhat offset by negative dairy market pricing in the second half of the year. We're seeing sustained demand for high-quality whey and non-whey protein solutions, driven by global trends in Performance Nutrition and everyday wellness. Our expertise in protein chemistry and our unique assets, combined with the ability to deliver consistent functionality and nutritional density positions us as a partner of choice for customers seeking premium, science-led protein solutions. We saw good growth in existing and new customer wins in 2025. An example of this momentum includes our novel protein solutions such as the Oven Pro series, targeting high protein breakfast and other snacking usage occasions. These solutions exemplify pleasure with purpose, indulgent products with protein content that taste good, meeting end consumer demand for great taste without compromise. Turning to whey and whey volatility. We're one of the largest suppliers and the largest buyer of whey protein Isopure globally, and we have a clear ongoing strategy on whey procurement. As consumer demand for protein continues to grow, which is driving growth in our priority brands, we also continue to see whey pricing hit record levels, driven by this strong demand. We have a lot of experience across dairy complex, but there's currently no way to effectively hedge whey protein, but we have a robust program using all available levers to manage it. As you can imagine, there will always be a lag impact on margin as we implement consumer price increases and navigate this input volatility. We have now contracted supply into early quarter 4, providing certainty on our cost base for 2026, with prudent assumptions for the remainder of the year. New global supply of high-end whey of approximately 15% to 20% has started to come on stream and is expected to expand across 2026. We continue to engage with our suppliers for longer-term supply investment. And as mentioned previously, we're also investing in our own WPI capacity within our joint ventures, which will come on stream in early 2027. We continue to take decisive action to mitigate the impact as much as possible, and we're very thoughtful on this to ensure we do it in a measured way to maintain revenue growth and protect share. In 2025, we increased prices in international markets in quarter 2 and in the U.S. in quarter 4, and we are currently implementing price increases globally for execution in quarter 2, which is supported by promotional efficiency and product mix. To date, we've seen limited elasticity from price increases in 2025, but we'll continue to monitor demand carefully, particularly as we move through the second round of price increases. We continue to review the possibility of further revenue growth management initiatives later in the year, depending on consumer reaction and the evolution of whey prices. In addition, we also carefully manage our cost base to ensure we're efficient and adjust our marketing investment appropriately to ensure we prioritize spend on brand building initiatives. We will also be pricing across our protein solutions business in Dairy Nutrition. And lastly, with innovation, we're looking to broaden our product mix from whey protein to include other protein sources, such as collagen, milk and plant proteins, while also driving non-whey innovation, as you've seen at our energy platform. We made good progress on our group-wide transformation program during the year, which is focused on driving efficiencies across our new operating model and supporting the next phase of growth through 3 focus segments. The program is expected to generate annual cost savings of at least $60 million by 2027, and we are on track to deliver approximately 40% of savings in 2026. Of these savings, we expect to reinvest approximately 50% to drive growth across our Performance Nutrition and Health & Nutrition segments. Significant progress has been made across 4 key pillars to give us confidence in delivering on the targets. New operating model is now established, simplifying our structure with Dairy Nutrition and Health & Nutrition established as new Dedicated segments and the reorganized performance of Nutrition in Americas, injecting new capabilities into the business. The second pillar is to unlock efficiencies, and we're centralizing and streamlining key activities and capabilities across procurement, engineering, planning and quality and driving operational efficiency through a mixture of automation and continuous improvement. We're also accelerating our procurement savings and leveraging our global manufacturing footprint for capacity. The third pillar is about accelerating our digital transformation, and we've expedited the transformation of our back-office functions and continues to focus on automation and the implementation of AI and analytics to enable front office growth initiatives. We are leveraging Agentic AI across the group, which is supporting marketing campaigns and new product innovation and performance attrition and analyzing customer interactions in Health & Nutrition and Dairy Nutrition, providing us with both the intelligence and the infrastructure to drive growth and improve our efficiency. The final pillar is our ongoing portfolio evaluation. We're focused on simplifying our group structure and optimizing our overall margins. And in 2025, we completed the sale of 2 noncore brands, and we also completed the acquisition of Sweetmix and Scicore, further expanding our global scale. As we outlined at our Capital Markets Day, we have a clear strategy in place to drive the next stage of growth, and we've shown evidence of this model throughout 2025. Firstly, we're focused on driving Optimum Nutrition globally and growing our portfolio of lifestyle brands. Optimum Nutrition delivered double-digit like-for-like revenue growth in the second half of 2025, and we continue to see strong momentum for the brand. We're ambitious to scale our Health & Nutrition segment as a leading solutions partner in our end-use markets and the acquisitions we've made and a commitment to capacity expansions we've outlined are core to this growth strategy. We are focused on optimizing Dairy Nutrition to maximize profits across our scale dairy operations while growing our protein solutions and bioactives business. We continue to expand internationally, leveraging our scale and global supply chain footprint. And lastly, investing in innovation to stay at the forefront of our growing categories is vital to us and the savings from our transformation program will allow us to continue to reinvest in innovation. Delivery against each of these requires focus on execution excellence enabled by our group-wide transformation program, our teams, talent and culture as well as our strong financial discipline. And with that, I will hand over to Mark to take you through the financials. Mark Garvey: Thanks, Hugh, and good morning to everyone on the call. 2025 Group revenue was $3.95 billion, up 2.3% on a constant currency basis. At the group level, volumes were up 3.7%, driven by good performance across all 3 divisions and a particular strong demand for our protein brands and ingredient solutions. Price was up 0.5%, driven primarily by positive dairy market pricing and positive pricing in Performance Nutrition. 53rd week in the 2024 comparison negatively impacted revenues by 2% and the net impact of acquisitions and disposals added 0.1% of group revenues as a result of the acquisition of Sweetmix offset by the disposals of SlimFast and Body & Fit. 2025 group EBITDA pre exceptional charges was $499.1 million, down 9.4% in constant currency, primarily as a result of higher whey input costs impacting Performance Nutrition EBITDA, somewhat offset by strong EBITDA growth in Health & Nutrition in the year. PN EBITDA was down 23.2%. H&N EBITDA was up 16.7% and DN EBITDA was up 1.7%. Group EBITDA margin was 12.6% compared to 14.4% in the prior year. PN EBITDA margins were 13%, down 380 basis points constant currency. And in Health & Nutrition, we saw good progression in EBITDA margin to 18.4%, an increase of 80 basis points constant currency on the prior year. Adjusted earnings per share for the year was $1.3493 down 2.4% constant currency on the prior year and ahead of the previously guided range of $1.30 to $1.33. The group generated operating cash flow of just over $454 million with a strong operating cash flow conversion of 91%, well ahead of our 80% target. Return on capital employed for the year was 11.3%, in line with our target range of 10% to 13%. Cash flow generation was strong in 2025 with operating cash flow of just over $454 million. Operating cash conversion was 91% compared to 88% in the prior year. Operating cash flow was enhanced by another year of disciplined working capital management. Net working capital balances at year-end were broadly in line with prior year, and net working capital outflows for the year amounted to $11 million. Free cash flow for the year was $360 million compared to $403 million in the prior year. At year-end, the group's net debt position was $526 million compared to $436 million at the prior year-end. The closing net debt balance represented a net debt to adjusted EBITDA ratio of 1.08x. Interest cover in 2025 was 13.7x. Both metrics are well within the group's financing covenants. The group has $1.4 billion in committed debt facilities with a weighted average maturity of 2.7 years with no facility due for renewal prior to late 2027. Now let me turn to our capital allocation framework. Of the $437 million deployed in 2025, we returned the majority of this capital to shareholders. In respect of dividends, the group returned EUR 102.5 million to shareholders during 2025, related to the final 2024 dividend and the interim '25 dividend. Today, we announced that we are increasing the 2025 final dividend by 10%, so that the total dividend for 2025 will be EUR 0.4287 per share representing a payout ratio of 35.9% of adjusted earnings per share, which is within our updated target payout range of 30% to 40%. As we stated at our recent Capital Markets Day, the group is committed to a progressive dividend policy. The group also returned EUR 197 million to shareholders via share buyback programs during 2025, acquiring and canceling 15 million shares at an average price of EUR 13.10 per share. In addition, the Board has authorized a further EUR 100 million share buyback program for 2026 and we are launching an initial EUR 50 million tranche of this today. In 2025, the group spent just over $51 million on strategic capital expenditure with investments in ongoing capacity enhancements, business integrations and IT investments to drive further efficiencies. In the second half of 2025, we acquired Sweetmix, a Brazil-based nutritional premix and Ingredient Solutions business for an initial consideration of $41 million that enabled Health & Nutrition to continue to expand in Latin America. Post year-end, we completed the acquisition of Scicore, manufacturing facility in India providing in-market manufacturing for both PN and H&N for consideration of approximately $16 million. We will continue to look for organic and acquisition opportunities to scale our Health & Nutrition business supported by our strong balance sheet and financing facilities. The group incurred exceptional charges after tax of just over $100 million during the year. These primarily related to a group-wide transformation program and losses on disposals of noncore brands. The multiyear transformation program was announced in late 2024 to drive efficiencies across the group's new operating model and to support the next phase of growth. In 2025, cost of this program amounted to $55 million, which are primarily people-related costs and advisory fees associated with outsourcing certain back-office functions and establishing the new Health & Nutrition and Dairy Nutrition businesses. The program is on track to deliver $60 million of annual savings during 2027, of which 40% are expected to be achieved by the end of 2026. Total cost of the program is expected to be $100 million. The noncore brands, SlimFast and Body & Fit were divested during the year, and we have recognized the loss of disposal of these businesses of $45.7 million in the current year. We've also taken a noncash impairment charge of $16.5 million related to the level of direct-to-consumer retail business. As part of the decision to exit our dedicated European D2C retail strategy, and following the sale of the Body & Fit business, we are exiting the level of D2C retail business as it no longer aligns with our strategy. Net finance costs were $29.4 million, up approximately $2.6 million compared to prior year due to the acquisition of Flavor Producers in 2024. The average interest rate for the year was 4.2% compared to 4.6% in '24. The effective tax rate for the year was 15%, down from 16% in the prior year. And for 2026, we expect the group's effective tax rate to be between 14% and 16%. Joint venture performance increased by $11 million versus prior year, primarily related to improved dairy market dynamics, including the implementation of the U.S. Federal Milk Marketing Orders program from June 1. For 2026, capital expenditure, both strategic and sustaining is expected to be between $100 million and $110 million, which includes initial spend related to the expansion of our Health & Nutrition facilities in Asia, U.S. and Europe, as Hugh has referenced earlier. These projects, which are expected to be substantially completed by the end of '26, will have a total investment of approximately $40 million and will enhance our ability to service customers in growing end markets. We are ambitious for growth and we outlined our medium-term growth algorithm at our Capital Markets Day in November. Over the medium term, we are targeting 5% to 7% annual organic revenue growth in Performance Nutrition and 4% to 6% annual organic revenue growth in Health & Nutrition. We expect to grow earnings ahead of revenue in PN and H&N supported by our transformation program that will deliver $60 million of savings annually by 2027. EBITDA margins in PN are expected to improve by 250 basis points by 2028, and EBITDA margins in H&N are expected to be in the range of 17% to 19%. Dairy Nutrition EBITDA is expected to be in the range of $150 million to $160 million. From a group perspective, over the medium term, we are targeting annual earnings per share growth of 7% to 11%, with 85% cash conversion. And we will continue to invest for growth and returns, targeting a dividend payout ratio between 30% and 40%. Our 2026 outlook is aligned with these medium-term targets. Performance Nutrition like-for-like organic revenue growth, excluding dispositions, is expected to be between 5% and 7% in 2026 and will be pricing led. As we enter '26, we continue to see strong demand for our protein products, and we are currently implementing price increases, which will be effective in Q2 to offset whey inflation. Volume trends have remained broadly resilient following prior year pricing actions, and we will continue to monitor these trends and demand responses closely as the year progresses. As whey input costs are expected to remain elevated this year, we will continue to assess the need for further revenue growth management actions in the second half of the year. We continue to utilize all levers within our revenue growth balance from playbook including disciplined pricing actions, promotional efficiency and product mix management, allowing us to manage the cost environment while maintaining competitiveness and supporting the long-term health of our brands. We have very good visibility in our cost base this year as we have contracted whey supply needs into early Q4, and we have made prudent assumptions and whey costs for the remainder of the year. New global whey supply of 15% to 20% have started to come onstream, and we expect this to continue through 2026, albeit strong demand is taking up this supply. We expect to see EBITDA margin progression and Performance Nutrition in 2026 as a result of price increases, the sale of noncore brands and our group-wide observation program. Progression is expected to be second half weighted as a result of the phasing of price increases and timing of marketing investments. Revenue in Health & Nutrition is expected to grow between 4% and 6% and will be volume-led across both premix and flavor solutions businesses, with strong growth expected across our core end-use markets of active nutrition, functional beverages and vitamins and supplements. H&N EBITDA margins are expected to be in line with our medium-term guidance of 17% to 19%. We continue to expect profitability growth across Dairy Nutrition and the group's U.S. joint venture. In Dairy Nutrition, we expect EBITDA to be in line with our medium-term guidance of $150 million to $160 million with continued strong demand for whey protein. And our U.S. joint venture will see profit after tax growth given the full year impact of the U.S. Federal Milk Marketing Order, which was implemented on June 2025. We expect to deliver adjusted constant currency earnings per share growth in the range of 7% to 11%, in line with our medium-term guidance. We also expect operating cash conversion to be over 85%, and returning capital employed to be in the range of 10% to 13%. And with that, I will hand it back to Hugh. Hugh McGuire: Our purpose is better nutrition, and we're ambitious for growth. We're operating in exciting high-growth categories with leading brands and ingredients driven by consumer megatrends. We have transformed our business, sharpening our focus to capture growth in our primary engines of Performance Nutrition and Health & Nutrition. And finally, we believe we have the right people, the right capabilities, the right portfolio and balance sheet firepower to deliver on our growth algorithm and drive strong shareholder return. And now I'd like to hand over to the operator for questions. Operator: [Operator Instructions] Our first question today comes from the line of Patrick Higgins from Goodbody. Patrick Higgins: My first question is just on whey cost, a very clear commentary there. And in terms of how you've hedged on your outlook. But maybe just to ask a little bit more color. So at the Q3 point, I think you said you hedged for H1 marginally ahead of H2 '25 levels. given the level of hedging you have in place now for this year, how should we think about year-on-year impact for your whey cost bill for '26 versus '25? And I guess the second question around this is just you flagged more new supply coming on stream as we speak today, what is your base case assumption in terms of whey prices over the course of the next year? Like are you still anticipating a normalization? Or has that changed just given how strong demand has been over the last kind of year or so? And then my last question, if I can sneak it in, is just around innovation for GPN clearly dialed up and kind of took more of a focus at your CMD in November, maybe you could just talk us through the success of some of the recent launches in H2 and some of the plans for the year ahead. Mark Garvey: Thanks, Patty. Just, I'll answer the cost question, and he will talk innovation. Yes, look, we've been managing our whey fairly closely, as you can imagine. That's why we are procured out to Q4. We've been layering in that procurement since last summer, Frankly, as you sort of look at what we're doing for this year. Costs continue to be elevated. There's obviously a 90 to 80 element to whey, and those have 80 have rising a bit more recently, I would say, 90 a bit more stable, but certainly have continued to elevate as the year has gone on. So when we look at year-on-year, we'd expect to see double-digit increase in cost of whey versus the prior year. And that, of course, will feed into the pricing conversation, as you can imagine as well. And in terms of your question on new whey supply coming on stream, as I said right now, it's been taken up in terms of the strong demand we're seeing for protein in all different formats. Clearly, we're benefiting from as in our Dairy Nutrition business and our Performance Nutrition business. But certainly, right now, that supply has been taken up. So as we look to '26, I don't think we expect to see any significant change in terms of significant reduction in whey prices. So we've assumed they'll stay at an elevated rate for the year in terms of our overall guidance to you. Hugh McGuire: Yes. Thanks, Mark. Apologies to all of you, fighting a bit of a cold that you might hear in my voice. Yes, just to add actually to what Mark said on whey at a more strategic level, we see it in Dairy Nutrition, demand is exceptionally strong at the moment across multiple formats. And we're seeing the benefit of that in Dairy Nutrition. So clearly, new supply is coming, and I can assure you that every dairy company out there is figuring out how to make more WPC and WPI given these prices. But fundamentally, it's driven by demand. I think you're going to see all categories price increase over the course of 2026 and figuring out the impact that may or may not have. But the fundamentals remain very strong for demand of whey protein. If you look at innovation, Patrick, what I'd say is what we shared with you in our -- at our Capital Markets was only coming online at quarter 4 and into this year. So we spoke to you about we're moving into blends of whey and collagen, targeting hydration and recovery so [indiscernible] The U.S. [ Clearway ] In Europe, good start there, very early. A lot of new flavor, variants of creatine. We just launched our new creatine gummies actually in the TikTok shop in the U.S. I'd be interested to see how that does. The foreground shape that we present here has just launched amino energy stick packs and we just launched new AMP preworkout as well in January in the U.S. So a lot of activity, but very early to say. But obviously, a key focus for us in Optimum Nutrition as we extend usage occasion. And lastly, just to say we are very focused on value to the consumer. So, we've launched 10 -- a lot of new opening price points, whether it be the sachets or 10-server, 14-server, and we continue to invest and support those new pack sizes to support consumer. Operator: Your next question today comes from the line of David Roux from Morgan Stanley. David Roux: Just 2 questions from my side. Just to go back to your comments on the Performance Nutrition margin for this year, you pointed out we should expect some margin progression. Now there's obviously the 50 basis points net benefit to margin in '26 from the disposals, which you had previously flagged. So should we expect margin progression beyond that? Or is this only going to be driven by that? That's my first question. And then my second is on the club channel. Can you just give us some more color here? I see there was a noticeable acceleration in like-for-likes in the second half of your food, drug, mass and club sort of segments. There's obviously the lapping of the club private label issues from summer of 2024. But our sales in the club channel specifically now above levels prior to these issues. I think any and or color on the club channel would be appreciated. Mark Garvey: David, I'll take the margin question, and Hugh will update you on the club channel. A number of moving pieces, as you can imagine, as we look to margin in 2026, and we are confident in getting margin progression in '26. You're correct, we'll expect to see a 50 basis point improvement from the dispositions. In the full year, actually, that will be 80 basis points, but we've got some dissynergies as we enter the year that are impacting that as well. But of course, the big thing for us this year as we see costs increase, we also have the pricing coming through. So we'll have double-digit pricing coming through in quarter 2. As you know, there can be a lag as pricing catches up with increases in whey cost. So we'll see that move as we go through the year. So that will have a negative impact. A positive impact then will be the transformation savings. We said we get $60 million by '27%. 40% of that will come in, in '26 and about half of that will hit the bottom line, quite a bit of that in PN. So that will help us in terms of mitigating some of the lag on the pricing side. And in the first half, you'd expect to see some more marketing investment relative to the year as we normally do that, sort of how will be second half weighted. So overall, when you put this together, I'd expect about a 50 basis point progression as we work through the year here, second half weighted. Hugh McGuire: Thanks, Mark. I suppose the first thing I'd say is very happy with performance in Optimum Nutrition, and I secure with double-digit growth in half 2 last year, particularly in -- and a reminder that we're an omnichannel business are focused across all our channels of distribution. And so I wouldn't pick out one in particular. Our Food, Drug, Mass data is very strong categories growing very well. We're growing in both categories, both our brands. So look, the club channel will always have puts and takes, just given the nature of products that go in and out as part of their test and as part of kind of their innovation focus. But from our perspective, we're confident in our revenue guide for the year, particularly driven by Optimum Nutrition and Isopure. Operator: Your next question comes from the line of Alex Sloane from Barclays. Alexander Sloane: A few questions from my side, if that's okay. I mean firstly, on Health & Nutrition, very strong organic performance in quarter 4 and really notably ahead of quite a lot of larger B2B ingredient peers. Can you give a bit more color in terms of what you think your weighted sort of end market growth was against that organic delivery in Q4? I guess what I'm trying to get is this outperformance really driven by structural mix of categories? And do you see kind of growth being sustainable in 2026? And secondly, on just to come back to whey, thanks for all the color already, just a couple of questions. Firstly, I guess, have you seen the broader peer set take similar pricing that you put through in November in the U.S. so that your kind of relative price points are unchanged. And secondly, thinking a bit longer term, so you're not assuming that whey costs come down or whey prices come down in '26 because of the strong demand regarding the sort of 250 basis point improvement target out to '28, are you embedding a normalization in whey prices in that assumption? Or can most of that be driven by organic means? Hugh McGuire: Alex, very pleased with Health & Nutrition performance, as you said, a strong quarter 4 after a strong quarter 3, I suppose, we highlighted this in our Capital Markets again, we're targeting 3 end-use segments, Active Nutrition Functional Beverage and Vitamin Supplements and they're all doing well for us. We're seeing the same benefits in Health & Nutrition in terms of the end consumer we target that we're seeing in Performance Nutrition. So I think that's the first thing I'd say. Second is that we're focused and agile business as well. It would be smaller than a lot of the peers you referenced, but we're very focused on those segments. We invest in deep customer relationships, good to see continued progress in international. So very positive there. And we're also then leveraging cross-sell opportunities across the broader group, which is an opportunity for us as well. And Clearly, Mark called out as well and as did I, we're investing in capacity expansions in Asia, Europe and the U.S., which is a positive as well. So as we laid out in our Capital Markets, we are ambitious to scale this business. Mark Garvey: And in terms of your question on whey in terms of the 250 basis points, Alex, I would say that we are expecting that we'll have a normalization or a stabilization of cost versus pricing at some point here as we get through the 3 years because this year, clearly, there's still some catch-up on lag, as I spoke to. At some point, this should normalize and not necessarily expecting a significant reduction given how sort of popular protein is, and we expect to see that in the medium term. Of course, I also have significant transformation work going on, which I know will give me margin improvement as well. So we're still confident in the 250 basis points over the period, but we are assuming that we get to a point where we have some stabilization of cost increases on pricing. Hugh McGuire: And lastly, just on your question, Alex, on whey and competition. I think I'm comfortable in saying that everybody is going to have to move on price and are moving in price given the whey price inflation we've seen over the last 24 months. We saw it first in international, we would have moved in quarter 2. We saw a little bit of elasticity for a quarter until all the competition moved. And now in fact, in international markets, some of our competition are moving ahead of us. And in the U.S. as well, we're starting to see competition move. Just given the scale of these prices. As Mark said, we're not planning for stabilization in a way at this point until we see what happens to demand and what happens to elasticity and what happens additional volume supply. So yes, we are seeing the market move. Operator: Your next question comes from the line of Matthew Abraham from Berenberg. Matthew Abraham: First on the Optimum Nutrition. Just wondering if you could provide a view as to how you see the volume outlook for Optimum Nutrition in FY '26 just relative to the positive volume momentum that, that brand reflected in the second half of the year? And then just one more question, in reference to some of the color you provided on whey costs are higher, the longer dynamic you've outlined. Can you just provide a bit of detail as to what impact you're seeing that have on the breadth of brands that compete with you? And if that's having a more adverse impact on some of the smaller, not vertically integrated brands on shelves? Hugh McGuire: Matthew, the line wasn't great there, but I think I got the first question, which is just continued ON volume momentum into 2027. Clearly, we're very happy with performance in half 2 last year. The year started well for the brand. You can see that consumption numbers as well, we'll be pricing in quarter 2. That's in train now as well. So figuring out the potential level of elasticity versus the level of price, et cetera, it's just all a hard one to call. We've seen limited elasticity to date and the price increase in November in the U.S., and we've been -- we worked through any small elasticity we saw in international earlier in 2025. So overall, positive, what I'd say is, look, our revenue guidance for PN is across the entire portfolio. So we would be ambitious for ON to be a little bit higher than that. So overall, positive as we go into 2026. And look, you can see it in the category data as well. Category growth is accelerated in powders. We spoke at our capital markets on how powders are mainstream and the different consumer benefits, mixability, higher protein content, versatility. So not just price but affordability is actually -- these are very affordable, even post price increase on a cost per serve versus other formats of high-protein products. It's a great question on whey. Look, we are effectively vertically integrated. We have a dairy business where we create insights on the protein markets and protein solutions, we manufacture on our powder. So that gives us probably we have good foresight on how the markets are moving. Like the rest of the industry, we want to always get it right, but we are -- we will have good foresight earlier than a lot of competitors. I would think the smaller competitors, if they weren't locked into some of these prices or if they weren't locked into supply, will struggle to get supply and will struggle with pricing. But I don't know anything for fact there, but just to say that it is likely if they're working to [indiscernible] And they weren't brought forward, they could struggle. Operator: Our next question comes from the line of Damian McNeela from Deutsche Numis. Damian McNeela: First one is just on the indicated CapEx increase. And can you just clarify that the increase is going towards H&N and that the planned expansion will complete this year, i.e. you'll be able to sort of start driving that factory growth or factories growth from next year? Second question is on online revenue momentum. It looked like you delivered pretty strong growth in the year, just over 10%. Can you sort of provide what are the key sort of market drivers behind that? And whether the sort of -- we should expect that to continue through '26? And then just one last one, just on marketing. Are you in a position to sort of quantify what the step-up year-on-year is likely to be in 2026, please? Mark Garvey: Damian, I'll take the CapEx question. We're a little bit ahead, you probably noticed of our CMD guidance. We said $80 million to $100 million in CMD, We're a bit ahead of that. And the reason for that, frankly, is the strength we're seeing in the Health & Nutrition business, we're just -- the volume numbers are strong. We expect to see that sustain quarter-by-quarter into 2026. So as a result, we do require increased capacity. So to your question, most of that will be done by the end of 2026. So we should be having production in 2027 in terms of our Chinese and U.S. and European expansion. So we should all -- most of that [ $40 billion ] will be spent by the end of 2026 based on our current plans. I'll pass it over to Hugh for... Hugh McGuire: Yes, maybe start with the marketing first. Damian. Yes. So look, one of the things we are -- Mark laid it out, we're pulling all levers, as you can well imagine, across the business given the current inflationary environment on whey particularly. So that will include marketing spend as per last year, but also our transformation project or cost base, our mix -- our revenue mix. In terms of marketing spend, though, to be mid- to high single digits, it will be higher than last year, but all of that increased spend will go behind the Optimum Nutrition brand. In terms of e-commerce, obviously, as I said it earlier on, we're an omnichannel business so we're pushing for growth across all our channels that we compete in. But e-commerce channel as always, an online channel is always a key channel for us as we can engage so well with the consumer there in terms of information, in terms of content, et cetera. So we continue to expand that. You can expect as well -- that's where a lot of our innovation will go online first because we can move quickest on it. So you could -- we would absolutely be ambitious for continued growth in that channel. Operator: Your next question comes from the line of Cathal Kenny from Davy. Cathal Kenny: Two quick questions. Firstly, Hugh, just on the affordability piece within PN. Obviously, you mentioned 10-server, 14-server and stick any early evidence on the performance of those formats? That's my first question. And my second question just relates to the guide for PN. I'm assuming