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Operator: Good morning, and welcome to NIQ's Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. With that, I'd like to turn the call over to Will Lyons, Head of Investor Relations. Please go ahead. William Lyons: Thank you. Good morning, everyone, and welcome to NIQ's Third Quarter 2025 Earnings Call. Joining me today are CEO, Jim Peck; COO, Tracey Massey; and CFO, Mike Burwell. Following Jim and Mike's prepared remarks, Jim, Tracey and Mike will take your Q&A. As a reminder, our remarks today will include forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in today's earnings press release. Any forward-looking statements that we make on this call are based on our assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. Also, during this call, we will present both GAAP and certain non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release, which is available on our IR website, investors.nielseniq.com. A replay of this call will also be available on our IR site. And lastly, just a quick housekeeping item. Posted alongside our 10-Q and earnings release, you'll find a supplemental file that reflects recasted financials related to our post-IPO legal reorganization. This includes a noncash mark-to-market adjustment on the Nielsen Media warrant for all historical periods prior to Q3 2025, where the instrument has converted to equity treatment. And with that, I'll now hand the call to Jim. James Peck: Thanks, Will. Good morning, everyone, and thank you for joining us. I'm very pleased to report that our Q3 results beat expectations across the board, 5.8% organic constant currency revenue growth, 21% margins, up 300 basis points and $224 million of levered free cash flow, achieving most of our second half cash flow guidance in Q3 alone. We've raised our 2025 outlook, and we're heading into 2026 with momentum. Q3 is further proof that we are reaping the financial benefits of our multiyear transformation. In terms of revenue, EMEA and Americas grew 8.8% and 4.1%, respectively, on an organic constant currency basis, and APAC growth improved. Intelligence revenue grew 6.6% in organic constant currency. Intelligence subscription revenue, our version of ARR, also grew 6.6%. This was our sixth straight quarter of 5-plus percent organic constant currency growth and 6-plus percent Intelligence subscription growth. Activation revenue improved in the quarter, and our pipeline remains robust. On profitability, net loss and adjusted net loss improved while adjusted EBITDA of $223.7 million accelerated to 25% growth. We expanded adjusted EBITDA margin, and we're tracking to significant expansion in 2026. And with our strong Q3 performance, we now expect to be free cash flow breakeven on a levered basis for the full year 2025. The first step of what we expect will be a multiyear free cash flow inflection. As an important reminder, levered free cash flow in the first half of the year did not reflect the $100 million of annual interest savings we achieved as part of the IPO. Looking at high-level business performance. Aligned to our revenue growth algorithm, Q3 was driven by strong pricing as well as innovation cross-sell and upsell. In Intelligence, we're seeing continued strong adoption of our omnichannel measurement products such as eCommerce, consumer panel and full view measurement, which contribute nicely to our growth. We're also successfully executing our proven integration playbook at GfK. Tech and Durables revenue has grown year-to-date, and we're aiming to accelerate further in 2026. In Activation, our AI-first BASES, analytics and media products are growing rapidly, supporting 2025 revenue and bolstering momentum heading into 2026. Lastly, integrations of our Gastrograph AI and M-Trix acquisitions are going well, and we're penetrating new markets and converting new business. In short, it was a strong quarter. We're growing profitably and improving margin and free cash flow ahead of schedule. For the balance of my prepared remarks, I will address how AI is widening the moat around the NIQ ecosystem and improving our financial profile. We are not simply participating in the AI revolution in consumer data intelligence, we're leading it. Let me start by highlighting 3 key takeaways. First, AI widens the NIQ data moat. Today and into the future, AI models need the right data in scope, accuracy and depth. Our data assets are vast and hard to replicate, are enriched, are proprietary and span decades of consumer spend and behavior and are updated constantly. Second, we are rapidly embedding AI across our solutions portfolio. We're also evolving the NIQ user experience to enable client speed to insights and further enhance our revenue growth. And third, we believe we are in the first innings of capturing significant AI-driven operating efficiencies and margin expansion. On my first point, today's consumer brands and retailers face a daunting and expensive reality. Consumer behavior is changing rapidly and shopping data is exploding in volume and complexity. Identifying, collecting and analyzing this data across a rapidly growing number of channels and touch points is more challenging and costly than ever. As generative and agentic AI reshape this competitive landscape, CPGs and retailers seek real-time granular insights so they can act faster and compete smarter. General purpose AI models alone are insufficient to extract meaningful signals from messy unstructured data and not built to support high-stake decision-making. Try asking a general purpose LLM who sold the most chocolate during October 2025, and the result is incomplete, outdated and inaccurate. This is because the accurate data simply isn't available in the public domain. But we have this granular data at NIQ. Through Discover, clients can click into sales data by day, week, location, which specific candy bar at what price point, sold through which retailer, why the consumer bought, what else the consumer bought, everything and more about that transaction. In our ecosystem, we harness advanced technologies and draw on decades of industry leadership to amass the global superset of consumer shopping behavior data, which is continuously updated with first-party data. Our data covers every dimension that matters to clients, including geography, channel and category. We also believe our data is the most granular available anywhere down to the specific product SKU. This data moat is intentionally designed. Our data scale is vast, global and proprietary. Our harmonized data assets are extremely difficult and highly impractical to replicate. We ingest retail point-of-sale data from thousands of retail chains in over 90 markets and our robust industry reputation for data stewardship facilitates these exchanges. In traditional trade retail, our extensive network of field auditors and digitized collection methods enable us to cover consumer purchases with less technology for retailers in key developing markets, a feat unmatched by others. We also believe we have the most comprehensive digital commerce assets, offering the most detailed view of the digital marketplaces as well as the largest global e-receipt consumer panel. In fact, panels are a key area of focus and differentiation for us. We have collected decades of consumer shopping data from our panels, and we're investing to expand our panel footprint. By pairing the what the consumer bought from our leading measurement data with the why from our robust panel data, we are uniquely able to deliver clients a full view of consumer shopping behavior globally. In addition to the massive amounts of data we ingest, it's the rich data that we create that further enhances our moat. We generate a substantial layer of rich reference data and metadata, which includes tens of millions of product attributes, taxonomies, hierarchies and harmonized product information across the 220 million items in our database. This includes brand, category, size, ingredients, packaging type and more. Our rich layer of descriptive data enables NIQ to organize, analyze and pair products at a granular level, making it possible for clients to uncover trends, benchmark performance and make smarter decisions faster, which brings me to my second point, how our solutions drive clients' speed to insights and unlock new growth. NIQ data and insights power mission-critical client decisions across their enterprise, and our clients are leaning in. By Q3, users on our Discover platform grew 9%. Total data points consumed grew 29% and the average monthly data consumed grew 39% versus last year. As clients increasingly rely on our data and insights, we're leveraging AI to deliver deep value. For example, NexIQ is our proprietary AI engine, which we purpose trained on our 160 petabytes of global consumer and retail data. Unlike generic large language models, NexIQ understands the nuances of consumer shopping. This enables 10 to 12x faster data processing in general purpose LLMs and with near perfect categorization accuracy. NexIQ isn't just automation. It's NIQ Intelligence at scale, delivering real-time insights with unmatched precision and speed. Developed with partners like Microsoft, Snowflake, Google and Intel, NexIQ is also the backbone of our AI-powered product suite, driving innovation across Intelligence and Activation products. We're building tools to transform how our clients make decisions from predicting winning product concepts in minutes to generating automated KPI narratives. NexIQ's integration into our ecosystem ensures that every insight is grounded in the most granular harmonized data available, giving NIQ a defensible edge in the market. And from this strong foundation, we're rapidly evolving our AI solutions. For example, version 1 of our Gen AI Copilot, Ask Arthur, has accelerated speed to insights by 40% across our omnichannel measurement and consumer panel data. In 2026, we plan to launch Arthur version 2, an intelligence research hub with predictive signals and analytic storytelling that can chat, anticipate, act and summarize. Eventually, Arthur will be able to suggest NIQ products, data sets and analysis based on client needs, enhancing our Discover software into an AI-powered cross-sell and upsell engine. We're also driving AI innovation throughout our Activation suite. For example, Revenue Optimizer is our AI-driven analytics solution, helping clients optimize pricing and manage trade spend for maximum profit. Precision area uses AI data harmonization to segment countries into local markets by demographics and by retail data. This enables clients to find the needle in the haystack in terms of growth opportunities and investment optimization down to the granular neighborhood level. This year, we also launched 2 AI-first solutions, BASES AI Screener and Product Developer. These solutions seamlessly combine our leading global data assets with our advanced analytics offerings. With BASES AI, clients can now rapidly test, develop and commercialize products that consumers want to buy. We're driving expansion and seeing strong early client adoption. BASES AI Screener is now live in 11 markets across 129 product categories. Client feedback has been overwhelmingly positive, and we've added 18 large clients since launch. With BASES AI product developer, 31 clients, including our largest CPG clients to SMB, tested 500 product concepts in Q3 alone. Unilever reported a 65% reduction in product development time, stronger innovation success rates and accelerated speed to market, launching products up to 6 months sooner compared to traditional testing methods. And as showcased in our IPO roadshow, Brown-Forman use BASES AI to identify a winning Jack & Coke formulation, adapted for new markets and plan future line extensions. They reported a 350% sales increase, 2.5x sales velocity increase and repeat consumer purchases that nearly doubled. So AI is embedded broadly across our entire product suite, supporting revenue growth and innovation. We believe we're well positioned to capitalize further in 2026 and beyond. Lastly, on my third point, artificial intelligence is a key driver of operating efficiency and margin improvement at NIQ. It helped us deliver better-than-expected margin expansion in Q3 and year-to-date, and it's laying the groundwork for continued expansion in the years to come. For example, we're harnessing agentic AI to automate our entire data operations workflow from acquisitions to coding to delivery. We're finding that the combination of advanced AI and operational expertise boost efficiency, elevates data quality and accelerates our innovation. Clients benefit from our ability to bring products to market faster and to expand into new markets. On the customer support front, our globally launched NIQ service suite now delivers dynamic, personalized and contextual support powered by Gen AI. AI-driven support ticket routing and automated intelligence unlock faster resolutions and more seamless client experiences. Since launch, user engagement with Gen AI support tools has increased efficiency by over 40%. And our agentic customer success ecosystem is setting new standards for end-to-end client satisfaction. Across our corporate support functions, including HR, legal and finance, we're deploying advanced AI and automation to streamline operations, enhance compliance and unlock new efficiencies. In finance, AI-powered process automation has enabled us to standardize reporting, reduce transactional workloads and deliver real-time insights for executive decision-making. In HR, intelligent analytics are helping us optimize talent acquisition and workforce planning, while legal teams leverage AI for faster contract review and improved regulatory compliance. In summary, we believe AI is a strength for NIQ on all fronts. It's a differentiator and a profitable growth enabler. We use it to turn global omnichannel consumer complexity into competitive advantage. We turn client questions and needs into client value. As we close out 2025, we are excited about what's ahead in 2026. We'll continue to lead shaping and building the AI-powered future of consumer intelligence. With that, I'll turn it over to Mike to cover our financials. Michael Burwell: Thanks, Jim, and good morning, everyone. Q3 was another strong quarter. We exceeded expectations across the board and demonstrated a powerful free cash flow inflection, delivering most of our back half levered free cash flow guidance in Q3 alone. AI-powered automation is reducing manual effort and increasing efficiency across NIQ. This contributed to margin expansion in Q3 2025, and we expect it will be a margin driver in 2026 and beyond. We are raising our 2025 guidance. We believe this further demonstrates the mission-critical value we bring for clients and the embedded operating leverage in our business. Turning to our Q3 results. In Q3, organic constant currency revenue grew 5.8% to $1.1 billion, surpassing the top end of our August guidance. We saw particular strength in our EMEA segment with Intelligent Solutions driving renewals, value-based pricing, cross-sell, upsell and expansion into new verticals. On an organic constant currency basis, EMEA grew 8.8%. From a product perspective, total Intelligence revenue grew 6.6%. Annualized Intelligence subscription revenue also grew 6.6%, our sixth straight quarter of 6% plus growth. Annualized Intelligence subscription net dollar retention and gross dollar retention remained strong at 105% and 98%, respectively, reinforcing the strength in our revenue growth algorithm. As Jim mentioned, Q3 Activation revenue improved to year-over-year growth and our client pipeline remains robust. On expenses, total operating expenses increased $89.3 million or 8.9% on a year-over-year basis, driven primarily by a $50 million onetime stock-based compensation charge triggered by the IPO, which we previewed to analysts as part of our IPO process. This is the life-to-date catch-up related to pre-IPO equity awards. Other factors driving expenses included higher amortization driven by our Gastrograph AI and M-Trix acquisitions as well as fluctuations in foreign currency exchange rates. It's important to note that outside of these aforementioned factors, OpEx growth remains modest and well below revenue growth. Net loss and adjusted net loss improved $16.1 million and $47.6 million on a year-over-year basis, respectively. We accelerated adjusted EBITDA growth to 25%, delivering $223.7 million for the quarter. We expanded adjusted EBITDA margin by 300 basis points to 21.3%. Profitable organic revenue growth as well as ongoing GfK integration and AI-driven synergies remain key drivers this year. Importantly, we remain firmly on track towards our midterm margin target of mid-20% that we shared during our IPO roadshow. We expect 2026 will be another year of significant margin expansion as revenue growth flows through and we drive AI-powered efficiency across the business. Turning to free cash flow. We delivered $224.4 million of levered free cash flow, achieving most of our back half 2025 guidance in Q3 alone. This was driven by higher adjusted EBITDA, lower interest expense and significantly improved net working capital as we improved DSOs by 7 days compared to Q2, well ahead of schedule versus our August guidance. I'll also note that Q3 working capital benefited from a vendor payment that we accelerated in Q2 in exchange for more favorable contract terms moving forward. For a better-than-expected Q3, we're raising full year 2025 levered free cash flow guidance to breakeven. This is an exciting inflection point for our business as we continue to improve and progress towards our steady-state profile in the coming years, up $20 million from our previous guidance midpoint, full year breakeven implies a $225 million improvement versus 2024. It also implies $280 million of levered free cash flow in the second half of 2025, which is above the high end of our prior $245 million to $275 million range. As an important reminder, levered free cash flow in the first half of the year was burdened by our pre-IPO capital structure and did not reflect the $100 million of annual interest savings we achieved by deleveraging the balance sheet and repricing our debt. In fact, our strong Q3 performance triggered another interest rate spread step down, generating an additional $9 million of annual interest savings moving forward. Turning to our balance sheet. At the end of Q3, we had cash and cash equivalents of $446 million and $750 million of available capacity under our revolver for a total of $1.2 billion of available liquidity. On capital allocation, as I've mentioned before, as free cash flow ramps, debt repayment remains our top priority. At the same time, we continue to pursue accretive tuck-in acquisitions that complement our growth strategy. We are confident that our inflecting free cash flow and strong liquidity position enables us to simultaneously achieve our financial priorities. Now turning to our increased guidance. Based on our strong Q3 performance and favorable business dynamics, we're setting Q4 guidance ahead of what was implied at our August call. We now expect reported revenue growth of approximately 7% to 7.3%, organic constant currency revenue growth of approximately 5% to 5.3% and adjusted EBITDA growth of approximately 25% to 26%. This implies adjusted EBITDA margin nearing 25% or 360 basis points of expansion on a year-over-year basis. On free cash flow, we now expect to deliver positive $55 million to $60 million for the quarter. This implies that for the full year of 2025, we expect reported revenue growth of approximately 5.1% to 5.2%, organic constant currency revenue growth of approximately 5.5% to 5.6%, adjusted EBITDA growth of approximately 22% to 23%. This implies adjusted EBITDA margin nearing 22% or 300 basis points of expansion on a year-over-year basis. And our expectation for breakeven levered free cash flow is a $20 million improvement versus the midpoint of our previously stated range. I'll note that margin expansion has exceeded our expectations in recent quarters. We attribute this outperformance to AI-driven operating efficiencies, including as part of our ongoing GfK integration. Heading into 2026, we're actively identifying additional AI-driven operational efficiencies across the business. In summary, it was a strong Q3, and we're excited about what's ahead. We're focused on closing out a strong 2025. We're in the midst of finalizing our plans for 2026, which we expect to be another year of mid-single-digit growth, strong margin expansion and significantly increased free cash flow generation. We intend to provide more details on our Q4 and year-end earnings call tentatively scheduled for late February. Operator, we're ready to open the call for Q&A. Operator: [Operator Instructions] We'll take our first question from Alexander Hess at JPMorgan. Alexander EM Hess: NIQ exceeded its guidance at a time when many of your CPG clients have been paring back their expectations for their calendar years or fiscal years, at least those that we follow. Can you walk us through the general trajectory of your clients' wallet of trade, R&D, marketing, sort of that wallet that you're able to capture share of? And then what you guys are doing that's specifically increasing your share of wallet, which feels like sort of where you're at and what the trajectory is right now. James Peck: Yes, great question. It lets us explore a lot of questions that other folks might have. And I'll start off by saying, as you know, whether things are going really well or things aren't going so well for our clients, they really need our mission-critical services. So in good times, they need us more for innovation. Maybe in bad times, they need more to help them understand where they want to spend their money and where they're going to get the most bang for the buck, and that's holding true right now. And of course, we have a lot of new innovations that are part of our growth strategy that are increasing our share of our clients' wallet as they're on their own journey for growth. And so as you know, Tracey worked at one of the biggest manufacturers in the world, and I'm going to turn it over to her to give her perspective from kind of a client's perspective. Tracey Massey: Yes. Our clients are in different places. Some of them are really driving innovative solutions. So if you look at the market and performance of our clients, the ones that are winning that have the best innovation are the ones that are partnering with us -- with our BASES AI Screener, our BASES Product Developer. We're helping them get much quicker to market with their innovation with some of our new AI products, but also then we're able to help them with their innovation. If it's working, then where to double down, increase your advertising, increase your trade. If it's not working, where to pare back and where to move your money around. So whether you're growing or you're struggling, we're absolutely critical to them across all their decisions. If I look at our top customers, 8 of our top 14 customers are growing mid- to high single digits, some of them in double digit. Some of them are in -- are struggling a little bit more where they've had -- and we've talked about this before, where they've got internal changes like they've changed their CEO or they've got restructurings or they've got divestitures, they tend to double down internally for a few months and then they pick their heads back up. So we're seeing really good momentum with our clients as they get coming out of some of these internal changes, we expect to see even better performance from some of them that are picking their heads up now and looking at where they can drive innovation and growth. But what you have to remember with these CPG clients, the ones that are growing are the ones that are winning. So they're all looking for our help to maximize their growth performance. That's where they get the ROI from their spend with us. Operator: We'll move next to Manav Patnaik at Barclays. Manav Patnaik: Jim, I appreciate all the detail on the AI debate. I think that was really important and helpful. I just had a follow-up in terms of -- can you talk about the data acquisition that you get? And I guess the debate is how much of that data do you buy that somebody else can buy and how much you collect yourself? I know you alluded to adding your context around it, but I was just hoping you could address that where the data comes from, question. James Peck: Yes. So as you know, we get data from literally thousands and thousands and thousands and thousands of sources. And some of it, I'm not going to give you a percentage of anything actually. And part of the moat around our business, which I think is what you're really asking me is that to collect that amount of data is really quite improbable, I think, for someone to try and do that. the way we do it. But that's a chunk we get from retailers. And then we get another massive amount of data from going into a huge network of people going into stores in the traditional trade and actually having to, by the way, using AI-powered technology going in and understanding what's selling in India, what's selling in different parts of Latin America, what's selling in different parts of Asia Pac. And then on top of that, of course, we get -- we have some of the biggest consumer panels in the world, delivering us all their e-receipts, telling us who they are demographically. And we collect that massive amount of information every day, every second of every day and add it to our database. That data is often very messy. And so not only do we have to do the normal cleaning, we also have to put it in context with which each of our clients view their world. And that's part of what we call coding. So there's a ton of metadata that goes into making our database function properly and function properly with AI, by the way, for our clients. And so that is really the moat. And I think you're trying to get at, well, someone can just go buy data and they'll slap on ChatGPT and they're going to create something. That's just -- that's not going to happen. And I tried to give the example in my remarks. I was at Halloween, I was like, okay, let's see what's out there. Who is selling the most chocolate bars right now in the United States. And I won't say which clients came back on top. I could easily tell right away, this is what's happening real time with chocolate sales. This is what's happening this day, this week up to the month of Halloween or up to the day of Halloween. Here's what's happening in this region. Here's what's happening in the city. Here's what's happening in the store. Here's why they're winning. Somebody is discounting pricing, so they're selling more units, but their prices aren't as high as they normally are. And you can't get any of that kind of thing from anywhere where -- like that's somehow going to come through somebody throwing an AI tool on top of some public data, but you can go ahead and look it up yourself. Right now, you may be able -- if there's an annual report out there, you may be able to see someone's annual report at a very high level. But you're just not going to get to the level of granularity, even close that our clients need to run their business, and it's not going to be right. And I'm going to go off on this one for a little bit. If our clients make huge decisions based on what we do. And if we give them the wrong information, they can make decisions that will cost them millions and millions and millions of dollars. And so we also have the responsibility to make sure this stuff works right. And so we do a significant amount of testing to make sure that our AI tools sitting on top of this information and other analytic tools are providing the right answers. And while I've got this subject, if you think about it, we're sitting on all this data and what has been a constraint for any company like ours on providing more and more innovation is just enough access to capital or how much capital do we have to invest in all these new tools that we know we can build and that maybe others are building. With AI now, we have kind of a way to develop things much more cheaply and efficiently and we know what our clients want. And so we can spend all day long innovating. So I think what you're going to find is that we are the ones who have access to this information to actually build things and test them and get them in our clients' hands. And so it's just going to make our innovation engine run that much faster. And then I'll just conclude with that -- to do what we do, we have to have a lot -- data stewardship is very, very important. So making sure that we're doing the right things with the data that we're allowed to do. We -- it's not just a contract. It also has to be done technically. There are a lot of things we have to do to make sure that certain clients' data don't get in the hands of others that they don't want them. And so that's a big part of our ecosystem as well and just another moat around the business. Manav Patnaik: Got it. That's super helpful. And then just a follow-up, Mike. You talked a little bit about, I think you were planning for '26. I missed that part a bit, but just early thoughts into this momentum continuing into next year and how we should think about the kind of prior numbers we had? Michael Burwell: Yes. So I think the numbers that you've had are still makes sense, Manav. But look, when we announce at the end of February, we'll give you guidance in terms of looking what '26 is. But we're excited about the momentum that we're