that you're -- within that, the assumption is a high degree of elasticity on the second price increase and the price increase in Q2. They are my 2 questions. Mark Garvey: Yes, A little bit early in some the sachets were just really launching. But our 10-serve, 14 serve we launched last year and really pleased with the performance there. And in fact, what we're seeing there is it's bringing in a lot of new consumers, particularly the 10-serve online. So affordability hitting the right price point, it's a $20 price point in some instances has been important. So we continue to do that. And we see that in the U.S. and internationally as well. In terms of the guide for PN, yes, we debate this a lot, and we discussed this a bit in our quarter 3 results as well, particularly internationally, when we price increase. We saw a little bit of elasticity for a quarter. It's hard to call. We have built elasticity into our assumptions. In saying that, demand for whey protein continues to be exceptionally strong. Our categories are going very strong. Our brands are outperforming the categories in this space as well. So calling what the elasticity will be is a difficult thing to do. As you can imagine, we're very thoughtful in this and careful as we move through the year because our goal here is to continue to start to go to the brands and ahead of category. So there's lots of debates internally, but simply put, yes, you can assume we have elasticity built into our assumptions for the year. We'll keep you updated as we go through the year, how we're thinking about that. Cathal Kenny: Just a quick follow-up on creatine, obviously, you called it out in terms of very good growth. One is, is there much opportunity to scale that further and I think beyond North America? And secondly, just in terms of the pricing environment you're on creatine, could we get a little bit of color on that, please? Mark Garvey: Yes, I think I can be quite clear. When we're talking about price increases, actually, we're just talking about price increases on our protein category. It's all driven, which is a fair 65%, 70% for business. We won't be price increasing on our energy or creatine products. Two, I'd actually say, the creatine growth is low. It's across all of our markets. it was a significant double-digit growth in 2025 over 2024. We've launched a lot of new innovation, different format sizes, different flavors, but continues to do well, and the teams will continue to be -- they are the 2 that kind of energy creatine and protein or what's going well for us. Operator: Your next question comes from the line of David Roux from Morgan Stanley. David Roux: Some follow-up questions. I appreciate that is another dairy 101. But just going back to whey, supply is obviously going to react to price, right? I mean can you give us an idea how quickly producers can react to adding new WPC 80 or 90 capacity from brownfield conversions? Or does this all need to be greenfields given that, I guess, there's not been much investment into cheese over the last few years? And then the other question is on marketing. And Hugh, I promise this is a generally serious question, but can you confirm if Optimum Nutrition renewed its partnership with England Rugby, they previously had or is it only Ireland rugby that it now has like a main rugby team in the 6 nations? Hugh McGuire: I have to kind of start with that last question given the weekend, it's winner David. We sponsor a number of -- we sponsor Marcus Smith, the English rugby player but not the English rugby team. And yes, we do sponsor the Irish rugby team and a number of athletes within there as well. So the -- yes, like you know what, we could give you a thesis on this, and I know it wouldn't be fully accurate because there's so many variants in this. So the first thing I would say is we know from our own dairy plants that every dairy business is looking at efficiency initiatives to increase the output of high-end whey proteins, whether it be 80 or 90. I think a lot of dairy plants can switch between the 2. So depending on economics, they can switch between WPI and WPC 80. I think if it was an add-on, the best example I'd give you is probably our own facility where we've approved the CapEx at late next year, and that will be in place for early '27. So probably from approval of CapEx implementation kind of that probably a 15-month period, and that will be leveraging existing whey stream and they're concentrating upto 90%. If you were to build a new facility, I would obviously take that a little bit longer probably 2 years plus. I suspect everybody is running the rules over whether they build new facilities or not. The challenge always will be in the cheese whey markets as the cheese market is effectively flat. So can you sell the cheese because that's -- and then cheese prices. I think the difference now what you'll probably see is businesses -- dairy businesses start looking at kind of produce whey casing rather than just whey cheese. So not produce cheese at all, which is a different plant configuration. But given the demand we're seeing in the prices, the returns -- the returns will work. So there'll be a lot of work going on at the moment around at these prices. And with this demand, even if prices were to drop, my sense is the dairy industry be quite confident the demand will remain strong. So even if there were a drop back a little 20%, 30% for a period, they will -- that will still be enough premium there to incentivize new capacity over the next number of years. Operator: Thank you. That concludes the Q&A. I will now hand the call back to Hugh McGuire for closing remarks. Hugh McGuire: Thank you, operator. Look, just to briefly close, just reinforce our conviction from the team here that Glanbia remains well positioned for growth. We're moving at pace as we laid out at our Capital Markets Day. And just thank you for your time and look forward to connecting with you all individually over the next few days. Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
Robert Barrie: Hello, and welcome to the Freelancer Limited Full Year of 2025 Financial Results. Apologies for the half an hour delay in getting going. We had some technical difficulties here in the conference room. Not sure what happened. We had a Board meeting here last night and overnight, the machine fried itself. So we've managed to sort that out, and I do apologize for the waiting, and we'll get going now. With me in the room today, I have Chief Financial Officer, Neil Katz; Vice President of Product, Andrew Bateman; August Piao from Escrow.com; and Mas from Loadshift. Today, this is the full year of 2025 financial results as we operate in the calendar year, and I'll get going. Financial highlights. The group gross marketplace volume, which is cash to the business, was $881.5 million, which is down 7.1% in FY '24. The Freelancer GMV was up 2.3% at $133.4 million. Escrow was $748.1 million, down 8.6%. Group revenue was up 4.1% versus the full year 2024 at $55.3 million. Freelancer revenue was up slightly at $40.9 million, and Escrow.com set an all-time record of $12.3 million, up 18.8%. We recorded an all-time record net profit after tax of $2.2 million, which is up from a small loss of -- in the prior year. Escrow just completed its fifth year of consecutive profitability and is paying tax and going to its sixth year of profitability. And with Loadshift, we also achieved a maiden full year profit. We also achieved an all-time record operating profit, excluding unrealized FX of $2 million, which is up 162%. Operating cash flow was a positive $7.7 million, up 32% on PCP. Cash flow was $0.5 million versus $0.8 million on PCP, but also included a net of $1.5 million in buyback of Loadshift shares, which increased our shareholding to 73.4%. Cash and cash equivalents was $22.9 million, down 11.9% on the half year, but flat on the prior year and so forth. So we achieved a significant turnaround in profitability. I've said previously in the last quarterly calls that my goal was to do $0.5 million a month of operating profit consistently. We're about 2/3 of the way there. We have a little way to go, but we're working hard on both the revenue side of the business and also on the cost side of the business. We got -- had a pretty decent cash flow of the business at $7.7 million, I said before, up 33%. And we decided to increase our stake in Loadshift. I think this year for Loadshift is going to be a pretty transformational year as I'll describe a bit later on. So our ownership has been increased to 73.4%. Freelancer is working hard to build the Amazon services. There are many companies out there that are global marketplaces of products that are very large in terms of scale and scope, the likes of the Amazons, the Alibabas and to an extent, Shopify, which is a marketplace of marketplace of products. We're trying to do that for services, and we are in the fields of labor payments and freight. We have over 90 million registered users across all our portfolio of businesses. Freelancer is the largest cloud workforce in the world. Escrow is the world's largest online escrow company, which facilitates the secure large value payments. And Loadshift is Australia's largest heavy haulage freight marketplace. And so we have services that meet the needs of consumers right up to very, very large organizations. For the core marketplace in FY '25, we onboarded 7.32 million new users and 666,000 new projects were added to the marketplace. The average project size continued to climb and averaged at USD 413, up 19.4%. And the sustained expansion in average project size reflects ongoing shift towards higher value, more complex work across the platform and also our targeting of our customer acquisition programs. Liquidity is very strong. And in fact, in many areas, we're doing some work, which we'll explain a bit later to 10% of the liquidity because it is very, very high and nowhere else in the world is as liquid as we are for getting work done. On average, you get 54 people bidding on your project, which is up 8% on PCP and contests have exploded to a fairly ridiculous 761 entries per contest, which is up 50%. So you can see here that really since 2020, we've had a trend up in average project size and that's across both the Freelancer and the Loadshift business. In terms of acquisition, in the fourth quarter, we saw a slight decline in year-on-year performance driven by a decrease in the SEO channel. We've actually rectified that, and it's bounced back down in Q1. Volume from SEM is at record levels as of writing the report and a relatively stable return on investment. We're starting to see a lift in AI-related jobs in the marketplace, and it's still at an early stage, but it is lifting. It's starting to meaningfully contribute to GMV. It's about 5% of total marketplace volume in the marketplace. As I said before, I think we're in probably the third phase of transition of businesses, thanks to the Internet or transformation, thanks to the Internet. In 1994 to 1995, you had the Internet go mainstream in Western economies, and that led to businesses going online for that. They got web development done as they wanted their presences built out on the Internet. We then had mobile phones get deployed and you had app development. And now with AI, you have AI development. And there's a whole range of features and functionality, not the least of which being AI agents, but also using AI to personalize workflows and accelerate productivity. And we do think, as I've foreshadowed in previous quarterly results that this is going to be a very, very big category in the time to come. You get over to the same place to get your AI developed that you get your website developed and your app developed; which is small individual freelancers, small agencies, large agencies and very, very large service providing organizations; and we aggregate all of them on Freelancer. The shift with AI is creating a powerful 2-sided effect in the marketplace. We're getting an increase in new AI-related jobs from clients, but also freelancers have lifted their skills quite dramatically through using AI tooling. We think the killer combination is humans with AI. And certainly, the freelancers are probably one of the largest -- on our site are probably one of the largest and most active users of AI out there with that 90 million people rapidly adopting tooling and lifting in speed, quality and output. And so we think this is a great structural enhancement to the value of our marketplace, the competitiveness of the freelancers and the scalability of our model. We're seeing work coming quicker. We're seeing higher quality work, and we're seeing that across the whole breadth of skills that we have available in the marketplace. In early January, we successfully launched, as we talked about in previous quarters, not just audio and video calling, but client-initiated audio and video calling now before you award the job to a freelancer, so you can post your job, get your bids in and talk to some of the top freelancers over audio and video prior to awarding. We've managed to do that successfully because we have a real-time data science pipeline, which does real-time analysis on those conversations to ensure that we don't have off siding, et cetera. And so as a result, this functionality is great, not just for clients to interact with the freelancers before they make the selection, but also for freelancers to win business. And so that's also led to an increase in membership revenue there on the Freelancer side. We've also managed to automate our project review using both AI and our data science pipeline called Iris. We used to have all the listings on both Freelancer and Loadshift go through human review before they went live in the marketplace. We've now managed to pretty much almost fully automate that, which has led to a lift in conversion as projects go live quicker and don't go through delays. Our focus in the first quarter will be continuous introducing AI into the primary job posting the funnel. We're focusing not on the very top of funnel at this point in time, we're focusing more on the bidding process and to match talent more effectively and counter bid spam. Because we're in the world of AI now, any form of user-generated content out there can be enhanced through AI submissions. And so we're really now focusing on ensuring that the bids that are coming in are true representations of freelancer skills and experience and that very, very quickly, we can make recommendations. We can annotate the bids coming in to provide what freelancers or platform thinks about the freelancers and to ensure that the bids are accurate on the freelancer side. We're also working on improving our payments infrastructure. In the first quarter as well, we've also now launched a Prototyper. This is our AI-powered collaborative whiteboard enables clients and freelancers to basically prototype ideas in real time and also what we call Make It Real and generate code to interpret those drawings and turn them into software with one click. So you start with a blank canvas, you sketch the concepts using whiteboard tools, traditional things like sticky notes, annotations, images and more. And then with click to Make It Real button, we transform those white frames into clickable interactive prototypes with no coding required. And so we can replace lengthy text briefs or conversations with actual visual collaboration, and it provides freelancers clarity early on and clients clarity in terms of where their build is going. So I think that's pretty cool, and there are a lot of different directions that this can head in the future. And of course, all of this stuff is powered by the mainstream foundational models. So we plug into OpenAI and Core, et cetera, powering this back end as well. So that we always keep up to date with all the latest advances in model technology. We remain to be the #1 [ site ] building platform in the world in terms of freelancing and cloud work. We're rated now 4.5 excellent on Trustpilot from 18,000 reviews; 4.7 on SiteJabber, 20,000 reviews. Yet again, we maintain our #1 position, and we've won awards that have celebrated that from those review sites. Our Enterprise division continues to work to expand its client base and operational infrastructure. We launched Concierge services for premium customers and established a Bangalore office to drive sales and operations in that region. It's very clear to us that India is the body shop to the world and every BPO there and every large major tech company has operations there, and that's the place that they source talent. And all those BPOs don't have breadth and the depth of talent that we have across geographies and niche skill sets. So our engagements spanned technology, business services, financial services and education verticals. And we're doing some pretty exciting things where we're marshaling very large fleets of people to work in everything from AI to field services to sales to so forth. And over the course of this year, we'll probably be making a couple of announcements about that. And so we are really focusing in FY '26 on deep pools of repeatable work and workflows. And I think we're pretty excited to hand-in-hand with our office be building out some features in the enterprise product over the course of this year to enable it to happen at scale. Now second half of last year, the Bangalore office started as a sales office and operational office to service enterprise demand and global fleet across India. We've got good momentum and a good pipeline. We're pretty excited about the pipeline of opportunities we've got, and that's headed up by Gerard Christopher, who has worked for us for a couple of years on engagements such as the GitHub Packard engagement. Generative AI work continued throughout the year with projects across a variety of different languages, transcriptions, image collection, going to locations, collecting data for surveys, collecting data for -- going into foundational model training, et cetera. We've also got a new company, where we're doing field service repairs of laptops. There's a picture there of a new brand of laptop that we're repairing in Kolkata. And the project for FY '26 is to really double down in the office, scale up the delivery volumes and scale into the North American markets. On the innovation front, over the course of FY '25, we've announced previously that we were a joint winner of NASA's upscale 10-year USD 475 million NOIS3 contract. That contract is a big upscaling of NOIS2, which we were also a winner of, which went from $75 million to $125 million, now it's $475 million. There has been, over the course of the second half of last year, some delays in task orders being awarded and funded due to various government shutdowns and restarts and shutdowns task orders have started flowing recently again, and we're bidding on them, et cetera. And we're doing some pretty exciting things, everything from genome edited delivery for the NIH. We did some work for the Orion spacecraft in the compiler technology for software testing, lunar south pole navigation concept, zero gravity indicators, et cetera, and so on. We currently have a challenge live for detecting underwater explosive ordinance for the United Nations. We've also got another challenge being launched shortly to model the particle distribution of explosive devices using AI and ML techniques. In addition, our government division is progressing. We've got now, I think, a solid program that can be appealed to both state and national governments around the world around helping people come up unemployment benefits and go to the workforce. We're pioneering that. We pioneered with a few countries and now with Bahrain with the Tamkeen accelerator. I think we've got a pretty robust program that we can scale up and reapply all around the world. In FY '26, the key focus will continue to be, one, to enhance marketplace engagement, continue to improve the user experience and matching capabilities to attract activate and retain high-quality freelancers and clients. I'm pretty excited about the work we're doing here. I mean, obviously, you can address questions at the end to any of the people in the room. But Andrew Bateman, who's here, VP of Product and myself, we're pretty excited last night talking through the range of capabilities that are literally over the next 2 weeks going live to allow you to very, very effectively find great freelancers, have recommendations from the platform in real time on those freelancers, do natural language search to find those freelancers and to curate the bidding lists, the directories and notify the freelancers and so forth. In addition, we have a whole bunch of trust and safety measures cracking down on bad actors. We're also accelerating AI-driven innovation, expanding our integration of advanced AI solutions across products and services, allowing efficiency, automation, and new opportunities for enterprise growth. Our vision here is basically that we provide access to all the tooling of all the major AI tools through the platform to the freelancers. So we act as a distribution channel. As I said before, we have a very large network of users of AI. The freelancers are very active in adopting latest tooling across a range of different areas, and we think we can be a place that can really distribute those products and services to those freelancers to lift their skills and lift their earnings. And we're also expanding our financial service offerings. We're really streamlining our payments infrastructure. We're doing that in a global way to ensure that we have excellent acceptance and excellent native payment methods no matter what geography we're interacting in. And hand-in-hand with that is we have -- we're building out quite a sophisticated capability in our ability to levy taxation. Governments around the world are pretty much broke and they are looking towards platforms to, at minimum, provide reporting of earnings, but also to start collecting taxes in various jurisdictions around the world. And we're quite advanced with that in many jurisdictions. And I do think that in the future, this is going to be a great regulatory shield for us. We've already had some of the biggest $1 trillion tech companies in the world come to us who while they may be able to solve this problem, don't want to solve this problem or find it very hard when they do product innovation to solve this problem. And so they've come to us to basically solve it for them. So I think as we build a more robust offering there, that could be very, very attractive to some very, very large companies. We're also focusing on driving operational excellence strengthen platform reliability, quality and performance through rigorous internal processes. Andrew Bateman leading to a complete overhaul in the way we develop product, the way we ship product, the way we think about product and the way we think about product quality. We're also enhancing customer satisfaction and market leadership. And I've said before, I want to get sustainably $500,000 a month of operating profit every month on an ongoing basis and trend that up over time. And we've made some significant progress you see with our record profit this year in the FY '25 period, and I expect to do even better this year, doubling down on that. In terms of awards, we are recognized for our 13th Webby Awards, which is really the Emmy or the Grammys of the Internet. So we're very pleased to receive our 13th Webby and our 26th Gold Stevie. And I think it's just a testament to the hard work the team is putting in. Escrow.com has a GPV of AUD 195.8 million in the fourth quarter, up 3.8% on PCP, slightly down in U.S. dollars. Full year 2025 GPV came in at $760.4 million, 8.2% down primarily due to the lapping of a large IPV4 transaction in 2024. I'm pleased to report the Q1 numbers as well. I don't want to present them too much, but they're up a bit from here in Q1. So we're seeing a good entry into 2026. Revenue for the full year was up 18.8% to $12.3 million. As I said before, it's our fifth year of profitability entering into our sixth year of profitability, and we've used up all our tax -- deferred tax assets. So we're paying tax now, which is a good first real problem to have. So I think we've got the business into a pretty robust state. As you can see, there's a long-term trend line, which has been continuing through the business, and we hope now to not just continue that trend line, but also to start really kicking in and accelerating that. And as I said before, punching out 5 years of profit and going to a 6-year of profit now, this is a very solid and strong business and also very unique and very strategic in the fact that there has a licensing for 55 jurisdictions for payments. We're also positioned for strong sustainable growth with various e-commerce partnerships. Our pipeline is actually the best it's ever been, both for high-value transactions and also for sales. We were just actually going through the high-value transaction over the last couple of weeks. We're pretty amazed by the quality of things that we're seeing in from our broker network, but also in additionally, we have quite a wide range of new verticals that we're going into. And I think we're going to have pretty significant merchant adoption in 2026, so much so that we're building a go-to-market team as we speak. We've got heads up and in our North American sales hub, which is in Vancouver. We're building out the account management team under Tony Yan, who's been just promoted to Director of Operations as well as building out our go-to-market and our activation team. So we're really trying to -- we're really trying to copy here what Afterpay did. They had a very aggressive team going after merchants and platforms on the sales front and then they had an activation team, which really took you to market once you became a partner and integrated the Afterpay checkout solution. So we really want to use that as inspiration for how we see building out our checkout product. We continue to see strong interest from digital asset marketplaces seeking trust, fraud protection and cross-border transactions. Partnerships include Dynadot and Connexly, market leaders in domain and IPV4 transactions. We're also continuing to invest in new verticals and providing customized experiences through the flow for those verticals. We've got some great B2B electronics marketplaces and broker networks being on board. Some of these guys do very, very big volumes. One of them is over $900 million of GMV per month that they do in entirety. Now we're not going to get anywhere near that number from them, but I think we could, if we execute well, get a substantial volume from these partners. And obviously, when you're selling things like B2B electronics, you've got all sorts of trust and safety issues. Are you getting what you think you're getting? Is it the equipment in good condition? Is it not stolen? Is it not damaged, et cetera and so forth? We have also got key broker marketplaces offering escrow payments through integrated and nonintegrated solutions, sites like BrokerBin, which is the world's largest B2B electronics database broker site, secondhand electronics, BrokerForum, TradeLoop, all wholesale markets. We're doing interesting things in other international trade markets. We've got a very large agricultural transaction that's currently being set up that they should go through shortly. We've got premium luxury goods marketplace in advanced stages of integration and all sorts of other marketplaces, including regulatory marketplaces that are coming on board. And we've got some work also kicking on in automotive. New partnerships for in 2025, increased our visibility and reputation, quite a number of U.S. sort of businesses. This is for WatchFacts, a luxury marketplace that we did some partnership work with that do fine jewelry, handbags, luxury watches, et cetera. Grit Brokerage and domains Immobilium with real estate agents. We're starting to tiptoe into real estate, which is obviously the holy grail. Acquired.com, we really doubled down our relationship there in the M&A of businesses and businesses from the digital side up to medium-sized businesses. And we also just brought on Pitch Capital, which is a capital raising platform, which has secured more than USD 370 million funding for start-ups and now those transactions will start to go through Escrow for fundraising for ventures. We also presented our top Master of Domains award. We published a quarterly report on domain pricing. We're actually, I think, next week, publishing our first IPV4 pricing index, which will be a quarterly pricing index and so forth. We're also releasing next week our quarterly domain report. We did see an uplift in domain volumes. We saw a tripling into AI domains over the course of FY '25. And then while second cousin to dotcom, we are seeing a very, very big lift in volumes. It was up 189%. Is that right, Austin? Is that right, August? Almost a tripling in the volume getting to about $27 million. So we are seeing a contender come in, and we're just seeing where that continues. The other thing we did, I should mention is we completed our first transaction for straight-through financing through our Funding.com subsidiary. We've done over $670 million of vendor financing through Escrow to date in the domain space, and we've actually just completed our first straight-through financing transaction with a third-party financier. We believe Domains offer a premium form of security well and above the assets of the business because you can flick off someone's website or payments or e-mail in 5 minutes and flick it back on again. So we think that as a security for lending, it's a premium asset. We have a custody service where we hold things like domains for lease to purchase options, and we've now got financiers financing, taking advantage of that custody service. We've also now 24/7 with our customer support. That was a very important thing we wanted to do for Shopify. We've got the go-to-market team is being built out for Shopify specifically. We're onboarding more and more merchants. It's still very early days. We're not visible because we haven't crossed the 50 merchant platform threshold yet for that. But over the course of this year, we will be moving that quite rapidly. We needed to make sure we got all our ducks in a row in terms of our operational and service capabilities before we could really pump a lot of volume through this business. So we've really been working on that, and we've been making some changes in terms of the management team to be able to support that. We're also in the process of migrating the front-end technology -- it's 189% I think it's close to 189% [indiscernible]. We're also in the process to migrate the front end of Escrow to the freelancer technology stack. That's the stack that runs Loadshift, it's the stack that obviously runs the Freelancer platform. That allows some very modern features. It's a single page architecture, so it's very quick and very lovely to use. You've got real-time chat and messaging capabilities, obviously, audio and video calling capabilities, which are not available currently on Escrow. We've got AI agent capabilities, we've got whole framework there. We've got AI agents doing support and doing sales and doing operational sort of work. That will become available on Escrow as a result of doing this and a range of other features. And additionally, it also allow Escrow transactions to be available on Freelancer and on Loadshift. So we start extracting more synergies between all of those businesses. And down the track, that will also allow us to do things like upsell freight off the back end of -- sales through Escrow of products, something that's been a long time coming, but with a unified front end it will allow us to do that more easily. The other thing we'll be able to do is have a unified payments infrastructure and a unified identity service. So what that will mean is if you KYC once with any one of our platforms, you're KYC'd everywhere. So you don't have to do [ first ] in Freelancer and Loadshift potentially separately. You can just do it once and it will be done everywhere. So that's some of the synergies we look to extract this year through this unification process. The other advantage is that allow us to be a lot more nimble. We'll be able to move engineering and product and design between the businesses a lot more easily and fluidly. And so we will see a real, I think, acceleration in the product development of all 3 platforms as a result of unification of all on the same technology stack. Loadshift, I think, is starting -- is going to have a breakout year in 2026. We're obviously Australia's largest heavy haulage freight marketplace. Midweek, we get somewhere between 300,000 to 400,000 [indiscernible] on the site, which is the Earth to the Moon. And it's basically the Freelancer stack or heavy haulage freight currently, and it's currently also in Australia only, but we are looking to broaden that out and take that global and that we're starting to do some things in the back end to enable that in the later -- of this year. We had record performance in FY '25, our strongest operational and financial results to date. Revenue and GMV increased year-on-year through improved ops team, marketplace efficiency, conversion and other innovation. Revenue was up 12.4% on PCP. GMV was up 7.7% on PCP. We had an all-time record quarterly revenue consecutively in the third and fourth quarter, up 15% on PCP in the fifth fourth quarter. So you can see it's lifting. 2026, I think, will be a breakout year for us. Job postings are up, award rate was up, total jobs awarded up, delivered workloads are up. So we're starting to see that take off. The big thing that was holding back Loadshift last year was audio and video calling. The big use case difference between Freelancer and Loadshift is that the majority of the work in the heavy haulage freight business happens over the phone and not through a desktop website, for example. So we had to build out the audio and video calling capabilities. And this year, in addition to that, we'll be building out audio capabilities to interface with the app, et cetera. We're pretty excited about where this goes. Not only do we have audio and video calling now fully deployed, but we've got in real time, the conversation is being transcripted, and so we can assist with project management or trust and safety purposes. In addition to all of that, you'll be able to interact in the future with the app through voice. So you have -- if you're driving a vehicle, you don't -- you can't interact with your handset with your hands. So you'll be able to talk to your -- to Loadshift. Obviously, all the capabilities we make available for Loadshift will be available for Freelancer and vice versa. So we're pretty excited about the future of that and being able to have a fully agentic version of Loadshift in the future and where that's going to go. So yes, key innovation is obviously getting that audio and video calling app, which is an app. We also made it -- we polished it with several rounds of improvements, which allows you to use the app very nicely once you're in a call, et cetera and so forth. We're also now focusing on enhanced GPS tracking capabilities. We're pretty excited about the features and functionality there. We're going to not just have real-time tracking of all of our fleet, no matter where in the world that will be, but there's a whole bunch of features that are rolling out hand-in-hand with that around compliance, around delivery notifications, pick-up notifications, tracking of the state of any cargo to ensure that hasn't been damaged in transit. And really, it's going to be a pretty comprehensive suite of functionality over the course of this year, which I think is going to be pretty, pretty exciting. We've also got a number of enterprise -- large enterprise clients now starting to come and talk to us wanting this technology. And that ranges from companies that do equipment hire, that do auctions of automotive and storage and so forth. So we're pretty excited to see where some of those conversations go. And we're engaged with some of the largest mining companies in the country. So we've got some pretty solid client base here. So overall, at group level, we had NPAT of $2.2 million positive, which is an all-time record. There was a small loss of last year. Additionally, we had a positive cash flow of $0.5 million, operating cash flow of $7.7 million, up 33%. We had outflows of $6.9 million, primarily related to lease payments for office premises. Across offices, the costs are coming down. In fact, I think it's next weekend, we're moving into our new office in Manila. We've got some improvements. Neil Katz has done a phenomenal job. Every time we do a lease renewal of chipping down the leasing costs in pretty much every office location we've got around the world. And I will say in Sydney in 2027, we'll be moving office as well, and we'll also get a reduction in our lease costs. So that's a line item that continue to tick down. As of 31st of December, we held $22.9 million in cash and cash equivalents. It's down a bit because we did a buyback of Loadshift shares primarily. We now own 73.4% of Loadshift shares. So that's fantastic. In terms of group management, we strengthened our management team with several key appointments and promotions. Andrew Bateman was promoted to VP of Product for the group, bringing over 2 decades of technology and product leadership experience. He sits to my right. And after this call, you can in the Q&A, ask any question of Andrew, if you wish. Owen Smith is the Director of Legal Compliance and expert in regulatory affairs. He heads up our compliance team, and he's doing a great job of kind of building that out and building our capability for world's best compliance and AML. Brent O'Halloran joined us as Director of Communications. He ran the foreign news desk for Sky News. He's been a pretty serious foreign correspondent for quite a number of news organizations, and he's really lifting our communications capability across the business. Tony Yan is Director of Operations for Escrow, he is overseeing partnerships, account management, the global support team under Dean and parts of payments, and he's a scientist by background. And Trisha Epp, who runs innovation was promoted to Director of Innovation for NASA. Gerard Christopher runs our India office. And we wound down the Buenos Aires office at the end of last year on the 31st of December, which was no longer fit for function. It was supposed to be a second 24/7 premium support team for a very, very high-end account management. We've moved that to Vancouver now primarily. Instead, it was a bit hard to communicate with the time zones between Sydney and BA, as well -- they were fit for purpose. And particularly a number of the functions now we've managed to automate with AI or move to Manila as well at the back end. So instead, what we've done is we opened up an office in Bangalore, and it's a sales office and operational office that's on the front end, pointy end of working with enterprise customers. I will also say another notice went out today this morning. Neil Katz, our Chief Financial Officer, has announced his retirement. We've had a very, very good run with Neil. He's with the business for 16 years. He took us from startup to a listed entity. He was very instrumental in many parts of the business that are very, very complex on the financial side. The 55 jurisdictions we're licensed in, Neil pretty much spearheaded most of that. We took from 8 licenses in 2015 when we bought it to 55. That is a very, very, very complex thing to do. And in fact, I could not do that again from scratch if I tried. And it takes 5 to 7 years for jurisdiction to get a license. You are then audited every 2 years on average by the regulators. We've managed to go through that very smoothly, albeit it did take time because it does take time, but he did that very, very well. He went through the IPO with us. He's been through the expansion of the businesses. I don't know how long his dongle chain of bank account access tokens is, but we've got bank accounts in currencies all around the world that he controls and manages and all the treasury function and so forth, the modeling and so on. And in fact, Neil and I have obviously worked together, not just at Freelancer, but also in my prior company, where he was chief financial officer. There's been about a 20-or-so year history of this. So it's been a long track record. And I do thank Neil very much from not just the management team, but also the Board last night and the Board of Directors for his service. It's a very orderly transition. It's been well flagged for the last couple of years. We have been out there looking for -- it's a 2IC under study for some time for Neil's group. As of today, we'll be upgrading the job listing to a Chief Financial Officer search, that we are kind of well advanced in kind of succession planning and have been for many years here. Neil's notice period is 6 months. So he's going to be with us to August 2026. And he's also very graciously in the Board meeting last night, offered to potentially stay on past that and potentially in a part-time capability should the new CFO wishes and so forth. So from all the company and myself and the Board, a heartfelt thank you for Neil for his service. It's a very, very long and track record for achievement. But we're out there and we're active in the process of searching for a replacement, and we'll make notifications to the market in due course when we select the final candidate. Now I apologize again for starting half an hour late on this call. We had some technical difficulties that I'll ensure does not happen again. You may now direct questions to anyone in the room. To remind everyone of who's in the room, you obviously have myself, Matt Barrie, the Chief Executive Chairman of the business. You have Neil Katz, Chief Financial Officer; you have Andrew Bateman, who is VP of Products; August Piao from Escrow and Mas from Loadshift. We'll now open it up for questions from the audience. And if Oscar, if you could read them out if any are in the chat. Operator: Yes. First question from Ray Johnson. Have there been any tangible outcomes from the expansion of the Board? Robert Barrie: Ray asked, has there been any tangible outcomes from the expansion of the Board? The answer is absolutely yes. Over the course of last year, we added Craig Scroggie, who's the Chief Executive of NEXTDC and also Patrick Grove, who is the founder of many businesses from ICar Asia to iProperty Group and is Chairman of Catcha Group. Yes, they have certainly -- there's a whole spectrum of things we've done. One is we've improved how the Board functions in terms of just generally how we run meetings and how we -- what we talk about and the strategy and so forth. Patrick has been pretty [ inspiring ] in pitching a few ideas that we're currently evaluating. Craig has been very instrumental in the execution and thinking about the execution of those ideas and how we can actually go about organizationally implementing them. And I think the discussion has really lifted to the strategy and even the governance. We obviously had our Board meeting last night with the Audit Committee, meeting, et cetera, Craig's already led quite a number of questions of the orders, et cetera. So I think we've really lifted the capability of the Board to the next level. I'm very pleased to attract -- be able to attract to the business such world-class entrepreneurs. Craig, for example, is probably one of the hottest CEOs in town right now, obviously, running NEXTDC and building data centers pretty much anywhere there's a square meter of real estate in a city in Asia Pac. He's building data centers. And then Patrick, obviously, one of the greatest entrepreneurs that Australia has produced, having built marketplaces in property, in automotive and in media, he's got marketplaces in Latin America. Last night, he was in Panama with his latest business, et cetera. So no, it's been a phenomenal step up, I think, in the Board's sophistication and capability. Operator: Next question from Katherine Thompson. Within the enterprise part of Freelancer, could you rank the contribution to revenue from the various areas, e.g., NASA, field services, GenAI in full year '25 and '23? Robert Barrie: Yes. So we don't break them out in the financial results. They are currently fairly de minimis to be frank. We do expect a big uptick to be coming from NASA, for example, very shortly. There's been some government shutdowns that have kind of held up the deployment of capital from the NOIS3 program, but that it should start to flow. We're starting to see task orders coming in now. We are the largest company that is a winner of NOIS3. It is a joint tender, for example, but we are the largest cloud workforce capability, and that's represented in all of NASA's presentations. On the enterprise side, the focus -- we think we have a lot of work happening in terms of activity on the AI services side. We had a whole call last night with a very large major BPO that is using us actively on some small-scale stuff. The trick we have figured out is we have to build a bigger product so that we can effectively scale these workflows up to very, very large scale. The company to look at is Scale.AI. That's a company that's only a few years old that Meta bought half of, for about a $14 billion purchase. We can do everything Scale AI does and better. We have a deeper network of workers with more skills and more capabilities and greater geographic reach. And in fact, I would not be surprised if actually Scale AI. I got a bunch of freelancers from our site, to be honest, through various means. But we have to build the workflows. What -- where I think we have somewhat been misdirected with the enterprise work we've done with Freelancer is we've had pretty much every major Fortune 500 come to us looking for a contingent labor solution. They're saying, okay, what you do. We've got full-time staff in our office. We've got service providers that provide us with contractors. We've got various HR technology infrastructure that can manage those fleets of people. But what we don't have is we don't have a contingent labor capability with gig or cloud. The -- and that's the approach we have been taking is really to really react to that demand, whether it's a Deloitte or whether it's Arrow Electronics and literally all the Fortune 500 in there and try and build them like this generic contingent labor capability. Now the challenges we run into when we've discovered is even though those customers pay us, I think Deloitte paid us about USD 5 million to build their capability. It's quite complex and it's quite custom. You have to integrate with their vendor management systems. You have to integrate with their single sign-on system so that all the staff can log in and it's got the same look and feel. You've got to potentially integrate with their time tracking system, active directory, this, that, the other. And then you have to do quite a large amount of customization. While we are chipping away at the product capability to make that easier and easier and simpler and simpler to be able to deploy that for any large enterprise, really what we've come to discover is you've got to find where the deep pools of repeatable work are and really build workflows and then automate those workflows with freelancers. And I come back to my comment about Scale.AI. I think they did that very, very well and very, very efficiently in a very, very narrow niche area where they built very effective workflows, a very small number of workflows, but they did that very effectively and then they managed to rip through there with huge volumes of work. And that's really the focus we're taking now moving forward with enterprise with Freelancer is we really -- we know the pieces we need to build. We've put together a whole product plan. In fact, there's probably 8 iterations of that product plan in terms of that capability. We've got quite a number of partners that potentially might be interested in building that capability with us and financing that capability. We know what needs to be done. We're building some of the building blocks. And I'm pretty confident when we get up and running, we have a workforce that ultimately is more capable and deeper and more sophisticated and more skilled to be able to rip through that work better than anyone out there that has done it before. So there are some examples of people who have done this with workflows. They've got very big businesses quickly because it becomes very pump work through. We know what to do, and we're going to do it. At the moment, the contribution is fairly small. And -- but we are learning a lot. We're bidding on some big stuff for field services right now. There's a big satellite installation DISH capability we're bidding on. We've got another partner that we started up with field services laptop repairs. I think over -- and we've got some big things happening in field sales. I've got some big expectations, for example, with the India office and kind of what they're doing. Contribution right now is fairly small. We have learned a lot with enterprise, trying a lot of different things. No one has really figured it out globally out there. But -- and I think we have the inherent innate advantage with the largest cloud workforce in the world to be able to do it very, very well. No one's done it yet. We're working towards it. There's a $1 trillion problem to solve both at the consumer level and the enterprise level, and we're chipping away at it, but not big. With Escrow, I have said this repeatedly before, and I can feel it getting closer and closer. One of the customers we're going to onboard or partners want to onboard will do the entirety of Escrow GMV times by some multiple. There's some very, very, very big volumes that are out there in the global payment space at the high end. We had to build our capability to be able to service that. We -- for example, we have a Shopify solution to go into the Shopify ecosystem. And I do get asked by investors, well, why isn't that fully guns blazing just yet and turned on. I have purposely slowed that down because we need to make sure that the support, the compliance, the back-end systems, the payment processing, everything is as slick as possible so that we can really scale and do so reliably. So we now have 24/7 support. We now have done a complete review of all our AML controls and are in the process of automating quite a number of them. We have done a couple of team restructures in terms of making sure we've got the best structure for servicing high volumes. And we're just getting our ducks in a row. So while that business is ticking up fairly well, I do think we're going to have some really blowout years soon with Escrow, but we need to get just all our ducks in a row in terms of the capabilities and processes of the systems to be able to cater for that. But we're getting there, and it's getting closer and closer. And with Loadshift, the good thing about Loadshift is, I mean, that -- the frame industry that we focus on is extremely chunky. It's high-value loads. It's the big end of town, and we are starting to see some pretty good enterprise interest coming in. We've got a couple of proposals out for a multimillion dollar integrations that would lead to pretty significant volumes. They are relatively early days in terms of progressing, but we are now at the point where we are focusing more on enterprise in our sales process, and we are out there actively pitching proposals. We've built an enterprise dashboard, for example, which is being very well received. And I do think that very soon, we're going to have a pretty robust enterprise capability. So I know it's been a long time coming across these businesses, and I will be very open and honest about that. We have learned a lot from dealing with enterprises. We know what works. We know what doesn't work. We kind of know how to think about now structuring and building the product and the operational teams and support to be able to service these organizations. And I do think that we are chipping away the problem across all 3 businesses. Thank you for your question. Operator: Katherine asks again, in the Loadshift business, are you able to say which country you would like to enter next? And how high do you think you could get the award? Robert Barrie: Next country will be Canada. It will be Canada because it's very similar to the freight we do in Australia. We're well advanced in our planning for that, and we also have an office in Canada able to service that region. But the next location will be Canada. Operator: And how high do you think you could get the award for? Robert Barrie: For Loadshift? Operator: Yes. Robert Barrie: Yes. So I literally had a conversation about this morning. Mas is smiling. I literally went to his desk and discussed it with him. Look, I personally think -- so when you have a marketplace of whether it's Freelancer or Loadshift and to an extent when you have an account managed transaction on the Escrow, if you leave transactions alone and self-serve, and obviously, you can chip away at this over time with better product and features and so forth, particularly with AI, you can do a lot. Transactions will close will match at a certain percentage, right? And across the labor space, and you look at any of the marketplaces that are out there, so I'm just talking about -- and I've looked about 200 or so financials of marketplaces because we bought about 35 businesses over the life of this company. So I've looked at a lot of these things. The labor matching in these marketplaces match around plus or minus, they're at 30%, right? So all the jobs being posted about 30% get matched and paid and so forth. If you put a human in there and that human chaperones the transaction, so it gets on the phone and talks to the client and talks to the freelancer and you do it a market making or you kind of do it of recruiting, et cetera. And you can bump that number by plus 20% pretty much across the board. With the peak performing human doing the matchmaking and the market making and so forth, you can get up to about 65% or so in terms of the conversion on the award rate. You can burst a little bit, maybe a little bit above that, but that's kind of the peak. Above that, you have clients that just lose interest. You have -- which makes up the other 35%. You've got people posting jobs for time machines, wanting to get things done for $0.99, completely unrealistic or nonfirm, just trying get an idea or maybe in the shower, they want to be an entrepreneur one day and they put the job and the next day, they kind of get busy or whatever it may be. And so that gives you a feeling for adding a human. The same is in Escrow. When you put an account manager in an Escrow transaction, they lift it by a 20% absolute the conversion rate of a transaction closing because there's handholding. And you got to remember, Escrow plays with complex high value end of deals -- so some of these deals, there's a lot of complex negotiations [ breaking ship ]. There might be multiple sellers, multiple brokers involved in the transactions, et cetera, and so forth. But you can usually bump by plus 20% if you put a human in there. On Loadshift, I think we're doing somewhere between 27% and 31%, I think, award rate at the moment. The primary thing holding back Loadshift award rate has been the fact that most of the transactions happen by audio that happen over the phone. And so we still, to this day, still hand out all the phone numbers to the drivers because historically, when we bought the Loadshift bulletin board business, it was the bulletin board you pay $69 a month and you kind of, if someone posted a job, you saw the phone number. So that business, traditionally, that's how it operated. We managed to transform that successfully into a marketplace model, have the payments flow through us. We cleaned up the trust and safety in the marketplace. There are a lot of cowboy operators, et cetera, people that are not licensed properly, not insured properly. We cleaned all of that up. We now have feedback. We have reviews. We have a whole compliance function that we provide as a layer on top. We provided more enhanced functionality, et cetera, and so forth. But we still hand out the phone numbers. With the in-app calling, which is live, you can do audio video calling, et cetera. It currently does not bridge to the PSTN or the packet switch telephone network. So it's -- if you've got the app installed on both sides or if you're on the desktop experience and you've got the app on side, we now connect. And very shortly, we've literally got in testing, we'll be connecting to the phone network. So it will be like an Uber where the driver can call you on your phone number rather than on the app. Once we have that, we think we will be a big leg up in the award rate just simply because we've just been easy, easy as it goes in terms of transforming the business model from a model primarily to a marketplace model. I personally think that the award rate on Loadshift should be higher than on Freelancer simply because if you've got an excavator and you're posting a load to move it from Kalgoorlie to [ Whoopu ] you have the excavator or you are looking at a price check because you want to buy it. They're basically the 2 scenarios. I personally believe that the ultimate peak award rate of Loadshift should be around 85%. So I think there's a significant way to go in terms of where we can lift that, but it should be significantly north of where it is now. We've been just very gentle. We obviously took it from 0% to somewhere between 27% and 31% now. The next leg up will happen with the PSTN calling because we've obviously got to control the marketplace a little bit better, and we've got to clamp down off siding and so forth, which we've really started to do on the Freelancer side recently and -- through the audio and so forth that we've deployed. So I think we've got a big leg up there just even on existing volumes we have right now, there's significant potential for very, very large revenue growth just on the volumes we have through looking at award rate. So it is actually a great question. There is a debate kind of how high we think we can get it to. But I think that -- if you're posting a load and you want to move something, the thing that you're posting load for exists and you either own it or you're about to own it or you do a price check on it. And as opposed to on Freelancer, somebody will wake up in the morning and they want to be an entrepreneur and they post a job and then realize how hard it is to actually start a business and they kind of flake out. So I personally think the award rate on Loadshift should be higher than Freelancer in the countries. Thanks for your question. Any other questions from the audience? Apologies again for starting a bit late. I'll ensure that next time we do this, it doesn't happen. But we do have an old Cisco machine here in the conference room and sometimes it's got a mind of its own, whether the cameras are working, et cetera and so forth. But we will endeavor to ensure that, that starts on time at 9:00 next time. I'll leave it open for another 30 seconds if someone has asked a question. Normally, there's a few people who are a bit shy who've got their microphone on mute that take a little bit of time to get one in. But otherwise, if there is nothing coming in, I will shut the call down. As always, you may direct questions to myself or any of the management team at any time. If you send an e-mail to matt@freelance.com, matt@freelance.com or investor@freelance.com, we'll be happy to arrange a one-on-one with any of the team. Okay. There is another question that just came in on? Operator: Yes. From [ Doug ]. Robert Barrie: Doug you are on audio. You are on mute. Unknown Analyst: I just want to know how each of the divisions have done year-to-date. Robert Barrie: Okay. You are off mute but I can't hear you. Maybe if you want to type your question. Operator: He did ask it in the chat as well. Robert Barrie: He did. Operator: How has each division performed in Jan and February compared to last year? Robert Barrie: Yes. So we've had a -- I don't want to preempt a little bit. I think Escrow and Loadshift have been the standouts in Jan and Freelancer is lagging a little bit, and that's traditionally, I think, what we've been kind of really focusing on, and that's continued into 2026. I do think however, pretty soon, we should have a good uplift in the Freelancer numbers. We've got some very, very enhanced functionality on, I think what I think is the core thing to focus on right now to maximize the lift in revenue, which is that bidding matching experience. And I know that we've had conversations before about that, Doug. I'll be happy to go through in a one-on-one the sorts of things we're doing there. But there's a massive focus on us to really bridge that uncanny valley where it's very easy to post a job on Freelancer. It's very easy to get the bids in. And there's a moment where you kind of get all these bids in and you kind of a bit confused about who's actually good, who can actually do my work, who's using an auto bidder, who's using ChatGPT to write their bids. And we've got some -- a whole suite of measures coming in to kind of bridge that gap because once you kind of get through that and you find a great freelancer, the work is done efficiently, it gets done cheaply. It's mind-blowing and very addictive. And we see that sort of in the long-term retention curves. Once you kind of cross that valley, you kind of stick, but we've got to cross that valley. And that valley, the chasm has been widening a little bit over the last few years through automation, right? So what's been happening over the last few years is there's been auto bidding software. You've got people generating ChatGPT generated bids using that auto bidding software. Sometimes those bids misrepresent the skills and experience of the freelancer and create a negative effect. Firstly, sometimes the bids come in too quickly and you don't think they actually wrote their brief. Secondly, you kind of go, well, these bids are too good to be true and then you browse their profiles and you realize they're not. So we know how to solve that problem. I think at least make major inroads into that problem. We literally have 7 things we have going up in the next 2 weeks, something like that, both on -- give you an idea, we are going to annotate the bids on what we think the bids should say, so give you a high signal to noise ratio there. We've got a classifier looking for the people who are misrepresenting their skills and we're penalizing them. We have LLM search. We have a prefiltering step where we're separating the people we think are likely to be able to do the job from the people who are not likely, and we're surfacing relevant reviews for items, et cetera, and so forth very, very quickly. And all the testing we've done, it's a huge step forward and it should test very, very, very positive. And then on top of that, we've got some stuff that we wanted to get out last year, and we struggled to get through the AB testing through, I think, 4 different attempts, but really smoothing out the whole sign-up experience, e-mail verification, phone verification, what have you. Down funnel, it tested very positive, plus 10% on the financial metrics up funnel, it was causing some issues. We split it into 2, and we should be able to chaperone that out in the next quarter. So we could see a big lift there. But it's basically in terms of the ranking is sort of Escrow, Loadshift, Freelancer in terms of performance this year, same as last year. Any other questions? Operator: Doug says, Thanks, Matt. You've preempted my other questions already. Robert Barrie: No problem. Okay. Well, thank you, everyone. As I said before, happy to arrange one-on-ones, please send it into either matt@freelance.com or investor@freelance.com and we'll arrange for either with myself or anyone with the management team, and you're welcome at any time to come talk to us physically or online. So thank you for your time, and apologies again for the late start today.
Operator: Good day, and welcome to the Trex Company, Inc. Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Casey Kotary. Please go ahead. Casey Kotary: Thank you, everyone, for joining us today. With us on the call are Bryan Fairbanks, President and Chief Executive Officer; Adam Zambanini, Executive Vice President and Chief Operating Officer; and Chris Gandhi, Senior Vice President and Chief Financial Officer. Also joining the call is Amy Fernandez, Senior Vice President, Chief Legal Officer and Secretary; as well as other members of Trex management. The company issued a press release today after market close containing financial results for the fourth quarter and full year 2025. This release is available on the company's website. This conference call is also being webcast and will be available on the Investor Relations page of the company's website for 30 days. I will now turn the call over to Amy Fernandez. Amy? Amy Fernandez: Thank you, Casey. Before we begin, let me remind everyone that statements on this call regarding the company's expected future performance and conditions constitute forward-looking statements within the meaning of federal securities laws. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. For a discussion of such risks and uncertainties, please see our most recent Form 10-K and Form 10-Q as well as our 1933 and other 1934 Act filings with the SEC. Additionally, non-GAAP financial measures will be referenced in this call. A reconciliation of these measures to the comparable GAAP financial measure can be found in our earnings press release at trex.com. The company expressly disclaims any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. With that introduction, I will turn the call over to Byan Fairbanks. Bryan Fairbanks: Thank you, Amy, and thank you all for participating in today's call to discuss our fourth quarter and full year 2025 results and our outlook for 2026. I know you've also seen the exciting news that Adam Zambanini will be named as Trex's next President and CEO following my retirement in late April. I'll discuss this shortly, and Adam will share a few words. But first, let's review the quarter and the year. Against the backdrop of a third consecutive down year for the repair and remodel sector, I'm pleased to report that Trex finished the year with strong fourth quarter results and year-over-year sales growth of 2% and mid-single-digit sell-through for the full year 2025. Over the past few years, as R&R spending has lagged, our focus has been developing on industry-defined product innovation rooted in deep understanding of our consumer, expanding the channel partnerships in both the Pro and home centers and continuing to drive operational excellence, efficiency and safety. Our team has higher expectations for future growth, and there are several very positive achievements in 2025 that will allow us to maintain and build on our track record of outperforming the broader market in both up and down cycles. I want to begin by highlighting the market response to Trex's new product releases. Products introduced over the last 36 months continue to show robust growth, representing 24% of our 2025 sales, up from 18% last year. This speaks to the strength of our product design and development programs, which combine new performance features with leading aesthetics that align with consumers' evolving preferences. One clear example of this alignment is our Suncomfortable heat-mitigating technology, which we extended to new decking products, bringing this very popular feature to a broader consumer audience at an accessible price point. Perhaps the most exciting highlight of the past year was the success we achieved in the execution of our multiyear railing strategy. Several years ago, we set out to disrupt the railing market as we did with decking over 30 years ago. After engineering a full line of railing products across a broad range of price points and investing in best-in-class distribution and channel partners over the past 2 years. In 2025, we achieved robust double-digit growth in railing. We're very encouraged by the recent stocking wins and displacement of competitive products in both the Pro and home center channels. The momentum built in 2025 has us on track to achieve our longer-term goal of doubling our share of the railing market by the end of 2028. Next, I want to turn our attention to the development of our Arkansas campus, which continues to deliver on its construction and start-up schedule, including on-site production of plastic pellets, reducing our reliance on more expensive external sourcing. When we made the decision to invest in Little Rock, the industry overall was approaching full capacity. And then through the growth years of COVID, it became clear that capacity to meet consumer demand would be key to long-term growth. While the industry growth curve has moderated in recent years, I'm confident that the capacity we add in Little Rock will fuel Trex's growth and result in cost optimization and margin opportunities for years to come. And lastly, we further strengthened our positioning in the Pro and home center distribution channels in 2025 and into early 2026. With expanded pro channel relationships and a meaningful increase in stocking locations at the home centers covering both decking and railing products. These wins reflect the strength of the Trex brand and the advantages of our expanded product portfolio in terms of both performance and aesthetics. Trex remains the only wood alternative supplier with a significant presence in both of the country's largest home centers, both on shelf and special order. These highlights represent the early results from increased investments we have made and will continue to make in R&D, sales and marketing, digital technologies and utilizing our capacity to drive accelerated growth. Our improved market incentives have resonated well with our Pro dealers and contractors, and we're seeing increasing commitment to Trex as they're making their early buy stocking and selling decisions. Additionally, we've seen early positive results from our new marketing campaigns and digital investments. Notably, sample program volumes and website traffic, which are early indicators of purchase intent, have increased considerably and our improved digital tools have helped to generate double-digit increases in lead generation for our contractors. We found that increases in our lead generation and website customer engagement over time correlates with revenue growth. We also made significant progress in strengthening our distribution network, which will ensure unparalleled access to our products from leading national and regional distributors in North America. Midyear, we announced the expansion of our relationship with International Wood Products, building on our success with IWP in the Pacific Northwest and California. We expanded our relationship to Salt Lake City and across the Intermountain West. Later in the year, we expanded our relationship with Weekes Forest Products, strengthening our presence in the upper Midwest, including areas in Minnesota, Wisconsin, Iowa and North Dakota. And in November, we announced that we were expanding our relationship with Specialty Building Products in Michigan, which builds on the success of the long-standing Trex SBP collaboration. As we turn our attention to 2026, innovation and strategic investments will continue to fuel Trex's growth. After rigorous testing, we were pleased to announce the launch of Trex Refuge decking in January of this year. Our code-compliant fire solution combines style and advanced fire performance with the durability and low maintenance benefits that are the hallmarks of the Trex brand. This ignition-resistant PVC decking line enables us to effectively compete in regions of the country with heightened fire safety requirements, and we are now shipping to California, Oregon and Washington State. When we look historically at periods of sustained growth for Trex, those periods saw Trex invest approximately 18% into SG&A. We recognize that branding reductions made during the growth years of the pandemic and subsequent years needed to be revisited to meet the current market conditions and the long-term opportunity. Targeted investments on programs for our customers and investments in consumer branding will provide a financial return in top line growth and market share capture as they have in the past. Closely working with our Pro channel and home center customers, we've identified the most important points of leverage and tailored programs to incentivize incremental growth, maximize product bundling, especially with railing and further shift purchasing within our portfolio to our more premium products. For the longer term, you can expect to see our branding and sales investments grow in line with revenue, while other fixed SG&A spending will be leveraged with growth. We also know where and how customers get their information is evolving. We're deploying solutions that make it easier for consumers to learn about Trex decking and railing. This includes messaging to consumers through new campaigns targeted at high-impact media, enhancing the digital experience through upgrades to our 3D visualization tool and elevating the retail experience through new point-of-sale solutions and product samples. Early marketing metrics are all up double digits and recent stocking position wins by Trex gives us confidence that we have the right plan in place. As you've seen in our releases today, I've made the decision to retire as CEO of Trex after nearly 23-year career with the company, including 6-year tenure as the CEO and 5 years as the CFO. While this is not an easy decision, I am confident it is the right one, and the Board has made an excellent choice in naming Adam Zambanini to take over the role at the end of April. Adam has been a great partner in developing and implementing major strategies over the years as well as leading a substantial portion of the overall organization in his current COO role. Adam is a strong leader and a brand builder with deep knowledge of Trex business. His passion for Trex is unmatched. Now I will turn the call to Adam to share his thoughts. Adam Zambanini: Thank you, Bryan, and good afternoon, everyone. It's been a great experience working alongside a leader of Brian's caliber. His steady guidance has made a meaningful impact on the team and the organization as a whole. We are grateful for his leadership and collaboration, and we look forward to a smooth and successful transition as we build on a strong foundation he has helped establish. As I take on the role of CEO of Trex, you can expect us to focus on execution while building momentum for the next phase of growth. Shortly after joining the company, I led the development of the launch of a game-changing technology that redefine the standards in the decking category, Trex Transcend decking. The product established a new benchmark for performance, combining scratch, stain, fade and mold resistance with refined wood-like aesthetic. This innovation marked the industry's first generation of high-performance composite decking and served as a catalyst for sustained market share expansion over the following decade. Moving forward, we will build a disciplined innovation pipeline around Trex decking that creates a durable, defensible moat and raises expectations across composite and PVC decking category while continuing the longer-term conversion from wood. Also, we will continue to capture additional meaningful market share by executing our railing strategy. Trex is the market leader in alternative railing with the broadest portfolio of products available for every residential application. Performance engineered for your life Outdoors is more than a tagline. Our decking is evolving to perform across diverse environments with heat mitigation technology, submersible marine capabilities and with the recent launch of Trex Refuge, mission-resistant solutions for dry fire-prone conditions. We want to continue to push the limits of where our products can go and be at any price point with those features that consumers expect from their project. Looking ahead, I am committed to developing new standards for innovation at Trex and take full advantage of the substantial growth opportunities we see on the horizon. Stay tuned for more on this as we move through the year. Our brand is a powerful driver of consumer appeal, and we will continue to leverage that through expanded marketing efforts to highlight the unmatched value of the portfolio of products. And as we plan for the future, we will navigate the dynamic industry landscape to build a clear road map for continued success. As you have seen from our release, and you will hear from Prit in detail in a moment, we are expecting 2026 to be another year of growth. I look forward to participating in upcoming conferences and meetings to keep our investors and analysts updated on our initiatives and to sharing additional insight into our vision of the future. Now I will turn the call over to Prit for his financial review. Prithvi Gandhi: Thank you, Adam, and good afternoon, everyone. I'll now review our fourth quarter and full year 2025 results. Please note that unless otherwise stated, all comparisons discussed today are on a year-over-year basis compared to the fourth quarter and full fiscal year 2024. In the fourth quarter, net sales were $161 million, a decrease of 4% compared to $168 million in the prior year period. Results came in approximately $17 million above the midpoint of our fourth quarter revenue guidance, primarily due to higher-than-anticipated railing sales in the back half of Q4, continuing to demonstrate the strength of our railing product portfolio. Decking shipments for the quarter were also slightly better than we had forecasted. As of the end of the year, we believe channel inventories were at 6 to 8 weeks at the low end of historical levels, but appropriate given our new level loading and inventory management program. Gross profit was $49 million, down from $71 million and gross margin was 30.2%, down compared to 43% in the prior year. This decrease is primarily the result of 2 changes in accounting methodology that Trex adopted in Q4 2025. First, we elected to change the company's inventory accounting method from LIFO to FIFO to improve comparability with other companies in our industry to more accurately reflect the value of the inventory on the consolidated balance sheet at each reporting period and to be consistent with how the company manages its business. While this change had no impact on the 2025 income statement or cash flow statement, it resulted in an upward restatement of our Q4 2024 gross margin, resulting in most of the decline in year-over-year gross margin in Q4 2025. Please refer to the reconciliation tables in Footnote 2 of the company's 10-K for further details. In addition, we changed the [indiscernible] methodology to our warranty reserve estimate, which resulted in an expense of $6 million in the fourth quarter. These changes were partially offset by plant efficiencies from higher utilization. Gross profit results included onetime start-up costs related to the Arkansas facility and onetime railing conversion costs totaling $1 million. Excluding these items, adjusted gross profit was $50 million. Selling, general and administrative expenses were $45 million or 28% of net sales compared to $39 million or 23.4% of net sales in 2024. The majority of the year-over-year increase was related to higher personnel-related costs. In the fourth quarter, onetime expenses related to digital transformation activities and the start-up of the Arkansas facility were approximately $1 million. Excluding these onetime expenses, SG&A was $44 million or 27.4% of net sales. Net income was $2 million or $0.02 per diluted share versus $22 million or $0.20 per diluted share. Excluding the previously mentioned onetime charges incurred in the fourth quarter, adjusted net income was $4 million and adjusted diluted earnings per share was $0.04. EBITDA was $20 million or 12.7% of net sales compared to $45 million or 26.9% of net sales last year. Adjusted EBITDA was $22 million. Note that the Q4 2025 adjusted EBITDA, adjusted net income and adjusted EPS do not add back the $6 million warranty reserve estimate expense. Turning to our full year results. Net sales for full year 2025 totaled $1.17 billion, a 2% increase compared to $1.15 billion, primarily due to pricing across all product categories and expansion in railing placements during the year. Net income was $190 million or $1.78 per diluted share compared to $238 million or $2.20 per diluted share in 2024. Excluding onetime charges incurred during the year, adjusted net income was $201.7 million or $1.88 per diluted share and adjusted EBITDA was $336 million. For 2025, adjusted EBITDA, adjusted net income and adjusted EPS do not add back the $6 million warranty reserve estimate expense. I want to comment on inventory levels at year-end. Our inventory level decreased by approximately $18 million year-over-year. As previously mentioned, in 2025, Trex elected to change its inventory accounting method from LIFO to FIFO, which had no impact on the 2025 income statement or cash flow statement. However, because of this change, we restated our 2024 year-end inventory balance from the previously reported $207.3 million to $257 million, which resulted in the reported inventory decline from 2024 to 2025. 2025 operating cash flow was $358 million compared to $144 million in the prior year. The increase was primarily a result of inventory reductions in the current year compared to prior year inventory build and higher collections in 2025. Consistent with our capital allocation strategy and continued confidence in our long-term outlook, we returned $50 million to our shareholders in 2025 through the repurchase of approximately 1.5 million shares of our outstanding common stock at an average price of $32.75. We also invested $233 million in capital expenditures in 2025, primarily related to the build-out of the Arkansas facility. Our Board of Directors has authorized a $150 million share repurchase program to be completed in the first half of 2026, subject to equity market conditions. In addition, we intend to continue opportunistic share repurchases throughout the balance of the year, reflecting current valuation, our conviction in the long-term outlook for Trex and the meaningful reduction in 2026 capital expenditure as the Arkansas facility is now substantially complete. Before moving to our 2026 outlook, I want to spend a minute on our approach to capital allocation. First and foremost, Trex's priority is always to create shareholder value by funding our long-term organic growth through capacity expansion that meets expected consumer demand. With the completion of the Arkansas facility in 2026, we will have the capacity to service growth for years to come and therefore, expect to generate meaningful additional free cash flow in the foreseeable future. Consequently, at this time, share buybacks will be a significant use of capital. That said, Trex is also likely to become more active in executing strategic tuck-in acquisitions to expand our growing portfolio of outdoor living products. We take a very disciplined approach to evaluating acquisitions by comparing their potential risk-adjusted returns to the return from ongoing share repurchases and moving forward only if acquisitions returns outweigh buying back Trex shares. Now turning to our 2026 guidance. For the full year 2026, we expect net sales to be in the range of $1.185 billion to $1.23 billion, representing low single-digit to mid-single-digit percent growth year-over-year in an R&R market that is expected to be slightly down to flat relative to 2025. Adjusted EBITDA is expected to range from $315 million to $340 million and includes approximately $8 million in currently expected adjustments for the full year, mostly related to digital transformation initiatives and railing conversion. These adjustments are evenly split between COGS and SG&A. SG&A expenses are expected to be approximately 18% of net sales for the full year. Interest expense is expected to be $10 million to $12 million. As a reminder, Trex has consistently been paying cash interest on its line of credit balances for the past several years. However, because of the construction of the Arkansas facility, GAAP accounting rules required us to capitalize interest expense on the balance sheet as a construction in progress item that would otherwise have been recognized on the P&L in both 2024 and 2025. With the completion of construction scheduled in 2026, we will once again be recognizing interest expense on Trex's consolidated income statement in 2026. Depreciation and amortization of approximately $85 million with approximately 45% occurring in the first half of the year and approximately 20% of the full year D&A within Q1 2026. As previously communicated, the additional depreciation is related to bringing our new Arkansas decking lines to production-ready status during 2026. In 2027, annual depreciation will be at an annual run rate similar to D&A exiting Q4 of 2026. We are projecting an effective tax rate of approximately 25.5% to 27% for the full year, and capital expenditures are projected to be approximately $100 million to $120 million for the full year. For the first quarter, we expect net sales to be in the range of $335 million to $345 million. With that, I will now turn the call back to Bryan for his closing remarks. Bryan Fairbanks: Thank you, Prit. While we've been operating in a challenged R&R space for an extended period, Trex has substantial runway to convert the market from wood and increased wood alternative decking and railing market share to Trex. We are committed to product innovation and through our marketing investments, we will ensure the continued strength of the Trex brand, making us top of mind with consumers when they're making their outdoor living decisions. These actions, along with strategic capital allocation decisions, including the $150 million share repurchase authorization through the first half of the year and likely additional purchases later this year will result in a meaningful return of capital to shareholders. We expect share buybacks to remain a key priority with a significant increase in free cash flow in 2026 and the coming years as we drive revenue and earnings growth and build shareholder value. Operator, please open the call for questions. Operator: [Operator Instructions] The first question today comes from John Lovallo with UBS. John Lovallo: The first one is on the implied growth is 1% to 5% in that ballpark in a flattish to slightly down market. I mean is it fair to think that you guys are assuming decking will be up sort of low single digits with railing being up double digits? Bryan Fairbanks: Yes. We do expect railing to be up double digit, continued driving of those share gains that we've seen this year and we expect to see in 2026 and beyond. I think that's the right way to look at it from a decking perspective as well. We do have some shelf space wins. We are seeing benefits from the new programs that we've put in place. And then the way we've ranged the guidance is at that low end, if we continue to see weak negative type R&R at the low end, if we see R&R starts to improve, especially in the back half of the year, a little bit closer to that higher end of the guidance. John Lovallo: Understood. And typically, you guys will provide sort of a next quarter sales outlook and sometimes an adjusted EBITDA margin view. I mean, can you give us an idea of how maybe you're thinking about these metrics or maybe just the shape of the year in general? Prithvi Gandhi: Yes, John, thanks for the question. In terms of the shape of the year, we gave you the full year's EBITDA range for $315 million to $340 million on an adjusted basis. For Q1, I mean, the best way to think about it is in terms of EBITDA again, as I said in my prepared remarks, D&A is about 20% of the full year. That will be about $17 million to $18 million. The SG&A in the quarter should be about 100 basis points more than it was last year, and that's the continued investment in marketing that we spoke about in Q3. And then in terms of gross margin, if you look at kind of where consensus was before the call here, we're going to be about 100 basis points below that, and that's largely because of, again, the higher growth of railing, the higher depreciation, and that's partially offset by pricing. John Lovallo: Prit, that's for the full year, that 100 basis points you're speaking of? For the gross margin. First quarter. Prithvi Gandhi: It's Q1. Operator: The next question comes from Susan Maklari with Goldman Sachs. Susan Maklari: Can you hear me now? Operator: Yes. Susan Maklari: Okay. Sorry about that. Well, first off, congrats to both Bryan and Adam on the announcements there. I'm looking forward to working with you more, Adam. My first question is, my first question is talking a bit about the outlook as you think to the spring. Can you talk to what you're hearing from your contractors as they're starting to perhaps build some of their backlogs in some of those markets, especially the ones that maybe aren't quite so impacted by weather. And you noted that you're seeing some pretty strong demand out there for samples and web traffic and just what that could imply for revenues as we look to the season? Bryan Fairbanks: Yes. So it's definitely a challenging environment as you see the flat home improvement spending. But as we look at it, we're still seeing our top-tier contractors still booked out probably in some cases, in the rougher parts in terms of weather, 4 to 6 weeks and then better weather, probably 6 to 8 weeks. So from that perspective, we feel good. And we've actually had 2 TrexPro events this year to cover our highest end of the network, and they all felt that this year was going to be better than the previous year that they had, and we did some polling on that across the contractor group. So that was good. We've also got some placements that we've picked up at retail, incremental placements when we look at the decking and the railing. And so we feel good from the position that we are as we move forward on that front. So there's a lot of signs plus the marketing metrics, as you mentioned, have been very solid this year, more than we saw the previous couple of years in terms of when you start to look at searches from contractor searches to dealer searches, some of those metrics have been a lot better here this year. Susan Maklari: Okay. That's helpful. And then turning to SG&A. You talked through those investments that you expect to make in terms of brand and sales. Can you talk to how the efforts around data and the digital transformation will play a role in that? And what that could also mean as you think about leveraging some of those costs? Bryan Fairbanks: Yes. We've done a lot of work on the digital transformation side of the business over the -- primarily over the last 12 months, but the planning for that started 18 months ago. We are starting to see some of the benefits now where we're able to better understand what those market drivers are as we're seeing volume come through our website, they're engaging with various parts of it that I consider to be sales drivers. That's going to be your purchasing of samples, contractor leads, looking for a contractor or looking for a dealer and things like that. So all of that information together and being able to derive information out of that so we can better target those customers over the long term. I'm extremely excited about the path that we have going forward from a digital transformation perspective. We've got the right people in place from a marketing perspective as well as the IT group and a lot of great things as we move forward. Operator: The next question comes from Phil Ng with Jefferies. Philip Ng: Bryan, thank you for all the help over the years and Adam looking forward to working with you more as well. I guess to kind of kick things off, John asked a question about your top line revenue guidance. Midpoint is about 3%. Can you help us unpack how much of that is via load-in because you've had some wins at home centers? And from that standpoint, any color on what price point for decking, how big of a contribution perhaps is railing? And then as well as pricing, I think you got some carryover pricing. Just kind of help us unpack the outlook you've provided. Bryan Fairbanks: Remember in the last call, we did talk about higher incentives going into the market. So our net pricing for the year is flat. While there is some pricing going in, that is being offset by incentives in the marketplace. As it relates to the guidance piece of it, from an infill perspective, we will have some benefit early in the year on that. But of course, that product needs to turn. And while there's a meaningful number of shelf spaces out there, the product infills on their own aren't that big of a number. Those products need to turn within those environments. And we have shown historically with the additional shelf space, we will see the turns on that. We've been extremely happy with the additional shelf space that we've gotten both in decking, but also on the railing side. In many cases, we're seeing our new Trex railing systems being installed on non-Trex-related decks. Big part of that is because of the quality of the product that we have going in, but also because it's readily available. It's right there on the shelf and they have the ability to immediately get everything that they need to be able to build out that rail and complete the project, whether they're a contractor or a DIY consumer. Philip Ng: Okay. Great color. And in some of the success you called out bundling railing, any other categories that stand out? I know you talked about potentially more bolt-on. Just a little more [indiscernible] there or potentially any JV opportunities with any other partners? Adam Zambanini: Yes. We definitely talk about tuck-in. Recently, we got into the fastener category in a much larger way. So that's the first area that every single time you sell, you have to attach it with some sort of fastening system. So we've seen great growth in that area. And then you've seen some of the licensed products that we have, which kind of gives us the opportunity to, I will call it, taste test or see what the preferences are in some of these categories, which lead us into maybe there's something along those lines from a tuck-in perspective. But when I think about the backyard, we want to own the backyard. So we have a fencing product line that I think is probably the best bar none in the industry. I don't think we do enough to market it. I also don't think we do enough in terms of when we look at a broad range of that portfolio, how we can compete in every segment even beyond composites, kind of like what it looks like from a railing perspective. So I think there's a lot of opportunities when I think about outdoor living and where we can go, and that can even expand to the envelope of the house as well. Unknown Executive: And Phil, just to add to Adam, the other kind of tuck-in types of things that we could look at are things that improve our cost position, things in manufacturing, vertical integration and those types of things. So there are opportunities like that as well. Operator: The next question comes from Ketan Mamtora with BMO Capital Markets. Ketan Mamtora: I want to extend my congratulations to both of you all as well and look forward to working with you Adam. Adam Zambanini: Likewise. Ketan Mamtora: Maybe just starting with -- on the PVC side, you talked about kind of first of several new products. Should we think of it as there are other products along these lines that you are looking to launch or these could be kind of other products, not necessarily on the PVC side? Unknown Executive: Yes. So I think when you look at PVC, there's really 2 parts of the [components of] PVC the most. You see it in New England and you see it on the West Coast when I see it a lot. When you get to the West Coast, a lot of times, that's around fire. And when I think about fire, I don't think we should be locked into some sort of a material set of [indiscernible] PVC. So -- when we think about that in the future of it, yes, we will be in that PVC category, and there could be other products within that umbrella. But it would be when we look at all the different segments and classifications because there's different levels of fire that are out there today, it is how can we compete aggressively to take that market share away from PVC. And that is going to definitely be on my radar screen. And the same thing when you look at New England, it's a little bit different. It's not as focused as much around fire. There's just a segment there of contractors that have been in PVC for the last decade or 2. And there's some performance features in terms of some things workability and all that, that I think that from that segment of contractors, we're going to target aggressively, and we're going to go after ways that we can convert those contractors over to WPC. Ketan Mamtora: Understood. That's helpful. And when I think about your full year guidance at midpoint, you talked about the 3%, should we assume sort of sell-through also in the similar range, meaning there are no sort of inventory changes that we should be thinking about? Bryan Fairbanks: Yes, that's correct. Operator: The next question comes from Keith Hughes with Truist. Keith Hughes: It seems like this railing initiative is having substantial success. Is this raising your attachment rate? Is it soon enough to say that it had that effect? Bryan Fairbanks: Yes. Attachment rate is notoriously difficult to calculate. That's why we are using a market share metric on it. But we are hearing through our contractors that with products that we didn't have in the past, the steel system, the entry-level aluminum system, our new T-Rail system, that they are making that conversion over from competitive products over to Trex products. So we are pleased from that perspective. We'll continue to work to try to create something that gives a better view of attachment rates, but it varies widely from region to region and trying to get really good information on that is a challenge. That's why we think market share is a better metric to use from a market perspective. Keith Hughes: And is there any holes in your railing portfolio now that you think you need to add either third party or acquisition? Unknown Executive: We have an unbeatable railing portfolio. When I look at this right now, this reminds me the decking category over 20 years ago where there used to be 20-some different manufacturers. That's the same issue when you look at railing. When we look at our #2 and #3 competitors on railing, we consider them regional competitors. So we think there's a tremendous opportunity to take market share from a significant amount of regional players that are out there, and nobody has the portfolio to contend with Trex from top to bottom. So could we do tuck-ins? We could. Do we have to? No, we don't have to. Keith Hughes: Okay. I mean not downside, but the gross margins are lower railing than deckboard. Is that correct? Bryan Fairbanks: Yes, that is correct. With the tariffs coming through, that was a significant headwind. Last year, we did take some pricing. Now we're giving that back through other incentives in the marketplace. But over time, we will be working on strategies that will close in that gap and expect over time that we can close it completely. Keith, the thing when you look at this is volume is a great thing for Trex. We manufacture a significant volume in decking. And the more volume we can get in railing, the more opportunity for continuous improvement. So we're going to be able to leverage the scale of railing over time. And therefore, the success you saw in the margin expansion on decking, we're going to take the formula that's worked with Trex over the last 15 years, and we're going to apply that to railing moving forward. So you're going to see more vertical integration on railing just like you did on decking over time. Keith Hughes: Congratulations on the [indiscernible]. Operator: The next question comes from Tim Wojs with Baird. Timothy Wojs: Maybe just my first question, Bryan, just the tone of your voice is a lot different than maybe it was 3 months ago. And so I'm just kind of curious if you could kind of maybe walk through what's kind of changed in terms of how you're kind of assessing the environment as we kind of come into '26. Bryan Fairbanks: Well, a couple of things. First, it was a considerable reset that we had in the third quarter. And I always understand how difficult those things are going to be. Everybody's model needs to change. I don't take that lightly when we do that. I think on the other part of it is related to where the marketplace is. Going into that, it assumed that there would be a further deterioration in the R&R sector during the fourth quarter. We did not see that. And as we moved our way through the quarter and now here at the end of February, we're also starting to see the benefits of some of those actions I talked about in the third quarter call. So I'd say those are really the 2 things that the key difference from last call to this call. Timothy Wojs: Okay. And I guess when you look at SG&A, I think this year, it will be somewhere like, call it, $220 million. It's up $40 million from basically '24 levels. I guess, a, what is the split there between field resources and kind of marketing? And then I guess the second question, just bigger picture. Is there any scenario where you would look at investing more than 18% of sales going forward? Bryan Fairbanks: Yes. There's carryover of additional headcount coming in from the sales team from last year. The largest piece of it is going to be on the marketing side. We're not going to get into exact splits on it. I think at this point, I don't know if Adam would add anything, I mean, from my perspective, I'd be surprised if we were to go over that number. Adam Zambanini: Yes, I don't see us going over that number. We've only done it a couple of times in our history, and if it's an opportunistic point of view in terms of the markets doing really well as we move forward and we had the ability to expand revenue, we would look at that. So I think from that perspective, could it happen? Yes, it could happen, but I don't expect us to go over it. Operator: The next question comes from Ryan Merkel with William Blair. Ryan Merkel: My first question is on gross margin. I think last quarter, you talked about down 200 basis points in 2026. Is that still the right ballpark? Unknown Executive: Ryan, thanks for the question. So look, I think, again, relative to kind of where consensus was before our announcement here, we think we'll be about 100 basis points lower for the coming year. Yes. So that's -- I mean -- sorry, one second. Yes, we'll be slightly below where the preannouncement consensus was. So I think consensus was around 37.4%, 37.5%. So that's kind of the ballpark that we will be for the full year. And the main difference is we gave you guidance today for full year D&A of $85 million. I think the Street is a little bit lower than that. Ryan Merkel: Okay. Well, just a follow-up there. I thought that gross margin comment was a 1Q comment, but it sounds like [indiscernible]. Unknown Executive: It happens to be similar -- it happens to be the same for Q1 and the full year. Ryan Merkel: I see. Okay. Thanks for clarifying that And then on the marketing spend, it sounds like you're seeing some early progress there. I'm curious what -- if you were to rank what tactics are working the best, I'd be curious what that is. And then what other milestones are you watching for through the year to see that you're getting a return on investment there? Unknown Executive: Yes. I prefer not to get into the tactics that are specifically working the best for us. But I think the way to best refer to it is that we closely watch where the spending is going. And if we see something isn't working, we will pivot off that quickly. That goes back to the earlier question about digital technologies and understanding the reach that you're having with your consumers, how are they interacting then with our channel partners that are out there. And so if we need to make a change, we make a change pretty quickly. And if we see something that is working well, we double down on that. But we're not going to try to get into the specifics of what each one of the items right now. Ryan Merkel: Yes. Fair enough. I guess maybe a follow-up, though. Are contractor conversions, I assume that's a part of the strategy. Are you seeing that yet? Or is that maybe something you'll see more through the year? Unknown