seeing, right, in terms of what's happening from a revenue standpoint and the launch of both of our AI activities in terms of what it's doing to drive revenue as well as what it's doing for us in terms of coding and margin improvements as well. So I'm excited to be able to give you more of that preview. I guess I just think we're continuing to move in that direction and momentum. And I guess I look forward to giving you that update when we get through Q4 and update you at year-end in terms of what we look like for '26. But nothing further at this point other than like where we're trending. Operator: We'll move next to Ashish Sabadra at RBC Capital Markets. Ashish Sabadra: Just wanted to focus on EMEA in particular, where we've seen some really material acceleration in growth. I was just wondering if you could drill down further and talk about what's really driving that robust growth in Europe in particular. Michael Burwell: Sure. When we look at Europe, we have continued -- and I'm sure Tracey will comment on it. Our Panel on Demand service offering is doing very, very well. It's being widely accepted and that people can look at Discover. And in Discover, they can get the overall market read, but they also then can look at consumer panel information so they get both what was sold and why it was sold. And it's really powerful to be able to bring that together, particularly as you look across the markets that represent EMEA. It's been very, very well received. But Tracey, maybe I don't know, you want to comment on that? Tracey Massey: Yes, sure. There's 2 big impacts in our EMEA region. Firstly, it's where our GfK acquisition was the biggest, the tech and durables part of our business. If you remember, we acquired that in 2023. It was a bit of a drag on our growth in 2024, and we've been able to turn that around this year. So that's a big part of their growth as that business, that large business turns around. But also, like Mike said, the consumer panel business, growing over 20% in EMEA, and that's really a result of this panel on demand. If you remember, when we divest -- when we took -- we bought -- we acquired the GfK business, we had to divest our panels in Europe, and we weren't allowed to compete against YouGov until Q4 of last year. So we've seen a massive acceleration once we've been able to compete in consumer panel. We've built our own panels and significantly increased the size. We've seen many, many takeaways in that part of the world as we've done that. And the main reason, like Mike said, is because we've got panel on demand. You can see measurement, which is our RMS solution, which tells you what happened. And you can see why it happened, which is our panel solution. You can see it in one place. If you don't buy -- we're the only people that can do it in one place. So I'll give you an example. One of our clients had some out of stocks on one of their chocolate products and they saw their sales go down. They were able to see that in our measurement business. And then when they looked at why that happened, not only did they find that their sales went down because they were out of stock, but when they came back in stock, customers have switched, they switched to other brands, and they've had an impact on penetration and loyalty. They can see all of that on one platform. You can't get that if you're with anybody else because you've got measurement in one platform, panel in another, and you've got to go in and out of systems and you've got to try and work out what's going on. We're winning a ton of business in EMEA, in particular, because we can put both in one place. And in particular, that panel business is really picking up a lot of our RMS clients getting more efficient, too, because if you can buy from one supplier, that's a cost saving. So not only are they getting better information and being more efficient internally, they're more efficient on their spend because they're moving the second part of that business, the panel business to us and having both together. Ashish Sabadra: That's great color. And then maybe just on the Activation side. Again, you've seen some improvement there in the third quarter, but fourth quarter tends to be the seasonally stronger quarter for Activation. I was just wondering the kind of visibility that you have for Activation revenue in the fourth quarter. Obviously, your fourth quarter guidance was really strong, but any incremental color on the Activation side? Tracey Massey: Yes, we see strong momentum for our Activation business quite often in Q4. Clients are trying to spend their budget. I know that sounds crazy, but they've got budget, they will spend it in the fourth quarter. They've been -- they know where their business is going. They know what they can and can't spend. So we have very good visibility into our pipeline, feeling good about that activation business. It picked up in growth in Q3, up against some very tough comps last year. We had a very strong Activation comps in Q2 and Q3 of last year, and we expect to see a good Q4 on that Activation side. Operator: We'll take our next question from Andrew Nicholas at William Blair. Thomas Roesch: This is Tom Roesch on for Andrew Nicholas. I was wondering if you could provide color on your pipeline in the fourth quarter and exit the year across Intelligence and Activation and just kind of the visibility you have into both as well. James Peck: Yes. This is Jim. So we obviously have a ton of visibility into our pipeline. I want to make sure I'm covering your question because we just talked about Activation, but both in Intelligence and Activation, we actively manage our pipeline every day, of course. And so it's very -- it's highly predictable to begin with, as you know. And so the variable part, which is I think what you're talking about, which would include new wins or new projects is very, very, very visible to us. I want to let you have a follow-up question though, because I don't know if there's something behind your question that you're trying to get at. Thomas Roesch: Yes. I want to maybe focus on like new wins. Are you seeing those come in during the fourth quarter like thus far? And kind of what are you projecting as you go into 2026? James Peck: So it's really more of the same where we are focusing on multiple things right now. So let's make sure we get all our various forms of price increases all set and ready to go in '26. Let's continue to make the big push on SA&I or what we call activation as the year is ending and our clients are just by their nature, spending their different parts of their budget. And so we need to get that closed and fulfilled, and we feel really good about that. And then, of course, just continuously as contracts come up with our clients looking for new wins and looking to penetrate with our different innovation projects or different new product capabilities. And so we feel like we have good -- the momentum there already, right? It's been building since last year, really, 2024, 2025, and we just see the same as we run into 2026. Thomas Roesch: And then for my follow-up, I was wondering if we could double-click on the SMB market and just kind of what the health of the end market is, especially given all the tariff noise? And then also if you have any color on the growth you saw in the quarter there? James Peck: Yes. I think we'll let Tracey talk to that. She manages that every second of every day. Tracey Massey: Yes. So on the SMB market for the smaller clients, we grew 20% in '24. We're growing 20% year-to-date in '25, very strong market for us. There's a big market out there that we've got opportunity to activate against. We're winning against our competition, taking business in that space and also creating lots of new clients. It's a high churn business. They go in and out of business. And many of them go from small to then become bigger clients as they grow their business. But we're very, very happy with that part of the business, like I say, double-digit growth. Operator: Next, we'll move to Jeff Meuler at Baird. Jeffrey Meuler: Can you comment on the sustainability or runway for growth in Panel on-demand just as you anniversary the relaunch in EMEA? And if you can comment on how adoption is going forward in other geographies or if they require more of a displacement sale. James Peck: Go ahead, Tracey. No, go ahead. Tracey Massey: It's a very -- we've got a lot of runway there. In terms of panel, we're not -- in terms of RMS retail measurement, we're the largest player; in terms of panel, we're not. So we have a long, long runway there and a lot of runway in many parts of the world. EMEA was very strong growth rate because we were restricted from actually having that competition for a while. Now that restriction is off, expect it to come down a little bit, but not a lot. There's a massive market out there. And like I say, nobody else can do both. So long, long runway and across the world. Jeffrey Meuler: Okay. And then on the AI-driven margin improvement narrative, I just want to see if we can better tie that to what we're seeing in margins on a geographic basis because if it was more AI-driven, I wouldn't expect the margin expansion to be so concentrated in EMEA, and I'd expect more in the Americas, if you can comment on that. But I think you were making a point that AI tools were helping with GfK synergies or something to that effect, if you could provide more perspective on that. James Peck: Yes. Let me just talk broadly about AI and then maybe, Mike or if you want to sweep in and talk about EMEA. So you don't have to look hard at our company to know that AI applies, we're a data company. So everything from collecting the information with -- for the people out in traditional trade, just helping them know where to go when they get in a store, helping them know what to look for, doing recognition, and it's just going to keep getting better and better and better at doing that. And so that's not only enabling efficiencies, but that's enabling better collection, right? And so that -- you're going to find that helps us in areas that are emerging markets. But AI also applies in how we code the data and how we prepare it to go online, and that's some of our biggest costs. And just like any other company, we are using AI to get more efficient in HR, to get more efficient in finance, to get more efficient in legal and all our support groups. And of course, we're using AI to get much more efficiency in our, let's call it, coding, so actually writing code, software code. So I -- you're seeing the beginning of that in our margin expansion. And as we run into next year, I think you're going to see even more -- if I could foreshadow that, you're going to see even more expansion as we've, I think, even in the last 6 months, had further epiphanies on how we can use AI to get more efficient in everything we do. So we're feeling very much on our front foot with understanding how to make it work, and we're -- every one of the people who report into me is becoming very, very -- or has become very, very AI proficient in how to lead it and then how to generate results from it. And so it's something we're focusing on quite a bit, and I think you're going to see it in our results, and you're already seeing it in our results. Michael Burwell: And maybe, Jim, just to add to your comments. When you think about the GfK business, and we've been focused on that integration, the largest piece of that historical business is in EMEA and a big part of margin improvement has been the integration that's been going on. So that's the driver of why you're seeing that margin being driven. And equally, just to repeat back what -- pile on what Jim said. And when you look at our operations and we're doing coding more efficiently and what that means for us in terms of margin and using AI to assist us in terms of coding as well as customer success, as we continue to become more and more AI-driven in our customer success support, all of those are becoming operating efficiencies that are flowing through in terms of margin. Operator: We'll move to our next question from Wahid Amin at Bank of America. Wahid Amin: In your prepared remarks, I think you mentioned strong pricing and up or cross-sell within the quarter. Is there anything in particular that contributed more in this quarter or region specific? I think last quarter was called out a bit, but any commentary there would be helpful. James Peck: Yes. So I'm going to repeat our revenue algorithm. And so the pricing just is consistent, right? And that roughly equates to about 2.5% of our growth. And then the new capabilities or what we call innovation contributes roughly 2.5%. And that's where you get your cross-sell, upsell balanced across those initiatives. I think you -- we would note that e-com and our consumer panels with Panel on Demand are especially strong and continue to contribute, but that -- those also have a long runway for growth. And then our SMB is, again, it's like a machine. It's a steady drumbeat of establishing new clients, more like with telephonic sales, if you know what I mean. And so we have more of a machine there. We know who all the new entrants into the market are. And so we're able to identify them, tell them how we can create value. We already know how we're creating value. And so that's just a steady drumbeat. And so that algorithm continues to march on and we'll continue to march on every month and every quarter. Wahid Amin: Got it. And then on the region-specific, Americas has sort of come down a bit on organic growth. I know it faces difficult comps. But is there anything you're seeing from a client perspective where you're a bit more confident on the go-forward basis of that region? Tracey Massey: Yes. So the biggest reason is the comp. So in Q3 last year, we grew 9% in the Americas. So the biggest reason for the slight deceleration is just that comp year-on-year. It's an easier comp in Q4. We're not seeing anything specific with related to clients. That part of the business is also very strong. I would say some of the launches happened a little bit later. So we recently launched our Panel on Demand in the U.S. later than we launched in Europe. So that big omni shopper panel, we moved to 500,000 consumers. That was only recently launched in the U.S. So I expect to see an acceleration as we go into Q4 and into next year as that product really takes hold and people see the benefit of that much larger panel because it's a massive difference you can get much more granular in your understanding of the consumer, where they live, what they're doing, then how bigger your panel is. So expect to see that continue, but nothing out of the ordinary, seeing good pickup of our new solutions on full view measurement, whether that be e-com or our Costco and Amazon Reads. We're starting to see some really nice momentum there and in particular, momentum on the activation side of the business with BASES Innovation AI Screener. Operator: We'll go next to Shlomo Rosenbaum at Stifel. Shlomo Rosenbaum: I just want to start out a little bit just getting a little bit more granular, if you could, on the status of the GfK integration. It looks like the top line growth is really moving in the right direction, which is frankly usually the hardest part. Could you talk a little bit about what's going on in terms of the operational side and margins? How much of the margin expansion is because you're outperforming the top line versus the efficiencies you were trying to get? And where are you operationally? There was just also like a comment about the integration driving a higher AR, DSO over there. Maybe you can kind of talk about that as well. And then I'll have a follow-up. Michael Burwell: Sure, Shlomo. Maybe I'll start off here. When you think about it from a revenue standpoint, you may remember when we talked about it at the IPO time frame, we said that the strategy was going to be rinse repeat similar to what we had done with NIQ. And we knew the playbook, and we were going to continue to execute it, and Tracey alluded to it in her comments and that's a playbook we've been running. We've gotten discipline around our service offering, discipline around our contracting process and making sure we're exceeding clients' expectations overall and making sure pricing is flowing through the same algorithm that Jim commented on when you think about it in terms of price, what we're doing in terms of end markets and what we're doing in cross-sell and upsell activities. That algorithm is in place and operating and driving top line for the legacy GfK business. And look, I look at it roughly a couple of hundred basis points in terms of being driven through that. When you look at it from the back office side, I really feel good as the back office is getting principally done. Ops is going to be complete through next year. And we're continuing to drive margin through that. So I think about half of that margin improvement that you're seeing from us is coming through the GfK integration. So the top line is obviously helping that, but we had anticipated that, and we're delivering it through the bottom line overall. So look, we're very pleased with where we are, what's going on and how that business is performing. And as I say, it was the same playbook we pulled out and executed and have been driving. Shlomo Rosenbaum: Okay. And before the next question I had is just to go through the sequential margin trends in the Americas and APAC, they were down a little bit. And is there a seasonal impact, a mix issue or anything else about that? And also, if you could just put a bow on the last answer, just to comment a little bit about that AR, DSO comment that was in the press release about GfK, what that was about? Michael Burwell: Sure. So when I look at the what's been happening on the GfK side, we're continuing to see that margin improvement flowing through. When we look at the DSO comment, we did see -- when we put the 2 systems together at the end of Q2, we had a little bit of a timing issue in terms of getting that cash collected, billed, collected, et cetera. Just as we integrated those systems, we were all over it, and you saw that improvement happen in Q3, and you really saw that improvement being driven through that DSO drive a reduction of 7 days that I commented on overall. The GfK is -- we're continuing to drop that bottom line. So maybe, Shlomo, go back just to make sure I covered your questions. Shlomo Rosenbaum: Yes. Just on that GfK one, there was just some kind of comment about DSO going up a little bit on GfK. That was the only thing I was just wondering if there's some lag that's still going on a bit. Michael Burwell: Yes, that was the Q2 and really not at all when only seeing working capital as you're seeing in the numbers really flow through in a very, very positive fashion. Shlomo Rosenbaum: Okay. Okay. So then we're fine on that. And then if you could just finish up on the sequential margin trends in the Americas and APAC and if it's seasonal mix or something else? Michael Burwell: So when you look at the APAC margins, we're continuing to invest in improved coverage. And that's really what's driving that side of the equation. I think we touched on EMEA. And when you think about North America, as Tracey said, you had a little bit tougher comps in terms of where that revenue was flowing. And then therefore, with our fixed cost base, you saw a little bit of impact on that as it relates to margins. But we look at it in aggregate and feel very good about where our margins are and continue to drive that 300 basis points improvement over the past -- versus the prior year and over 60 basis points improvement from Q2 to Q3, and we're going to continue to drive margin improvements going forward, kind of going back to Manav's comment -- question. Operator: We'll take our next question from Jeff Silber at BMO Capital Markets. Jeffrey Silber: I know it's late. I'll just ask one. I hate to nitpick here, but when looking at gross margins, you didn't have a lot of gross margin expansion on a year-over-year basis, and we've seen that play out in prior quarters. Was there anything specifically going on this past quarter in terms of mix or anything else? Michael Burwell: No, nothing specific. I mean we tend to manage the business really looking at EBITDA margins in terms of thinking about it in total, but there's nothing that I would call out or that was unusual, Jeff, to make sure to call out to you. Operator: And we'll move next to Jason Haas at Wells Fargo. Jason Haas: The fourth quarter guidance does imply a decel on an organic basis from 3Q to 4Q despite the compares getting easier. Your commentary sounds pretty positive on how the business is trending. So I was just curious if there's any factors to think about that could be driving that decel in 4Q? James Peck: Yes. So we're -- as you know, from the last quarter's guidance, right, we're -- and in my opening remarks, we are very confident in our growth algorithm, and we're really going to stick to that as we're kind of training the company and training ourselves to hit the targets that -- or beat the targets that we're giving out. So there's nothing systemic or something like that, that you're looking for that we can -- that you would associate with a slowdown. And as you know, we're fairly conservative here. And I think as a new company doing -- becoming public, that's the track record we just want to establish. We're managing a whole portfolio of geographies, a whole portfolio of new initiatives, a whole portfolio of renewals and takeaway. And so we feel like very comfortable in the range that we're in. And you can expect us to continue that pattern going forward. Jason Haas: Okay. That's great. That's very helpful. And then as a follow-up, -- in the prepared remarks, you did -- yes, just for the follow-up, I just wanted to ask about in the prepared remarks, there was a comment about you're expecting significant margin expansion next year. And I know you're not giving guidance for next year, but what was the thought behind putting that comment out there? Are you trying to say that there's not any sort of like onetime benefits in the margins this year, and therefore, this is the right run rate? Or like, yes, what was the genesis behind that comment? You can't like talk to next year, maybe you could just unpack like this year's margin, so we know what's onetime, what isn't? James Peck: All right. I'll let Mike unpack this year's margins. But of course, our comments are very deliberate when we say something like that. Between continued synergies that we're going to get from the GfK integration, which will manifest next year and continued just good operating efficiencies. We are going to see AI starting to contribute now, but it's going to continue to accelerate. And we're very confident in the things we've -- that we're doing, they're going to allow that to happen. And we'll be able to talk more about that, of course, next year when we're on the same call. Mike, do you want to talk about. Michael Burwell: Yes, Jim, I would just add to your comments. We have been talking about getting to mid-20s margins in the midterm is what we had talked about. And -- but we're -- we're continuing to see AI, as Jim said, really kick in. We know that GfK's synergies are driving 2/3 of that margin improvement and organic revenue growth, as we've talked about previously, 50 to 100 basis points improvement. So we are continuing to drive margin improvements, and we'll see that going forward. Operator: And that concludes our Q&A session. I will now turn the conference back over to Jim Peck for closing remarks. James Peck: Yes. So thanks, everyone, for joining us. We look forward to continuing our journey with you and with our clients, with all the people who work for NIQ who do such an amazing job and of course, with our investors, and we'll see you in February. Operator: And this concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Good morning, everyone, and welcome to Geodrill's Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded today, November 13, 2025. Before we begin, certain statements made on today's call by management may be forward-looking in nature and, as such, are subject to various risks and uncertainties. Please refer to the company's press release and MD&A for more details on these risks and uncertainties. I will now turn the call over to Mr. Dave Harper, President and CEO of Geodrill. Please go ahead. David Harper: Thank you, operator, and good morning, everyone. Welcome to Geodrill's Q3 conference call. Joining me on today's call is Greg Borsk, our CFO. I'll begin. Fiscal 2025 is playing out to be a year of 2 halves. Our first half was evidently solid. Quarter 3 2025 reflects the complex realities of strategic expansion. While our financial results show short-term cost absorption, they also highlight the strength of our long-term vision. We are executing a deliberate strategy to build a resilient geographically diversified platform capable of delivering consistent performance across seasonal and regional cycles. South America presents challenges but also opportunity. It is a market that demands upfront investment, operational discipline and patience. We have doubled our rig count in the region, supporting major multiphase drilling contracts. This expansion is not just about growth. It's about positioning Geodrill where we see long-term value. Geodrill has always operated where there is opportunity and risk. This is how the company started 25 years ago with risk comes reward. The higher the risk, the higher the reward. We don't chase crowded competitive markets, we never have. We go where opportunity lies. One of our key advantages is our proximity to operations. We live and work close to our drill rig fleet, boots on the ground. I live in West Africa, and we have now established hubs in South America and in Egypt that are treated with the same level of commitment. Despite these headwinds, we remain focused. Our platform in Chile is growing. Our West African operations continue to show strong post wet season demand. Surface drill programs in Egypt are restarting and our multiyear multi-rig contracts provide a solid foundation for sustained performance. We have achieved 7.8 million man hours LTI free, our bidding pipeline is highly active. Commodity prices remain favorable, and our team continues to deliver with discipline and resilience. I'll now turn the call over to our CFO, who will review our financial performance in detail. Gregory Borsk: Thank you, Dave. As Dave mentioned, in Q3, we faced significant headwinds. However, we still delivered revenue of $39 million, an increase of $4.9 million or 14% when compared to $34.1 million for Q3 2024. The increase in revenue was a result of the company's strategy to diversify its operations to South America, and to operate in a geographic region that is not impacted by wet season. The increase in revenue was predominantly the result of an increase in revenue in South America of $5.8 million partially offset by a decrease in revenue in West Africa and Egypt. The gross profit for Q3 2025 was $2.4 million being 6% of revenue compared to a gross profit of $8.4 million being 24% of revenue for Q3 2024. The decline in the gross profit margin this quarter can be summarized regionally as follows: West Africa contributed to 66% of the decline. The decline in the region was driven by wet season -- the wet season slowdown, the drilling mix, wage inflation and the Ghana cedi appreciation. We expect improvements in Q4 in Ghana, Cote d'Ivoire and steady performance in Senegal. Egypt contributed to 17% of the gross profit decline. This was due to lower revenue and lower drilling activity. Q4 recovery is expected from restarting surface drill programs in Egypt. Lastly, South America contributed to 17% of the decline. Rapid rig expansion in the region led to upfront costs and operational delays, especially in Chile. Q4 improvements are expected with stabilized operations and new job starts. EBITDA was $4.3 million or 11% of revenue compared to $7.6 million or 22% of revenue for Q3 2024. We reported a net loss for Q3 2025 of $1.5 million or a loss of $0.03 per share compared to net income of $2.6 million for Q3 2024. EBITDA and net loss were favorably impacted by the expected lifetime credit recovery of $100,000, a foreign exchange gain of $800,000 and the $1.8 million gain on equity investments. Despite operational challenges this quarter, our year-to-date performance reflects the underlying strength and resilience of our business. Over the first 9 months, we have delivered solid financial results, maintain financial discipline and reinforce our strategic positioning for long-term growth. We ended the quarter with shareholders' equity of $129 million, including net cash of $11.1 million. We remain confident in our ability to navigate the expansion in South America, leveraging our core capabilities and disciplined execution to optimize margins and capital efficiency. At this point, I will turn the call back to Dave. David Harper: Thank you, Greg. So let me jump straight to it. The drilling market is strong, and we are positioned to outperform. The global mining drilling sector is entering a multiyear expansion recycle driven by a number of factors. For example, rising commodity demand, governments doubling down on strategic resource security, and increased capital deployment across exploration and development drilling. This is translating into real activity on the ground, and Geodrill is uniquely positioned to capture outsized value through its disciplined execution, operational leverage and