Executive: Yes. No, this is the time of the year you start to see some of the contractor conversions at the beginning of the year, and those continue throughout the year. So we've definitely seen some contractor conversions. We've definitely seen some dealer conversions. We leveled up on our program on the contractor program and the dealer program, and that's been positively viewed from customers. And so therefore, we've won some people back into our camp as we move out into 2026. Operator: The next question comes from Collin Verron with Deutsche Bank. Collin Verron: Congratulations, Bryan and Adam. I just want to start with the comment in your prepared remarks, Bryan, that industry growth curve has moderated. Can you just expand on that comment and how you're thinking about the long-term growth sales algorithm for decking and railing in the industry and maybe Trex? Bryan Fairbanks: Yes. Specifically, I was referring to it moderating coming out of COVID, and then we've seen 3 down years in repair and remodel. As I look out over the long term, I'm very bullish on the repair and remodel sector. And that's because we have had 3 years of down spending along the way. There's probably some piece of there's some catch-up from COVID and there's general economic weakness out there. But homes are at a record age at this point. We know there is a large population, 40 million, 50 million decks in North America that they're aging, they're going to need place. In the past, we would see repair and remodel recover after 2 years. So the word unprecedented 3 years is used quite regularly. We're not sure where 2026 ends up. I think we're very similar to many other companies that are reporting right now. But I have no doubt it's going to come back. We're going to make sure we're going to invest in the appropriate products, marketing and our brand that when that's there, we can be driving well above market returns. Collin Verron: Great. That's really helpful color. And then I just wanted to touch on the gross profit margin bridge again. Any color as to sort of what level of inflation you're expecting in some of your cost categories and maybe how you guys are thinking about continuous improvement in 2026? And then lastly, how are you guys baking in any benefit from the lapping of the costs associated with the improvements in the enhanced deck cohorts and I guess, the warranty expense that you just called out in the fourth quarter here? Unknown Executive: So there was a lot -- a couple of things. In terms of the gross margin bridge, as we said in the last call in Q3 as well, basically, we are going to have product -- we always have productivity projects, and they do offset a lot of the decline that we see in gross margin this year. But we -- as we told you in the last call, we aren't -- our productivity and our pricing, we were able to offset some of the -- all of the additional discounting, but we also had this big depreciation headwind. And then there was the mix change in the higher growth from railing that we weren't fully able to offset. So that still continues, and that's why you see overall the 100 basis point decline in gross margin. Operator: The next question comes from Trevor Allinson with Wolfe Research. Trevor Allinson: I'll echo congratulations to both Bryan and Adam. First one on Railing, you guys talked about double-digit growth. Here, you're expecting double digits again in 2026. Given all this growth, can you size that business here for us as we're exiting 2025? Bryan Fairbanks: It is not a separate business segment for the company. So we will provide market share indicators as we move forward as we continue to grow that, but we've not broken that out as a separate business. Trevor Allinson: Okay. Understood. And then second question, going back to the revenue guide. Similar to what you guys have seen in the last couple of years, but you're ramping marketing spend this year. You've also got some wins with the home centers filtering in throughout the year. I guess the question would be, how do you expect your growth rate compares to the decking market overall in 2026? And then have you built in the tailwinds from this additional marketing spend into your number? Or would that be potential upside to your expectation should you see some really strong execution with those initiatives? Bryan Fairbanks: We've outperformed overall repair and remodel considerably over the last couple of years. I would expect our growth to be somewhat ahead of the general overall growth for the decking and railing marketplace because of those account wins as well as the marketing we're doing. Remember, part of that marketing is making sure that our name is in front of everybody for the long-term benefit of the Trex brand as well. Operator: The next question comes from Michael Rehaut with JPMorgan. Michael Rehaut: Congrats, Bryan. I appreciate working with you all your help. And Adam, look forward to the future working with you. First question just on -- I wanted to get a sense kind of big picture, how you're thinking about where the composite decking share is within the broader decking market. I mean I think last data point we had was maybe around 25%. I wanted to kind of understand if that's still the case as we close out 2025 and how maybe we should be thinking -- what's been the share gains of composite versus the broader decking market over the last couple of years, how maybe we should think about the next couple of years? Adam Zambanini: Yes. So it's about 25% when you look at wood alternative, it's about 21% in wood plastic composite. It's about another 4%, 4.5% in the PVC. And so that's why we have interest there is there's only really 2 players that are really of any magnitude in that PVC category. So we're definitely going to be looking at targeting that in addition to the wood segment, which is still the 75% share in terms of conversion there. And both the wood plastic composites and the PVC markets are both growing moving forward in terms of like projections, they're anywhere from -- the latest one was 1.7%. So 1.7% on the growth. We've been outperforming that in the last several years. Michael Rehaut: Okay. No, I appreciate that, Adam. I guess, secondly, you've highlighted some of the strength in distribution agreements in your press release and in the prepared comments. We heard from one of your competitors a couple of weeks ago around some of the challenges that they've been having with market share as well. So I wanted to kind of get a better sense of how you anticipate some of those shifts playing out over the next year or 2? And if there's any way to think about how those shared shifts might be benefiting Trex from a top line perspective? Bryan Fairbanks: I think what you're seeing in the marketplace is your best distributors in specialty building materials. And I think it's important to recognize those are the distributors that we focus on. Those distributors are focusing on the top 2 companies that have composite decking, railing type products that are out there. We're pleased with the footprint that we have today. Some of the announcements we made last year were just some fill-ins that we felt that we needed to address expanding relationships with current business partners that we had in areas that we felt that we could be a little bit stronger. But overall, very comfortable where we are and pleased with those that represent the Trex brand. Operator: Next question comes from Reuben Garner with Benchmark. Reuben Garner: Congrats, Bryan and Adam to you both. Let's see. So any -- are there any costs or were there any costs in the fourth quarter associated with the shelf space wins you had? Or do you foresee any on the way? I know in the past, you've had to kind of buy inventory in some cases. Is there anything like that embedded in either the outlook or in the fourth quarter numbers? Bryan Fairbanks: No. There's nothing in the fourth quarter number. There are some costs as we move through this year. That is embedded within the guidance. Reuben Garner: Okay. And then a question on the way it works with contractors and some of the adjustments you've made to marketing spend or incentives. Are any of your competitors or are you guys locking in any contractors with like aligned agreements that maybe some of the benefits of your changes might kind of take hold more in '27 than '26 necessarily? Is this something we could see longer-term benefits from as well? Just curious on how that works from a contractor standpoint. Bryan Fairbanks: We have a mix of contractor agreements in the markets. And I would say they're less formal when especially when you start talking about exclusivity. The contractor is working exclusively with the brand, they're doing it out of choice because they are getting the strongest support from that organization. They're getting the best products. There are incentives that come along with it. There's growth incentives and things along that -- along those lines. But a large portion do work with multiple brands. They want to keep some flexibility in the marketplace. We've got a good share of fully exclusive contractors that are in the market as well as contractors that use a variety of different brands and Trex is their largest driver of their business. Operator: The next question comes from Trey Grooms with Stephens. Trey Grooms: Congrats to both of you, Bryan, best of luck on your next chapter. And Adam, congrats on the new role, well deserved. So I guess, first, and I know we've spent some time on the guidance there. But as you kind of look at the puts and takes on the full year guide, specifically around the implied EBITDA margins, I think there's about 100 basis point difference there from the high to the low end. I guess really what gets you to the -- maybe the high end versus the low end, specifically around the EBITDA margin range for the year? Bryan Fairbanks: I mean that's going to be the strongest driver, whether it's going to be this year, we get that higher volume, that absorption is coming through. I think it's an important point to make for everybody on the call. As Trex adds volume to our existing capacity as well as new capacity, that improvement in gross margin and EBITDA margin starts coming through quickly. I think back to the early years, 2012 through 2019 time frame, I'd encourage you to go back and look at some of the margin improvement. Now some of that came through some of our own cost improvements we were doing, lower-cost polyethylene. But a big driver of that was filling existing capacity that we have here. And that is a significant opportunity for the company to continue driving that more dollars back to our shareholders. Trey Grooms: Yes. I recall back in the day, a lot of attention around utilization rates, capacity utilization and the powerful influence it can have on your margins. So that's good to hear. And then, Adam, secondly, kind of bigger picture maybe as you take the reins here, any strategic or operating changes maybe that you see here or that we should be kind of expecting on the horizon as you're entering your new role? Adam Zambanini: Yes. Great question. When you think about it, we've been working together for a long time, Bryan and I. And so we've been pretty in lockstep on the strategy. So there's no hard changes. But when I think about the leadership team, we're going to be focused on the roles that are going to kind of reshape some of the cultural things. The performance standards, I think I bring an innovation angle. Some of my philosophy is some of the hardest experiences are the best experiences. So in my mind, we need to change the game in terms of our products on decking. So a color or a streak to a deck board, that to me is table stakes these days. We need to somehow make an impactful or a dent in the market, right? And so that's what I'm going to be after is what is going to build that, I call it the durable defensible moat that we can compete in and nobody else can. And so you will see me really focus on some of those things on the high-performance innovation, and we've talked about performance engineered for your life outdoors. Now you're starting to see some of these applications, right? I believe we're the leader in heat mitigation technology. We're now focused on submersible marine applications. And then now fire is a big thing that we're really chasing going after. So I think you're going to see different forms of innovation from Trex moving forward, and that will be some of the things that will be evidenced, I think, as you look after my first year here at the [indiscernible] Trex. Operator: The next question comes from Adam Baumgarten with Vertical Research. Adam Baumgarten: Just one quick one for me. Just on the gross margin. Prit, can you just give us an actual number just because there's a lot of different consensus numbers out there. I just want to make sure we're thinking about this properly. Prithvi Gandhi: Yes, for the full year? Adam Baumgarten: Yes. Prithvi Gandhi: Yes. Again, around mid-37% gross margin against the -- our midpoint of our guide on revenue in that ballpark. Operator: The next question comes from Matthew Bouley with Barclays. Matthew Bouley: Best of luck to both Bryan and Adam going forward here. Just a question on the revenue cadence. Apologies if I misheard it. I think you guided to roughly flattish revenue in Q1 on a year-over-year basis. And maybe that suggests the second to fourth quarter would be up 4% to 5% year-over-year. So just anything to that, just timing of channel inventories, et cetera, just what would be driving that? Bryan Fairbanks: Yes. Shaping, first, from a first quarter perspective, we've talked a lot about inventories in the past. We do not want to have excess inventories in the channel regardless of how the market turns. We will have the ability to supply our customers. We've also gone through some rough weather in the past 30 days or so. So again, part of the reason not to put anything additional into the channel during the early buy period. When we look at it from a shaping perspective, roughly in line with last year from a first half versus second half, let's call it slightly lower in the first half than the second half, but otherwise, similar. Matthew Bouley: Okay. Perfect, Bryan. And then secondly, back on the gross margin. So I think if I heard you correctly around Q1, you're talking sort of a low maybe 38% gross margin. And correct me if I'm wrong, but sort of what you just said around the full year seems to [indiscernible]. Go ahead. Adam Zambanini: No, last year, I think we were about 40.5% gross margin. So about 100 basis points below that. Okay. Got it. I thought you're talking about relative to consensus. Okay. That makes a lot more sense. Well, I guess the question ends up similar. What I was trying to get at was, obviously, given the depreciation comments you gave, certainly, the headwind gets fairly larger as you go through the year, and it's a lot bigger in Q4. Is there just any other sort of positive offset to that gross margin, Q2, Q3, Q4, maybe thinking kind of your level loading production, et cetera, that might offset some of that kind of mounting D&A headwind? Bryan Fairbanks: Yes. There's always going to be opportunities. We've got a strong group that's always focused on continuous improvement. We have a significant number of projects that will enter into the system and will start generating benefits from that this year. There's always more opportunity as we go forward. That team has overdelivered the past couple of years. So we'll be looking for them to deliver on that, trying to keep the -- not assume that all of that's going to come through, but I can tell you the management team is absolutely focused on driving improvement to those numbers. Adam Zambanini: Yes. I mean we look -- we always look for ways to optimize the use of the lines and so forth. So that's always things that we look at to drive improvement. Operator: The next question comes from Steven Ramsey with Thompson Research Group. Steven Ramsey: I wanted to start with more distributors adopting the full portfolio of railing solutions. Were there certain railing SKUs that were bigger drivers in '25, such as price points or any other ways to parse that out? And do you think the same drivers help in '26? Bryan Fairbanks: I think it's really across the board. Trex competes at the lowest end against vinyl PVC rail. We've offered an opening price point aluminum rail. Then we step up into wood plastic composites and then we go back to, once again, higher-end aluminum that has what we call rod rail, cable rail, glass rail once again, nobody has this broad portfolio. And so we've seen wins across the board in every single segment because the issue with railing is there's a tremendous amount of working capital tied up to the amount of SKUs there. And if you're carrying 3 or 4 brands of railing, you generally -- your margins is hard to turn a profit on that. And so by consolidation into one brand, linear counter salespeople to only focus on Trex makes you highly profitable. So from there, the consolidation just makes a lot of sense, plus our service levels are bar none the best when it comes to this part of the portfolio. So that's another reason why you want to partner with Trex. You got the brand, the best product portfolio, the best service, why not Trex. Steven Ramsey: Okay. That's great insight. And then secondly, on incentives from a bigger picture, with Arkansas set to provide much better margins as volume ramps up, does that give you capacity to further expand incentives in the next couple of years to continue driving volume? Bryan Fairbanks: I wouldn't say that the capacity is there to drive incentives. The capacity is going to be there to support volumes along the way. I think we're in the right place from an incentive perspective. We haven't seen escalation from that perspective in the marketplace. So there was some catch-up that we needed to do. We talked about that in the third quarter. And everything that we've heard from the channel is we're in the right place. And a lot of these programs are driven by growth to be able to earn out those incentives. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Bryan Fairbanks for any closing remarks. Bryan Fairbanks: Adam, Prit and I look forward to seeing you at conferences and other meetings in the coming weeks. Thank you to everybody on the call that have supported me, both as CEO and the Trex Company as a whole. Have a great evening. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Light & Wonder Fourth Quarter and Full Year 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 first speaker today, Rohan Gallagher. You may begin. Rohan Gallagher: Thank you, operator, and welcome, everyone, to our fourth quarter and full year 2025 earnings conference call. Joining me today in Las Vegas are Matt Wilson, our President and CEO; and Oliver Chow, our CFO. During today's call, we will discuss our fourth quarter and full year results and operating performance, where we will refer to our earnings presentation. This will then be followed by a question-and-answer session. Today's call will contain forward-looking statements that may involve certain risks and uncertainties that could cause actual results to differ materially from those discussed during the call. For information regarding these risks and uncertainties, please refer to our earnings materials relating to this call posted in the Investors section of our website and our filings with the SEC and the ASX. We will also discuss certain non-GAAP financial measures. A description of each non-GAAP measure and a reconciliation of each non-GAAP measure to the most directly comparable GAAP measure can be found in our earnings release and earnings presentation located in the Investors section of our website. With that, I will now turn the call over to Matt to discuss the fourth quarter and full year results and operational highlights on Slide 3. Thank you, Matt. Matthew Wilson: Thanks, Rohan. Hello, everyone. Thank you all for joining us. 2025 was a pivotal year for Light & Wonder. In May, we completed the acquisition of Grover Charitable Gaming, a highly synergistic and complementary business with meaningful greenfield growth opportunities. At our second Investor Day since rebranding as Light & Wonder, we announced our long-term targets of $2 billion in consolidated AEBITDA and EPSa exceeding $10.55 by 2028. In November, we completed our transition to a sole ASX listing, and early market feedback has been encouraging. Importantly, we also resolved the peer dispute earlier this year, removing any unnecessary distraction and allowing the organization to remain focused on execution. Our results reflect the team's execution and resilience. Despite challenges along the way, we delivered within our previously guided 2025 consolidated AEBITDA and adjusted NPATA target ranges. Over the year, we strengthened our operating foundation and further positioned the business financially for long-term sustainable growth. The quality of earnings continues to improve, supported by consistent net adds in the Gaming operations installed base and $2.2 billion of recurring revenue with margin and cash flow expansion evident throughout the year. Consolidated AEBITDA and adjusted NPATA both grew in the high teens year-over-year, and EPSa increased 27% to $6.69 to close out 2025. We remain committed to advancing our growth initiatives while returning capital to shareholders. During the year, we repurchased $877 million worth of shares and have now completed 78% of our second share repurchase program. In total, we have returned $1.9 billion to shareholders since launching our initial program in 2022. Together, these highlights demonstrate strong performance and reinforce our commitment to continuous improvement across financial and operational metrics. Turning to a high-level overview of our performance on Slide 4. Consolidated revenue growth was driven by Gaming, including the contribution from Grover and record results in iGaming, both in the fourth quarter and for the year. That strength was partially offset by modest declines at SciPlay. Just as important, our continued focus on profitability translated into meaningful AEBITDA growth across all 3 businesses with 29% consolidated AEBITDA growth in the fourth quarter and 16% for the year compared to 2024. Our commitment to the comprehensive margin enhancement initiatives remained intact as we grew consolidated AEBITDA margins 500 basis points in the fourth quarter and full year 2025. The margin uplift across the organization is expected to remain largely sustainable as we continue to identify and execute key efficiency projects and further optimize our corporate cost structure. With a streamlined set of complementary businesses, we are well positioned to generate sustained top and bottom line growth, supported by an efficient R&D engine, which enables us to innovate, scale and leverage capabilities across the enterprise. As many of you may have observed from recent headlines, AI is at the center of debate across many industries, including Gaming. At Light & Wonder, we see AI as a growth enabler, another lever in creating value and helping us achieve our full year '28 financial targets. Through our strategic transformation and track record with margin enhancement initiatives, we have demonstrated the ability to adapt and capitalize on changes, and we believe we can leverage AI to further enhance our existing capabilities. You can see here on Slide 5 that we are well positioned, courtesy of our global scale, which provides us with unique proprietary data sets. By leaning into AI, we can further improve both the quality and quantum of games in a more productive manner and distribute across multiple channels, where we already hold leadership positions. Furthermore, our sizable R&D, customer relationships and incumbency in highly regulated markets is underpinned by a collaborative culture fostered by an aligned Board and leadership team, which will only further strengthen our structural moat. AI presents a significant opportunity for Light & Wonder. In fact, we have embraced this technology and commenced on our AI transformation program to drive both growth and efficiency. We are excited to be taking a leadership role in this arena, and we'll provide further details as our AI journey evolves. With that, let's turn to our business unit highlights. On Slide 7, Gaming revenue was up 17% to $602 million in the quarter, primarily driven by higher gaming operations revenue, which increased 35% year-over-year to $237 million. Drivers included higher North American installs, specifically in the premium segment, and a $41 million contribution from Grover. Growth was fueled by strong launches of our Cosmic Upright and Lightwave cabinets and other key games in hardware as showcased at AGE and G2E last year. Gaming machine sales also delivered a record quarter of $234 million, a 20% increase year-over-year on a record of 7,000 units shipped in North America. International shipments remained solid, supported by a sizable order of our SSBTs in the U.K. as previewed. Our systems and tables businesses both saw timing-related sales declines in the quarter, with systems impacted by higher sales in the prior year and tables on lower utility sales in Asia, partially offset by North American sales. We firmly expect both businesses to return to growth underpinned by targeted near-term investments and commercial strategy. Gaming AEBITDA rose 26% year-over-year to $323 million, driven by record game sales and strong gaming operations revenue growth. AEBITDA margins increased to 54% on a higher mix of gaming operations units and cost efficiencies, reflecting the team's continued execution on quality of earnings enhancements through recurring revenue and streamlined cost structures. Now for an in-depth look at our gaming KPIs on Slide 8. Our North American installed base increased 42% year-over-year to over 48,300 units. Excluding Grover's installed base of over 11,600 units, gaming operations grew over 700 units sequentially and over 2,600 units year-over-year, marking our 22nd consecutive quarter of North American premium installed base increases, which now accounts for over 53% of the total North American installed base. This strong growth was driven by the successful launch of Lightwave and the continued momentum of our Cosmic series cabinets. Average daily revenue per unit in North America increased to $47, up 4% year-over-year, driven by a richer product mix, offset by the inclusion of Grover units. Excluding Grover, our North American installed base revenue per day grew 9% year-over-year, driven primarily by stronger performance in premium and wide-area progressives. In fact, we continue to excel across multiple game categories on the Eilers charts with 11 of the top 25 index new premium leased and WAP games featuring our Huff N' Puff and Ultimate Fire Link titles. This continued momentum is a testament to the quality of our diversified game franchises with demonstrated performance not just in premium, but also in Class II, among others. Global gaming machine sales recorded another strong quarter, up 29% in unit shipments year-over-year to over 12,300 units. Replacement shipments remained strong, and our array of products enabled us to expand our presence in rolling replacement and RFP markets such as the Canadian VLTs as well as entries into the Nebraska skill-based market and Eastern European dynamic multi-game market. We continue to see progress in the latest Eilers report where Huff N' Triple Puff debuted #2 in the New Core Video Real Game Index, while Piggy Bankin' Break In remained at #3 with 3 other Light & Wonder titles in the top 10. We have an expanded and robust global hardware and content road map planned for 2026, as shown on Slide 9, driven by continued investments in our studios. 2025 was an incredible year for gaming operations as we launched the Lightwave cabinet and introduced Cosmic Sky and our stepper Landmark 7000 with Jackpot Wheel, both of which will be available to our customers shortly. Additionally, we are looking to further solidify our game sales market share with Cosmic Dual screen and Lightwave Solar with new game titles such as Jin Chan and Fiesta Caliente. We've also planned for expanded regionalized road maps for our Australia and Asia customers on Slide 10 to support and extend the momentum we've built over the past few years in these markets. Moving along to Slide 11 for an update on our prized acquisition, Grover. Since closing the deal in May, Grover has contributed $102 million of revenue, reinforcing the attractive recurring nature of the charitable gaming model. Operationally, we're seeing strong momentum in the installed base. We've added over 1,000 units since the announcement and exited 2025 with over 11,600 units installed. In the fourth quarter alone, we added 345 units sequentially across our existing operating markets, demonstrating continued demand and solid execution. We also expanded our footprint into Indiana with a successful launch in late December and are in the early stages of a disciplined deployment strategy. Initial installed locations are demonstrating strong performance consistent with our expectations, and we are continuing to see strong demand from qualified charitable partners. We are well positioned operationally to support continued expansion and remain confident in achieving our fair share in Indiana, consistent with our performance in the jurisdictions we currently operate in over the long term. From an integration standpoint, we're actively optimizing game floors by bringing Light & Wonder game mechanics, cabinets and brands into the Grover footprint. At the same time, we're investing to ensure best-in-class service and to build share as we enter new markets, including existing ones like Maryland, where we currently do not operate in, and potential future openings such as New York. Overall, Grover is performing well, scaling quickly and building a meaningful runway for profitable growth that is akin to our core gaming operations business. Turning to Slide 12. SciPlay revenue was $195 million for the quarter, with Quick Hit Slots and 88 Fortunes once again reaching record quarterly revenues, their 16th and 6th, respectively. The strong performance of these and other portfolio games was offset by a decrease in average monthly payers at Jackpot Party. I'd like to share that underlying metrics is becoming more consistent starting in December of 2025 and into the new year with engagement and retention rates returning to normal. This stability gives us confidence to lean back into UA investments, which is vital to sustainable growth. While the revamp of this magnitude takes time, we are confident in a return to prior performance levels. Player monetization remains a key focus and an integral part of the flywheel with average revenue per daily active user up 4% year-over-year to $1.10 and average monthly revenue per paying user increased 14% to over $133 in the quarter. Importantly, we continue to see significant progress in our direct-to-consumer offering, which now has grown to over 25% of the total fourth quarter SciPlay revenue or $48 million, up from just 13% at the end of 2024. We will cultivate the DTC runway as it has been a primary driver of SciPlay's AEBITDA growth, which is up 8% to $80 million year-over-year. SciPlay is an integral part of our omnichannel strategy, and we remain committed to the initiatives that we expect to drive above-market performance going forward. Moving to iGaming on Slide 13. We delivered a third consecutive quarter of record revenue of $94 million, up 21% year-over-year on continued strong momentum in North America, underpinned by first-party content proliferation in the U.S. and the expansion of our partner network. This quarter marked the fourth sequential period of global first-party content GGR growth on our content aggregation platform, OGS, underpinned by solid game performance across the Huff N' Puff franchise in the U.S. and the Pirots franchise in Europe. In fact, 8 out of the top 10 games across our content aggregation network in the quarter were first-party titles with Huff N' Lots of Puff ranking first, Pirots 4 ranking second, and 3 other Huff N' Puff family titles rounding out the top 10. iGaming AEBITDA of $36 million was up 44% year-over-year at record levels, reflecting continued first-party and third-party content growth with margins up 600 basis points versus the prior period. This margin expansion was driven primarily by profit flow-through from increased revenue and cost realignment associated with the discontinuation of our live casino business. Wagers processed through OGS grew 22% year-over-year to $29.2 billion with record volumes across all regions and content types reflecting the platform's global reach and growth potential. In addition to our aforementioned successful game franchises, we have more land-based favorites in our road map, such as Big Hot Flaming Pots Tasty Treasures and Piggy Bankin' Superlock, as you see on Slide 14. Our network scale has enabled games from various studios to reach wider audiences across North America. In fact, Elk Studio is now live in Michigan and New Jersey with Pennsylvania expected to follow. We're also excited about the recent legalization of iGaming in Maine, which is a welcome sight to the industry. With the recently passed bill in the U.K. increasing online gaming taxes to 40%, we expect an adverse impact to the business beginning in the second quarter of this year, given our meaningful presence there. We will continue to explore mitigation initiatives with key operating partners as the industry adapts to the change. International expansion continues to be an opportunity for growth. Just last quarter, we received approval to operate in the Philippines as the first licensed iGaming supplier, and we're excited to share that we are now live. We have a strong presence as a leading land-based slot supplier, and we look forward to launching our popular games in the market soon. Similar to the Philippines, we have now received approval to operate in the UAE with a launch expected later this year. This is another sizable market opportunity we're excited to pursue. Our investments in robust regionalized road maps will continue to support our team's execution in nascent and international markets, further extending our current iGaming market momentum and global presence. With that, I will now hand over to Oliver to go through our financials. Oliver? Oliver Chow: Thanks, Matt. 2025 marked a year of strong earnings growth across all 3 businesses, driven by continued disciplined execution of our strategic and operational initiatives across all 4 quarters. I'm very proud of our team's accomplishments. Let me walk you through our results, starting with Slide 16. In the fourth quarter of 2025, we delivered consolidated revenue of $891 million, up 12% year-over-year, driven primarily by 17% growth in gaming revenue, including $41 million from Grover, and record iGaming revenue, up 21% year-over-year. Recurring revenue