strategic footprint. At Geodrill, we don't chase volume for volume's sake. We focus on disciplined growth, margin integrity and operational excellence. That is what drives shareholder value. So in closing, to recap, here's what sets us apart. Global rig utilization is climbing, and Geodrill's is the highest in the industry. Our rigs are working. Our teams are delivering and our clients are extending contracts. This is not a theory. This is happening real time. It's on the ground. Our margins will return. We are seeing pricing power across key markets. And as we work through operational challenges in South America, we remain confident in our ability to deliver the improved returns we have achieved in prior cycles. Our balance sheet is clean. We are not overleveraged and we are not overextended. We have the flexibility to grow and the discipline to protect returns. And finally, our work pipeline is real. We have contracts in hand, mobilizations are done and new tenders are in advanced stages. We are building a geographically diversified operationally resilient business, and from here, it's head down execution, eyes on the prize, and we are confident in the path ahead. This concludes our prepared remarks. Q&A session, over to the operator. Thank you very much. Operator: [Operator Instructions] Your first question comes from Donangelo Volpe with Beacon Securities. Donangelo Volpe: Just looking for some clarification on the gross margin shortfall with the focus on Africa and South America. So I guess related to Africa, like was there an earlier shutdown and kind of later resumption of activity in the wet season? Or is like most of the impact through the currency appreciation of the cedi? Gregory Borsk: Donnie, it's Greg. Yes, it was actually -- it was a combination of really 3 items there. We had the wet season, so the slowdown impacted us in the 3 countries in West Africa. It hit us in Ghana. It hit us in Cote d'Ivoire and also Senegal. So you had lower drilling activity. And then we also had 2 other items that contributed to that. We had significantly higher salaries in West Africa. There's a salary increases that we put in at the start of the year. So on a quarter-over-quarter basis, they're really amplified in Q3 2025. So that led to a part of the gross margin decline. And then lastly, in West Africa, the cedi appreciated considerably. Q3 2024, the cedi was about 15, 16:1. And what we experienced in Q3 this year was about an 11 to 12:1 cedi. So it's a significant increase when we convert the cedi to U.S. dollars for reporting significant increase in our salary. So that's the West Africa. In South America, the gross margin, we had a negative gross margin and we're just significantly ramping up operations in South America, and I made a note on that in the revenue. And what's happening when you're ramping up as quickly as we are with significant jobs and significant rigs on the continent -- it's the costs are well ahead of the revenue. So we're -- we hope to catch that up in Q4. And also, we just didn't get the drill time that we needed in Q3. So that kind of explains West Africa and South America. Donangelo Volpe: Okay. I appreciate the color there. Just a follow-up on South America. I was going through the MD&A, and I kind of saw it was -- there were onboarding delays, coupled with operational issues. I'm just kind of curious on what some of those operational issues were. Was it trying to ramp up the new employees that were brought on, like were there any delays coming from the customer themselves? Like can you just provide any more color on what was happening there? And if we're expecting -- if we're kind of expecting a drag on gross margins to persist out of South America as you guys are starting new projects? David Harper: It's Dave, Donnie. Yes. Look, it was basically onboarding. The solid ramp-up, we went in quarter 3 last year, we've generated about $2 million in revenue. This time, it was significantly higher. So we've doubled the rig fleet and basically, what happens with all of that is the training and the preparation before going to a Tier 1 mining site. It begins about 2 or 3 months before you actually arrive at site. And so we had a solid -- there's one rig would come -- go out into the field, another one would come in and we'd have to go through the cycle again. So it was basically just onboarding. There is light at the end of the tunnel, I should add, and that is that the rigs are actually now in the field, and they are drilling, and they're producing. And so we're expecting a pretty solid turnaround from South America in quarter 4. So it was a tough quarter. But we're confident that the hard yards are done, all of the costs are prefinanced and upfront and revenue is the laggard. And so the rigs are in the field. They're turning, they're earning and the heavy upfront costs are pretty much absorbed now. So from here, it's -- it should be a bit of a turnaround story for sure. Gregory Borsk: Yes. Donnie, one other thing just on South America, our high-altitude job, we didn't -- we only got about 2 weeks of drilling in Q3, call it, the second half of September. But that's going to be fully operational through Q4 for us through October, November, December. And then also in South America, we have another job starting, which started for us in October. So you'll see that in Q4. So we're expecting significant revenue increase in Q4 in South America. Donangelo Volpe: Okay. But just size of that new project being started, are we expecting like similar start-up costs that we saw related to Q3? Or we would anticipate a little bit of improvement on that front? Gregory Borsk: No, yes. Sorry, we had that a bit in Q3. We did get started, but only for about 2 weeks, second half of September. So we were fully ramped up by the start of Q4. David Harper: The pain side of the price is essentially out of the way. And from here, it's the gain that follows the pain. So we'll see improvement in quarter 4 for sure. But we've had a significant increase in activity levels in South America, and all of that was essentially prefinanced throughout -- some of it was quarter 2, but the majority of it is quarter 3. Operator: [Operator Instructions] Your next comes from Vitaly Kononov with Freedom Broker. Vitaly Kononov: I have a question related to the gross margins that we just discussed. So yes, I could hear the reasons for the gross margin decrease. However, in the notes to the financial statements, also come across the drill rig expense and the contractor services that were up nearly 30% and 60% year-on-year. Could you please give us a little comment on that? What goes into those line items? Gregory Borsk: Yes. So what happens in the -- the major components of our cost of goods sold are salaries and wages. And if you look at that, our salaries and wages increased significantly. Typically, when we're having our normal gross margin, we're able to recover those salary and wages through drilling performance. And in Q3, with the start-up in South America, we didn't get the drilling performance to cover that, okay? So -- and that's due to the rapid ramp-up. Also, I think you mentioned the drill rig expenses. Again, certain of those drill rig expenses are related to operations. And if we're not getting the -- they're fixed, they're rentals, they're consumables, et cetera, and we just didn't get the revenue in the quarter in South America to capture those. Vitaly Kononov: All right. If I could hear you correctly, you mentioned that in South America drills -- the drill rigs were only in use for 2 weeks. So can you give me a little approximation that... Gregory Borsk: No, no, sorry. No, that -- no. So that's -- what we communicated was -- in South America, we have a high altitude job that is seasonal. So it didn't -- it only drilled in South America. We were only able to restart that job later in September. So that one job was only operational for 2 weeks in the quarter. We had other jobs in South America that operated throughout the quarter. And that's how we effectively -- if you look in the MD&A, we disclosed the revenue from South America. The revenue in the quarter was approximately $6 million. I think it was about $5.8 million from South America. Vitaly Kononov: Great. So since we're on the topic of South America, can you give a number estimate that you might have internally for the 19 rigs that are in use at the moment? How many are actually on site? Do you have a utilization rate that we could apply in our model? David Harper: This is specifically for South America or specifically -- or sorry, for the group? Vitaly Kononov: Well, since South America is expanding at the moment, I'm more curious about it, but you can answer to both regions. David Harper: So in terms of utilization in South America, utilization is 75%. Vitaly Kononov: Okay. Great. And so are you moving operations from Peru to Chile? What are the reasons? Do you have a real backlog of orders coming from Chile, that so? David Harper: All our focus at the moment in South America is Chile. We are 100% focused on Chile. We had one rig operating in the quarter in Peru. We will now have decided to focus on the Chile market. We'll actually be actually winding down the operations in Peru for now so that we can focus on our pipeline of work in Chile. Operator: There are no further questions at this time. I will now turn the call over to Dave Harper for closing remarks. One moment please, there is another question from John Sartz with Viking Capital. John Sartz: I noticed that despite the less than stellar results, you still like can't avoid building cash positions. So I'm wondering if there -- what plans you might have and suggestion on my part would be perhaps you might, a, reintroduce your dividend or b, buy your shares back. Gregory Borsk: Yes. The -- thanks, John. Thanks for the question. Yes, I think you did notice we did have -- the balance sheet, our balance sheet is extremely strong. If you look at -- we ended the quarter, we actually increased cash. Net cash at the end of the quarter was $11.1 million. So we're very happy with our total shareholders' equity. We have $129 million in shareholders' equity ended the quarter with net cash of $11.1 million. So we're extremely happy with the increase in net cash. And we'll look at -- we'll revisit the dividend. We'll look at a dividend when we return to profitability. John Sartz: What about share buybacks? Gregory Borsk: Share buybacks, and we look at in conjunction with the price of the share. And our share buyback, or NCIB is in there to use it as a floor. So we'll monitor the price of the stock throughout the quarter, November, December. And if we need to get in and put the -- in place, we will. But again, that's more of just to put in a floor for the stock price. But -- so it's hard to say, but we'll look at how the stock performs over Q4 and into Q1. Operator: Your next question comes from Donangelo Volpe with Beacon Securities. Donangelo Volpe: Just a quick follow-up. Just looking for some quick facts here. Q3 utilization -- or yes, the utilization rates on a regional breakdown would be appreciated. And then on a consolidated basis, the commodity mix for the quarter, given the improved activity in South America. David Harper: So utilization currently is approaching -- it's north of 70%. It was 72% a couple of days ago, and it continues to trend north. We're getting back to basically utilization that we saw in quarter 1 and quarter 2. So north of 70% kind of hovering around 72% at the moment, we think will probably trend to about 75% as we go through November. And then traditionally, what happens is we have a solid first half of December, and then we slow down for the Christmas shutdown. And that pretty much goes through to about the first or second week of January. So if we look at it on a semester basis between quarter 4 and quarter 1 through that sort of growth period, if you will, coming off a low base is the things get really solid and continue through quarter 1 and quarter 2, but we do get this culling out of the -- in the trajectory, if you will. And if you look at the history of the company, this has pretty much been the norm since -- I mean, every year is pretty much the same. We do our best work in quarter 1 and quarter 2, then come quarter 3, which is essentially the quarter we've just come through, we just reported, that's the quarter that we see as the consolidation quarter. It's the quarter in which we literally so for what we harvest through quarter 4, quarter 1 and quarter 2. Now we begin that -- we're actually seeing that harvest begin just now. It will -- we do get an interruption during the second half of December and the first half of January and it normally flows into a very solid quarter 1, which is usually followed by a very solid quarter 2. So does that answer your question? 70% -- north of 70% at the moment, probably going to trend to about 75%. And I think once we hit our straps in quarter 1, quarter 2 next year, we'll be basically possibly north of 80% last quarter 1, quarter 2, there were times there where we hit 81%, 82%, 83%. I hope that answers your question, Donnie. Donangelo Volpe: Yes, that answers the first part of it. The second part was on the commodity mix for the quarter and how that compares to last year. I would assume a little bit more copper exposure. David Harper: Yes. So looking at it of the, call it, more or less 100 rigs. I think the rig count we closed the quarter was 98 rigs. We have 20-odd rigs in South America, of which about 15 are currently drilling. So it's kind of -- it's trending north and it's moving from what was about 15% of our business to -- I expect it's going to probably end the year somewhere around 20% of our business. 80-20, gold, copper, nothing else at the moment, not drilling or anything else, just gold and copper with an approximate split of about 80-20, I would say, in around -- in high-level terms. Operator: There are no further questions at this time. I will now turn the call over to Dave Harper, CEO, for closing remarks. David Harper: And I'll just say thank you very much, everyone, for attending the call today, and thank you very much, operator. I'll say goodbye. Gregory Borsk: Thank you. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
Operator: Thank you for standing by, and welcome to the MediPharm Labs conference call to discuss its third quarter 2025 results. Our speakers on today's call are David Pidduck, President and Chief Executive Officer; and Greg Hunter, Chief Financial Officer. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The information during this call should be considered together with the more detailed information disclosure, financial data and statements available on the company's website and on its SEDAR profile at sedarplus.ca. As set out on the webcast slide, I would like to note that remarks during this earnings call may contain forward-looking information and forward-looking statements within the meaning of applicable securities laws. This includes, without limitation, statements about MediPharm Labs and its current and future plans, expectations, intentions, financial results, operations, levels of activity, performance, goals or achievements and other future events, trends, profitability, business developments. All statements other than statements of historical facts are forward-looking statements. The statements made are based on the company's current expectations, estimates and beliefs as of today's date. The company's remarks may also contain references to certain non-IFRS financial measures, including adjusted EBITDA. These measures do not have any standardized meaning according to International Financial Reporting Standards, or IFRS, and therefore, may not be comparable to similar measures presented by other companies. Please review the company's most recent disclosure materials filed on SEDAR for the risks associated with forward-looking information and the use of non-IFRS financial measures, including the section titled Reconciliation of non-IFRS Measures in the company's most recent MD&A available on SEDAR. Please note that all dollar amounts mentioned on today's call are in Canadian dollars unless otherwise noted. And now I would like to turn the call over to Mr. David Pidduck. Please go ahead. David Pidduck: Good morning, and thank you for joining us for MediPharm Labs Third Quarter 2025 Earnings Call. As you saw in our news release earlier today, in the third quarter of 2025, MediPharm continued to successfully execute against our strategic priorities, reducing costs while driving sales momentum and delivering 17% revenue growth year-over-year. This growth demonstrates the effectiveness of our strategy, highly differentiated capabilities and the dedication of our team. We continue to strengthen our position across complex regulated markets to deliver trusted pharmaceutical-grade cannabinoid solutions, advancing patient care and building a stronger global foundation for long-term shareholder value. In Q3 2025, international medical cannabis revenue grew 83% compared to prior year, with international medical sales now representing 56% of our total revenues. This is a significant achievement and underscores the success of our international product and market expansion strategy. Our achievements in international markets are built on years of preparation, investment, operational execution and regulatory capabilities that are not easily replicated. MediPharm holds a unique and unrivaled suite of pharmaceutical licenses and registrations, including an FDA-inspected facility. We maintain a portfolio of GMP-compliant products offered across the EU, U.K., Australia, Brazil and other jurisdictions, enabling us to operate confidently in complex regulatory environments. Our multiple GMP licenses are not just compliance checkmarks. They are strategic advantages that allow MediPharm to compete in the highest value-add segments of the global cannabis market. Our international capabilities position MediPharm as a trusted partner for delivering innovative, pharma-grade products globally and again, represent years of rigorous quality and regulatory work. It takes significant time and expertise to achieve this level of licensing and to support clinical research partnerships with pharmaceutical cannabis. Our infrastructure is purpose-built for international success, and our revenue results in Q3 demonstrate the impact of enduring partnerships, operational excellence and distribution networks that enable consistent and scalable growth. Financial stability has also made MediPharm appealing and reliable partner internationally. We have virtually no debt and remain committed to disciplined cost management, reducing Q3 2025 operating expenses by 19% year-over-year. At the same time, we are investing strategically to capture growth opportunities and meet rising demand in our core export markets, including Germany, Australia and the United Kingdom. Our balanced approach allows us to strengthen our path to profitability while positioning the company for continued long-term revenue growth. In addition to our international revenue success in Q3, we have several noteworthy international progress updates to highlight. In Q2 2025, we announced our plans to expand cultivation capacity by approximately 30% at our EU GMP-certified Napanee facility. I'm pleased to share that our operations team delivered on this commitment, successfully completing the first harvest from our newly added grow room recently. We've begun production on our first purchase order for Teuto, a leading pharmaceutical manufacturer and marketer in Brazil, and we plan to ship in Q4. While pricing pressure remains a challenge, we are working closely with partners to adjust positioning with launch time lines dependent on permits and partner compliance with authorization windows. MediPharm is one of just a few North American companies with partners to receive multiple sanitary authorizations for cannabis products while holding an ANVISA GMP license. The Brazilian medical cannabis market is growing annually and is expected to exceed USD 260 million by 2026. Subsequent to Q3, MediPharm also recently completed the company's first production order for France in partnership with an authorized distributor, marking entry into one of Europe's most promising emerging medical cannabis markets. This collaboration underscores our ability to develop new pathways to market for the company and ability to supply pharmaceutical-grade products that meet stringent European standards. France is the largest consumer of cannabis in Europe and has been gradually expanding its medicinal cannabis market. The French medicinal cannabis market is projected to reach revenues of over $250 million in 2025 and is poised to grow as new legislation develops. Looking ahead to 2026, we have partnered with a top-tier distributor in New Zealand, which in Q4 received approval to launch MediPharm products in the new year. We expect this partnership will position us to enter New Zealand, a developing, highly regulated market with strong growth potential. We are confident that these new market entries into Brazil, France and New Zealand will contribute to continued international growth in 2026. We also continue to monitor the U.S. market. As earlier this year, communication from the U.S. federal government and various media reports indicated that current administration is reviewing the rescheduling of cannabis federally in the U.S. Speculation is that this could mean the U.S. government potentially changing the classification of cannabis from a Schedule I drug to a Schedule III drug, though this is not confirmed. If this were to occur in the future, we expect that the rescheduling may signify some recognition of the medical benefits of cannabis at the federal level in the United States. Schedule III classification could expand the possibility for U.S.-based research on medical cannabis products. MediPharm has gone through the complex process of foreign drug manufacturing site registration with the U.S. FDA and has already shipped medical cannabis active pharmaceutical ingredients, API, and cannabis products to the U.S. for research, including National Institutes of Health, NIH-funded clinical trial. MediPharm was the first Canadian company to register a CBD API DMF with the U.S. FDA. With the possible rescheduling of cannabis, MediPharm Labs holds existing licenses and expertise to serve the anticipated expansion of U.S.-based research. Beyond new market entries, we continue to diversify our product mix internationally in our core regions of focus, including expanding our portfolio in Australia to include new flower strains, additional inhalable cartridges, edibles and novel metered dose inhalers. These innovations strengthen our leadership in advanced delivery technologies. As discussed in our Q2 '25 earnings call, the launch of our metered dose inhalers aligns with our strategy to deliver innovative pharma quality cannabinoid products globally. In Q3 2025, we launched these inhalers in Australia. And in Canada, we extended our inhaler portfolio to include minor cannabinoid formulations. Our metered dose inhalers offer patients a discreet, precise smoke-free delivery method, supporting both medical and wellness applications. The inhaler provides a fast onset format without smoke or vapor. It features direct-to-lung delivery for higher bioavailability of cannabinoids compared to ingested formats. And the metered dosing feature helps ensure greater precision and repeatability in dosing for more consistent outcomes. I'm especially excited about the transformative potential of our inhaler technology to meet consumer needs for a smoke-free controlled experience with fast onset. We envision a future where this format could become an attractive option for consumers who are seeking alternatives to combustible products, offering convenience and consistency that traditional consumption methods cannot match. As we prepare to launch our metered dose inhalers in additional international markets, including the U.K., we see meaningful opportunities to make this innovation more widely available and to explore how it can fit into evolving consumer preferences across both medical and wellness applications. We remain committed to offering a diverse range of products tailored to the evolving needs of patients and consumers with the metered dose inhaler offering more rapid onset, while our other products like tinctures, soft chews and soft gels allow for a slower onset and longer duration of effects. MediPharm's wellness focus combines innovative delivery technologies with patient-focused services and education. In Canada, we operate our own clinic network to provide direct access and support for patients, while internationally, we advance education through clinic partnerships and physician outreach. This commitment to education enhances patient engagement and informed prescribing, and it complements our role in supporting research by supplying pharmaceutical-grade products for studies aimed at improving patient outcomes. We are proud to support cannabinoid-based pharmaceutical research by supplying pharmaceutical-grade products for over 10 clinical studies and trials. On our Q2 earnings call, I spoke about the LiBBY Alzheimer's clinical trial. Today, I'd like to highlight another important research initiative MediPharm is supplying clinical materials for, the CAN-DRE epilepsy trial. This triple-blind placebo-controlled study is led by Dr. Lauren Kelly at the Children's Hospital Research Institute of Manitoba and spans multiple sites from Alberta to Nova Scotia. The trial is expected to enroll 90 participants to evaluate changes in seizure frequency across 3 formulations: a placebo, a highly purified CBD isolate and a cannabis herbal extract. Safety profiles will also be assessed. This is the first head-to-head comparison of isolate versus full spectrum formulations, addressing a key hypothesis supported by emerging clinical evidence. We value the opportunity to contribute to research that could shape future treatment options for patients. It has been estimated that almost 1 out of every 100 people in Canada have epilepsy and about 30% of people with epilepsy do not respond well to conventional therapies. Drug-resistant epilepsy, DRE, is when people do not achieve sustained seizure freedom after the use of several seizure medications. This clinical trial is being done to compare changes in seizure frequency reported at maintenance phase compared to baseline. Our collaborations with leading universities, medical institutions and pharmaceutical companies across Canada and internationally aim to advance the science of cannabinoid therapies and generate evidence that improves patient outcomes. These partnerships demonstrate our leadership in pharmaceutical cannabinoid solutions and highlight our commitment to driving innovation that matters for patients and partners. While international medical cannabis remains our priority growth driver, we continue to support partners, patients and wellness consumers with exceptional products and services in Canada and abroad. Our domestic strategy emphasizes margin-accretive products and prioritizes profitability over top line growth. I will now turn the call over to Greg Hunter, our CFO, to provide a detailed overview of our Q3 financial performance. Greg Hunter: Thanks, Dave, and good morning, everyone. As Dave noted, MediPharm continues to execute on our strategy to grow revenue, expand internationally and drive operational efficiencies to become profitable and cash flow positive. Our Q3 2025 results reflect meaningful progress on these priorities. Revenue for Q3 was $11.4 million, an increase of $1.6 million or 17% versus prior year, driven by strong growth in our international medical cannabis business. International medical cannabis revenue increased $2.9 million or 83% year-over-year to $6.4 million in the quarter with broad-based growth across our German, Australia and United Kingdom customer base. International medical cannabis accounted for 56% of total revenue this quarter, up from 36% a year ago. Canadian medical cannabis revenue was $3.0 million in the quarter and decreased versus prior year, driven by sales to third-party medical channels, while our Canna Farms medical channel remains stable. Canadian adult-use and wellness revenue was $1.8 million in the quarter, up 4% year-over-year and 9% sequentially versus Q2. Gross profit for the quarter was $2.6 million, reflecting margin pressure from product mix with our international business. We remain focused on optimizing product mix and production efficiency to improve margins. A key part of this strategy is the introduction of innovative products such as our metered dose inhalers. As Dave noted, these inhalers represent a novel pharmaceutical-grade delivery technology that offers patients a precise smoke-free option. By expanding this differentiated portfolio, we believe we are creating value through innovation and thus improving our margin profile. General and administrative expenses of $3.2 million in the quarter decreased 19% versus prior year and 40% versus prior quarter. Marketing and selling expenses of $1.2 million in the quarter decreased 17% versus prior year and 15% versus prior quarter. Total operating expenses, which include G&A, marketing and selling and R&D was $4.4 million in Q3 and decreased $1 million or 19% versus prior year and $2.3 million or 35% versus prior quarter. Management continues to focus on further expense reduction opportunities. Adjusted EBITDA loss of $1.1 million in Q3 was impacted by product mix, while year-to-date adjusted EBITDA improved $0.3 million compared to prior year. Net loss for the quarter was $2.2 million, an improvement of $0.6 million year-over-year and $1.6 million versus Q2 2025. While we don't provide formal guidance, we are encouraged by our revenue trajectory and expect continued progress, though we anticipate some variability as international markets mature. Our focus remains on driving profitable growth and achieving cash flow positivity. Turning to our balance sheet and liquidity. We ended the quarter with $10.6 million in cash, up $0.2 million from Q2 2025, driven by disciplined cash management and supported by $0.4 million in redundant asset sales. Trade and other receivables were $7.7 million with 90% aged 60 days or less. Trade and other payables were $8 million. And unlike many other cannabis companies, we are up-to-date on cannabis excise duties, sales taxes and trade payable obligations. The company has virtually no debt and owns 2 production facilities with an appraised value exceeding $15 million. In summary, Q3 was a step forward for MediPharm. We delivered strong revenue growth, improved our cost structure and maintained a robust balance sheet. We are well positioned to invest in both organic and inorganic growth opportunities as the industry evolves. To summarize, revenue in Q3 increased 17% versus prior year and year-to-date revenue increased 14%. International medical cannabis revenue in the quarter increased 83% versus prior year and 71% year-to-date. Adjusted EBITDA in Q3 was impacted by margin pressure, but year-to-date, it improved $0.3 million versus prior year. Net loss of $2.2 million in the quarter improved $0.6 million versus prior year and improved $1.6 million versus Q2 2025. Year-to-date net loss of $6.3 million improved $2.6 million versus prior year. And finally, we have a strong balance sheet relative to our peers with $10.6 million in cash and virtually no debt. We remain focused on innovation, expanding our international footprint, strategic M&A and supporting clinical research partnerships that differentiate MediPharm in the market. I'll turn it back to Dave to close this portion of our call before taking questions. David Pidduck: Thank you, Greg. As you have heard today, MediPharm is delivering on the company's strategy, and we are making measurable progress on our key priorities. International revenue continues to represent more than half our business, and these results reflect years of investment in infrastructure, compliance and partnerships that position us uniquely in the pharmaceutical cannabinoid space. Our long-term vision is clear. We aim to lead globally in delivering pharmaceutical-grade cannabinoid solutions that improve patient outcomes and create sustainable value for shareholders. We are uniquely positioned to lead in global medical markets as governments around the world continue to raise the quality and regulatory bars even higher. We enjoy the advantages of our 2 owned facilities with GMP certifications across multiple jurisdictions; our strong balance sheet, including $10.6 million in cash; our commitment to furthering clinical research; and our proven ability to drive revenue in highly regulated environments while implementing cost savings. On our last call, I also discussed MediPharm's successful M&A track record, the most significant to date being our 2023 VIVO transaction, which has been a key strategic pillar in our international growth and profitability. We continue to engage in meaningful M&A discussions with select partners where we believe a potential transaction could deliver significant cost synergies, revenue opportunities and enhance shareholder value. While the global cannabis sector remains complex and challenging, MediPharm's pharmaceutical capabilities and strong financial position give us a distinct advantage. We are well positioned to pursue both nonorganic growth through strategic acquisitions and organic growth through continued execution of our global strategy. As we look forward, MediPharm is committed to scaling responsibly, innovating meaningfully and strengthening our presence in the highest value segments of the industry. Our differentiated licensing foundation, operational excellence and combined focus on profitability and cash flow gives us confidence in our ability to deliver long-term growth and value for shareholders. Thank you for your continued support as we execute on this vision. The operator will now begin our Q&A session. Operator: [Operator Instructions] We do have a question from Troy. It is what specific actions will management take to reverse the gross margin compression from 39% in Q1 to 22% in Q3? David Pidduck: Yes. Thanks for the question, Troy. We -- as you saw, we had a margin that was lower than we had in previous quarters. And I think we have a lot of variability depending on the mix. And the mix comes from both a product perspective in terms of which high-volume products are coming through and what the mix is between international business and our other business. So we have seen variability in revenue, and we've seen variability in margin. In this quarter, we had a -- our plant was shut down for a week, and that impacts somewhat on the margin. And we expect that the mix going forward will be healthier and that we'll see stronger margins going forward. And Greg, you want to build on that? Greg Hunter: Yes, I can just add to that. So we like to think Q3 was a low watermark on our margin, as you indicated, 22%. There are a couple, as Dave mentioned, a couple, I would say, anomalies in the quarter impacting it, one being the shutdown of 2 of our plants in August. So if you were to adjust for that factor, margin would have been more in the line of 26%, which is still lower than we've seen. And a lot of that was impacted by mix. We had a lower mix of some of our higher-margin international products like dronabinol and oil within the quarter. And so go forward, what is management doing on? I mean, as you've seen it with our margin profile over the last quarters, we've been ruthlessly focused on improving that through cost reductions, which we did implement some additional ones in late Q2, early Q3, which will spill over into Q4. So we should get the benefit of that as well as we said in our prepared remarks with product mix as we look at new international markets with higher-margin products, whether that be Brazil, New Zealand, France and with new products such as inhalers. The last thing I'd just add on some of the things we're looking at on investments to drive operational efficiencies within the plant around automation. So rest assured, we believe it is the low watermark, and we are ruthlessly focused on not just improving margin, but overall cost structure within MediPharm. David Pidduck: And maybe -- thanks, Greg. One more thing I'll add to that, which was in our remarks, products like the inhaler, which have -- are differentiated, innovative and are launching both in Canada and in other markets, they tend to come with higher margins. So as the mix goes to newer launch products and we're more successful, and the same thing goes of new markets that we're entering. Generally, when you're entering into a new market, it's earlier in its life cycle, and we can expect higher margins from there. So I think that combination with what Greg is talking about, we're optimistic that the margin profile is going to improve. And as you noted, our cost structure continues to be ratcheted down. And so those together, we'll see improving margins going forward. Operator: And there are no further questions at this time. Ladies and gentlemen that concludes today's call. We thank you all for joining. You may now disconnect.
Operator: Welcome to the Northland Power conference call to discuss the third quarter 2025 results. As a reminder, this conference is being recorded on Thursday, November 13, 2025, at 10:00 a.m. Eastern. Conducting this call for Northland Power are Christine Healy, President and CEO; Jeff Hart, Chief Financial Officer; and Adam Beaumont, Senior Vice President of Capital Markets. Before we begin, Northland's management has asked me to remind listeners that all figures presented are in Canadian dollars, and to caution that certain information presented and responses to questions may contain forward-looking statements that include assumptions and are subject to various risks. Actual results may differ materially from management's expected or forecasted results. Please read the forward-looking statements section in yesterday's news release announcing Northland Power's results and be guided by its contents when making investment decisions or recommendations. The release is available at www.northlandpower.com. I will now turn the call over to Ms. Christine Healy. Christine Healy: Good morning, everyone. Thank you for joining us today. I will begin with our business update, and then Jeff will provide more details on the financial results. Just a quick note that with our 2025 Investor Day coming up next week, today's remarks will focus on Q3 results and details behind the change to the dividend. We will share more detail on strategy and growth priorities on November 20, and we hope to see you there. After our prepared remarks, we'll open the line for questions. So I'll start with health and safety because, as always, safety remains a core value and top priority at Northland. This quarter, Northland and our partners at the Oneida battery storage project received an Ontario Electrical Safety Award, recognizing the project's safety practices. With nearly 300,000 worker hours and 0 lost time incidents, Oneida has set a new standard for field safety on large-scale builds. We're very proud of that. And during my visit to site, I saw firsthand the team's strong commitment to safety and performance. The executive team and I are looking forward to sharing our new strategy at Investor Day next week. We'll be presenting a plan that capitalizes on the growing demand for power globally and particularly in our core markets of Canada and Europe, and this is driven by electrification, energy security, data center and decarbonization trends. This demand for power, particularly in our core markets, offers a number of organic opportunities and value enhancement opportunities within our existing fleet. Northland's strong capability as a global power operator across multiple solutions allows the company to execute on this strategy. I will add that as part of our new strategy, we have been assessing growth opportunities in our core markets. And we have line of sight to multiple value-accretive opportunities where Northland's capabilities can be deployed to deliver long-term value for shareholders. To provide greater financial flexibility for self-funded growth and maintain an investment-grade balance sheet, the Board of Directors, including me, has decided to adjust Northland's dividend to $0.72 per share on an annual basis. We are committed to this sustainable dividend, and it remains an important component of our long-term value proposition. So I'm going to pause here because as you know from my previous comments and from my history, changing the dividend is not something I wanted to do. In my career, I have always resisted this. And I can tell you that I have resisted it here at Northland, too. But my goal and our goal at Northland is always to deliver best value for shareholders. And after much analysis and assessment, I'm convinced that this is the best way to do that. Since arriving at Northland, I've had hundreds of meetings with investors, partners, suppliers, governments and competitors. I brought Jeff in and I tasked him with analyzing where we are with our current assets in our pipeline. And he and the teams have done a great job to give us a clear picture of what's happening. We've also completed our strategy deep dive and our planning cycle now for 2026 to 2030. I also stood up this task force, and we've been screening hundreds of opportunities, large and small, in Europe and in Canada, and they have found several value-accretive opportunities, and you're going to be hearing more about these in the coming weeks and months. These opportunities are better than any we've seen in the last 5 years, and indicate to me that having the flexibility to move on those opportunities is important. And so I contrast that against the backdrop that we've seen in 2025, which I would refer to as a year of volatility. We saw historically low winds in the North Sea in more than the front half of the year. We saw a dramatic shift in sentiment in the United States related to renewables. We've seen a softening of corporate PPA activity in Europe, and we see, in many of our core markets, increasing divergence in electricity pricing forecasts. In parallel, we have 2 very large projects in construction. And while they remain on track, and our teams are delivering, in the words of Robert Frost, there are miles to go before we sleep. So when I'm looking ahead at how are we going to deliver best value to shareholders over the 5- and 10-year horizon, we established some financial guardrails. We will maintain an investment-grade balance sheet. We will provide flexibility to deploy on value-accretive growth that is self-funding without reliance on equity markets, and we will maintain a sustainable dividend, all of which is achieved with this change. We believe this recalibration brings the payout ratio to a level that is prudent for a capital-intensive growth company. This plan does not rely on external common equity, and it enables us to fund a project pipeline that will generate highly attractive risk-adjusted returns. And I will reiterate that the dividend remains an important component of Northland's capital allocation framework. Turning to our third quarter results, they were strong. Our global operations performed again to a high availability, over 95%, and the stronger wind in September led results to surpass last year in the same quarter. That good wind has carried into October, which we were happy to see. Turning to our projects in construction. At Hai Long, our 1.1-gigawatt offshore wind project in Taiwan, over half of the wind turbines have now been installed. As you will note from the press release, though, pre-completion revenues have been lower than expected due to longer commissioning times for installed wind turbines and certain technical components of the onshore substation needing to be replaced. We expect this to be resolved, and it will enable us to remain on track. And so the overall message is that the project remains on track for full commercial operations in 2027. In Poland, our 1.1-gigawatt Baltic Power Project installed both offshore substations, each weighing in over 2,500 tonnes and located about 20 kilometers offshore. These substations will collect energy from our 76 turbines and transfer it to the onshore grid. That project also remains on track, with full commercial operations expected in the back half of 2026. Turning to development and growth. We continue to advance and refine our development pipeline, pursuing opportunities in our core markets of Canada and Europe that meet our investment criteria and deliver shareholder value. In Canada, we see opportunities across all our generation and storage technologies, leveraging our small -- our strong domestic platform and brand. In Europe, we're evaluating several renewable power and battery storage projects where we can apply our project execution and operational expertise. In Scotland, the 1.4-gigawatt floating foundation project, Havbredey, has been deprioritized as part of our disciplined capital approach. At the same time, our 900-megawatt fixed bottom offshore wind project, Spiorad na Mara, has completed community consultation and is progressing toward consent submission with the government. Global demand for reliable, affordable, sustainable power continues to rise, and Northland is well positioned to capitalize on this trend. I also reiterate that we have access to a growing number of opportunities, including what we call value enhancement projects that offer short cycle opportunities to deliver higher returns from our existing fleet. We see organic growth opportunities within our own pipeline and opportunities for acquisition of projects in mid- to late stage on attractive terms. So with that, I'm going to turn it over to Jeff for a detailed update on our financial results. Jeff? Jeffrey Hart: All right. Thanks, Christine, and good morning, everyone. I'll take some time to discuss our third quarter results, which were positively impacted by strong wind resource in September. And as Christine mentioned earlier, our strong availability of over 95% allowed us to capture much of the benefit. The quarter also benefited from the Oneida battery facility operations commencing in May. Performance was partially -- that performance was partially offset by planned grid outage at DeBu and lower solar and wind resource at our operations in Spain. Northland generated adjusted EBITDA of $257 million, a 13% increase compared to the same quarter of 2024, which was mainly a result of higher production at our 3 offshore wind assets and an outage last year at Gemini, and the additional contributions from Oneida, which came on earlier this year. During the third quarter, we generated free cash flow of $45 million, which was approximately 130% higher than the same quarter last year. And on a per share basis, free cash flow in the third quarter of this year was $0.17 compared to $0.08 in the third quarter of '24. The increase to free cash flow was primarily related to the higher adjusted EBITDA that I mentioned earlier. And the net loss for the quarter was $456 million compared to a net loss of $191 million in '24, and this is primarily due to a $527 million noncash impairment that was recognized for the Nordsee One offshore wind facility, resulting from the transition from the initial subsidy pricing regime to market pricing by May 2027. We have also updated our long-term production forecast and anticipate an increase in operating and maintenance costs. Turning to our investment program at the Hai Long and Baltic Power projects. As of the end of the third quarter of 2025, we have spent approximately $12 billion to date, with remaining expected gross capital expenditures for the 2 projects to be $5 billion. At Hai Long, we've started to see the first revenues post first power, although lower than we expected, as Christine mentioned, impacting the pre-completion revenues by approximately $150 million to $200 million Northland share. Overall, the project is continuing on track and on budget. At Baltic Power, we continue to advance to first power in '26 when grid connection is planned. Our financial guidance for '25 is unchanged with adjusted EBITDA expected to be in the range of $1.2 billion to $1.3 billion, and free cash flow is projected to be between $1.15 and $1.35 per share. Now turning to the balance sheet and updated capital allocation plan. As Christine mentioned, the announcement of the decision to recalibrate the dividend was not easy, but provides the company a sustainable financial framework and provides funds to make accretive investments, which are underpinned by the cash flows of our business and an investment-grade balance sheet. Our plan is expected to be self-funded with no reliance on common equity issuances. I'll be happy to share further details with you and lay it out at Investor Day next week. I'll hand it back to Christine to conclude the call. Christine Healy: Thank you, Jeff. I'm also looking forward to our Investor Day next week, and we will then be providing deeper insight into our focus areas, the progress we're making across the business and our growth plans. That concludes our prepared remarks. So I'll turn the call over to the operator. Operator, please open the line for questions. Operator: [Operator Instructions] And our first question comes from Baltej Sidhu of National Bank of Canada. Baltej Sidhu: Could you shed some color on the magnitude of the impairment at Nordsee One? And what are the factors that led to the recalibration of the write-down? Was prior market expectation of the market price is elevated? And how are conversations evolving with respect to recontracting opportunities? Jeffrey Hart: Yes. No, thanks, and it's Jeff here. Yes, the impairment was primarily related to the pricing that we've gone out, and I'll remind you, we're stepping down from the initial contract period from EUR 194 per megawatt hour. And ultimately, there's a phase step down to EUR 154 per megawatt hour. And then ultimately, we go to market pricing in 2027. Now we've been out in the market on the PPAs. And I would expect something in the weeks and actually days. We're fairly close. And so we really, with those benchmarking, as Christine alluded to in the script, the PPA markets, and so we've triangulated, I'll say, broadly, I'd say, into a market price in and around the PPAs of of EUR 60 to EUR 70 per megawatt hour. And so really, it's a reflection of that step down and this is the only asset we have in the 5 years in the offshore that's stepping down. Baltej Sidhu: Okay. And then just as a follow-up to that and then just appreciating the last comment that you made on the 5 years for the assets that are stepping down. When we're looking at Deutsche Bucht, which is still recontracted out until, I believe, the early 2030s, are there similar assumptions that were made prior given the pricing dilemma dynamic and curtailments that are evident as well? Jeffrey Hart: No, I think, what you alluded to curtailments in the German market. And I think year-to-date, we've probably seen a 7.5% negative price curtailment. I think our long-term assumptions aren't really far off of that, plus or minus 0.5% to 1% on it. We've really focused on where we have contract renewals coming here in the first 5 years. And that's where we look at the PPA market, isn't really, I'd say, a longer-term market. It would be more into the 5-year frame. And that's really what's setting it and impacting N1. Operator: And our next question comes from Sean Steuart of TD Cowen. Sean Steuart: Christine, on the rationale for the dividend cut, you touched on a few points. I guess a part of it here is freeing up more capital to feed an expanding investment opportunity set and the risk of front-running the Investor Day next week. Can you give a perspective -- on the 8.5 gigawatt pipeline, beyond the under construction stuff, any perspective over the next 5 years, how much of that might be advanced? And I ask only because it seems like there was a line of sight on this payout ratio coming down as Hai Long and Baltic Power reach commercial operation. Just trying to gauge how much of that growth opportunity set you might expect to come into the midterm development pipeline? And how much of this is just aligning the payout ratio with industry norms? Christine Healy: Thanks for the question, Sean. And I do want to make sure that you come to Investor Day, so I don't want to give too much of it right now. But I think it's -- part of it is that we have, I would say, a couple of types of projects. First of all, I alluded to the fact that we've been looking externally at what other people have and what projects are for sale in the market, and there's a real opportunity set there that did not exist even a year ago, but certainly not a couple of years ago. And from a pricing perspective, very attractive if you can by now. So that's interesting to us. And if we can high grade through that, we like to. We also have a set of initiatives that we've been working on through our existing fleet that we call it value enhancement initiatives, and these are things that we would do that are near term, short cycle and that deliver a demonstrable rate of return in the existing fleet, and it's just getting more out of what we already have. And so some of those projects require capital, and we've been doing a lot of work to understand the capital those projects require. But this is -- from my perspective, it's value lying on the ground, and we would be foolish not to take it. So we wanted to find a way that we could invest in those projects and ensure that we have -- still we keep the balance sheet flexibility given the projects that we have still in construction. So the idea that we would pass up on all of these opportunities or push them well out into the future, when we modeled it, it was just a poor use of funds than investing in them sooner. Sean Steuart: Okay. Understood. I guess, we'll get more detail next week. Jeff, can you give any perspective on, I guess, discussions with the rating agencies, and appreciating the investment grade is paramount to what you guys are focused on. Do those discussions have any bearing on the dividend decision? Jeffrey Hart: Yes. So thanks for the question. We're obviously in constant communication with our rating agencies, and have open dialogue with them. I'll kind of go back to what Christine said and reiterate. For us, it's making sure and reinforcing, from our perspective, the best use of resources on a risk-adjusted basis. And so for us, an investment-grade balance sheet is important, I think, ultimately, to ensure funding through cycles, number one. And then number two is with the opportunity slate in front of us, rebalancing to capture those in a growing market is really the drive here. And so it's all of it together. And it's really from our perspective of reinforcing the investment-grade balance sheet and ensuring funding certainty there. And then I think capturing the market opportunities is really the main driver of that, and we felt this is the best use of shareholder resources. Christine Healy: I guess I'll add on to that, Jeff, to say that this was very much a Northland decision, and it was driven by an enormous amount of work that's been done, and we looked at many different options of how we could deliver best value for shareholders. So it was -- that was the driver for this decision, full stop. Operator: And our next question comes from Robert Hope of Scotiabank. Robert Hope: Can you add a little bit more color on the specific issue driving the delayed pre-completion revenue on the onshore substation, and when you expect it to be rectified? And if you have any recourse through insurance or warranty with the manufacturer on both the cost and lost revenues? Christine Healy: Sure. Thanks very much for the question. I love the technical and detailed questions. It's -- so basically, with the onshore substation, when we were installing some cabling, we were doing normal course testing, and we were dissatisfied with some of -- we were seeing some -- we were dissatisfied with the results of some of the tests. And when we investigated further, we saw that there was a bushing that we felt could create problems for us over the long term. So it was functioning effectively, but it created a risk for long-term reliability. So we, in fact, insisted that, that get changed out. So the supplier for that component is a subcontractor to one of our suppliers. And so we don't have a direct contractual relationship with them, but we've been working with them to make sure we're satisfied with the replacement. So in order to do that replacement work, though, we have to shut down the onshore substation for 20 days-ish. I think. I can't remember the exact number, so don't quote me on that. But we have to turn off the -- turn down the -- turn off the onshore substation in order to complete that. But then we can be assured that the solution is there for the long haul. So I think it's the right thing to do. The question of insurance and the rest, I think that it would be more a question for our supplier because this is part of what our supplier has to deliver for us. Robert Hope: I appreciate that. And then maybe just 1 more follow-up question there. Just given the long lead times on some equipment items, when would you expect the 20-day outage to occur? And just given its onshore, I guess you don't have to wait for any weather windows and that can be done at any time? Christine Healy: Yes. No weather windows, and that's going to be done before the end of the year. And we already have all of the components. We have those in our [ top little hand ] at our warehouse as we speak. Robert Hope: Okay. So is the impact then in -- just in 2025 then? Christine Healy: So we have -- there's 2 things going on at Hai Long, so we have this issue at the onshore substation. The commissioning of the turbines that both Jeff and I referred to, that is an issue that is continuing into 2026. And in fact, we see the financial results of that in 2026 instead of in 2025. But basically, this is a situation, again, managed within the perimeter of our supplier for the turbines. They have an obligation to deliver turbines to us that have been installed and commissioned. And in fact, they've passed a reliability test, and they've been running for a number of days before we accept them in the handover. So the planning for that commissioning was based on typical North Sea performance, which would be they would typically commission 2 to 3 a week. But I think in the Taiwan Straight, the weather conditions have been more challenging and it has been slower than anticipated. So the -- our supplier has, I think, a robust plan in order to improve on that. But right now, we are in the poor weather time. So they will be delivering on that in 2026. And hopefully, they will be able to start delivering the commissioning pace that we expect to see. So -- but right now, we've seen disappointing performance on the commissioning. And