continues to perform well, supporting earnings durability and driving strong incremental margin flow-through. For the full year, consolidated revenue was $3.3 billion, up 4% from 2024. Gaming operations increased by $170 million, driven by $102 million Grover contribution and a $68 million contribution from our diversified game portfolio. iGaming also reported revenue growth of 13% or $38 million compared with the prior year period. Given the recent successful resolution of a peer dispute, the fourth quarter reflects a $128 million settlement, along with other charges of $49 million, which includes $25 million in contingent acquisition consideration fair value adjustment related to Grover, $18 million in costs related to the ASX transition and other costs, totaling $177 million under restructuring and other. As a result, we reported a net loss of $15 million in the quarter. Absent these charges, profitability was strong, driven by consolidated revenue growth and record AEBITDA margins across all businesses. Net income for the year decreased 18% year-over-year, impacted by $219 million of restructuring and other charges described earlier. Absent the previously mentioned settlement, business segment growth was driven by strong execution of operational efficiencies throughout the year. Fourth quarter consolidated AEBITDA grew 29% year-over-year to $405 million, reflecting both top line growth and margin expansion across the portfolio, including contributions from Grover. Our consolidated AEBITDA for the year was $1.44 billion, well within our guided range, reflecting solid operational performance. Adjusted NPATA for the quarter grew 27% to $161 million and adjusted NPATA for the year grew 18% year-over-year to $567 million. Growth was largely driven by an AEBITDA increase with record margin across all businesses. On a per share basis for the year and given our restructuring and other charges described earlier, net income per share on a diluted basis decreased by 11% to $3.26 compared to $3.68 in the prior year period. Adjusted NPATA per share, or EPSa, increased 27% to $6.69 compared to $5.27 in the prior year period. The full year EPSa does not reflect the full impact of significantly higher share repurchases we made in the fourth quarter as the metric is based on an average share calculation. Our outstanding shares as of February 18, 2026, were approximately 77.1 million shares, in line with our year-end position. If you were to take our period ending outstanding share count, our EPSa would have been meaningfully higher and sets us up nicely as we move into 2026. On Slide 17, you'll see our fourth quarter consolidated AEBITDA and adjusted NPATA bridges, which reflect broad-based growth. Gaming AEBITDA increased $66 million year-over-year. Margin expansion for the fourth quarter was primarily driven by strong North American gaming operations installs, higher revenue per day led by the performance of our premium and wide-area progressive units, contributions from Grover, and record North American gaming machine sales. Going forward, we expect continued growth in our premium North American installed base, which we forecast to be over 500 units a quarter this year. Importantly, we anticipate another year of net installed growth in our North American installed base, coupled with the incremental benefit from Grover. I would also like to note that we had substantial domestic and international new openings and expansions as well as VLT units in the first quarter of 2025, which will impact comparability in the coming period. As Matt mentioned earlier, our planned hardware launch in the coming months is expected to drive performance in the second half of the year. Looking ahead, we expect our gaming AEBITDA margin to be around 50% in the first quarter on product mix and tariff impact. SciPlay AEBITDA increased $6 million, primarily supported by increased direct-to-consumer revenue mix of 25% with strategic and targeted UA investments. Going forward in 2026, we expect UA spend to ramp up further increases in DTC mix and stabilization for Jackpot Party as we continue to invest back into the business. iGaming reached new records for revenue and AEBITDA, driven by growth in first-party content and the discontinuation of Live Casino. Based on our road map, we believe there is ample runway to scale this business despite some headwinds related to the U.K. tax changes starting in the second quarter of 2026. Corporate and other improved by $7 million through margin expansion initiatives and cost efficiencies. Looking at adjusted NPATA, we delivered a $90 million year-over-year increase in consolidated AEBITDA driven by strong revenue growth and record margins across every business segment. This improvement was partially offset by several cost and expense dynamics. Depreciation and amortization increased by $8 million year-over-year, reflecting the addition of Grover units and higher success-based capital expenditures within gaming operations. Interest expense increased by $13 million, primarily due to the higher debt levels associated with the Grover acquisition and ongoing share repurchases. These repurchases mitigated uncertainty and volatility during the fourth quarter as we transitioned to our sole ASX listing. Additionally, income tax expense increased by $32 million, primarily resulting from a higher effective tax rate in the fourth quarter of 2025. From a tax perspective, our effective tax rate was approximately 24% in 2025, and is expected to range between 22% and 24% for the coming year. Turning to cash generation on Slide 18. We delivered another strong quarter and year of cash flow, in line with our commitment to our cash enhancement initiatives. Operating cash flow was $319 million in the quarter, up 58% year-over-year. Over the same period, free cash flow increased 138% to $176 million, driven by earnings growth, lower cash tax payments and lower cash interest following our third quarter financing actions. For the full year, operating cash flow was $794 million, an increase of 26% year-over-year, and free cash flow was $452 million, up 42%, reflecting the underlying strength and resilience of our cash-generative model and lower cash taxes. Importantly, cash conversion improved year-over-year progressively. Conversion rate in the quarter nearly doubled on both AEBITDA and NPATA basis to 43% and 109%, respectively. For the year, free cash flow conversion was 31% of consolidated AEBITDA, up from 26% in 2024 and 80% of adjusted NPATA, up from 66% last year. It is important to note that these figures include onetime costs of $18 million in professional services related to the ASX transition and the Grover acquisition and $75 million in litigation settlements. We continue to focus on strengthening the working capital cycles, optimizing inventory levels and maximizing capital expenditures to enhance our quality of earnings and cash conversion over time. Moving on to our capital structure on Slide 19. Our net debt leverage ratio at year-end of 3.4x remained within the targeted range on a combined basis as previously discussed. This was despite the accelerated pace of our share repurchases during Q4 as we transitioned to a sole ASX listing back in November of 2025. Given the strength of our operating model and cash generation, we expect to delever organically through 2026. The principal value of our debt at period end was $5.2 billion. Last month, we successfully repriced our $2.1 billion term loan, reducing the applicable margin by 25 basis points to 2%, which reflects our strong credit profile. This repricing is expected to generate approximately $5 million of annual interest savings. Our debt maturity profile remains long-dated and well laddered with an average tenure of roughly 4.4 years. We also extended bond maturities from 2028 to 2033 at lower rates last year. Our effective net interest rate is approximately 6.65% with a 53% fixed and 47% floating debt mix. We also maintained meaningful flexibility, ending the period with $927 million of available liquidity to support growth initiatives. As previously noted, we will continue to evaluate opportunities to optimize our capital structure as favorable market conditions arise. I will now go through our capital allocation framework on Slide 20, which remains consistent and execution focused across our key priorities. First, we will continue to reinvest in the business in a targeted and efficient manner in line with sales growth consistent with prior years. We continue to target combined R&D and CapEx at around 17% of consolidated revenue, which may vary quarter-to-quarter given timing of investments. That said, you will see ongoing investments weighted toward the first half of the year and the first quarter, in particular, related to Grover ramp and Indiana entry as well as other value initiatives. We aim to retain a flexible balance sheet, which gives us the ability to deploy capital opportunistically under the right circumstances. Over the long run and absent major capital allocation opportunities, we expect to naturally gravitate towards the lower end of the 2.5x to 3.5x leverage range over the long run on our strong operating model and highly cash-generative business. Importantly, we remain focused on capital returns. In the fourth quarter, we stepped up share and CDI repurchases to $500 million and returned $877 million at an average price of $86.80, utilizing 78% of the $1.5 billion authorization in 2025. Looking ahead, we will remain opportunistic regarding the use of buyback with consideration to our capital allocation priorities. Since the initiation of our share repurchase program back in 2022, we have returned $1.9 billion to shareholders. That equates to about 25% of the total outstanding shares prior to the commencement of our broader program. Overall, our framework continues to balance disciplined reinvestment, financial flexibility and shareholder returns anchored by a strong cash-generative model. With that, I'll pass it back to Matt to provide you an update on our 2026 outlook. Matthew Wilson: Thank you, Oliver. In conclusion, I'd like to provide a summary of the shape and growth trajectory of 2026. You can see here on Slide 22 that we anticipate another year of strong adjusted NPATA and EPSa growth with the shape of earnings to be broadly similar to 2025, reflective of our growing recurring revenue base and industry cyclicality. Importantly, strategic investments, tariff costs in gaming and legacy costs pertaining to legal matters are anticipated in the first half of the year and the first quarter in particular. Operationally, we expect all business units to continue targeting above-market growth with a particular focus on the recurring revenue parts of our business. As mentioned earlier, we expect continued installs across North American premium gaming operations and Grover with continued game sales momentum in North America off a record fourth quarter as well as improved performance in Australia, pending the cabinet launch in the second quarter. On the digital side, SciPlay is expected to continue its DTC expansion and iGaming to further expand its 1PP content. Whilst we continue to be opportunistic regarding share repurchases, from a capital management perspective, we plan to naturally delever our balance sheet over the course of the year. Lastly, we've also guided to some key financial metrics for modeling purposes and provided commentary pertaining to our business verticals in addition to an update on our progress to the various 2028 targets in the appendix. And now we will turn it over to the operator for your questions. Operator? Operator: [Operator Instructions] Our first question will be coming from the line of Matt Ryan of Barrenjoey. Matthew Ryan: Appreciate the slide that you've got on Page 5 around artificial intelligence. Obviously, it's been a huge talking point around the sector of late. I was just hoping if you could focus a little bit on the right-hand side and the structural moat that your business has. And maybe you could just talk about how that, I guess, keeps you in good stead around any competitive risk that people might be concerned about at the moment? Matthew Wilson: Yes. Thanks for your question, Matt. I'll address that directly, and then I've got Victor Blanco, the CTO of Light & Wonder, here to kind of cover off kind of the practical application of what we're doing around AI in the business, clearly a hot topic in the market at the moment. So let me give you L&W's perspective on AI. We see AI as a significant growth enabler for our business. There's probably 2 things to understand about AI at L&W, one through that kind of defensive moat lens and the other through that offensive lens. So I'll step through the moats. We do have strong and durable structural moats around this industry and around our business. We have strong established market positions. We've been building these positions for decades. We're either #1 or #2 in all the markets that we operate in. It's a highly regulated market, the gaming market. We have over 500 licenses in jurisdictions all over the world. These are developed through personal one-to-one relationships with regulators in each of those markets. So it takes time to build that scale into your business. Importantly, we've got scale and incumbency. We spent, just in '25 alone, over $562 million on R&D and CapEx. That's a huge base for us to optimize over time. And we think these AI tools will allow us to do that. If you think about our team's ability to drive these margin enhancement initiatives, a lot of that was outside of the R&D organization, but these AI tools kind of really directly help us optimize that spend. So it's a massive base that we can continue to optimize over time. We've got valuable IP and brands. So I think Huff N' Puff, Ultimate Fire Link, Dancing Drums, Journey to the Planet Moolah, just to name a few of the games that we have in our portfolio. These are the Coca-Colas of the gaming industry. Players love them. They trust them. They want to play the next variation. That's why every next version of Huff N' Puff that we launch ends up on the Eilers charts, players trust these, and they're unique to us, and they can't be leveraged by competitors or start-ups entering the space. I think importantly, we have unique data sets. So we have decades of certified math models on our archive that we use to develop games. We've got the ability to leverage OGS player session data to help inform the way we create games. We've been leveraging AB testing in SciPlay. I think that's one of the factors that's really driven the incremental successes you've seen in our portfolio. And importantly, all of these data sets are within the 4 walls of Light & Wonder. They can't be crawled by an LLM. That's unique to us specifically. I think one of the big things that's overlooked by the market as it relates to gaming is we're not a SaaS company at all. We're really this beautiful intersection between hardware and content. We launch 5 to 7 proprietary cabinets every year. We launched 7 in the last 12 months. And those things are unique and they take time to develop. So you combine that with the signage and merchandising we build, multiply that by the 500 jurisdictions we're in, that's a huge matrix of configurations and complexity that you have to deal with. And when it comes to hardware, that's really supply chains, it's procurement, it's logistics, it's storage, it's deployment, it's servicing those games in the market. This is massive established infrastructure that takes time to build. It cannot be replicated by 2 quants and an LLM in a garage somewhere. These are things that are built over time. So yes, through my perspective, we have massive structural moats around the Gaming business, and that will persist over time, and AI will be a massive opportunity for us. From a growth and productivity standpoint, this is really when we go on the offense around AI, there's kind of really 3 different areas that we're looking to leverage this. It's through technology, so accelerating new platform development, AI architecture, code generation, test automation. There's lots of opportunity with Claude and some of the tools, that Victor will speak to, that will allow us to drive some efficiencies in that space. From a content perspective, it's really nascent targeting, improving our quality and hit rate of games, by really taking a lot of the noncreative elements of the process off the table through the use of AI tools. So there's lots of opportunity there. And then finally, like every business in every industry is leveraging AI to drive business operations and the efficiencies around that. I think importantly to note for investors, we launched an AI transformation program in 2025. We intended to come to market and explain that to our investor base sometime in 2026, but we thought just given a lot of the anxiety in the market today, we wanted to give you a bit of a precursor to that. The Board is aligned around that transformation program, as is the management team, and we see significant opportunities. But I'll hand to Victor to speak about AI in practical terms. Victor Blanco: Thanks, Matt. I'm happy to share how we're advancing AI here at Light & Wonder from the technology organization. One of our key initiatives that I'm personally driving is our Carbon game development kit. A new development is, September of last year, we made the strategic decision to restart Carbon as a completely AI-led platform development initiative. This means leveraging coding assistance like Claude as our primary development methodology. We did a comprehensive reset of all of our Carbon architecture decisions, we evaluated all the latest technologies, and we looked at our current future business goals. Now building Carbon on this AI-led approach, we've effectively surpassed our prior Carbon development progress. We delivered on a new development language. We have a brand-new game engine and an authoring experience, all done in just over 4 months. Carbon is now delivering 100% game portability across land, social and web, where before we were just sitting at around 70%. So a huge difference. Our first Carbon land-based game is still on track for launch this year, and we've aggressively pulled in our first iGaming Carbon game into '26 as well, just given the confidence of what we're seeing. And now finally, because Carbon was developed entirely through AI-led methodologies, these same tools, the workflows and all the productivity gains that we're seeing in the platform are going to carry forward directly into our studios as they adopt Carbon as their basis for building games. Now with all these benefits that we walked through that we're already seeing in Carbon and many other platforms in our business, there are elements of the game design that we just can't simply replace. The first is our player experience. We know that most of our successful games are built on this intuitive understanding of that player experience. It's built up over decades of observing real player behavior across our market and demographics. While AI is able to analyze this engagement data at scale, we've struggled to figure out how to originate that creative instinct that makes that game experience feel so compelling for our player. This is still a very human-led process. Another AI challenge is creating those creative breakthroughs. AI is great at recombining patterns from existing data, but it's our game designers that are still creating the genuinely novel mechanics. All of our new bonus structures, our unique feature configurations and our progressive systems, these are the hit games that are driving our market share through these breakthrough concepts, not through that kind of pattern recombination. We're still using AI to accelerate the iteration and execution, but it's still our studio heads that are driving that spark that's making successful content. So look, I'm excited the way our games and teams are adopting this technology, and I do believe that AI is going to continue to amplify our process for years to come. Matthew Wilson: Yes. I mean Victor is right at the tip of the spear of this initiative. So we're excited to cultivate this more and then share more with investors throughout the course of 2026, but I thought it was timely to give you that update. So thanks for the question, Matt. Operator: Our next question will be coming from the line of Barry Jonas of Truist. Barry Jonas: There's been a lot of legislative activity we've seen recently in states like Pennsylvania and Missouri, which could involve VLT expansion. Just hopeful you can maybe frame the potential opportunity and likelihood of seeing that VLT expansion. Matthew Wilson: Yes. Look, we're very encouraged to see the progress here. Unregulated gray markets are a significant problem for our industry. There's tens of thousands of these skill-based games right across the states in the U.S. So it's nice to see that level of activity at the legislature around potential VLT expansion. We're very well positioned. As you know, we're a market leader in Illinois. And so to the extent that those regulations are replicated in either Pennsylvania or Missouri, our whole product suite is set up and ready for deployment. We try not to get ahead of ourselves in these markets. There's a lot of twists and turns when it comes to legislative progress. But it is exciting to see that that's spoken about. I think the AGA has spoken at length about the dearth of gray market skill-based games across the U.S. They're not taxed effectively. They're not regulated. And I think if you look at the Illinois example, regulating and taxing it can lead to great outcomes at a state revenue level. So yes, we're excited for that. We'll be ready to activate it. There's various different suggestions about market sizes. Pennsylvania, I think, is predicted at a 40,000 unit potential market. Missouri, not quite that high, but still both very significant. But we're seeing a lot of activity across the legislative front on multiple dimensions. We heard over the holiday break that New York is legislating charitable gaming. So that's an interesting incremental market for us. There's activity in Maine as it relates to charitable gaming. So positive to see some potential expansion opportunities. I'll just remind you that none of those new market opportunities sit inside our long-term guidance out to 2028. These are all discrete unique opportunities that would be kind of incremental to our plan. So watching it closely, preparing as best we can, but ready to ride the twists and turns as it relates to legislative progress. Operator: And our next question will be coming from David Fabris of Macquarie. David Fabris: Can we just focus on the Grover acquisition and just a couple of questions here. I mean, if we think about the growth prospects in your legacy jurisdiction, it looks like you're tracking kind of 300 quarterly net installs based on the 3Q and 4Q trends. Is that something we can extrapolate into '26, excluding Indiana? And then if we think about Indiana, you've started installing machines in the 1Q. So that's post balance date, obviously. Can you give us any insights into how you've been tracking for that near 2 months? And if we're thinking about fee per day as well, it looks like Grover reports about $39 per day. Is Indiana accretive, dilutive or broadly in line with that $39 trend? Matthew Wilson: Yes. Thanks for the question. We're thrilled about the Grover acquisition going very, very well. I mean, pacing well ahead of our expectations so far. I think one of the exciting things, we saw unit growth across all of our markets in the fourth quarter. So it just shows you the organic growth potential within existing markets. We entered Indiana. The market was regulated on December 30. So not our favorite time to be activating a new market. The team has worked hard over the new year, but really leaned into that. So we're, I'd say, 6 weeks into that market being live. We're going kind of door-to-door, looking at the opportunities. And Grover has always won off the back of great game performance and great service, and that's how we're going to win in Indiana, too. We're not going to chase discounting or deals in that marketplace. We want to win the right way, and that's how the team is kind of focusing themselves. We think over time, we'll get similar share to other existing markets. New markets have opened over the years. There's the initial rollout, then you get the optimization from a game performance and service perspective. So we think over the long term, we'll have similar share in that market to the existing markets. I think your fee per day is around where we are from a Grover contribution standpoint, very similar to a Class 2 type fee per day, which I know you're very familiar with. Yes, we expect Indiana, just given kind of the economic dimensions in that market, to be reasonably consistent with what we see across the board. So I think that's probably the best way to frame up the RPD opportunity in Indiana. Oliver Chow: Yes. And David, just one other add to that. I think if you remember some of the conversations we've had in previous quarters, at a base kind of run rate perspective, I think 150 to 200 units ongoing is a good starting point from a model perspective. And then yes, you'll start to see incremental adds for Indiana as that ramps up. So I think from a modeling point of view, that's how I would think about that. Operator: Our next question will be coming from Andre Fromyhr of UBS. Andre Fromyhr: Just wanted to focus on the ops business. I see in your outlook commentary, you've talked about net installs in the premium space of 500 plus per quarter. And I was wondering if you could put that in perspective of the year ahead versus the year we've just had. 2025 sort of started with Dragon Train removed from your pipeline. So how does the game pipeline compare as you start 2026 and add to that the demand that you've seen for the Lightwave cabinet? Matthew Wilson: Yes, it's a part of the business that we love. So happy to talk about it. That was the 22nd consecutive quarter of premium gaming operations installed base growth. So it's almost metronomic, the results that Siobhan and Brian Pierce and the whole team are delivering. It's our highest value part of the business. To see that level of growth is very satisfying. We added 700 gaming ops units in the fourth quarter. It was 2,600 year-on-year. So we've guided to a bit more of a modest 500 plus. We want to give you numbers that we can meet and achieve. So I would expect the 500 to be a baseline, and the team will be pushing to capitalize on all the opportunities in front of us. I think the other encouraging thing, it's not just about installed base growth, but we saw RPDs expand 9% year-on-year. So it's that combination of installed base growth, but doing it profitably. That's the best way to grow your business over time is to do it with profitable placements. This is all underpinned by incremental improvements in game performance. So Nathan's leadership over the studios, it's delivered 11 of the top 25 top-performing Eilers games in the new premium segment. That's a mouthful. But that's a real data point that suggests the games that we've been producing over the last kind of 12 to 18 months are getting better and better, and that's really a good forward indicator for future success. So we're thrilled about that. I'd say 3 new hardware catalysts in the portfolio in '26. So the Lightwave rollout. So that's been well received. We've got lots of games coming through on that platform that will optimize and continue to grow over time. We're about to launch Cosmic Sky, which is our kind of new vertical form factor with 3 very exciting games in the portfolio, led by a Huff N' Puff, which we're excited about. And then we've got a new version of our stepper, the L7000 with a Wheel. So as I mentioned in that AI precursor, that combination between great brands and great hardware is a powerful combination. So yes, we think the setup is nice for '26 as it relates to gaming operations. If you look at the Eilers future purchasing intentions, that elevated percentage of the floor that goes to gaming operations is still intact, and we don't see that trend subsiding. So yes, we feel confident in the direction of travel for gaming ops. Operator: And our next question will be coming from Jeff Stantial of Stifel. Jeffrey Stantial: Just one from us on the quarter. So another quarter here where margins were better than expected across all 3 of the businesses, similar to what we saw back at Q3. Oliver, you gave us a handful of sort of scattered data points just to help us think about the trajectory here into 2026 by segment. But maybe if we can just to tie it all together, can you help us think about how this sort of all shakes out at the consolidated AEBITDA margin level, and then even better, just given the seasonality with some of these puts and takes, just how to think about sort of quarterly cadence as we progress through the year. Oliver Chow: Yes. Thanks, Jeff. Great. Great to hear from you. So yes, obviously, we're very pleased with how we closed out the year for the quarter. But really, if you look at it from a full year point of view, it was just an outstanding result from the broader team. If you look at Q4, to your point, it was a 500 basis point increase year-over-year. And you've heard me say this a lot over the last couple of years, which is kind of this margin enhancement kind of mentality just continues to be a key focus for us. So as I kind of unpack this by line of business, I think gaming margins in the quarter was really driven by, Matt said this, the continued scaling of our recurring revenue business. So if you start to look at gaming operations installed base scaling 700 units quarter-over-quarter, you saw a 9% increase in our base RPDs, driving strong performance. On top of that, you now have the inclusion of Grover, which is recurring revenue. So certainly, as our recurring revenue scales over the period, we should expect to see kind of strong margin contributions from that point of view. To your point, there will be some quarters that there will be some mix effects associated with. So if you look at the fourth quarter as an example, you would have seen elevated global game sales in the previous year. So that mix effect will happen quarter-to-quarter. And obviously, we'll continue to kind of manage that kind of broadly speaking. If you think about -- and we flagged this at the Q3 earnings call, if you think about the combined kind of gaming ops, gaming and Grover, the combined margin will likely be in that 50% range. And that, again, based on mix, we'll have tariff impacts coming here that we talked about kind of mid- to high single-digit millions per quarter. That began in the fourth quarter, and that's going to be consistent here even with all the noise that we heard over the last week, 1.5 weeks. And so I think that's a good range for you to start to think about gaming margins as we move into next year. SciPlay, I think the margin expansion was really driven by our DTC growth and really the prudent ROI-driven UA spend that we drove. As you know, kind of Q4 CPIs are generally lower ROIs and CPIs are much higher during the holiday season. So I think as we look into '26, I would expect kind of to maintain these margin levels around kind of 2 core principles, right? One, the steady DTC progress. And then second, if we continue to see opportunity to scale UA, we'll do so. And that's going to really help us drive revenue growth across the portfolio. And then lastly, I think from an iGaming point of view, I think it was a combination of a couple of things. We had some structural and operational levers, but what you saw was a favorable shift towards our first-party content, which obviously is a higher-margin business for us. And that's off the backs of really great franchises like Huff N' Puff. I mean that was a monster game for us in the fourth quarter here in the U.S. and Pirots is just a great global game for us. So looking forward, as Matt mentioned, we'll look to drive kind of 1PP share over time. The one thing to note that we'll keep an eye on is the U.K. tax increases that start in the second quarter. We're going to work very closely with our operator partners to mitigate as much of that as possible, but we'll see how that unfolds here as we head into next quarter. But I think broadly speaking, if you look at it from a quarter-to-quarter basis, it will likely fluctuate a little bit, but this is the efficient kind of baseline of foundation that I would think about our business. And then our goal will be to then drive and enhance that profile as we move forward. Operator: Our next question will be coming from Justin Barratt of CLSA. Justin Barratt: My questions are probably more around SciPlay, just the top line result there. I just wanted to try and understand how much of that potentially reflects the issues that you had with Jackpot Party last year and I guess, somewhat of an inability to get some of those customers back. But then conversely, DTC penetration continues to ramp up really, really nicely. You've got the 2028 target of 30%, but you're already at 25% in the fourth quarter. How should we think about your ability to meet that longer-term target and potentially exceed it quite nicely? Matthew Wilson: Yes, great question. I would think about SciPlay as a portfolio of games. So we've got some very fast-growing games, Quick Hits, 88 Fortunes, Monopoly being the best example. They're kind of industry-leading when it comes to growth rates. But we had a tough year with Jackpot Party in 2025. There's no kind of skirting around that. And it's a game at scale. So when Jackpot Party wobbles, the entire SciPlay top line comes into question. We've had a few false horizons through 2025, where we thought we had fixed the issue, but I don't want to set unrealistic expectations. We are seeing stronger engagement levels through the first couple of months of 2026. And that's what we need to see to allow us to invest behind that game through UA. That's what is going to get us back to those peak levels. So Josh and the team have been working hard to kind of recalibrate the economy in that game. So players in those top tiers are seeing value in the purchasing activity. So we've seen some stabilization there, but I would think about SciPlay more broadly as a portfolio of games, some growing fast, others in turnaround mode, and that's certainly where Jackpot Party is. Yes, the team has done a fantastic job of driving that DTC mix, up from 19% to 25% in the fourth quarter, and carrying that momentum through Q1. Yes, we are pacing well ahead of where we thought we'd be as it relates to that long-term guidance around direct-to-consumer. We set the target of 30% by '28. Yes, I'd say given where we're at, logically, you could see upside to that over time. And we might come back in due course and reframe guidance around that specific number. But a testament to the team working hard. Clearly, they had a few challenging areas in 2025. I say it all