so they are not where they were meant to be at this point in time. Again, it's fully within their contract. So it doesn't have an impact for us on the budget. And we have enough float still in the schedule that it does still fit within our schedule, but it does affect on pre-completion revenues, and pre-completion revenues were part of our funding model for the project, and we're still working through that. Operator: And our next question comes from Nelson Ng of RBC Capital Markets. Nelson Ng: I had a quick follow-up question on the Hai Long commissioning of the turbine. So I think you mentioned that -- Christine, you mentioned over half of the turbines are now installed, and I believe you stopped installing turbines like early October or late September. So how many of the installed turbines are currently commissioned roughly? Christine Healy: So thanks for the question, Nelson. I'm the -- what I -- fully commissioned right now the challenge that we're having is that they have to do what we call a soak test, and so they have to run continually over a period of time with no alarms. And so quite a few of them have started the test and then alarms go off, and this is again a difference with the weather impact. Because in the North Sea, if you have those alarms, it's pretty quick, you can go out, you can check it, you can remedy it. And typically, it's not anything wrong with the turbine, it's often something wrong with the sensor. So that gets calibrated, that gets fixed. It's a really quick turnaround. Right now because the weather conditions have been very tough, getting out to check those alarms has been quite difficult. So in terms of maybe the better answer, we have -- so 14 of them have been commissioned, but they continue -- but they've continued to have alarms. So in terms of energized, right now, we have only 2 that are energized. I would -- energized is probably for me, that's the most important one. Those are the ones that are generating revenues. So right now, we have 2 that are energized and producing revenues. Nelson Ng: Okay. So 30-something installed, 4 commissioned, but 2 feeding power to the grid. Is that the right way of thinking about it? Christine Healy: We have 14 that are commissioned, but they're under warranty as well. So just because they're commissions doesn't mean that the supplier is off the hook with them. So right now, of the 14 commissioned, 2 of them are energized and functioning the way that we expect them to. Nelson Ng: Okay. But over half of the turbines are installed, so that's like 30-something turbines installed? Christine Healy: Yes, 37 turbines installed. So the installation went very well, and this is, I would say, a learning for our supplier about commissioning activities. So they have a good recovery plan. So I just want to be clear about that. They have a very strong recovery plan. They've got their A team on this. They will do a good job of this, but we probably won't see a huge amount of progress until the weather window opens up again in the new year. Nelson Ng: Okay. And then I know in the past, you talked about the winter. Obviously, the weather isn't great, but you have the option to work during the winter, right? So is that supplier pretty much like if they see a window of opportunity during the winter, they would go and try to commission more or energize more projects? Is that what you're referring to in terms of the plan to... Christine Healy: So yes, they have a team in country, and they are available to go when the weather window opens. So whether it's open for a day or 10 days, then they -- and they can do that in short bursts of time. But the reality is that the weather has been pretty harsh the last couple of weeks, and there's only been 1 day in the last, I think, I want to say maybe as much as 3 weeks now, but there's only been 1 day that they've been able to get out there. Nelson Ng: Okay. And then just overall, I think in terms of the guidance, you guys talked about how the pre-completion revenues might be $150 million to $200 million lower than expected next year. Can you just talk about what the new assumption is? I think in the financing plan, roughly 1 -- there was an estimate of, I think, roughly $1 billion of pre-completion revenues. Jeffrey Hart: Yes, that's right, Nelson. So where we're at is, you're right, it's [ CAD 1 billion ] at a 100%. And the reason we're talking about the impact into 2026 is the any PCRs we would generate this year would actually be collected in the cash generated next year in conjunction with effectively Q1 and Q2 PCRs as well. And so that's why we're talking about the 2026. And the $150 million to $200 million is our share, and that's 31%. So you can kind of back into the range there on a gross basis. Nelson Ng: Okay. So I guess, less than half of like so... Jeffrey Hart: Yes. Anywhere from half to 60% impact, give or take on the current expectation. And as Christine said is this, obviously, the supplier weather windows and to see how we could potentially close the gap in other alternatives, right? But that's effectively the good way to think about it. Nelson Ng: And as a result then there will just be a larger draw on the non-recourse debt or... Jeffrey Hart: Well, we're evaluating what we could do. Number 1 is the recovery plan and then looking at what we can do on the project side of it as well. And then obviously, we've got the financial capability to manage it as well. So we're looking at all the different avenues there and monitoring the technical situation. So we'll obviously keep everyone abreast as that's updated. Nelson Ng: Okay. And then switching gears a bit. In terms of the dividend, so the decision -- like in terms of the sizing of the dividend cut, so is the main target to internally fund all equity requirements going forward for the next 5 years, is that how the dividend was sized? Jeffrey Hart: Yes. So it's Jeff here. Absolutely. I think our view, and I think I've reiterated this is, I believe, in self-funding model. And I think it's an effective way to execute the plan and create what we view as a solid accretion and shareholder value. So that is the intent is self-funded plan, and that's what we intend on delivering. Operator: And our next question comes from Mark Jarvi of CIBC. Mark Jarvi: So Jeff, you talked about maybe compensation on the pre-completions contingencies in the project funding. How would you handicap the likelihood that Northland would have to put some incremental capital into Hai Long at this point? Jeffrey Hart: Look, I'm not going to get into hypotheticals and percentages. What I will say is I will always make sure -- as a CFO, you need to make sure that you've got the liquidity and capital resources and the funding strategy to manage contingencies like this. And so we have the capability to manage it corporately. We'll continue to progress it. But I always have to manage on the view that I need and have to have the liquidity to manage that, but we're looking at avenues within, Number 1, on the technical recovery plan; Number 2 and other things we can do at the project level. But I'm not going to give percentages on that right now, but I have to make sure we've got the resources to handle it. Christine Healy: Well, I'll just add to that, Mark, that this is back to the whole idea of we have to be prudent. These are large projects and they're being delivered very, very well, and we stand head and shoulders above many others who have -- who are delivering similar projects. But there are bumps in the road in every project I've ever been involved in, in my career. So that's why we have to be ready to adjust to that when they come. Jeffrey Hart: And maybe I can -- I'll reword it this ways. I -- from my perspective is we'll look to mitigate and manage impacts and look at the best alternative, but I also have to make sure that I can manage it as if there is an injection required. Mark Jarvi: Got it. So like this as a component of the dividend cut would be sort of a minor element kind of the messaging? Jeffrey Hart: Yes. I mean, I'll go back to what Christine and I reiterated is this, number one, it's rebalancing, I think the payout to a capital-intensive industry, and we also see lots of opportunity, both organic and inorganic in the markets we're focusing on. And so it's really to capture that opportunity, rebalance to, I'd say, a sustainable financial framework that allows us to capture those opportunities. And then ultimately, with that, it's the virtuous circle that gives you a balance of protection and resources to handle contingencies as well. Mark Jarvi: And then just going back in terms of the timing announcement, we can debate about when it should happen. But it sounds like you're trying to position this that do you have a use of capital for new growth that's showing up on short-cycle projects and other opportunities. Any consideration was put into whether or not you should have announced this concurrent with new investments? And how close are you on things like those short-cycle needs or potentially acquiring advanced stage projects? Christine Healy: Mark, we had a lot of debate about that. And I can tell you, there's no right time because I can honestly say that if we waited to Investor Day, then I would have expected somebody would have asked me the question then of why didn't you tell us this a week ago when you had your quarter closed because -- so they -- I think, we're being transparent. We -- there's never a good time for this. So we decided to to disclose the decision when the decision was made and the decision was literally just made. So we've -- we want to make sure that we're transparent about that. But I think you should not be surprised to hear some new announcements in coming days. Mark Jarvi: Okay. And then last one, just, Jeff, in terms of the IG rating, is there a view that you'll use a little bit more on balance sheet debt going forward versus how much nonrecourse debt you used? And is that sort of factored in, in the decision on the dividend level? Jeffrey Hart: No. Look, I think obviously, we'll get more color on it at Investor Day here on details on overall funding. But I would still expect the majority of our, I'll say, leverage or debt funding to be in the project finance realm. Clearly, the corporate balance sheet is an option for different opportunities, but that balance won't materially change. It's just to reiterate the point is the execution, the opportunity in front of us go forward and setting up the guardrails and framework that were sustainable through cycles. Operator: And our next question comes from Benjamin Pham of BMO. Benjamin Pham: I just want to go back to the dividend side because obviously market is quite perturbed today with the messaging and more to come next week on some of the rationale. But I'm curious when you think about the payout ratio, it's 60% this year on your guide. And it's reason to, I think, it's going to come down to through 2027. What do you think is the appropriate payout ratio for you? Because the way we were thinking about is you're generating $200 million of incremental free cash flow based on your guidance. And you can lever that up that and you can still sell fund growth under that alternative, so love your comments on the payout? Jeffrey Hart: Yes. No. And thanks for the question. And ultimately, we'll provide color on the funding and correspondingly read through to payout at Investor Day and to provide that color. And I'll reiterate back, this is to give a financial framework and foundation that we feel is balanced through the cycle and has guardrails, but we'll provide more color on that next week then. Benjamin Pham: Okay. Got it. And I'm also -- I mean, 40% seems to be a magic number for a lot of folks that have cut dividends in the past. I mean, when you did your analysis, can you talk about the other alternatives you were looking at, I think, you mentioned that earlier? And then how do you kind of think about just -- there's a lot of history, too, from companies that cut dividends and same thing. There's more growth coming. And it just doesn't seem the public markets really care for a few years. Can you just talk about that as you think about your -- I guess, your own patience with this? And how do you maybe differ from those case studies because there's been a lot out there? Jeffrey Hart: Look, and we -- I'm not going to -- and Christine will obviously add on to this. We looked at several different scenarios, looked at the best options that we felt an aggregate, balancing growth, cash returns to shareholders and felt the plan that we'll be putting forward in balance and coming to this is the best value creation and value proposition on balance. And really, for me, it's about being disciplined through this is we need to be -- have keep strength on the balance sheet. We need to have a sustainable payout ratio and then ultimately be able to capture opportunities in a growing demand market and be disciplined on returns. We won't chase returns down and all of that kind of goes together. We looked at a bunch of different modeling and analysis on this. And feel we've landed in the best path forward for the company. Christine Healy: So Ben, I do want to take the opportunity to add on to that because I can tell you that all those things that you say are very much on my mind is we've been having this big internal review and assessment of what the best thing to do in this circumstance is. And frankly, there are easier things that we could do, but they would not have been as value accretive to shareholders. So fundamentally, then I had to take a very hard look into the abyss and say, what is the right thing to do here? And fundamentally, I believe that this company is very, very good at building and operating projects. And the world has a huge demand for what it is that we do. And the idea that we would hunker down and not grow for a big chunk of time doesn't make a lot of sense to me. And in fact, when you model it out on the numbers, it doesn't make sense on the numbers either. And then when you look at the different ways you could fund that growth, the most value accretive way for shareholders is to do it the way that we're doing it. So there's no question that we take the pain now. And I am a shareholder, too. And I got to tell you, I'm a shareholder who really likes dividends. So I can say that I am definitely in the camp right there with people who are unhappy about that. But I have to say again, what are we trying to do here, and we're trying to build long-term value for shareholders. And that's what this plan does. So I will be talking more about that at Investor Day. But I can say hand on heart that if there was a better way to do it, I was definitely looking for it. Benjamin Pham: Yes. No, absolutely. And it seems like the old school model of high payout and issuing equity, that's kind of old days and high growth companies like yourself should have a lower payout ratio from a long-term perspective. So I could appreciate that. Maybe just 1 quick 1 for me. I get the PCR situation at Hai Long and the technical issues, and you got to manage that. That does prove that these are large projects that can go sideways. But is there a scenario there where you're thinking about that there could be even more impact from this technical issue where you have to actually repair the station, there's more CapEx, there's delays, like there's -- is that a scenario that you -- that could be in the realm of the possibility? Christine Healy: So Ben, this particular issue that we're having with the onshore substation is completely contained. And in fact, it gives me more confidence in the project team that they spotted this and we're able to respond to it so effectively and so quickly. So in fact, I view it as a very positive thing because it was only -- it was through very, very good work at the onshore substation and very good inspection work from our teams that we found the issue. So I don't see it as indicative of a bigger problem. I think it's a very discrete problem related to a very small bushing. And so it has been addressed and remedied and no indication of any kind of larger problem there at all. In fact, I think it was well contained and well managed. Operator: I'm showing no further questions at this time. I'd like to turn it back to Christine Healy for closing remarks. Christine Healy: I just want to say thank you to everyone for your great questions and your engagement in joining us today. And hopefully, we will see you at Investor Day. Thanks very much. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.
Operator: ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the Taseko Mines 2025 Third Quarter Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Brian Bergot. You may begin. Brian Bergot: Thank you, Jericho. Welcome, everyone, and thank you for joining Taseko's Third Quarter 2025 conference call. The news release and regulatory filing announcing our financial and operational results was issued yesterday after market close and is available on our website at tasekomines.com, and on SEDAR+. With me in Vancouver today is Taseko's President and CEO, Stuart McDonald; Taseko's Chief Financial Officer, Bryce Hamming; and our COO, Richard Tremblay. As usual, before we get into opening remarks by management, I would like to remind our listeners that our comments and answers to your questions will contain forward-looking information, and this information, by its nature, is subject to risks and uncertainties. As such, actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, I encourage you to read the cautionary note that accompanies our third quarter MD&A and the related news release as well as the risk factors particular to our company. These documents can be found on our website and also on SEDAR+. I would also like to point out that we will use various non-GAAP measures during the call. You can see explanations and reconciliations regarding these measures in the related news release. And finally, all dollar amounts we will discuss today are in Canadian dollars unless otherwise specified. Following opening remarks, we will open the phone lines to analysts and investors for questions. I will now turn the call over to Stuart for his remarks. Stuart McDonald: Great. Thanks, Brian. Good morning, everyone. Thank you for joining our call today to discuss the third quarter financial and operating results. As usual, I'll provide some commentary focusing on the operational results, and then Bryce will get into the financial performance for the quarter. As outlined in our release yesterday, third quarter results were definitely an improvement over the previous 2 quarters, both operationally and financially. Mining in the connector pit had presented more challenges in the early part of this year than we'd anticipated. But on the positive side, the higher mining rates in the last 2 quarters have opened up higher-grade benches that we've been anticipating. In the third quarter, grades increased to 0.22%, which is up from 0.19% in the first quarter and 0.20% in the same quarter. This higher grade ore and less transitional oxide material both benefited mill recoveries, which increased to 77% in the third quarter. Mill throughput has been very steady this year, consistently operating at around design capacity. So overall copper production in the third quarter was just under 28 million pound and that includes 900,000 pounds of cathode production from Gibraltar's SX/EW operation. Molybdenum production in the quarter was 560,000 pounds, which is also a big increase from prior quarters due to higher moly grades, which typically track copper grades. Costs in the quarter were USD 287 per pound, an improvement over the quarter. Total site costs in the quarter was $7 million higher than the previous quarter, mainly due to SX/EW costs now being expensed as well as increased maintenance costs. Maintenance costs, including parts and major components is one area where we continue to see steady inflation. And all of that translated into $62 million adjusted EBITDA for the third quarter. Looking ahead, we expect to finish the year with a strong fourth quarter. Gibraltar produced 11 million pounds of copper in October, which was the mine's highest production month in 2 years. So the quarter is off to a good start. We will provide formal guidance for 2026 in the new year as we normally do. But generally, we're looking for a more consistent year next year with less quarterly volatility. Now shifting over to Florence, where we have achieved a number of major milestones recently and the operation is now well on its way to producing first copper. In September, our general contractor achieved substantial completion of the SX/EW plant in plant area. This is a huge accomplishment for the project team. In just 18 months since we broke ground to Florence, our team has been able to deliver this major capital project on time and in line with our previous cost estimates. So it's really a great achievement and the project is now into the commissioning phase. In mid-October, we received the final regulatory approvals we required to commence wellfield operations. We then initiated a short commissioning period, which included pumping water from the offer to establish hydraulic control in the wellfield. A number of normal course commissioning issues were identified and resolved and in early November, so about a week ago, we began acidifying the commercial well field. Overall, we're a few weeks behind our original plan, but we're very happy with the wellfield performance so far as initial flow rates in the wellfield are in line with and even exceeding our expectations. So it's early, obviously, but the operation is off to a good start. About half of the wellfield is being acidified now and the second half will start up in the next week or so. And in the weeks ahead, we expect to see the grade of copper and solution or PLS grade from the wellfield start to increase to a point where we can turn on the SX/EW plant and start plating copper cathode. Commissioning of the plant area is advancing in parallel with initial wellfield operations, and we expect to be producing copper early in the new year. An important aspect of the production ramp-up in 2026 will be our ability to develop and integrate additional wells into the operation. We're now preparing to restart drilling activity with 2 drills planned to start up here in November, and an additional 2 drills will be added early next year. The operating team in Florence continues to grow. Recruiting has gone very well, and we're up to about 140 employees on site now. Needless to say, it's a very busy and exciting time for all of them. It's great timing to be starting up a major new supply of refined copper inside the U.S. Obviously, copper markets and pricing remains very strong. And there are some interesting dynamics in the U.S. cathode market. Although there are no U.S. import tariffs on refined copper right now, the possibility of tariffs in the future has led to some speculative trading activity and growing capital inventories inside the U.S. The COMEX space has continued to trade at a premium to the LME recently at a 4% premium or roughly $0.20 a pound. However, our understanding is that the quoted COMEX price may not reflect what can actually be realized in the physical market, and capital sales in the U.S. maybe at a higher discount than normal -- higher than normal discounts that you might normally see to the COMEX price. Although we're still seeing a premium to LME pricing. This is a situation we're going to continue to monitor as we start cathode sales from Florence in the next few months. The U.S. government has aided that it plans to revisit tariffs in middle of next year with the potential for 15% tariff on cathode at the end of 2026, increasing to 30% potentially at the end of 2027. So in the longer term, this shows the strategic value of Florence, which will become one of the few U.S.-based suppliers of refined copper. Before I pass the call over to Bryce, I wanted to say a few words about our recent equity offering that was completed in October. The proceeds of that raise have significantly strengthened our balance sheet. We've now repaid the $75 million that was drawn on our revolving credit facility, and the remaining funds provide additional working capital support ahead of the Florence ramp up next year. We're also planning additional spending at Yellowhead next year on environmental and engineering work to support the environmental assessment process. In the third quarter, we held open houses in the local communities and initial feedback has been quite positive. So Yellowhead project permitting is off to a good start, and we continue to view Yellowhead as an important longer-term growth project for us. And with that, I'll turn it over to Bryce. Bryce Hamming: Thanks, Stuart. Good morning, everyone, and thanks for joining us today. Total copper sales for the quarter were 26 million pounds, which includes 900,000 tons of cathode. This was slightly below production due to shipment timing at the end of the quarter. We achieved a strong average realized copper price in the quarter, just shy of USD 450 per pound, in line with the LME average. And this has still continued to strengthen since the quarter end. This strong copper price translated into total revenue of $174 million, which includes $14 million from moly sales. Combination of higher sales volume and strong pricing drove a 50% increase in revenue quarter-over-quarter. On an adjusted basis, we reported net income of $6 million or $0.02 per share. For GAAP purposes, we reported a net loss of $28 million or $0.09 per share, and that was primarily due to unrealized foreign exchange losses on our U.S. dollar denominated debt and an unrealized derivative loss related to our copper collars we have in place. Adjusted EBITDA came in at $62 million, a significant increase over prior quarter, driven by the higher sales and stronger copper price. Capitalized stripping for the quarter was only $6 million, and it was substantially lower than the previous 2 quarters, and that reflects our progress deeper into the connector pit, where the strip ratio has declined and access to ore has improved. Turning to Florence. We spent USD 27 million on the commercial facility this quarter, and that brings our total capital spend since the start of construction, USD 267 million. We achieved substantial completion with our contractor in Q3, and we only have a few million more on this capital project to finish the year. This is within a few percentage points of our original construction budget since the start of 2024, and it's a testament to the execution of our capital projects team. Operating costs at Florence were $8 million in the quarter, and these will increase as we continue hiring full-time staff and ramp up our well field operations, and that will include the procurement and consumption of asset going forward now our operations are underway. We ended the quarter with $91 million of cash. In October, we closed an equity financing, USD 173 million, and we used $75 million of that to pay down our revolver. And with capital spending at Florence largely behind us now and improving production at Gibraltar. And coupled with this cash injection from this financing, our liquidity outlook is robust. We're well positioned to support the ramp-up at Florence and advance our work at Yellowhead. That concludes my remarks, and I'll now turn it back to the operator to begin the Q&A session. Operator: [Operator Instructions] Our first question comes from Duncan Hay from Panmure Liberum. Duncan Hay: Just a quick one on the wellfield drilling. What's the -- can you talk through the benefits of accelerating that and bringing that forward? I mean, presumably, you're constrained by capacity in the plant. But yes, what sort of flexibility or comfort does that give you? Stuart McDonald: Well, I think initially in the ramp-up period, the key for us is going to be opening up additional wells. The constraint is going to be not the plant, but the amount of solution flows that we can get off the wellfield. So it will be key to be advancing that forward. So we've got 2 drills starting up here in November, an additional 2 early in the new year. And in Q2 and Q3 next year, we'll see those additional wells start to come online and contribute to the ramp-up. So no, it's a big part of the plan. I think it's always been part of the plan. But yes, glad that we've got a solid balance sheet, and we can move forward confidently with that work now. Duncan Hay: You could see -- I mean you're going to put guidance out in the new year, but that -- if you look at what you were thinking, say, 6 months ago, you could have more production next year given the position you're in? Stuart McDonald: Well, yes, we'll see. I mean we're not -- we're giving -- we're actually not going to give production guidance today. Obviously, the technical report is out there and that had some assumptions about drilling as well. But no, we're optimistic certainly what we see today, the early results from the well field are positive, but it's early days. And yes, we're keep pushing forward. And obviously, first copper is going to be a big milestone for us early next year. Operator: Our next question comes from Craig Hutchison from TD Cowen. Craig Hutchison: I realize you guys aren't going to provide guidance for next year until, I guess, early next year. But just curious how you guys think about the kind of milestones for declaring commercial production. Obviously, ISRs are relatively new for most people. Just how do you guys think about that in terms of production rate you need to get to, to clear commercial product and is it the 60% of design? Or is there some kind of metric that you guys look at to determine that? Stuart McDonald: Yes, Craig, we're not thinking about it in that way. I know that's a conventional way it's been done in the past for concentrators. It's going to be a steady ramp-up of production through 2026. And yes, as I said, the key is going to be bringing on new wells, but we should see sequential growth each quarter in the copper production. I don't know, Bryce, do you want to make a couple of comments about the accounting? So we see, I guess, the rules have changed in recent years. Bryce Hamming: Yes. I think the real focus will be on our -- obviously, our C1 costs. We're going to be looking at what point that our production generates operating cash flow, operating profit. And with this project, given the nature of the operating costs, that happens relatively back from what we're seeing, like we could see that by midyear. And then I think as we continue to do the ramp-up, it's really about free cash flow and making enough money there to pay for the ongoing sustaining capital with the wellfield development. And that we see sort of later by the end of next and then onwards, , of course. So those are kind of the 2 key milestones. I think first is operating profit, operating cash flow and the second really being generating free cash flow. And so that's what we're really kind of targeting as we think about that ramp up into commercial operations. Craig Hutchison: Okay. So I guess until you reach your mid next year, do we assume that some of the costs will be capitalized or the moment you guys are producing sellable cathode, you'll start booking revenues right way in terms of kind of accounting? Do we think about revenues next year? Bryce Hamming: Yes. On the accounting side, the standards changed a few years ago. We now recognize revenue once it's sold. So even the first pounds of capital will be sold. From a capital perspective, there'll be some of the -- until the plant is fully up and running, there will be some of the plant costs which get capitalized until it's sort of available for its full intended use. . But the key, I think, with this operation, as we've looked at it, is the wellfield development cost. So that's the drilling and development of the wells, that is capitalized. So there will be significant ongoing sustaining capital that's put to the balance sheet and then amortized over the life of the well. Craig Hutchison: Okay. Great. And maybe just one last question for me. Just in terms of the capital, you effectively now complete the initial capital spend at this point? Or is there still some lingering costs into Q4? Stuart McDonald: Effectively, the work is complete. There'll be a few costs, commissioning costs that kind of trickle in, in Q4. I think we still probably have some of the cost and payables, right, that will come through the cash flow. But effectively, the construction piece is complete. Operator: [Operator Instructions] There are no further questions at this time. I would now like to turn the call back over to the Taseko team for closing remarks. Stuart McDonald: Okay. Thanks, everyone, for joining. And yes, if there are other questions, feel free to reach out to any of us. And otherwise, we will talk to you next quarter. Thanks, again. .