the time, we've got a big and complex business. Some parts of our portfolio are fast charging and doing really well. There's others that need addressing and Jackpot Party is one of those, but we've got the right team focused on the right things, and we'll get back to growth with that game in 2026. Operator: And our next question will be coming from Kai Erman of Jefferies. Kai Erman: You guys have obviously flagged some margin impacts going into first quarter with some of those costs. But are there any other drivers that might sort of see any sort of quarterly difference in seasonality or earnings cadence throughout FY '26? Oliver Chow: Yes. Thanks. Great question. And I think just building on some of the comments that I mentioned on the prepared remarks, we will have some legacy costs that we'll work through here in corporate related to legal in the first quarter. I think it really does come down to kind of timing of kind of the broader CapEx cycle. If you look at kind of the overall mix quarter-to-quarter, it will vary in terms of Canada VLT versus the Class 3 kind of replacement cycle, which is a little bit more of a normalized cycle. So I think, by and large, you will see, I think, a fairly similar shape kind of from a '26 perspective relative to '25, and we'll kind of work through the puts and takes by quarter. But those are probably the key elements that we'll work through this year. Matthew Wilson: I'll say just one thing about investments. We haven't been holding back investments in '25 and then adding costs back into 2026. We're going to spend R&D and CapEx at a similar percentage of revenue that we did in '25 and '24. So we think that's the optimum amount of investment this business requires. You do have to front run some CapEx in markets like Indiana, where you're scaling the installed base. That does take some incremental CapEx. That's just logical, but a very high conviction way for us to invest shareholders' capital. So I would say for the full year '26, think about investments very similar to the way we invested on a percentage basis in '25 and '24. Operator: And our next question will be coming from Liam Robertson of Jarden. Liam Robertson: Just one really quickly for me on the outlook to '28. Obviously, those targets have been maintained, which is great. Can you just help us frame up the shape of how you're expecting to deliver that? Obviously, another strong period of margin expansion. I think you've already flagged AI allowing you to further optimize your cost base. I guess how should we be thinking about the contribution from top line versus further operating leverage as you build your bridge out to '28? Matthew Wilson: Yes. Clearly, we were thrilled to deliver on that long-term guidance. Back in '22, we delivered $913 million in AEBITDA. We guided to $1.4 billion. We delivered $1.44 billion. So yes, we had some different contributions, and twists and turns on that journey, but thrilled to get that chapter behind us. And now we're focused on operating momentum in '26 and getting to '28. We've built a really solid foundation. If you think about gaming operations, we added another 2,600 units year-on-year. So you carry that installed base through into '26 -- saw the fee per day increase year-over-year by 9%, so you carry that momentum into '26. A similar profile with Grover, same with iGaming. So we do expect all businesses to continue to perform ahead of market for their respective categories. That combination of growing installed base and fee per day sets us up really nicely. We see expansion in 1PP. And we talked about SciPlay stabilizing Jackpot Party and kind of building from there. But Oliver, anything you want to add from a contribution perspective? Oliver Chow: No. I think actually, we've added a new slide in the presentation in the back that kind of refers to kind of a traffic light system that, to Matt's point, all the things that he just listed, all the key drivers will kind of give a view on how we're progressing relative to those targets over the coming years. So I think that's been a consistent cadence of information that we can provide. But to Matt's point, a lot of it is in the core business growth, excluding all the market expansions that we would see, that would be incremental. So that's how I would think about it as we move forward. Matthew Wilson: Yes. But to reconfirm, strong growth at the AEBITDA line, NPATA and EPSa lines, expect that in 2026 as we get on that trajectory towards 2028. Operator: Next question will be coming from Rohan Sundram of MST Financial. Rohan Sundram: Just one from me, for Matt. Just how would you describe the slots demand environment at the moment? It looks buoyant. And how would you compare it to, say, earlier in the year amidst the tariff uncertainty? And how are you assessing the potential tailwinds under the One Big Beautiful Bill, whether it be consumer tax cuts or business tax incentives? Matthew Wilson: Yes, great question. If you go back to the second quarter last year, Liberation Day, obviously, there was a bit of concern about what is the outlook, I mean, from all of us. Everyone needed to digest what did those tariffs mean for slot demand. We saw that rebound really quickly in the third and fourth quarters. I think the '25 demand was really solid. I think the industry is holding up nicely. We're seeing continued strength in GGR, notwithstanding some softness in kind of those destination markets, but it's made up for more so in those regional markets and then the local high-frequency markets. So I think the best data point is that slot survey Eilers and Fantini put out. It's looking like a similar setup next year to -- sorry, this year to '25, so a similar market size. That's encouraging. I think the other interesting data point in that survey was 17% of respondents said that the One Big Beautiful Bill will increase their replacement rate in '26. So that will be interesting to see how that plays through. We know a few of the large corporates, you probably know the ones are talking about, who are saying they've got a big step-up in their annual spend. There's others that are saying they're going to spend consistent with '25. So all of that to say, it looks like a very buoyant market in '26, which means we just got to focus on how do we capture as much share as possible. I thought, again, that 7,000 units shipped in Q4 was enormous. And I think it speaks to the momentum and potential that we have. So yes, kudos to Siobhan and Brian Pierce, the whole sales team for making that happen, and Nathan for building the game. So yes, all that to say, it looks like the market is set up for another good year in '26. Operator: And I would now like to turn the conference back to Matt Wilson for closing remarks. Matthew Wilson: Thank you. Back in 2022, the teams were galvanized by the 2025 targets and transformed Light & Wonder into what it is today, a global games company driven by content and supported by leading platforms. To all of our employees and stakeholders on the journey, I sincerely thank you for all of your support. Thanks for tuning in today. Operator: And this concludes today's program. Thank you for participating. You may now disconnect.
Operator: Good day, and welcome to the Realty Income Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Ms. Lauren Flaming, Manager, Capital Markets and Investor Relations. Please go ahead, ma'am. Lauren Flaming: Thank you for joining Realty Income's Fourth Quarter and Full Year 2025 Operating Results Conference Call. Discussing our results are Sumit Roy, President and Chief Executive Officer; Jonathan Pong, Chief Financial Officer and Treasurer; Neil Abraham, President, Realty Income International; and Mark Hagan, Chief Investment Officer. During this conference call, we will make statements that may be considered forward-looking statements under federal securities laws. The company's actual future results may differ significantly from the matters discussed in any forward-looking statements. We will disclose in greater detail the factors that may cause such differences in the company's filing on Form 10-K. [Operator Instructions] I will now turn the call over to our CEO, Sumit Roy. Sumit Roy: Thank you, Lauren. Welcome, everyone. 2025 was a year in which our platform, discipline and global reach came together to deliver steady results and position Realty Income for its next chapter of growth. We delivered AFFO per share of $1.08 for the fourth quarter and $4.28 for the full year, supported by 98.9% occupancy and 103.9% rent recapture, reinforcing the stability and diversity of our cash flows. In the fourth quarter, we invested approximately $2.4 billion or $2.3 billion pro rata for our ownership interest at a 7.1% initial cash yield, driven by strong opportunities in Europe and the closing of our $800 million perpetual preferred investment in the Las Vegas CityCenter real estate assets with Blackstone. For the full year, we deployed approximately $6.3 billion or $6.2 billion pro rata at a 7.3% initial cash yield with 30% of acquisition cash income from investment-grade clients. We also sold 425 properties for approximately $744 million, enhancing portfolio quality and redeploying capital into higher return opportunities. As part of our disciplined approach, we proactively address client-specific risks. With At Home, we used early visibility into store-level trends to begin selling select assets ahead of its Chapter 11 filing. Over 18 months preceding the filing, we sold 8 properties for nearly $80 million, significantly reducing exposure. Across the remaining 31 stores, our blended recapture rate was just over 80%, consistent with our historical experience for bankruptcy outcomes. We only experienced one rejection, which was resolved in the fourth quarter. With the company now operating with what we believe to be a stronger financial position, we believe that our early action, disciplined underwriting and active asset management have preserved long-term value. The At Home experience also illustrates how our proprietary predictive analytics platform informs proactive decision-making. Store-level visibility gave us an early read on operating performance, but by using broader predictive analytics to assess closure risk, rents, sustainability and real estate fungibility, we can determine which assets carried elevated long-term risks. In partnership with asset management, that work allowed us to selectively dispose of higher-risk locations at attractive valuations and materially reduce exposure ahead of the filing. And when the filing ultimately occurred, our analysis validated the durability of the remaining locations. That same discipline carries through to how we manage the broader portfolio. We recognized $18.9 million of lease termination income during the fourth quarter, reflecting our proactive approach to resolving potential credit and renewal risk. We also continue to pursue terminations where we see a clear path to higher and better uses. These steps help us preserve long-term value while managing our exposure thoughtfully across the portfolio. Internationally, our established platform remains a competitive advantage. As we have previously discussed, Europe continues to offer compelling risk-adjusted opportunities, and we regularly evaluate the viability of other markets where we can further leverage the strength of our competitive moat. Last month, we expanded into Mexico as part of our broader strategic partnership with GIC, providing the majority of build-to-suit development financing and a $200 million takeout commitment for a high-quality U.S. dollar-denominated industrial portfolio, another example of how our scale, cross-border capabilities and balance sheet open new swim lanes of growth in a disciplined and repeatable way. As part of our international strategy, we are entering Mexico in a disciplined, partnership-led manner alongside GIC and Hines. This structure allows us to finance build-to-suit developments at attractive effective yield with forward commitments at cap rates that compare favorably to U.S. assets while maintaining our target risk-adjusted returns. Our initial focus is narrow and paced, centered on Mexico City and Guadalajara, core logistics markets with tight fundamentals, consistent rent growth and investment-grade tenants. We are investing in mission-critical build-to-suit facilities with institutional quality and U.S. dollar-denominated leases. Over the long term, we view Mexico as a strategic beneficiary of near shoring and expect to expand selectively as fundamentals continue to mature. Our approach also reflects current developments on the ground, including increased coordination between Mexican and U.S. authorities, that may support a more stable operating environment over time. While near-term conditions remain fluid and market sentiment can be volatile, we believe this reinforces the importance of our phased partnership-led entry and long-term conviction in Mexico's industrial fundamentals. Concurrent with our expansion into Mexico, the U.S. component of our previously announced joint venture with GIC is now executing a similar structure. Through this partnership, Realty Income and GIC will programmatically develop approximately $1.5 billion of primarily industrial build-to-suit properties. Last month, the joint venture closed its first transaction, a $58.5 million investment alongside a forward acquisition agreement for a modern industrial property in Dallas leased to a Fortune 500 service-based logistics client. This initial transaction demonstrates how the build-to-suit and financing components of this relationship function in practice, supporting mission-critical clients, earning interest income during development and creating a clear path to high-quality ownership split between a like-minded, long-term investor in GIC. A defining feature of Realty Income's evolution is pairing our operating platform with diversified partnership-oriented capital. This relationship orientation continues to shape our sourcing engine. Approximately 89% of our fourth quarter transactions originated through relationship-driven channels, underscoring the depth of our client and partner network. In addition to our GIC partnership, we furthered our relationship with Blackstone through an $800 million perpetual preferred equity interest in Las Vegas City Center, which becomes the second joint venture we have entered into with Blackstone for a high-quality Las Vegas Strip casino transaction. The structure provides attractive risk-adjusted returns with downside protection, given the strategic importance of this asset to MGM and a right of first offer on an iconic Las Vegas Strip asset, demonstrating our ability to execute large, structured relationship-driven transactions. Looking ahead to 2026, we see a steady core business supported by disciplined capital allocation, healthy occupancy and a pipeline that reflects both the depth of our sourcing engine and the flexibility of our multiproduct platform. With the benefit of global relationships, strategic partnerships and private capital channels, we expect to pursue high-quality opportunities across geographies and capital structures. Strategically, 3 priorities guide our capital deployment in 2026: first, deepen client relationships where we can act as a solution provider, particularly in mission-critical retail and industrial and increasingly through development in structured solutions, including via the GIC platform; second, broaden the investable universe by pursuing repeatable high-quality adjacencies that align with our underwriting discipline and generate resilient contractual income. As a one-stop shop net lease solution provider, our platform is well positioned to originate and structure these opportunities; third, optimize capital efficiency by diversifying equity sources and maintaining balance sheet flexibility, which Jonathan will outline in more detail. Bringing it together, Realty Income today is a full-service real estate capital provider with global reach, multiproduct capabilities and a more diversified set of capital channels supporting our growth engine, anchored by a high-quality portfolio that generates stable and growing cash flows. The momentum we saw exiting 2025, combined with the partnerships and platforms we have assembled, underscores the strength of our flywheel and ability to compound long-term value. With that, I'll turn it over to Jonathan. Jonathan Pong: Thanks, Sumit, and good afternoon, everyone. 2025 was a foundational year for us from a capital diversification perspective. We proudly launched our debut open-end fund in the U.S., successfully raising over $1.5 billion in third-party equity from over 40 institutional investors spanning state, city, county and employee pension funds, sovereign wealth funds, asset managers, foundations and consultants. We established this open-end perpetual life vehicle because this format was the most strategic, valuable and appropriate structure for our long-duration net lease business, which is known for its consistency and lack of volatility. We're humbled by the investor reception to our values, performance track record as a public company, the best-in-class human capital and unmatched access to proprietary data and insights across a seasoned real estate portfolio of over 15,500 properties globally. As Sumit previously mentioned, we were also pleased to establish a programmatic strategic relationship with GIC, which pairs our operating platform with a long-term and disciplined capital partner. While the focus of the partnership will be on build-to-suit industrial development, we expect to partner on a variety of large-scale opportunities given our combined focus on deploying capital at scale, where we can create superior value for our respective stakeholders. I want to briefly take a moment to highlight the broader design behind these initiatives. Our partnership with GIC and the launch of our fund business are not intended to be mere single-period contributors. They are programmatic vehicles that expand our opportunity set today while creating embedded pathways for recurring compounding growth over time. Turning to highlights from the fourth quarter. We ended the year with over $4.1 billion of liquidity on a pro rata basis with a net debt to pro forma adjusted EBITDA ratio of 5.4x, squarely within our long-term target range. Subsequent to year-end, we issued our first convertible note offering, raising gross proceeds just north of $862 million for a 3-year convertible note at 3.5%. We used $102 million of proceeds to repurchase 1.8 million shares of common stock, which reduced potential share dilution and allowed us to minimize the impact of the stock price as we price the transaction. The remainder of the proceeds were used to repay a $500 million note maturity in January, which had a rate of 5.05%, thus, representing immediate earnings accretion through the exercise. Our balance sheet is positioned to play offense on the investment front in 2026. We ended the year with cash and unsettled forward equity totaling approximately $1.1 billion. When combined with an annualized run rate of over $900 million in free cash flow, we have over $2 billion of equity or $3 billion fully levered dry powder to address an active deal pipeline. In addition, we have approximately $400 million of undrawn third-party equity capital committed to our open-end fund that adds further liquidity to deploy accretive capital at scale. Operational efficiency remains a priority. We finished the year with a cash G&A margin of just 3.2% while adding talented team members across our global organization, which ended the year at nearly 550 individuals throughout our vertically integrated platform. We are proud of our ability to invest in top talent at all levels of the organization while maintaining one of the most efficient cost margins in the industry. Turning to 2026 guidance. We are introducing AFFO per share guidance of $4.38 to $4.42, representing an acceleration in AFFO per share growth versus 2025. In addition to the $8 billion investment guidance for the year, key assumptions in our model reflect healthy underlying portfolio fundamentals and in particular, includes credit-related loss of 40 to 50 basis points of revenue, a meaningful decline versus the 70 basis points we experienced in 2025. We expect lease termination income to once again be a meaningful contributor to earnings in 2026 as we forecast $30 million to $40 million based on our current visibility. As Sumit mentioned, this income is driven by our proactive asset management efforts, and we expect this income to remain a recurring part of our business. Our expense margins continue to reflect the efficiency of our business. And for 2026, we are guiding to unreimbursed property expense margin to approximately 1.5% of revenue, and we expect cash G&A expenses to be just 20 to 23 basis points of gross asset value. Finally, we expect to generate approximately $10 million of base management fees from our open-end fund during 2026, which may fluctuate slightly depending on the pace of capital calls for investments made in the fund. Now to close out our prepared remarks, I'll pass it back to Sumit. Sumit Roy: Thanks, Jonathan. Before we open the line for questions, let me briefly summarize. Realty Income enters 2026 with a resilient core business, a broader set of capital partners and a deeper global pipeline that at any point in our history. Our partnership with GIC, our CityCenter investment with Blackstone and our successful cornerstone capital raise for our debut private fund all reflect the evolution of our business and the expansion of our investment buy box. We remained disciplined in underwriting, selective in deployment and focused on compounding long-term per share value. We're looking forward to continuing to demonstrate that our proven operating platform and unrelenting focus on generating durable income is highly valued in the marketplace. Operator, we are ready for questions. Operator: [Operator Instructions] And the first question will come from Linda Tsai with Jefferies. Linda Yu Tsai: As Realty Income has expanded into different capital raising and yield-generating capabilities, new channels, including private capital, new JV partners, build-to-suit initiatives, diverse geographies and loans, how different do you think Realty Income will look over the next 3 to 5 years? Sumit Roy: That's a great question, Linda. Obviously, all of these various different things that you're seeing now in some of the recent announcements that we've made, et cetera, has been part of our strategy going back several years. If you think about how Realty Income has evolved, we used to be 100% retail-only U.S.-centric business. That, over time, has created, first, new channels of investments that were adjacent to what our core competency was. Thus, we included the international business. We included other asset types, and then started to focus on making credit investments with our existing client base with the attempt to be viewed as that one-stop solution provider to our clients. The second part of this puzzle was on how we financed our business. And obviously, on the fixed income side, as we grew into multiple geographies, we were able to diversify our fixed income sources of capital. But on the equity side of the business, it was always our public markets here in the U.S. which has held us very well in our 31-year history as a public company. But what these last couple of years has shown is the volatility that could exist at points in time in economic cycles. That sort of impedes our ability to completely utilize a platform that is capable of doing circa $10 billion of investment per year, which we've shown in years past. And so that was the question that we posed to ourselves internally about how do we start to diversify our sources of equity capital, how do we create partnerships that can allow us to fully utilize the platform that was built for scale and size. And what you're seeing more recently and what you will continue to see is us leaning into these various different sources of capital, forming partnerships with like-minded long-term investors like GIC, working very closely with existing partners and enhancing those relationships, like with Blackstone, who view us as real estate partners that could potentially be a solution for them at points in time. And 3 to 5 years from now, all of these different avenues, including the open-ended fund, the Core Plus Fund that we've put into place, I believe, will be much more mature and will allow us to generate this growth profile that is much more commensurate with what our average growth profile has been over the last 30, 31 years. That is what I see manifesting over the next 3 to 5 years from now. Look, we've always been viewed as a company with the following 2 brands. It's trust and reliability. And growth for the longest time has been also part and parcel of Realty Income, this 5% growth rate that we have historically achieved. But in 2025, it was closer to 2%. And so the question that we are trying to answer, and I believe we have -- the market is now starting to see how we can use our size and scale to effectively differentiate ourselves and be a company that has a very unique investable mousetrap as well as sources of capital that will allow us to achieve that third element of growth. And so trust, reliability and growth, those are the reasons why we are doing everything that we are doing. And I believe in the next 3 to 5 years, all of these avenues will have matured and will allow us to be the company that we have been historically for the last 31 years. Linda Yu Tsai: One for Jonathan. On acquisitions guidance of $8 billion in '26, what's the cap rate you expect? And what are some of the assumptions that feed into your expectations? Jonathan Pong: Linda, rather than giving a cap rate guidance, I would say that we're expecting spreads to be fairly similar on a leverage-neutral basis to where we were in 2025 and where we've been historically, so call it 150 to 160 basis points relative to that weighted average cost of capital, short-term weighted average cost of capital. Operator: The next question will come from Michael Goldsmith with UBS. Michael Goldsmith: Maybe just following up on that last question but from a different perspective. Your acquisition cap rate ticked down in the fourth quarter sequentially. So can you just talk about like what the cap rate environment is looking like? Is that a reflection of what you're buying? Or is that a reflection of competition? Just trying to get a sense of if that acquisition cap rate is trending lower here. Sumit Roy: Yes. Good question, Michael. Look, I don't think quarter-over-quarter, a 10, 20 basis point movement in cap rates really is indicative of the overall market. What ends up closing in a quarter is a function of so many different things. And when you're sharing an average cap rate on all investments made, it sort of doesn't highlight the diversity of products that we are pursuing. Obviously, there are assets that we are buying that is inside of that average cap rate, and then there are some that are above that cap rate. And it's really a function more of what ends up closing in a given quarter, what gets moved to the next quarter that drives these 10 to 20 basis points of movement on average cap rates. But I can step back and share with you our perspective that, look, if you think about the last few quarters, I would say, 3, 4, 5 quarters, the cap rate has been in this low 7% ZIP code. And it is largely reflective of what you're seeing in the cost of capital environment and what you're seeing on the competitive side of the equation. And look, if the cost of capital continues to improve, I believe that cap rates are going to reflect that. And the competition today on the private side has largely been fairly muted, again, because of the higher cost of debt that is there in the market. But if that were to change, which -- I'm not saying it will, but if that were to change, then you'd have more competition coming from the private side of the equation as well. So those are the variables that I would be looking out for to see the direction of cap rates over the next 12 months. But I'll tell you that, over the last 6 quarters, the cap rate environment has been fairly stable. Michael Goldsmith: Got it. And just as a follow-up, maybe you can talk a little bit about the G&A guidance. It was 21 basis points. In 2025, for 2026, you provided a range, which at the midpoint implies it to go up a little bit. So can you just walk through kind of like why G&A may move higher in a material way? And then just also maybe that reflects some investments that the company is making. So maybe where are you investing in the business today? Jonathan Pong: Yes. Thanks, Mike. First of all, I would say the G&A methodology that we're giving for guidance now is percentage of GAV. And the reason for that is because we have consolidated vehicles, we have unconsolidated vehicles when you start to utilize the revenue and the income statement, and it doesn't give the full picture. So I would say if you look at 2025 apples to apples based off of that GAV methodology, we're about 21 basis points in cash G&A. Our guidance is for 20 to 23, so not really a material move. The one thing I'll say is that we've added a lot of really good talent to the team. We ended 2024 at about 468 employees. End of 2025, we're about 544, so about 76 employees hired. It was back-end loaded to the back half of the year. And we feel like we've got a very strong competitive moat across the globe, and a lot of the headcount has been abroad in Europe. And you can see how meaningful Europe has been to our growth, and so that is something that we're very happy about. I think when you look at 2026 as well, we do have a few heads that we are adding. And when you're talking about a platform today that's generating $5.3 billion, $5.4 billion in annual base revenue with over 15,500 assets and plans for it to grow significantly, we definitely believe that we have the ability to hire the best talent to scale the business and to still have one of the most efficient G&A margins in the industry. Operator: Your next question will come from John Kilichowski with Wells Fargo. William John Kilichowski: Just for my first one, maybe could you help me bridge this AFFO guide? It's a really healthy acquisition guide at $8 billion. Surprised with the upside. But I feel like the AFFO guide was maybe below what the Street was expecting. I'm curious, where are the sources of conservatism in your guide? Or what is the Street missing here? Jonathan Pong: Yes, John, I would say it really comes down to the credit loss guidance, credit loss guidance of 40 to 50 basis points of rental revenue, something that has a fair amount of conservatism. We're sitting here in late February, and I think, as is per usual, we want to have a little bit more visibility in terms of how things are playing out before we tighten and lower that guide. So I think if you kind of back into what that represents on a dollar amount, over half of what that represents is for unidentified credits that we don't really see much in the way of high risk of that being utilized, but I think that's probably the #1 thing that we would point out. William John Kilichowski: Okay. That's very helpful. And then for my second one, just to kind of go back on what you were talking to earlier on yields, how do we think about this incremental $2 billion that you're doing maybe above the [ $6 billion ], let's call it? Is that you moving into new verticals? Or -- and then how should we think about the yields on those? Like is that just -- it's a better acquisition environment but maybe tighter cap rates on those incremental deals? Like what allows you to kind of lever up there? Sumit Roy: The way I would think about investments is not necessarily in terms of yield but in terms of spread because ultimately, that's what drives our AFFO per share growth. And I would just underwrite to what we have traditionally achieved, which is that 150, 155 basis points of spread on that $8 billion. There are so many things that go into that mix, John. What is the timing of that $8 billion. Obviously, the reason why we've come out with a fairly large number is because we have a very good pipeline. We feel very good about what is happening here in the U.S. and what's happening in Europe and now what we are seeing in some of the other geographies that we've gone into. It gives us a lot of confidence that, finally, we are at a point where we can lean into the market. And we have all these different channels of financing our business that gives us this confidence. So that's how I would think about this $8 billion, is it's a testament to our level of confidence in the products that we invest in. There are no new products that we are going to be sharing with the market in the near future. It's -- these are products that we've already invested in, and we will continue to sort of lean into it, and that's what's going to constitute the majority of the $8 billion. Operator: The next question will come from Jana Galan with Bank of America. Jana Galan: Sorry, again on the kind of $8 billion investment volume guidance. If you could please clarify, it looks like that's at 100%. And so maybe help us think about how much is wholly owned. How much is in the private fund? Should we assume the full amount of the private fund is deployed near term and maybe mix between the development and acquisitions and whether you also expect it to be an elevated disposition year? Sumit Roy: That's a great question, Jana. We'll give you some level of insight, but obviously, it's an evolving year, and we'll see how things play out. In our fund, we have already deployed $1.1 billion. And so assuming that we hit our $1.7 billion, which we are on track to do by the end of March, we have about $600 million of dry powder of equity that needs to be put to work. And obviously, we can lever this instrument up a bit, and that will be what goes towards the fund. What is unknown is how much more capital can be raised. Both the cornerstone and time will tell. So that -- we set that aside. The rest of it is all going to be balance sheet is how you should think about modeling our investment numbers. Does that make sense? Jana Galan: Yes. And any color on kind of dispositions? Sumit Roy: The dispositions, as you know, we were right around $740 million in 2025. You should expect a similar number in 2026. And this is, again, something that we are starting to lean into much more heavily, and you've seen the run rate over the last few years. And yes. And that's the goal for 2026. Operator: The next question will come from Brad Heffern with RBC Capital Markets. Brad Heffern: Sumit, a lot of concerns about the impact of AI on almost everything in the economy at this point. Acknowledging that everything is very uncertain, how do you view the potential for AI disruption through the lens of your current portfolio? And does it change at all how you plan to invest going forward? Sumit Roy: Brad, that's a