Operator: Good morning, everyone. Welcome to the Pollard Banknote Limited Third Quarter 2025 Results Conference Call. Listeners are reminded that certain matters discussed in today's conference call or answers that may be given to questions asked could constitute forward-looking statements that are subject to risks and uncertainties related to Pollard's future financial or business performance. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. The risk factors that may affect the results are detailed in Pollard's annual information form and other periodic filings and registration statements, and you can access these documents at SEDAR+ database found at sedarplus.ca. I'd like to remind everyone that this conference call is being recorded today, Thursday, November 13, 2025. And I would like to introduce Mr. Doug Pollard, Co-Chief Executive Officer of Pollard Banknote Limited. Please go ahead, sir. Douglas Pollard: Thank you very much, operator, and thank you, everyone, for joining us. As Jaden said, I'm Doug Pollard. I'm joined on the call today by John Pollard, the other Co-CEO; and also Rob Rose, the Chief Financial Officer. We released our third quarter 2025 results yesterday. A reminder, you can access our news releases as well as our financial statements and MD&A on our website at poardbanknote.com and also on SEDAR+. Today, we'll start out with prepared remarks from me highlighting our 2025 third quarter operating achievements and overall business update, and John will then follow up discussing our, I think, quite strong third quarter results. And then as usual, we'll open it up to questions. The third quarter was truly a transformational quarter for Pollard Banknote with a number of very noteworthy contract wins in a highly competitive marketplace. covering a number of our different product offerings and product and solution offerings, and I'll address each of these in detail shortly. And at the same time, we did generate very strong financial results, which reflect the strength of our business across a number of different business lines. On September 12, the Loterie Nationale, the National Lottery of Belgium, announced the intent to award a contract to us to deliver and operate a next-generation gaming platform. That contract was officially awarded on October 8. This is really a monumental achievement for our team on a number of levels. It shows our commitment to provide an innovative omnichannel approach to the lottery industry, and it shows that, that is being recognized as, in fact, the future of the industry where lotteries are going to want to go. The Belgium lottery is a large, recognized and respected leader in the international lottery space, and this contract covers all of their technology ecosystem, including an Omnichannel Central Gaming System, which covers both retail and iLottery sales, the Player Account Management, or PAM, including the wallet. The Game Aggregation Bridge to deliver diverse game content from leading game providers in one unified player experience, an Instant Ticket Management System to optimize warehousing, inventory control and Instant Ticket Distribution for that important category and an integrated marketing engagement platform to deliver personalized data-driven experiences at every player touch point to help that lottery responsibly drive their sales. This -- it's important to note that this is a 12-year contract, and it was won in a competitive RFP process and the contract is valued at approximately CAD 289 million, and it's not insignificant that we replaced a long-time incumbent provider. Our teams between the lottery and us are already working extensively together as we begin this long-term collaboration with the lottery. So far, it's going very well. I'm very pleased with the way we've kicked it off. I'd just highlight this is really a game-changing win for our organization. We are truly honored for the trust that the Belgium lottery has placed with Pollard. And as we've done with other accounts, we look forward to delivering this on time and delivering on everything we've promised. In addition, on September 25, the California State Lottery named Pollard Banknote as their new primary contractor for their instant ticket products and related services, which they call scratchers. This new primary contract starts December 1, 2025. It has a 6-year term followed by an option to renew for up to an additional 6 years and has an estimated value over the entire 12 years of CAD 375 million. Now we had already been a long-time secondary provider of scratchers tickets to the California lottery. And with this new primary relationship, we'll now be increasing that to providing approximately 70% of the lottery's instant ticket games. Now replacing a long-time incumbent ticket supplier for one of the largest sellers of instant tickets in the world, those kinds of changes do not happen frequently in our industry. And we are very proud of that change because it really reflects the value of the long-time existing relationship that we've developed and it shows the importance of the innovative and creative solutions that we've been offering to lotteries that they want to work with us. So truly a massive win for our team. We look forward to helping California Lottery continue to be a leader in this space. Speaking of instant tickets, which is a core part of our portfolio. It's nice to see that overall demand for instant tickets remains positive. Retail sales growth has come back to the low single-digit range, still driven by higher selling price points, but also some other getting into new retail channels. Higher selling price points, I should note, also mean a much greater likelihood for us of higher value features being added. And as a result, that delivers higher average selling prices for Pollard Banknote. And in that space, one of our most important is Scratch FX, and 2025 is on pace to record annual sales of this very popular proprietary holographic ticket process. Scratch FX jumps out of retail and it has historically generated significant sales increases for the lotteries that far outweigh the incremental cost of the product in the future. Demand for our other products and solutions remain solid, including charitable gaming, printed products and, of course, digital eTabs and ancillary products and solutions such as retail point of sales and dispensers, demand for those products also remains robust as lotteries and charitable gaming operators look for new ways to grow revenue. Our Kansas iLottery solution continues to meet all of our expectations, including -- it was quite notable that during the quarter in August and September, we had the large $1 billion-plus Powerball jackpot run, and our solution handled that without any issues. In conjunction with the lotteries, we're now starting to institute a number -- sorry, in conjunction with the Kansas Lottery, we are now starting to institute a number of our planned road map initiatives that are going to move towards the phase of accelerating revenue growth and doing things like improving the website access, some improved targeted digital marketing and player acquisition tactics and enhancing some of the game features that we offer that will make the games more attractive. I remind you that Kansas does remain a critical calling card and reference point for our state-of-the-art Catalyst platform, and it is absolutely serving that with anyone who checked into the Kansas Lottery. Hand-in-hand with our platform solution is our expanding eInstant game content, which we're developing in our in-house game studio. It's not enough just to have a great platform. You also need exciting game content for success in the digital world. We provide that through our own platform in Kansas, but also through other third-party iLottery operations. Our games are now live in 9 jurisdictions around the world, and that is growing rapidly. You should note that Pollard Banknote has always been a strong creator of lottery game content. And so it's a very small step for us to now be bringing our decades of experience to more digital media in addition to our print and other channels. I'd always like to remind people that lotteries remain very engaged in discussions with us about adding to or updating their iLottery technology and offerings. And we remind you that the RFP and sales process for the iLottery process and really all lottery products, but especially iLottery, that, that is a very long cycle. I can assure you we are highly engaged in that cycle and at the forefront of those discussions in a number of jurisdictions. During the quarter, from an NPI perspective, our NeoPollard Interactive joint venture announced the award of a 2-year extension to continue to operate the iLottery for the North Carolina Lottery. That extends that contract to June 2028, and it highlights the confidence that the North Carolina Lottery has in our joint venture operation. NPI continues to generate meaningful results and cash flow. And with a number of long-term contracts and extensions already on the books, NPI will be doing so for a number of years. It's been autumn in the lottery world, and that means conferences. And I wanted to highlight how excited we were about our recent involvement in 2 of the more prominent conferences. September saw both the European Lottery Congress and trade show held in Bern, Switzerland. And the big North American conference is Nashville or North American Association of State and Provincial Lotteries that took place. Ontario Lottery hosted that in Niagara Falls. We were very present in those conferences. We showcased a number of exciting new innovative products and solutions, such as our successful Easypack pouches for printed instant tickets. And one of the products that generated the most buzz was our unique [Easyserve] self-service lottery product, which dovetails seamlessly with the overall retailers move towards self-service, which we know is coming, and we want to find a way to get instant tickets really seamlessly into those self-service lanes. So we enjoyed significant engagement with lotteries in both of those conferences. Their enthusiasm with our road map and our creativity is clearly evident. And it really shows, in my opinion, the high regard that lotteries have for Pollard Banknote and it's where we really enhance and build those relationships that lead to the significant wins that we had this quarter with lotteries like Belgium and California. So an exciting quarter for us. And I'm going to now turn it over to my brother, John Pollard, to highlight the first quarter results. John Pollard: Thank you, Doug. So during our third quarter, we achieved traditional GAAP sales of $156.3 million. This is a new quarterly record compares to $153.2 million for the quarter ended September 30 last year, 2024. We like to talk about our combined sales, which then also includes our proportionate share of our NeoPollard joint venture revenue. And when we look at combined sales, we reached $187.3 million in the quarter, also a new record, and that compares to $180.4 million in the same quarter last year. Higher charitable gaming volumes increased sales by $2.8 million in the third quarter compared to 2024. This was predominantly the result of the acquisition of CJ Ven Pacific Gaming. And in addition, the higher average selling price of charitable game printed products increased sales by a further $0.6 million. These increases were partially offset by a decrease in charitable eTab revenue of $1.1 million compared to 2024, which is primarily due to the impact from regulatory changes in our Minnesota market that began on January 1, 2025. I should say that we did have a decline due to those regulatory changes, but we've been steadily improving those results throughout the year since that time. Lower instant ticket averages selling price in 2025 decreased sales by $2.1 million as compared to 2024, mainly a result of customer mix. And in addition, a slight decrease in instant ticket sales volume for the third quarter of 2025 further decreased sales by $0.3 million. Higher sales of ancillary lottery products and services increased revenue in the third quarter of 2025 by $0.5 million compared to 2024. This growth was primarily due to increased digital sales, including, of course, our iLottery start-up in Kansas and higher distribution-related sales. This was partially offset -- sorry, partially offsetting [lease] increases was a decrease in sales of licensed products in the quarter, which is a product category which can be kind of lumpy. The weakening of the Canadian dollar compared to the U.S. dollar and euro compared to the same period in 2024 resulted in an increase in sales of approximately $2.2 million as well. Our gross profit decreased to $28.1 million, which would be 18.0% of sales in the third quarter of 2025 from $31.4 million, which would be 20.5% of sales in the third quarter of 2024. This decrease of $3.3 million in gross profit -- and the decrease in gross profit percentage were primarily a result in the start-up losses on our Kansas iLottery operation and also slightly lower eTAB sales margins due to the previously mentioned regulatory changes in Minnesota. And these 2 factors pretty much exactly account for the shortfall in the margin from last year. Administration expenses were $19.2 million in the third quarter of 2025 compared to the $17.0 million in the third quarter of 2024, and the increase of $2.2 million was largely the result of our ERP implementation-related costs and the addition of Pacific Gaming administration costs in the quarter. During the quarter, we also initiated the implementation phase of our new ERP system for our lottery and corporate operations. Selling expenses increased to $6.5 million in the third quarter of 2025 from $5.9 million in the third quarter of last year. This increase of $0.6 million was primarily due to the addition of Ven and Pacific Gaming and their selling expenses. Sequentially, the $6.5 million is consistent with the same $6.5 million of selling expenses that we had in the second quarter of this year. Pollard shared income from our NeoPollard iLottery joint venture increased to $15.3 million in the third quarter of this year compared to $13.6 million in the third quarter of last year. This $1.7 million increase was primarily due to just continued strong e-instant sales growth in both North Carolina and Virginia, 2 jurisdictions that continue to perform really strongly for us. We also saw some increased draw game sales in the quarter because of the impact of the Powerball jackpot run that we saw in later August and early September. But those gains that I just mentioned there now were partly offset by the expiry of the New Hampshire contract, which expired right at the end of last quarter, the beginning of this quarter. So our adjusted EBITDA decreased slightly to $32.0 million in the third quarter of this year compared to $33.3 million in the third quarter of last year. And the primary reasons for this $1.3 million decrease were a decrease in gross profit, net of amortization depreciation, which was $1.4 million. That was largely due to the result of our iLottery start-up costs that I just mentioned on Kansas and the lower eTAB margins that I just talked about as well. Further reducing our adjusted EBITDA were the increase in administrative expenses, net of our ERP implementation costs of $1.1 million and increase in selling expenses of $0.6 million. Then partially offsetting those decreases, of course, was the increase in our NeoPollard joint venture income of $1.7 million and an increase in realized foreign exchange gain of $0.2 million. Interest expense increased slightly to $2.9 million in this quarter compared to $2.7 million in the third quarter of last year as a result of an increase in our average long-term debt outstanding compared to last year due to the acquisitions that we completed and a higher investment in noncash working capital. This was partly offset by lower interest rates in the third quarter of this year. Net income, finally, getting to it, decreased by $10.3 million in this quarter compared to $18.2 million in the third quarter of last year. So the primary reasons for this $7.9 million decrease was the decrease in gross profit of $3.3 million, again, principally the result of the Kansas Lottery start-up costs and the lower retail margins. Further reducing net income were the decrease in net foreign exchange gain of $2.3 million, the increase in administration expense of $2.2 million, primarily sorry, the result of our ERP implementation costs, increase in income tax expense of $0.7 million, increase in selling expenses of $0.6 million and the decrease in other income of $0.3 million and an increase in interest expense of $0.2 million. And partially offsetting those decreases in income was the NeoPollard joint venture increase in income of $1.7 million. So net income per share, basic and diluted, decreased to $0.38 and $0.37 per share, respectively, in the third quarter of this year from $0.67 and $0.66 per share, respectively, in the third quarter of 2024. Just in regard to the international trade environment, obviously, there remains uncertainty regarding the nature, extent and duration of various protectionist trade measures, including tariffs that may have been -- and may be enacted within North America. We continue to believe that the current structure of our business, including extensive manufacturing facilities located in both Canada and the U.S. will ensure there is no material impact on our operations and financial results. We have the ability to produce almost all of our products that we sell in our U.S. market in our U.S. manufacturing facilities. And similarly, we have capacity to service almost all of our Canadian customers from our domestic Canadian capacity. So we'll be continuing to monitor those developments and assess any additional short- and long-term measures that might need to be taken to mitigate any other negative impacts, but we continue to be pleased with how that's working out for us. So it's been a good year generally for our instant ticket business as we've seen strong volumes and higher average selling prices that Doug talked about. And we're looking for this trend to continue as we move into 2026, particularly, of course, as we bring on the additional volumes from our new California instant ticket contract that we're very excited about. And at the same time, we're investing in new initiatives to improve our manufacturing efficiencies in instant tickets. The other things that we're really looking forward to coming up in the new year, of course, our Belgium contract, super exciting to us. We'll see a positive results from that in 2026 as we bring on revenues from that contract beginning right away next year. And of course, with our Kansas iLottery operations, we continue to have sales growth there, and we'll continue to see improvements in our margins on the Kansas iLottery business as well. We haven't talked too much about charitable gaming. But we made a lot of investments in charitable gaming last year to improve our product offering with our new ICON cabinets and lots of investment in new game content. We're starting to see the fruits of that, and we've got lots of also new jurisdictions that are looking at expanding into eTABs in 2026 that we're working with, and we expect to see some of those go live as well. So the outlook for our charitable gaming market, in particular, eTABs looks strong as well. So that's the end of the prepared part of our discussions. And operator, we'd be happy to entertain any questions at this time. Operator: Your first question comes from Jim Byrne from Acumen Capital. Jim Byrne: Maybe just looking at gross margins, I guess we heard a lot about repricing the contracts over the last couple of years. I guess I would have expected to see more of a positive impact on the gross margin side. Actually, 2025 has been down from 2024, and I understand Kansas has been a drag on that. But have there been other kind of moving parts that you haven't seen improve that profitability on the instant side? And should we expect that improvement to happen in 2026? Robert Rose: Jim, it's Rob Rose here. So as we pointed out, there are some new headwinds on our gross margin that we haven't really had in the past. All of the repricing that we've done has been baked in. There's not new repricing coming on board. We've got that all in our numbers sort of in this year. But then you always sort of look at the mix and the proprietary stuff that we can sell. So if you really account for the Kansas iLottery and the eTABs, our margin did increase on a year-over-year basis. And particularly when you think of last year, of course, was Q3, which is always a very strong quarter as well. But certainly, when you look at it sequentially, we continue to see improved margins in the underlying instant ticket that gets a little bit hidden with some of these new ventures that we're starting up and investing in. But for certain, as we go through 2026, particularly as John mentioned, in terms of bringing on the California volume, we'll continue to see that margin improve. And we'll just have to make sure we highlight sort of the other things that are impacting our overall gross margin. But of course, those negative headwinds will also be improving because the Kansas iLottery will continue to improve and reduce their loss as we move toward profitability. And we continue, as John pointed out, really work on that eTAB game content. And John mentioned that the regulatory changes in Minnesota impacted us negatively. Of course, they impacted the whole market. It wasn't just us. It was our competitors as well. They really changed the market. And now we're adapting to that and bringing on the game content that works within the regulatory structure that will really help to regain that gross margin. So really, we've got 3 positive trends that are underway as we speak. And going forward to 2026, you'll see that margin improve. Jim Byrne: Okay. That's helpful. And then just on the G&A side, you mentioned the ERP implementation. Those costs were a little higher than we expected. So is that all done? Should G&A kind of trend back to more normal levels? Robert Rose: I like your comment, Jim, is the ERP all done -- ERP implementations do take a long period of time. So we literally just started that really at the end of June. We've been planning for it for a while, but it's really kicked in. So no, it's not done. You'll see that impact our numbers through 2026. And it's fairly compressed because we want to do this quickly and get into the new system. So you'll continue to see that over the next couple of quarters. More it will be done in the first half of the year. You'll see that trail off a little bit in terms of the expenditures as we start to implement it actually go live towards the end of 2026, beginning of 2027. Jim Byrne: Okay. That's perfect. And then maybe just lastly on NPI. You mentioned the big jackpot run for Powerball into September. Mega Million just kind of picked that appears lately, approaching $1 billion. Are you seeing that momentum from the Mega Millions here into the fourth quarter? Douglas Pollard: Hi Jim, it's Doug here. We haven't seen as much of what they traditionally call jackpot fever yet from that Mega Millions jackpot. And I would say there's kind of 2 things that we're monitoring. You never know exactly why, right? The first is it came -- the previous Powerball jackpot that happened at the end of October, beginning of September was the first $1 billion jackpot that we had in a while. In fact, that was one of the drags on Kansas. You need those large jackpots to recruit players, and we were counting on getting one much earlier in our tenure of Kansas iLottery. So it was welcome when it finally did come. And so to now have this Mega Million jackpot coming a couple of months later, it's a little harder. It doesn't generate as much traction. People talk about there being jackpot fatigue. It's really not as much jackpot fatigue as it is media fatigue, right? It's just not as much of a story in the media. So that's hurting it. The other thing I would say is there have been some changes made to the matrix of Mega Millions and the price point where they moved that up to a $5 price point and made some changes to it. I don't know that those have been universally received positively by players. And so how much of that is affecting some of their uptake of it. But we are very close to a threshold level of $1 billion, and you may well see a little more activity. So I hope that we'll see that now start to pick up. And it's interesting, Powerball is such a strong brand. It's just chugging along right behind them. It's now already up to nearly $500 million, I think. So the short answer to your question, I hope that gives you a little more context. The shorter answer is it hasn't generated as much momentum as the last jackpot nor would I have expected it to do so. But I think we're going to start to see some of that impact as we cross that $1 billion threshold. Operator: Next question comes from Robert Young from Canaccord. Robert Young: The first one, the California win, congratulations, obviously there. But does that competitive takeaway shake up the space meaningfully enough that Pollard moves up a level and is thought more as a primary vendor? Or would you say that, that's the way that Pollard has been viewed for a long time? And then how do you think about capacity given California is quite large, and this may open up other opportunities? Douglas Pollard: You want me start with the first half of that. Look, there's no question, the California lottery is 40 years old, and they have had one primary provider for that whole 40-year term. And so for us to take that away, that generated a lot of notice in the lottery industry, no question. That was really nice momentum to have going into what I call the conference season, and people definitely took notice of that. Now did it change people's perceptions? I think you have to see that as an ongoing contribution to changing that perception. I hate the expression, but I use it anyway. I think Pollard has been punching above our weight for a number of years. And so when you go to these large conferences where everyone is together, they really -- for a while, we've gotten profile there that's roughly equivalent to Scientific Games and now Brightstar what was IGT. And so I think that we've kind of been seen at that level for a while, but wins in California and Belgium, I might add, kind of help cement that, that we really are at that top level. And we've invested in that for a number of years, right? We've been a top-level platinum sponsor of the World Lottery Association, for example. That was a tough bite for us a few years back. But you can see it's now starting to pay dividends. And so when we we've been saying we've got this stuff. But when we back it up with wins, I think that really has been helping. So California [ended] up itself doesn't change things dramatically, but it contributes to that long-term trend that we're really excited about. The second half of your question was about the capacity. And I don't know, John, do you want to address your perspective on that? John Pollard: Yes. Capacity-wise, it will be no problem for us. We -- as people noted in our results the last year or 2, our instant ticket volumes have been a little bit lower than they had been prior because we've been turning away lower-margin work as we've talked about for a couple of years now that we weren't able to make margin on. A lot of that was the French National Lottery work, which was a major customer of ours that we hadn't been able to reprice at a level that we were happy with. So our actual physical volumes have been a little bit lower. And these new California volumes will fundamentally only replace some of that lower French volume. So we'll easily be able to handle those volumes within our current capacity, which is why we're also hopeful that it will have a very positive financial impact, obviously, because our incremental costs to produce them should be quite controlled. Robert Young: Okay. That's very helpful. And then just a couple more. On the Belgium win, as you noted, it's online and offline hybrid contract. And so I was curious if you could help us understand the competitive space around iLottery vendors. How many of your competitors can offer a platform that can span those 2 worlds? And how important is that when you're going into RFI and RFP with that relative to the competitors? Douglas Pollard: Well, let me just say that some of the traditional competitors like Brightstar and Scientific Games and Intralot can do both. Some of the sort of newer offerings like Aristocrat Interactive, which was NeoGames, they are iLottery only. And others like All In and others, I'm not sure exactly where they would say they'd be there and where they are -- it's a little more of a continuum as opposed to a black and white. The competitive landscape in that space, however, is what Belgium showed was -- I think Belgium has deep technical expertise, so they could really engage with us and really understand what we had. And what they wanted to have was the responsiveness that newer agile technology gives them. And with some of the more legacy offerings, if I could say that, it's just slower, and it's harder to do some of the things they wanted to do. So for example, one of the things they might -- they really like to have is the ability to going forward, plug in any terminals they want at retail and not be stuck with one terminal, the same terminal at every retailer. And our solution can accommodate that. I always say to lotteries, I'm not speaking to Belgium, but in general, that I could envision a high-volume gas station and C-store is going to have a traditional lottery retail terminal for a while. But there might be some other locations that are more of a pop-up location, and they want to be able to just plug in an iPad and take orders. And our system has that kind of flexibility. So for lotteries that really see how technology is going to support their future, our technology does that. Now that comes with some degree of risk, right? I mean they've been -- this is similar to California. The Belgium lottery has been working with the incumbent technology for a long time. So it's a change. So that's still not easy to accommodate and accomplish. So it was a lot of work to do, and I wouldn't suggest that there's a whole bunch of lotteries that are about to flip. But those who dig into it and are really thinking about their future and their technology, they do appreciate the agility that comes with our solution. And we're quite excited to put this in place and make it a calling card. And frankly, so is the Belgium lottery. They want to show this off and show that this is the way to go. So it's a nice formula. Robert Rose: I just -- I can't help adding it's John Pollard here. The reason we're pretty excited about the last few months in this past quarter is not so much our financial results, which were good, but these kind of somewhat transformative wins. And so in our space, we've, for decades, had 2 major competitors, what used to be called GTECH then became IGT and now Brightstar. And Brightstar for ever have been the dominant player in central gaming systems and draw games with a 70% likely world market share. And our other main competitor was Scientific Games, who for decades has been the dominant supplier of instant ticket systems with a 70% world market share of instant tickets. And so what we've seen in the last few months is we've won contracts from both of those major competitors in Belgium and California of some of their biggest, longest-standing customers. And that is a big step that doesn't happen very often. We've obviously always been in the instant ticket business for a long time, but Brightstar has been a multibillion-dollar part of our lottery industry and central systems. That because of the omnichannel nature of our Catalyst system puts us in there. We're not just an iLottery competitor. We're a full central system competitor. So those are both very significant wins for Pollard Banknote. John Pollard: I mean just a couple more. I think earlier, Rob, I think you said that the biggest impact on gross margins was the Kansas ramp and the [e-pull] tabs headwind in Minnesota. I wanted to make sure I heard that correct. And then in the release suggested that profitability in Kansas could turn positive in the next few quarters because of some initiatives underway. And I was just trying to get maybe a little more precision around your thoughts on where Kansas -- that headwind dissipates. Robert Rose: Sure. So Rob, you did hear me correctly. Those are the 2 main factors on the gross margin headwinds. And certainly, we've talked specifically about moving towards profitability in Kansas iLottery. We've got a number of initiatives as we had anticipated now in our road map to really generate some additional sales. The Kansas lottery, correctly so, went off sort of what we would call a soft launch or a conservative launch, right? These are new things for these states, and they want to be careful of how it's perceived by the people in their jurisdiction. And that was -- and we agree with that. So we've been going very slowly. All along, we knew there was levers to pull to get back up to sort of more standard or more traditional gameplay and different factors that you see in a more mature iLottery. So we're undertaking those initiatives now. So we'll certainly start to move towards the profitability. I'm not going to specify in terms of exactly when we're going to turn into profitability, but you'll see the losses decrease over the next number of quarters. And then it just comes down to, as Doug said, a little bit more in terms of the jackpot play and the other factors. But it will take a little while, but we're certainly going to be moving in the right direction. John Pollard: So it's John. I will say in that September jackpot run in Powerball, we did see a significant increase in our play in Kansas and signed up players, and we've maintained a big chunk of that play going in post September. So we saw exactly what we'd expect to see with that jackpot in September and move to a higher level for sure based on that. Robert Young: And last question would just be on the ASP in the quarter you just reported. I normally would have thought of ASP being strong for holiday sell-in. And sorry if I missed it, but if you could just help me understand why ASP was a headwind, not a tailwind in the quarter, and then I'll pass the line. Robert Rose: Sorry, Rob, it's Rob again. So again, we had a very strong average selling price in this quarter as expected for exactly the reason you've talked about. We do a higher level of proprietary work, and we've obviously baked in all of our repricings now. The challenge is, and I hate to say this, but last year, of course, Q3, we have that same factor. So we had a very strong Q3 last year as well. So when you look at the ASP year-over-year, it's down a little bit, but really just a change in the mix component. But when you look sequentially, obviously, our average selling price is significantly higher this quarter compared to Q1 and Q2. So that trend is going to continue, and we're going to keep some of that trend going forward that we wouldn't have seen before in things like the fourth quarter or even in the earlier part of the year next year. Operator: Next question comes from David McFadgen from Cormark. David McFadgen: Yes. So a couple of questions. So when I look at the revenue, it was up slightly, but when you back out Michigan, it was still up slightly. So -- but the instant ticket volumes were flat, selling price was down. So I think at least relative to my expectations, and I think other people, they were expecting more revenue out of the instant ticket side of the business, because charitable gaming was up as well. So I don't know, what's your kind of outlook on volumes for the year and average selling prices to get to higher revenues on the instant ticket side? John Pollard: It's John. I mean the looking at the instant ticket market takes a bit of a sort of historical perspective. We saw a big jump in instant ticket volumes back to COVID. I hate to go back there now that's going back 3 years ago now. We saw a really big jump. And then volumes were flat coming out of that for a year or 2. So instant ticket volumes have been flat the last couple of years. But again, glass half full, we've maintained that COVID jump. And we're just seeing now in the last few months, a return, as Doug noted in his comments, to some modest growth in sort of low single digits. So I think we're getting back on a long-term trend of seeing instant ticket growth. If you sort of look at the trend of instant ticket sales for the industry over the last number of years and you sort of flatten out the COVID bump, you'll really see the long-term trend returning to that hopefully low to medium single digits growth in instant tickets. But it's been a little bit flattish the last couple of years. We had a bit of a tough comparison to our Q3 last year. And of course, our volumes because we were more selective last year or so in turning away lower margin work, no doubt, our own volumes have been a little bit under pressure on instant tickets. We've more than made up for that an increase in average selling price coming from our repricing and our -- as Doug talked about, the move to the higher price points in the industry where there's more $10 and $20 tickets versus $2 and $5 tickets is that we're selling more premium options like Scratch FX. So the good part of our instant ticket business last couple of years, the really good part has been that average selling price increase. The volume part has been a little more challenged. We were -- however, sequentially quite a bit stronger in the third quarter of this year versus the first 2 quarters. So I think there's a good trend within the year. And particularly with California coming on, we expect to see that volume trend going up. So it's kind of a -- it's a nuanced [dairy] our scratch ticket business to try to look at the last couple of years for sure. But the bottom line is it's still a really strong part of the lottery business. Sales are growing again in instant tickets in the industry. And we've just won the biggest contract in our lives. And so we're pretty bullish about that outlook. We expect our average selling price to continue growing slightly even going forward, even though the repricing cycle is mostly done because we're going to continue selling more options. One of the reasons California chose us is because they love our physical products and the options and the interesting things we offer. They specifically called that out of instant tickets. We have a variety of cool options, our Flip Scratch tickets, we get into all kinds of examples that our competitors don't offer. We're going to be selling those options to California. So it's still a really important good part of our business that we expect growing revenues from. But it's been a little nuanced the last couple of years for sure. So sorry for that long answer. David McFadgen: No, no, that's helpful. I was just wondering, do you think that the instant ticket side of the business is being negatively impacted at all by the growth of iLottery, so it could result in some sort of structural change in the industry or no? John Pollard: No, not. Doug, you can probably talk to that better than me. Douglas Pollard: I would definitively say no. There has been no evidence of that in any lottery. If you look over the last 12 years, we've been doing this in the U.S., let's focus on that where the biggest market is for instant tickets. The lotteries that have introduced iLottery have had faster growth of retail sales than non-iLottery states, okay? So there just isn't that evidence of it. And in fact, if you look at some of the kind of analytical data that you see out there, you see we know that omnichannel players, i.e., those players that play both retail and online are the most valuable, right? No surprise there. So a lot of that is you are taking retail players, and they are incrementally buying some tickets online. But the key is the flip side of that, and there are still players that when you survey them, their first purchase of lottery was made online, and then they have become an omnichannel player that buys at retail as well. And that's what's behind the numbers. And so it's just -- and then the last thing I'd say on that, David, is it's just a fundamentally different purchase. So iLottery is just so easy, right? When -- and that's in a different context. Think about it that you're going to look up and you're going to say, okay, Mega Millions is drawing on us at Friday night and the Jack buys $980, I forgot to buy it. Oh, yes, I just go on to my phone and I can buy that. That's really easy, okay? But also buying a scratch ticket at retail is really easy. You go in, put down your $10, they hand you a ticket, you get it back, you scratch it, you win, you hand it back to them, they give you $50 cash. Real nice, easy transaction. In fact, it's easier to buy scratch at retail than it is online arguably. So it's just a very different transaction. And for that reason, we haven't seen the kind of cannibalization that you're talking about in your question. So I'm confident that it is still good for the business overall and that our strategy of focusing on that this new digital space, while at the same time, not falling out of love with our core retail business is the right one for us as Pollard Banknote. And frankly, it's the right one for the lottery industry. David McFadgen: Okay. All right. So just a question on margins. So you talked about this on the call. So if you look at the EBITDA margin, you back out MPI, you back out Michigan, focused on the rest of the business, the margin is down. So you called out a couple of things that are driving that. So I guess it's Kansas would be the biggest factor in that, that it's running an EBITDA loss right now because you say ticket margins, EBITDA margins are up, charitable is up, right? So it would be primarily Kansas then, I guess? John Pollard: Well, if you're talking about EBITDA margin, which is distinct from gross margin, obviously, a different measure. So when we were talking on the call about gross margin, the 2 factors that entirely account for that in gross margin were primarily the Kansas iLottery start-up costs and secondarily, the lower eTAB margins due to the regulatory change in Minnesota, which we're steadily addressing and is getting better every quarter throughout this year. But on an EBITDA margin level, we do have a third sort of factor coming in there, which is our selling admin expenses are up as well from last year, which obviously would impact our EBITDA margins because we're aggressively growing our business, we're investing a lot of time and energy and money in our digital space, not just iLottery platforms with iLottery content and our eTABs. We put a lot of effort in the eTABS market, even though we're not really seeing the benefit of that yet in 2025 because we're doing a lot of [led] work on new jurisdictions and new products that will be hopefully launching in 2026. So we -- our selling and admin costs are up not insignificantly year-over-year. That's just because we're growing the scope of our business a lot and investing a lot in the future, and we expect to see the significant payoff of those, but we're not yet, right? So 2025 is being dragged down by all that investment. But look, the Belgium thing, the Belgium win, that's why it's so huge because it really says, yes, what we're doing here is not just been validated by the Kansas win, but our second major win. And so as well, the -- we'll expect to see that investment in SG&A get the payoff for that as we start to get profits from these investments we made. And as well, we did 2 acquisitions over the last year with Pacific Gaming and CJ Ven, and that's added somewhat to our selling and admin costs as well, which, by the way, both those investments have gone really nicely. We didn't really talk about them because they're smaller, but fit in really seamlessly well to our charitable gaming group. So there's -- that's my fuller answer on the sort of EBITDA margin question. David McFadgen: Okay. No, that's helpful. So when do you expect Kansas to be EBITDA positive? John Pollard: I think Rob Rose just tried to stick handle that question a little bit. It's hard to say for sure. As I said, we made significant improvement in the September jackpot run. We've moved to a significantly higher level of revenue in Kansas. We talked about some of the initiatives that we're taking with improved game content, website and that. And so it's hard to say for sure. We should see meaningful progress in the next couple of quarters as we get through on that, but it's hard to say for sure. But it's steadily improving, and there's no reason we won't bring it up to the levels that we're seeing in some of our joint venture customers. It's just a matter of how many quarters it takes, but we're seeing steady progress. Operator: There are no further questions at this time. I will now turn the call over to Doug Pollard. Please continue. Douglas Pollard: Okay. Thank you very much, operator. We talked about some of the game-changing milestones that we achieved during the third quarter, which confirms to us that our strategy is the correct strategy for our organization. Full credit goes to the 2,600 team members of Pollard Banknote working around the world. And I can just tell you that John and I are immensely proud of what our team is achieving every day. We talked about some of those specific projects like California and Belgium and Kansas, but those are just a sampling. We've got all kinds of examples of that from around the world in the lottery space, in our charitable gaming space and eTABs in lots of areas. Those folks that we've got in our team are out there tirelessly providing the innovative solutions that lotteries and charities require to be successful and putting us in a great position. So thank you to our team. The recent achievements that we've made are just the beginning of us reaping the benefits from the substantial investments we've made in recent years across our businesses, including innovative game technologies, exciting game content and of course, creative retail solutions. We are extremely excited about the opportunities that lie before us, and we look forward to more successes in future quarters. So thank you for joining us this morning. We look forward to updating you after year-end in March of next year. And in the meantime, have a great rest of your day. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Via Third Quarter 2025 Earnings Call. [Operator Instructions] Thank you. It is now my pleasure to turn the call over to Via. The floor is yours. [Presentation] Gabrielle McCaig: Good morning, everyone, and welcome to Via's Third Quarter 2025 Earnings Call. I'm Gabby McCaig, Via's Chief Corporate Communications Officer and Head of Investor Relations. With me today are Daniel Ramot, Via's Co-Founder and CEO; and Clara Fain, Via's Chief Financial Officer. During today's call, Daniel will review our third quarter 2025 business update before handing it off to Clara to discuss financial results and our guidance for the full year 2025. Daniel will end with some additional comments before opening it up to Q&A. In addition to prepared remarks on this call, additional information can be found on our investor presentation, press release and SEC filings on our Investor Relations website at investors.ridewithvia.com. Before we get started today, we want to draw your attention to the safe harbor statement included in our press release and investor presentation. Items we discuss today will include forward-looking statements about topics, including, but not limited to, our future financial performance, projections, and management's plans and objectives for future operations. Actual results may differ materially from those presented in the forward-looking statements, and are subject to risks and uncertainties described more fully in our SEC filings, including our S-1 and quarterly report on Form 10-Q. Any forward-looking statements that we make on this call are based on our assumptions as of today, November 13, 2025. Unless required by law, we undertake no obligation to update or revise these statements as a result of new information or future events. We would also like to point out that our discussion today will include certain non-GAAP financial measures in addition to, not as a substitute for, financial measures calculated in accordance with generally accepted accounting principles. Definitions of these non-GAAP financial measures, along with reconciliations of non-GAAP to GAAP financial measures are provided in our press release and our investor presentation. And without further ado, I'll now hand it over to Daniel. Daniel Ramot: Thanks, Gabby, and thank you, everyone, for joining us today. We're delighted to host our first public company earnings call, and we're very pleased to report that Via delivered another strong quarter, exceeding expectations on both top and bottom line performance. In Q3 2025, our revenue grew 32% year-over-year. Platform annual revenue run rate, which is our quarterly platform revenue multiplied by 4, was $439 million. The number of customers on our platform grew to 713, a year-over-year increase of 11%. Our results demonstrate the durability of our growth as we transform a vital and underpenetrated market, and customers increasingly embrace our cutting-edge platform. To provide additional insight into our performance, the increase in revenue in Q3 was driven by strong growth in our government business. Revenue from government customers increased by $26.5 million or 34% year-over-year. We also saw outstanding results in the United States. Revenue from our U.S. customers increased by $23.1 million, or 42% year-over-year. Taking a step back. Via provides the world's most advanced platform of software and services, transforming antiquated public transportation systems into efficient digital networks. We've built a single unified platform that replaces fragmented legacy systems across multiple transit verticals. Our platform automates key workflows, consolidates operations across verticals that have historically operated as a distinct silos. Via's vertical stack is deployed globally. It can be configured to support the broad and diverse local requirements of our customers without the need for software customization. We are fundamentally transforming the way governments and cities operate through automation, advanced algorithms, data and AI. Transit is a critical public service. In the United States alone, public transit systems provide 8 billion trips each year, and yet 45% of Americans do not have access to transit. For anyone who cannot afford a car, this gap severely limits their ability to get to jobs, educational opportunities and health care. We believe that after decades of underinvestment in technology, cities across the globe are poised to upgrade their -- and digitize their transit infrastructure. This transformation is already in progress and will only accelerate in the coming years. In our core geographies of North America and Western Europe, our serviceable addressable market is estimated at $82 billion, based on a report commissioned by us from a major consulting firm. Today, we capture less than 1% of this market. We also estimate that there are approximately 63,000 potential Via customers in North America and Europe. As of Q3 2025, we had 713 customers on our platform, representing approximately 1% of these potential customers. As the established category leader, we're extremely well positioned to capitalize on the digital transformation taking place within our core markets, and we are still in the early innings of capturing this very large opportunity. More than 90% of our revenue is derived from selling our solutions to cities, transit agencies and similar government organizations. Public transit generally and Via services, in particular, are in the unique position of enjoying broad bipartisan political support. One way to visualize this. In the U.S., 55% of Via services are in red congressional districts and 45% are in blue congressional districts. This bipartisan support has helped ensure that as reported by the American Public Transportation Association, funding for public transit has grown an average of 4% per year since 2012. This trend appears to be continuing with the Trump administration's latest 2026 budget proposal, including a $310 million increase in federal funding for public transit. Bipartisan support for transit extends well beyond the federal government. This is critical since more than 80% of government funding for Via services is provided at the state and local levels. We have consistently seen a broad consensus by voters in support of public transit in local elections. Earlier this month, 16 of 19 public transit ballot measures successfully passed, approving a total of $11.8 billion in transit funding. In addition, several major pieces of legislation in support of public transit have recently been passed by state and local legislatures, including in Illinois and Oregon, where billions of dollars in transit funding were approved. Importantly, we have not seen any impact from the federal government shutdown on Via services. At the Federal Transit Administration, it is our understanding that no employees were furloughed during the shutdown. Let's take a couple of minutes to deep dive into the Via platform. Over the past 13.5 years, we have, in a very deliberate way, through organic investments and strategic acquisitions, built a comprehensive end-to-end category-defining platform of software and services for public transit. Our platform is highly modular and can support the transit needs of any size city or community, from rural to suburban to major metropolitan centers. We provide software that allows transportation planners to design more livable cities. A one-stop shop for planning and scheduling both fixed routes and dynamically routed transit networks. Transit planners can leverage models trained on billions of data points to rapidly quantify the impact as they make changes to their network. Once a city, or transit agency, has planned its transit network, it can, with a click of a button, begin operating that network using our operating software. Via's operating software supports multiple transit verticals, including microtransit, paratransit, school transport and nonemergency medical transportation. Our software is powered by advanced algorithms and AI, which are used by customers to digitize and automate work streams across passenger reservations, dispatch customer support, program eligibility, government reporting and compliance. We also provide consumer-grade mobile apps and web-based interfaces for passengers to seamlessly plan, book and pay for their transit journeys across multiple modes of transit. When customers adopt our platform, their ability to visualize their data and derive actionable insights from that data greatly expands. This improved access to data can be transformational. Our analytics tools include prebuilt dashboards that allow customers to track their essential KPIs. Our customers can also easily build their own reports directly within our products to create bespoke analysis, or to meet specific funding and compliance obligations. These tools are intuitive and easy to use, even for those who may not be as data or tech savvy. In addition to software, our platform includes a suite of technology-enabled services which facilitate and accelerated adoption of our software. 