great question. We think of AI as an amazing tool to help us do our business even better going forward. We were one of the first adopters of AI, AI-type tools going back to 2019, and we've created proprietary machine learning tools that actually is part and parcel of every element of our business that we do today. We are restructuring internally how we think about how all of the data that is produced by the company, that is accessed by the company, how all of that is going to get organized, et cetera, in data lakes, which will then allow us to further accelerate adoption of AI in various different vertical, functional areas of our business to continue to separate ourselves from the rest of the business -- from the rest of the companies that we run into. This is not something that is scary to us. A lot of us within the company are -- we are very comfortable with technology. Some of our previous lives were within the technology sphere, and so we welcome the innovation that is occurring. And you're 100% right, Brad. Things are moving very quickly. Stuff like lease abstraction that had an 80%, 82% success rate literally 4 months ago is closer to 90% today. But those evolutions are going to continue, and the biggest challenge that companies are going to face is how do you create the infrastructure that will then allow you to embrace AI to create the scale benefits. But that's where the world is moving. We are very well positioned to adopt this innovation, and I believe that from a maturity perspective, we are well ahead of the curve. So bring it on. Brad Heffern: Okay. And then, Jonathan, obviously, you just completed the convertible notes offering. Can you talk about how you view that as a part of the toolkit? And is it something that was sort of specific to the point in time that we were in? Or is it something that you would expect to be more regular going forward? Jonathan Pong: Yes, Brad, I would say, to your point, the way we viewed it was exactly another tool in the toolkit. We believe in flexibility. We believe in availing ourselves of the entire menu of capital options available to us. And so we are known to be a very active issuer of capital, and a lot of that is equity. And so when you think about the conversion premium that we were able to structure, 20%, which takes you to the high $60 range, thinking about issuing that on the ATM at spot versus effectively at a 20% premium, we were okay with that possibility within 3 years. But I think I would also highlight, we have a U.S. dollar cost of debt on a 10-year basis of 5%, and the debt that we are repaying was north of 5%. And so at 3.5%, we view that as an accretive use of proceeds relative to what we had otherwise have done. So something that we'll look at from time to time, probably not to a significant degree, but when circumstances warrant, we now have established ourselves in this market. Operator: Your next question will come from Smedes Rose with Citi. Bennett Rose: I just want to ask you a couple of more questions on your guidance. It looks like your occupancy expectations come down a little bit for the year as well as same-store rent assumptions come down a little bit, just using the midpoint. So I was just wondering if you could talk a little bit about what assumptions you're making behind those 2 pieces of the guidance. Sumit Roy: Yes. With regards to the occupancy number, it's a physical occupancy number that we share, Smedes. And when you have a bunch of smaller concepts that basically have vacancies, they could move the occupancy number by these basis point movements that we have shared. Look, we feel pretty confident about the 98.5%. We -- and it is largely going to be a function of the type of expirations that we see, the size of these assets that are going to be expiring in 2026, which tend to be a lot more smaller assets with fewer rents. I believe the expiration schedule for 2026 is about 3% of our rent. So it's really a function of what kind of assets are expiring in a given year that dictates what the physical occupancy is going to look like in any given year. And I believe if you look at what our 2025 guidance was, it was in a similar range, perhaps even slightly lower, and we ended up at 98.9%. So this is our guidance. We feel very comfortable with it. And maybe there is a level of conservatism, but we'd rather be conservative than wrong. Jonathan Pong: And Smedes, I'll just add on the same-store side. Look, the portfolio overall has about a 1.5% CAGR just on a contractual basis. And so with guidance at 1% to 1.3%, that's really just to capture any type of credit-related loss that we may or may not have in 2026. And a lot of it is associated with just an identified credit loss that may or may not happen with a sense of conservatism. So that's the biggest contributor of that. I would also say there are 1 or 2 tenants where we did have some restructuring in the fourth quarter, and you're seeing the annualized impact of that through the 2026 guidance number. Operator: The next question will come from Ronald Kamdem with Morgan Stanley. Ronald Kamdem: Just 2 quick ones. On the sort of the investment guidance, is it still fair to say that Europe versus the U.S. is where you've seen the most sort of compelling incremental investment spread opportunities? Just if you could talk about where the incremental dollars are best spent across sort of geographies and even capital structure would be helpful. Sumit Roy: Sure, Ron. If you look at what happened in the fourth quarter, it sort of reversed in terms of where the volume came from. 60% -- almost 60% of it was U.S. centric. 40% was the rest of the world. And -- but prior to that, Europe was driving so much of the volume. And if you look at the year, 2025, $6 billion of acquisitions, it was dominated by what we did in Europe versus the U.S. But the point I want you to take away is in the fourth quarter and now going into 2026, we are starting to see momentum in the U.S. as well. Europe continues to be where there's a lot of visibility. And our core differentiators in terms of what we bring to the table vis-a-vis our competitors continues to lead to disproportionate amount of volume for us. And I believe that in 2026, we will continue to see that. And now that we've added here Mexico as well to the mix, I believe you're going to continue to see us looking for opportunities, et cetera. And by sheer math, I mean, the more geographies we're going to start adding, the reason and the rationale behind adding all of these geographies is because we feel like there's a -- it's helping us increase our TAM and our ability to source transactions. This shift is a natural occurrence of our ever-evolving business. So that's the other piece I'm going to leave you with. But the good news that I see and both Mark and Neil are sharing with me is that the momentum is strong in all of the geographies that we are playing in today, and we expect 2026 to be a banner year for us. Ronald Kamdem: Great. And then my second one is just we've talked a lot about, over the last 12, 18 months, whether it would be sort of gaming or some of the data centers or some of the retail parks. Just trying to get a sense of a pulse of like how sort of those opportunities are evolving. Is one playing out more or better than the other? Is one falling back? Just how are those initiatives coming? Sumit Roy: Yes. That's a very good question, Ron, and I'm going to try to be very succinct. Look, we said we were going to be super selective on the gaming side. I believe you can see that we've been super selective in terms of where we've invested in gaming. It's -- and the underlying asset that we have exposure to are the -- one could argue, some of the best assets in the gaming industry. So that's a check mark. They're all performing very well. No surprises. And in fact, I would go so far as to say that the Boston asset, when we started, had a particular coverage, which was very healthy. But if you look at the coverage today, it is 100 basis points north of where we originally underwrote the asset. So again, that's been very good. The retail park strategy is really starting to bear fruit. If you look at what our re-leasing spreads have been, we bought some vacancy. Some of the strategic conversations that Neil and team are having with clients who have aggressive expansion agendas for 2026 and beyond, that is starting to manifest in value creation that we had underwritten to, but I believe that most of the plans that are being executed are well ahead of where we had originally underwritten. So that's a double check mark. And we are the most established name on the retail park in the U.K. And we are well established in Ireland, and we are now starting to see if that same strategy can play out in the rest of Europe. So that's a strategy that has double clicked as well. Data center continues to be an area that we are very focused in trying to grow. But again, we've said that we are going to be very selective. We're going to make sure that we are partnering with the best-in-class developers and that the ultimate exposure that we have to assets have the fundamentals that gives us the confidence that they are going to continue to perform beyond that initial lease term. And so if you look at where we've invested, what we've announced to date, I think you will -- you can safely say that that's a double check mark as well. And look, we want to accelerate the data center investment piece, but we are not going to do it at the expense of taking on additional risk. So all 3 of those areas that you mentioned, Ron, continue to be very core to our strategy, and you will and you should continue to expect us to make investments. Operator: The next question will come from Jay Kornreich with Cantor Fitzgerald. Jay Kornreich: First off, just as you think about your cost of capital, the stock has performed very well year-to-date. And so I guess I'm curious, as you've seen your equity cost of capital improve, does that change how you're thinking about your investment outlook at all and maybe allow you to be more aggressive in acquiring real estate at slightly lower cap rates while maintaining healthy deal spreads? Just curious of your thoughts on that. Sumit Roy: Yes. So look, we are very blessed that the market is starting to recognize the value proposition that we bring to the table. The fact that our cost of capital has improved is an added lever that we can sort of lean on. But in terms of how we think about underwriting, how we think about risk-adjusted returns, that's on a asset-by-asset basis. And the fact that we can finance those assets at lower cost, I think, just lends itself to higher spreads. It is also true that we can pursue assets that are a little bit lower in the cap rate scale and still be able to get our historical spreads, and that is something that we will look into. But I wouldn't think, Jay, that it changes the way we think about underwriting assets. We are very focused on day 1 accretion. That is what our investors are looking for, along with making sure that the overall return profile of that investment is meeting our long-term hurdle rates. And so none of that changes. Jay Kornreich: Okay. I appreciate that. And then just following up on the private capital fund, which has the $1.5 billion of commitments so far. Should we expect any meaningful bottom line earnings contribution in 2026 from the private fund? Or is the AFFO earnings contribution more pickup in 2027? Jonathan Pong: Jay, in 2026, there will be accretion. The $10-plus million in base management fees is pretty good margin. The costs that accrue to Realty Income to generate that is really the dedicated team that we have, which today is around 7 individuals and some other costs that we bear at the Realty level. So you're still seeing margins that are kind of in the 70-plus percent area on a flow-through basis to Realty. And that's because, for us, we've got a platform that has 550 employees. And so we don't have to build from scratch the same way other subscale players would have to. Operator: Your next question will come from Bill St. Juste with Mizuho. Haendel St. Juste: Sorry. Bill, that's a first one. It's Haendel St. Juste from Mizuho. Sumit, I wanted to go back to a comment you made earlier. I mean, you're talking about another 3 to 5 years for all the changes you're making to manifest itself into real growth. So I guess I'm curious if you're suggesting that we should expect a similar growth profile from Realty Income for the next few years as you're forecasting this year given your commentary about spreads, dispositions, lease term fees? And maybe some thoughts on levers that you could pull to perhaps enhance that growth over the near term. Sumit Roy: Yes. Haendel, when I saw the name, I was going to ask you if you had officially changed your name, but I think I'll leave it at that. Look, everything that we do is to make sure that those 3 words that I said out loud, trust, reliability and growth, continue to be associated with Realty Income. The last couple of years has been a bit of an aberration on that third element. And so we started to cultivate channels to basically go back to a company that can grow at a level that continues to make us one of the most attractive companies to invest in on the real estate spectrum. So that's the goal, Haendel. And I believe that what you're starting to see now are those channels that have gotten over the finish line, and we can talk about it much more. And each one of those has been deliberately thought through to see how can it contribute to the earnings growth for the business. So that's why we're doing what we're doing. And I think Linda's question was around a 3- to 5-year horizon. That's my expectation, is that we -- within that time frame, not only will these channels have matured, but they're going to start to add meaningful contribution to our growth profile and get us to levels that we've achieved in the past and hopefully even supersede it in certain years where we have outsized growth. It's just like we have done historically. And so that's the goal. Operator: And the next question will come from Spenser Glimcher with Green Street Advisors. Spenser Allaway: Can you talk about how the dollar value of deals sourced for the parameters of the private fund compared to that sourced for the parameters of the public vehicle? I'm just curious, I'm like trying to get a sense of the opportunity set and what that looks like for each vehicle. Sumit Roy: Yes. I don't know, Spenser, if I am going to answer your question accurately. If I don't, please just help me understand what precisely you're looking for. Look, I think what lends itself to the fund is products that don't necessarily meet the public company's day 1 spread requirements. So they tend to be lower cap rate transactions but with very healthy growth that more than meets the long-term return profile that our fund business is looking for. But one of the reasons why we sort of wanted to create this perpetual life Core Plus Fund was to take advantage of transactions that we were seeing in the market that basically checked every element of our underwriting standard outside of that day 1 spread. And so that's the kind of product that you should expect to see going in to the fund. Having said that, if you think about the pure math of transactions that we do, being able to enhance -- because Realty Income will continue to be a significant owner of the fund, our 20% investment, co-investment in any of these vehicles, in any of these investments with the benefit of the management fees that we get on the 80%, that allows us to actually enhance our 20% investment. And so deals that we may not have been able to meet on a stand-alone basis, with the management fee on our 20%, it allows us to meet those spreads. So this is a flywheel. It's a -- however you want to think about it, a setup that we've created that would allow us to do so much more. Having these different pockets of capital available to us priced differently with different expectations and obviously, scale a platform that is built to do so much more. So hopefully, that answers your question, but not sure if I got your question 100% right. Spenser Allaway: Yes. Maybe to clarify, so per the parameters you outlined, which is obviously very helpful, how would you say that the deal volume that Realty Income looks at or looked at last year, how would you say that, that is split between what would be appropriate per those parameters for the private funds? So those low initial yield but longer-term growth opportunities, how much of the overall pie that Realty Income looked at, how much would fit the private fund versus the public vehicle? Sumit Roy: Yes. So obviously, what we ended up buying on the public side would sit on the public side. We forgo a lot of transactions that did not meet our year 1 spread requirement, which would have otherwise been purchased had the fund been up and running. And I think in quarters past, we've shared that number with you. I think in the third quarter, I shared a number that was circa $1.7 billion or $2 billion. I don't quite remember the number. But that was what we forgo, what we did not pursue because we didn't have the fund up and running and we didn't have that capital available. I think it was $2.2 billion if I remember correctly -- or $2 billion. And so if you look at what we sourced in 2025 -- it was, by the way, the single largest year of sourcing. It was circa $120 billion. There was quite a bit in that mix that could have lent itself to the fund investing, which we had to pass on because we didn't have this vehicle up and running. So there's plenty to do. And obviously, not all of that $120 billion was U.S. I think 55% of that volume was in the U.S. and 45% was Europe. So our fund is only U.S. centric, so we can -- you can make the adjustments appropriately. But it is absolutely true that there was a lot of stuff that we forgo on that we would have pursued had we had the fund up and running, yes. Spenser Allaway: Okay. Great. And then is there any cost associated with raising capital for this fund as of yet? Just curious if you are using or intend to use a marketing team, like an outside marketing team or a consultant as you continue to raise capital. Jonathan Pong: Spenser, so we have discussed in 8-Ks and press releases past that we do use a placement agent. I don't want to share the exact percentage of the fee, but I will share that it's inside of what we would pay on the ATM and certainly inside of what we pay on a public equity overnight. So much more efficient to raise capital via this channel. Sumit Roy: And beyond October, Spenser, this will be something that we're going to bring in-house, and so this will become part and parcel of our continuous fundraising given that it's an open-ended perpetual life fund. Operator: Your next question will come from Wes Golladay with Baird. Wesley Golladay: Maybe just following up on that last question. You're going to be able to source the cost of equity a little bit cheaper. I guess maybe could you put a parameter around how much the incremental spread could be where you're investing? Sumit Roy: Did we not have that in the investor presentation? Jonathan Pong: Wes, it's Jonathan. One thing that I'll share, we do have this in our investor presentation, where if you kind of do the math and if you assume that Realty Income is a 20% co-investor in the fund, utilizing our same 35% LTV ratio when we go out and finance transactions, and let's just assume, for round numbers, we're getting about 1 point from the 80% of equity we're managing on someone else's behalf, would otherwise be a fixed cap would be closer to 8.5%. And so this is all about amplifying our return on invested public shareholder capital. And that's how the math plays out, and so that's a way for us to generate more bang for the buck if you will. Wesley Golladay: Okay. Fantastic. And then you have the U.S. open-end Core Fund. Is there another opportunistic fund you can do later on? Sumit Roy: It's -- that's a forward-looking comment, Wes. We are not in a position to answer that right now. But we are very happy about the U.S. open-ended Core Plus Fund that we have in place. We feel super excited about that. Our goal right now is to make that as big as we possibly can. Operator: Your next question will come from Jim Kammert with Evercore. James Kammert: Does Realty Income have a sense of GIC's annual dollar investment appetite for net lease investments, whether owned or credit structured? Sumit Roy: It's big. James Kammert: Well, I guess then my second question, really, the related question is, is Realty Income prohibited from pursuing other programmatic co-invest programs away from GIC with other sovereign wealth funds, insurance companies, you name it. I'm just trying to get a sense of the scale of that sort of TAM or opportunity for you as you think about it. Sumit Roy: We are not prohibited from pursuing partnerships with other sovereigns or other sources of capital, but there is no need for us to look for other sources within the build-to-suit industrial development that we have in place with GIC. Like I said, they are -- they're very positively inclined towards the net lease space. If you recall, Jim, they ended up buying STORE. And this is a continuation of their overall strategy. And I don't want to speak on behalf of GIC. That's a question that's best answered by them. But we are very excited about this programmatic JV that we've put in place. And I believe Jonathan already mentioned this, but it's worth repeating. This is not a one-and-done deal. The $1.5 billion is the initial commitment. It's programmatic in nature. And the hope is that we can grow that co-investment thesis because there's value creation for both parties. They have certain requirements given FIRPTA, and we have the ability to help recognize earnings during the development phase. This works. And we are able to both lean into our own sourcing channels to make this as big as possible. I think that's what is so appealing about this particular relationship. Operator: Your next question will come from Jason Wayne with Barclays. Jason Wayne: You said a portion of credit loss assumed in guidance comes from identified properties. So can you give us some color on which tenants or industries are known today? Maybe which are risk to bring to the high end of the range for the rest of the year? Jonathan Pong: Yes. So on the identified side, I'm not going to name clients or tenants, but I think on the -- from an industry perspective, there's a couple of restaurants, restaurant chains that will be part of that. More broadly speaking, again, that's the minority of the 40 to 50 basis points. And so the unidentified piece is considerably larger. And of course, we don't have any type of color by definition given that it is unidentified. Jason Wayne: Okay. And then just does lower year-over-year occupancy guidance include any lease terms so far in the first quarter? And what's a good run rate for quarterly lease termination fees? Jonathan Pong: Answer to the first question is no, nothing material. From a quarterly run rate standpoint, look, this is very opportunistic, episodic. It's very difficult to say that this is going to be something recurring. But I think given just the proactiveness of our team, as I said in the prepared remarks, it is something that you expect to be, of course, over a 12-month period, something in line with this, call it, $30 million to $40 million that we discussed but obviously, subject to change as conversations are ongoing and the analysis continues to be done by several different functions within the organization. Operator: The next question will come from Upal Rana with KeyBanc. Upal Rana: Sumit, I appreciate all the comments on the potential to raise equity. Could you talk through your ATM strategy today given the improved cost of capital? There was no ATM issuance subsequent to quarter end, and the share price has had a nice run recently. So just wondering what it would take to issue equity to the ATM today. Jonathan Pong: Upal, this is Jonathan. I'll say this, over the last 30 days, we've averaged about $400 million a day in trading volume in our stock. If you look back a year ago, that was around $250 million. And so for us, we've got multiple ways where we can raise equity. A lot of it, we already have in place, over $700 million of unsettled equity right now. We had $400 million of cash as of the end of the year. We have over $900 million in free cash flow that we're generating on an annual basis now. We talked about the disposition activity, and that could easily be something very similar to this past year, over $700 million of equity-like proceeds. We've got $400-or-so million of uncalled capital for the fund. So when you start to take away all of that and when you look at an $8 billion investment guidance number, on a leverage-neutral basis, that will require roughly $5 billion of equity. But what I just highlighted was around $3 billion. And so you can do the math. If the delta is 2 and we're averaging $400 million a day in trading volume in the stock, we can be a very, very small percentage of a day's trading volume, barely impact the stock price at all and raise more than enough to that $8 billion and then some. Upal Rana: Okay. Great. That was really helpful. And then maybe you could update us on your watch list today. And could you update us on your Red Lobster exposure given they're back in the headlines that potentially shut down some locations? Sumit Roy: Yes. So Upal, our watch list is right around -- credit watch list is 4.8%. With regards to Red Lobster, it's certainly not in our top 20, and so it's not significant enough for us to really have much of a comment around them. We are watching them closely. They are trying a few different things, but it's not a significant piece of our business anymore. And so all I can say is they are trying a few different things. I believe they've rationalized their menu. They've reduced that by 20%. Lobsterfest is coming up, along with a few other promotions. So we'll see. And I think we are following this company closely, but like I said, it's not a significant portion of our registry. Operator: Your next question will come from Greg McGinniss with Deutsche Bank. Greg McGinniss: This is Greg McGinniss with Scotiabank. Haven't moved. Sumit, I wanted to go back to your comments regarding the other investment avenues maturing and getting back to a more historical level of growth in 3 to 5 years, especially considering many investors are not necessarily looking for a long-term wait-and-see story, which could pressure the equity cost of capital. And what does success or maturity look like with regard to those new avenues? And should we expect to see that 3% growth in the interim or a more modest ratable improvement back to the 5% over time? Sumit Roy: Greg, what I'd like to do is just show what we are capable of doing. We've come out with an earnings guidance at the beginning of the year. And we have all these avenues that we've talked about and allow these avenues to mature, and let's see how that manifests in a higher growth rate. For me to give you a blow by blow in terms of what my expectation is over the next 3 months, 6 months in terms of how this growth rate is going to accelerate, I don't think is something that I'd be able -- I'd be viewed as a prognosticator if I can do that. But my long-term view is that all of these channels will manifest in a growth rate that is much more commensurate with what we've achieved historically. How long does it take? I hope sooner than later. But I can't give you an answer more precise than that. Greg McGinniss: Okay. That's fair. And then just a follow-up. You mentioned that the platform is capable of around $10 billion investments a year, close to what it's achieved before. Is that enough to achieve these growth goals, especially as the company has gotten larger? Or are you anticipating investing in G&A and growing how much the platform is capable of? Sumit Roy: Yes. That's a good question, Greg. And by the way, when we talk about growth rates and earnings, we shouldn't forget that we are the monthly dividend company, and our dividend as of the end of last year, beginning of this year was still 5.7%. And so that's the dividend yield, and that continues to be something that we distribute on a monthly basis. So it's very much part and parcel of the total return story that's associated with Realty Income. With regards to what is this platform capable of, I think it's capable of a lot more. What I was pointing out to was if you looked at what we did on an organic basis in terms of investments in 2022 and 2023 or thereabouts was in that $9 billion, $9.5 billion ZIP code, and it was with a much smaller team with fewer geographies, and we still had fewer asset types that we were investing in at that point in time. So we have scaled the team. We are in more geographies today. Our cost of capital is improving. I believe that our team is capable of doing a lot more investments, just having created a much larger TAM for ourselves today vis-a-vis where we were 3 years ago. And that's where the scale benefit comes in. But what I'm saying is not mutually exclusive from what Jonathan said, which is, selectively, we will continue to look for the right people to drive certain areas of our business. And that is an investment we feel very comfortable making as we become a company that has defined all of these different channels of growth. So you should expect both us to do more and us to continue to invest very selectively in talent that can help us drive our business. Operator: Your next question will come from Eric Borden with BMO Capital Markets. Eric Borden: Great. How should we be thinking about the recapture rate on the 3% of ABR expiring in '26 relative to your long-term average? And should we see an acceleration over time from your re-leasing efforts across your retail park exposure? Sumit Roy: Eric, I -- again, every year is different. It's a function of what type of assets are expiring. Some assets lend themselves to higher growth rates in their option -- exercising of the options versus others. But look, if you look at, historically, what we've achieved over the last 4, 5, 6 years, it has been north of 100%, closer to 103%, 104%, 105%. And my expectation is that the team will continue to meet, if not exceed those numbers. But it is very difficult to compare 1 year over another just given the makeup of the expirations that are taking place. So I'll just leave it at that. Eric Borden: Okay. And then you currently have 173 properties available for lease. Could you just provide a little bit more detail on what percentage is slated for disposition versus the portion that you believe can be re-leased today? Sumit Roy: Yes. Eric, obviously, if you looked at that same number at the beginning of last year, that was closer to 220 or 230 assets. So capital recycling, making sure that we get to resolutions quicker so that the holding costs are much lower, those are all elements of a very proactive asset management team that we have in place today. Having said that, we are very comfortable holding on to a certain number of vacant assets because we are either trying to reposition it or we are trying to find the right client who can enhance the ability to recapture rents, et cetera. So in a company that has north of 15,200 assets, having 170 assets vacant, I think you could view that as what the natural rate of vacancy ought to look like. That's circa 1%. And I'm going to go a little bit more and say we are comfortable with this 1.5% to 2% of assets that we have that we are working on either to dispose of or to reposition. And so I think this 170 is a smaller number than if you were to compare it over the last couple of years, what you have seen in our portfolio. But I view that as a natural rate of vacancy. Operator: The next question will come from Tayo Okusanya with Deutsche Bank. Omotayo Okusanya: So again, just looking at the portfolio today, again, thousands of assets across hundreds of companies across several regions. It just feels to me like, again, given the nature of what you guys are doing, AI somehow should be able to create much more efficiencies in the overall business, whether that's on the underwriting side, asset management side. Just kind of curious how you guys are thinking through the use of AI in the business and how, if I may use the word, AI competency or supremacy could create additional competitive advantages versus your peers. Sumit Roy: That's -- it's in line with the question that was asked, Tayo. And I intentionally try to keep it brief because this is an entire discussion in its own right. What I will share with you is we are a very highly literate, technology-driven, data-driven organization. And so AI absolutely is going to be part and parcel of every element of our business. It already is on proprietary tools that we've created. It helps us on the sourcing front. It helps us on the underwriting front. It helps us on making asset management decisions, et cetera. And that's just one piece of it. But when you think about an organization and you think about the direction of drift, where is AI really going to sort of make monumental positive scale benefits for organizations, it doesn't start on the front end with the tools. It starts with the data. And it starts with creating an organization that has data that is very clearly defined. The interrelationship between those data is very well established, then data that gets created by this input data is also very well established. Then, you can start to come up with tools that you can overlay on top of this very structured data lake to create those various different scale benefits. But Tayo, you're 100% right. I mean, AI is and will become an even more integral part of every function within a real estate company. There is no doubt in my mind. And we, I believe in my heart, are best positioned to take advantage of that, given when we started on this journey and the level of sophistication from a technology standpoint and how this company and the management team thinks about technology as an enabler and creator of scale within our business model. So I'm just touching on things. Each one of these areas that I've talked about, we can spend 2 hours just having a detailed discussion. But we are well on our way, and there are certain tools that's very much part and parcel across the entire business that we already have, such as Copilot, et cetera. And then there are other very specific tools that are being used by vertical elements of our business to help drive scale. But that is still just scratching the surface of what AI will do 3 to 5 years from now for a company like Realty Income. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Sumit Roy for any closing remarks. Please go ahead. Sumit Roy: Thank you, Chuck, for helping facilitate this conference, and thank you, everyone, for participating. Look forward to seeing you at some of the upcoming conferences. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.