100% of our customers buy our software. Approximately 20% elect to also procure services. These services are delivered to our customers by a curated ecosystem of third-party providers, or in some cases, directly by Via. Our ability to provide services alongside our software is a critical element of our customer-centric go-to-market strategy. Our services enable adoption of our software, allowing us to win customers who lack the staffing or expertise to use the software, or leverage its full capabilities. Our services also increased the stickiness of our products and accelerate growth. And by broadening our platform and reach, they represent a strong point of differentiation in the marketplace. Via's platform is the product of an investment of hundreds of millions of dollars and over a decade of intensive efforts in research and development. Our data is derived from multiple sources, publicly available data sets such as demographic information from the U.S. Census, and proprietary data produced by our hundreds of services across the globe. Over the years, we have collected billions of data points from over 150 million trips. As we expand our customer base, we also continue to scale our data advantage. We have leveraged this data to create the world's first LLM for cities, an AI model trained on our proprietary data, which provides multiple capabilities that can meaningfully improve the way transit planners design their networks. From ridership modeling to bus speed prediction, to proactive and conversational transit planning recommendations, a transit planning co-pilot, if you will. A recent and incredibly exciting example of Via's platform in action comes from Springfield, Ohio. I love this case study, as it illustrates the power of our end-to-end platform. First, using our transit planning software, the city was able to rapidly analyze their existing transit system and model the impact of potential changes to their network. What became very clear very quickly was that in Springfield, there simply isn't a sufficient population density to support buses. You can see the bus network on the left, with the circuitous routes typical of a transit system, trying to use buses to provide transportation in low-density areas, where buses don't really work. The small black icon you see on the map surrounded by a small blue area is Jane. We've dropped Jane in East Springfield and asked how far can she travel using public transit? With the original bus system, it's clear that she can't go very far at all. When the buses are replaced by Via's microtransit system, the picture is very different. Now on the right, Jane can access a much larger area of Springfield using transit, and a car is no longer a prerequisite to having a job or getting to school. Needless to say, this has real impact for Jane and more importantly, since Jane is fictional, for the residents of Springfield. Based on this analysis, Springfield decided to fundamentally redesign their transit network, replacing all of their buses with the Microtransit system powered by Via's platform. Now for the same annual operating budget, the city is able to provide transit access to 40% more of the city and has dramatically improved the passenger headways, reducing them by a factor of 4. For those of you who aren't transit nerds, passenger headway is the average time a passenger has to wait for a trip. This is a remarkable transformation for Springfield and its residents. Even more importantly, we know it is applicable to so many more cities in America. Our business is characterized by consistent and durable revenue growth. This growth is driven by landing new customers and by expanding within our existing customers. Expansion within existing customers is driven by both volume expansion, as customers add more vehicles or vehicle hours to the platform, and upsell as customers increase the number of modules included in their solutions. In Q3 2025, we continue to land multiple new and strategic customers. The launch of our microtransit service in Omaha is a great example of a partnership that goes well beyond the transit authority and extends into the local community. In this case, the services received key support from a local nonprofit that is keen to expand access to jobs and other opportunities for Omaha residents. The early success of our Omaha service rapidly led to another opportunity in neighboring Council Bluffs, Iowa, demonstrating the potential for strong regional network effects for our platform. Council Bluffs will launch a new and modern paratransit service, leveraging Via's platform in Q4. We have also seen an exciting acceleration of our business in the U.K., where government initiative to bring transit networks under control of regional authorities is meaningfully expanding the pool of potential customers seeking Via solutions, with Birmingham representing a key customer. In Q3, we also continued to grow rapidly within our existing customer base through both volume expansion and upsell. The city of Mobile, Alabama launched Via's microtransit solution in March 2024, building on that successful launch the city adopted Via's planning solution, which allowed it to critically analyze the performance of its transit network, unearthing that only 45% of residents and 55% of the city's jobs were accessible by bus. In Q3 2025, the city added Via fixed-route scheduling and paratransit solutions, and committed to implementing a full network redesign with a focus on streamlining bus service, expanding microtransit and hugely increasing access to jobs. In 1.5 years, we've grown revenue with this account by 17x. Looking ahead, we believe Via wins through innovation and more specifically, by continuing to innovate across three key areas: one, broadening our platform; two, deepening our vertical stack; and three, being nimble and creative on our go-to-market strategy. Broadening our platform, both through organic product development and strategic acquisitions, allows us to increase our competitive advantage, grow our share of existing customers' wallets and drive margin expansion through new higher-margin software products. As we develop new product capabilities and features for our customers, this deepening of our vertical stack drives customer satisfaction and increases the stickiness of our platform. Investing in go-to-market innovation allows us to reach new government customers and reduce our customer acquisition costs. We believe this growth framework is key to our continued success, and we consistently evaluate opportunities and initiatives through this lens. One area where we have been investing in broadening our platform is our newest vertical, student transportation. Q3 was a very strong quarter for this vertical, which saw more than 2x growth in the number of customers subscribing to our solutions. Our efforts in the schools vertical are still nascent, but we're very encouraged by the initial results and believe this can be an engine for growth in the future, as well as a template for expansion into other new verticals. In Q3, we added multiple new product capabilities and features to our platform. These new capabilities have been extremely well received by customers. We are relentless about innovation and continue to invest in all parts of our products, even those that provide well-established functionality to our customers. Last quarter, we rolled out major upgrades to our core dispatching interface, allowing dispatchers to more intuitively visualize vehicle routes, handle passenger queries and cope with delays and disruptions in real time. Whether they're a parent, case manager, or front desk staffer at an adult day care center, our Caregiver App allows caregivers to manage trips and receive real-time trip updates for the individual in their care. In our agent AI suite, new features help our customers streamline PDS manual processes. Tools like the eligibility application scanner, automate the processing of paper applications into digital files for assessment. Our agent chatbot is helping to automate how our customers handle passenger calls. We continue to roll out advanced self-service capabilities for our customers, shortening the loop between planning a new transit systems and deploying it. We're also very pleased to announce the launch of our European Advisory Council. The goal of the council is to bring together prominent leaders from the transit, technology and academic worlds to generate thought leadership on how integrated digital networks will transform the modern European public transport landscape. The 3-member board is chaired by Dr. Rolf Erfurt, CEO of Toll Collect, who previously served as a Chief Operating Officer and Board member for the BVG, the Public Transit Authority of Berlin. Additional founding members include Professor Andreas Hermann, Director of the Institute for Mobility at the University of St. Gallen, and Professor Barbara Lenz, Senior Advisor and former Director of the Institute of Transport Research at the German Aerospace Center. We believe this high-profile Board can play a key role in advancing transit innovation and digitization in Europe, and ensure public budgets continue to be directed towards this important area. Last, but certainly not least, we were pleased to announce a new strategic partnership with Waymo to advance the use of autonomous vehicles in public transit. There is no question Via has a key role to play in the introduction of autonomous vehicles into public transit. And our partnership with Waymo is a step in that direction. Through this partnership, government agencies using Via software can now incorporate Waymo's AVs directly into their public transit networks. Chandler, Arizona is the first city to benefit from this framework, integrating Waymo's service into the city's Chandler Flex microtransit service. Public transit riders and the government agencies who serve them are too often the last to have access to cutting-edge technology. We're delighted that this partnership with Waymo paves the path for AVs to become accessible to millions of global public transit riders, enhancing mobility, lowering operating costs and improving safety outcomes. And with that, I'll pass it over to Clara to review the financial highlights for the quarter. Clara Fain: Thank you, Daniel. We are very pleased with our performance in Q3, where we exceeded expectations across top and bottom line metrics. Now let's dive into our results. In Q3 2025, our platform annual run rate revenue, which we defined as our quarterly platform revenue multiplied by 4, was $439 million, representing a year-over-year increase of 32%. As a reminder, we generate revenue primarily through recurring subscription fees for access to our platform. Our customers subscribe to one or more solutions, which consist of the combination of software and tech-enabled services tailored to each customer's needs. All of our customers subscribe to our software and approximately 20% of our customers bundle tech-enabled services. Contracts with our customers are typically multiyear and structured with a committed budget and a volume-based component. Pricing is generally based on a number of factors, such as fleet size, minimum number of vehicles or total vehicle hours. Each contract comprises one bundled price for the combination of software and any tech-enabled services selected by the customer. We are very pleased with our revenue growth of 32% this quarter. As you can see on our historical performance, our quarterly revenue growth can fluctuate quarter-to-quarter. Our business is mostly driven by public procurements, which have a certain cadence, and happen when their existing contracts terminate, which is not always consistent throughout the year. Our revenue is highly predictable. The unique nature of our market, customers, combined with our leadership platform position, the contracting nature of our revenue and mission criticality of our products provide us with significant visibility into future revenue. At any given time, over 90% of our projected revenue for the next 12 months is contracted. This is a testament to the high quality and durability of our business model. Our rapid revenue growth is driven by landing new customers and expanding with existing customers. We delivered strong results on both fronts this quarter. In Q3 2025, the number of customers leveraging our platform was 713, representing a year-over-year increase of 11%. As you can see, our year-over-year growth in new customers has historically ranged between 8% and 12%, which aligns to the cadence of our unique market. We also continue to experience rapid growth with our existing customers, driven by a combination of volume and product growth, as well as continued stickiness of our platform. In Q3 2025, the majority of our 32% revenue growth was driven by growth with our existing customers, in line with our historical performance as a private company. In particular, I want to highlight our strong momentum in the United States, and with our core government customers. In the long term, we expect that our business will generate consistent and durable revenue growth as we continue to digitize one of the last pen and paper industries, and penetrate our $82 billion serviceable addressable market. Our sales and marketing efforts are highly efficient for a number of reasons. We're addressing a very large market, which provides many opportunities for growth with both new and existing customers. The breadth of our platform and our position as a category leader provides Via with a strong competitive advantage and drives meaningful expansion opportunities. The mission criticality of our platform and ability to generate meaningful ROI for our customers, combined with our ongoing investment in innovation, drive that stickiness of the platform. And last but not least, the particular nature of our customer base, government and government agencies create a virtuous cycle of growth through word of mouth and referrals. In Michigan, you can see on the slide, we have begun to experience a flywheel effect. While the success of existing customers in the state is driving new customer opportunities without the need to invest further in sales and marketing. As you can see, we have witnessed a 200% increase in revenue per head in that state, and a 20% decrease in S&M as a percentage of revenue, highlighting the incredible efficiency of our team in this market. Let's dive into our operating expenses, which we're presenting on an adjusted basis. As of Q3 2025, we spent 14.1% of our revenue on sales and marketing, compared to 15% in Q3 2024. Over time, we expect to continue to invest efficiently in S&M to capture our market opportunity. As of Q3 2025, we spent 14.4% of revenue on G&A, compared to 16.7% in Q3 2024. Our research and development efforts have been our #1 area of investment since the foundation of Via 13 years ago. We have invested over $500 million in R&D. And as of Q3 2025, R&D expenses represented 19.1% of revenue, compared to 24.7% in Q3 2024. We are now harvesting a decade-long investment in R&D. And as we continue to adopt AI, automate our processes and expand our product suite, there's a significant opportunity to increasingly drive efficiency in our R&D spend. As of Q3 2025, our adjusted gross margin was 39.6%, compared to 39.2% in Q3 2024. In the near term, we are focused on landing our market opportunity and penetrating our customer base further. In the medium to long term, we reiterate our commitment to an adjusted gross margin of 50%, driven by 3 levers: one, transitioning lower-margin services to third parties; two, continuing to expand our platform with higher-margin products, notably our software offering through internal development; and three, continuing to explore strategic and accretive M&A. As a reminder, we have established a playbook to execute on M&A with the Remix and Citymapper acquisitions, which were both highly successful on all counts. Our industry is highly fragmented, and there are many point solutions which will not make it as stand-alone companies in the long term, and might be excellent additions to our platform. Our IPO was a powerful moment for brand awareness and has generated significant inbound interest for potential M&A targets. With mature customers, we have a proven track record of successfully being able to increase gross margins over time. In this example, from a customer in the Western U.S., the customer started with a software and services microtransit solution in 2019. In 2022, the customer had reached a maturity, whereby they were able to contract for certain services directly, rather than through Via. We were also able to add additional product upsell to the partner for several higher-margin SKUs. In the past 3 years, we have been able to double run rate revenue on this account, while expanding gross margin from 40% to 50%. We believe that this is a formula we can successfully replicate with other customers as their accounts reach maturity. While generating rapid and durable revenue growth, we have benefited from significant operating leverage in the business. This operating leverage supported a continuous improvement in net loss margin and adjusted EBITDA margin. In the last year alone, between Q3 2024 and Q3 2025, our adjusted EBITDA margin improved from negative 17% to negative 8%. We are pleased about our continued ability to deliver operating leverage, as the business scales. Now turning to guidance. For the fourth quarter, we expect platform revenue to be between $114.6 million and $115.1 million, representing 25% to 25.5% year-over-year growth. We expect adjusted EBITDA to be between negative $7.5 million and $8.5 million, and adjusted EBITDA margin to be between negative 6.5% and negative 7.4%. For the full year 2025, we expect platform revenue to be between $430 million and $430.5 million, representing 30% to 30.2% year-over-year growth. We expect adjusted EBITDA margin to be between negative 8% and negative 7.8%, compared to negative 16.1% in 2024. Now I'll pass it to Daniel for some concluding remarks. Daniel Ramot: Thank you, Clara. I just want to reiterate again how pleased we are with this quarter's performance, and to express my confidence in our ability to maintain strong performance as we continue to transform our massive and hugely important market. Our team remains incredibly passionate about building best-in-class technology for those that the tech industry has long neglected, local governments and some of their most vulnerable citizens. We believe that our financial success is directly correlated to the meaningful impact that our solutions deliver. In the course of our IPO, I had the opportunity to discuss with some of you our views on the importance of making sure that governments are not left behind in the AI revolution. Our customers, not by nature, an early adopter of new technology. And for good reasons, the government agency is responsible for providing public transportation, operating complex and demanding environments, where risk is rarely rewarded. The use of machine learning and AI has always been core to Via. But given the complex environment in which our customers operate, we believe it is our responsibility to help them gain access to this new technology. As we continue to broaden our platform, AI will enable our customers to generate a virtuous cycle of planning, operating, and optimizing their entire networks, leading to smarter and more efficient transit. As the category leader, we believe we are very well positioned to capitalize on the AI and autonomous vehicle opportunities in our space. We're excited to continue to work hard to help our government customers adopt new technologies and meaningfully increase the value they deliver to their constituents. And with that, I want to thank you all again and turn it back to the operator so we can take some questions. Operator: [Operator Instructions] Our first question comes from the line of Adam Hotchkiss with Goldman Sachs. Adam Hotchkiss: Great. It's great to speak with you all in a public forum. Daniel, you mentioned the 63,000 customer opportunity. How would you characterize both the catalysts, but also maybe the barriers you've experienced as you think about the next steps in converting more of that opportunity? And then Clara, just briefly, how do you balance growth and investment within that context? Daniel Ramot: Adam, thanks so much. Great to speak with you here. I think when we focus on the opportunity ahead of us, the barriers are similar to what we've experienced historically. Primarily the customer that we're dealing with has an aversion to risk fundamentally and reluctance to change, and that is usually the highest barrier for us to overcome. I will say that over the years and certainly in this last quarter, we have seen that barrier start to come down, and we're able to accelerate our ability to convince our customers to adopt new technologies And certainly, when we look at regions in which we have established any presence, and even more so when we've established a meaningful presence, that barrier can come down meaningfully and really help us accelerate through these regional network effects that we talk about. So fundamentally, the same. We need to keep doing a really good job explaining the value of the ROI to our customer, and showing them how it works in nearby cities, that's always very helpful. And that, I think, will help us continue to accelerate the progress. Clara Fain: Yes, Adam, great to reconnect, and thanks for the question. When it comes to the investments, we are very focused on putting the dollars where the growth is, and we have a very detailed framework of investment behind the new products that we're launching, focused on our core geography of North America and Europe, and some of the products that we went through together, including our -- obviously our microtransit product, our paratransit product, but also some fixed-route products, but also some new products notably around the school business and some other interesting opportunities that we've identified. So definitely putting the dollars behind the customer opportunity. Adam Hotchkiss: Great. That's really helpful. And then just on the quarter itself, how would you frame the makeup of the 24 net new customer addition sequentially you had? It was the largest number, I think we've had in recent company history. So was there anything notable about these customers, either from a product or geography perspective? Did student play more of a role? Or is it just where RFPs happen to fall in the calendar year? Any more detail on that makeup would be helpful. Clara Fain: Yes, happy to break it down further for you. As you saw, we're very pleased with the performance in North America, continuing to see very strong demand there, and that is reflected in the customer growth. And we're also seeing some good traction around new products, including the schools product, which has driven some of that growth as well. So I would say both of these are definitely drivers of the customer growth. Operator: The next question comes from the line of Josh Baer with Morgan Stanley. Josh Baer: Great. Daniel, Clara, Gabby, the whole team, congrats on a strong quarter and welcome to the public markets. I know you have great visibility on the pipeline. I was hoping you could share some of what you're seeing with us from an RFP perspective, or customer decision and implementation timing perspective. Ultimately, what do we need to look out for from the customer adds over the next several quarters? And then my follow-up, Clara mentioned the IPO as a branding moment more from an M&A perspective. I think I'm wondering if you've noticed a change in inbound conversations from customers as well? Has the IPO changed awareness and interest in the platform? Daniel Ramot: Josh, thanks so much. We're happy to be a public company. It's exciting. Looking at the customers and looking forward, I think we'll continue to see very positive trends across all of our markets. We are seeing -- and I think it ties to your follow-up question, too. We are feeling that the IPO was a moment for us. It's hard to quantify, but the reception on the customer side, definitely feeling sort of a different timber to it, if you will. And I think that's helping us also develop the pipeline and continue to push in that direction. As Clara mentioned, the U.S. in particular, we've seen really strong dynamics, and that's been true for the quarterly results and looking ahead at pipeline, so we're very pleased with that. And we're seeing some good dynamics in Europe, too, as well, especially in the U.K. So looking ahead, I think that's a market we're very interested in focusing on. Operator: Our next question comes from the line of Michael Turrin with Wells Fargo. Michael Turrin: My congrats as well on the first quarter as a public company for Via. I want to go back to the customer metric. I think given you had some commentary, we've been fielding questions around central government shutdown impacts. It doesn't sound like there was any real impact there. But I'm just curious how much of the bigger sequential adds you're seeing is tied back to some of the commentary Daniel is making around, just increasing referenceability, and just your view on us assessing that as a good leading indicator for the durability of future revenue growth, or maybe other indicators you would point investors towards as they're getting to know the company. Daniel Ramot: Michael, thanks for the question. I think -- I do think the referenceability is key. And I know we've been talking about that quite a lot. But the way that we are approaching this market, those proof points that we can point to for customers, whether it's in new conversations and also when we're talking to existing customers about expanding, the fact that they can see what's happening nearby is extremely important. And I think we talked a lot about the Mobile example a bit earlier. I think the fact that in Mobile, they were able to see what we did in Sioux Falls just as an example, and we're able to visit. That is incredibly impactful when they're making -- what is, frankly, a huge decision from their perspective to pass on to us basically management and the design of their entire transit system. I think the influence that these types of conversations that they can have with peers, incredibly important. So that referenceability is really key. And our hope is that we can continue to build on that over the coming years to really drive rapid adoption. Michael Turrin: And just on the Waymo partnership and autonomous in general, I think that sounds exciting and maybe a bit more advanced than we tend to think about within public transit agencies. Can you just expand on how you're thinking about the evolution of that opportunity and what that does for Via's TAM overall over time? Daniel Ramot: Yes. Thanks. I think autonomous is a huge opportunity for us. I also think it's incumbent us to play this role on behalf of our customers and help them adopt this new technology. So we're working very hard to build. Obviously, the partnership with Waymo is exciting. Chandler, Arizona is a first step, but I think with Waymo expanding around the country and now into Europe, lots of opportunity there to continue to expand that partnership. And we're looking to broaden our partnership base so that we can be that partner to our customers who enables them to adopt autonomous vehicles. We're seeing interestingly quite different dynamics in the U.S. versus Europe. U.S. is very focused on robotaxis and we can bring the public sector in. Europe, we're seeing much more of a top-down sort of drive from the government to push autonomous vehicles in the public transit sector. So that may actually be an early adopter of autonomous vehicles and lots of funding going into that. So I think a lot of opportunity in Europe from the autonomous vehicle space. And overall, what we've seen is when we help our customers reduce their cost they're willing to invest more and they see the ROI. So if autonomous vehicles can bring down costs, certainly improve safety, there's just a lot of opportunity there from our perspective. Operator: Your next question comes from the line of Brad Zelnick with Deutsche Bank. Brad Zelnick: I'll echo my congrats to you all as well, exciting to finally be out and a great quarter to start. Mike -- I've got two questions and ironically, they piggyback on Michael's last question. So first, on customer count, just given the very strong customer additions this quarter, how should we think about the cadence of customer count going forward? And please remind us of any seasonality here or anything else that we should keep in mind? And then I've got a follow-up. Clara Fain: Brad, thanks for the kind words. So we're very pleased with the results this quarter out of the gate. So thank you for the support. On the customer account, you've seen the chart, and we've discussed this quite a lot. There is some cadence to the market. We have certain quarters that are very strong on customer additions and some quarters that are strong but may be lower. The general range for customer additions is 8% to 12%. And when you look back at the last 10 quarters, that's been fairly consistent. So I would expect that we continue to remain in that range. This quarter was very strong. Some of our new products could be seasonal, but we are very early in the penetration of those markets. So there's still a lot of white space overall across the platform, and I feel very good about that range. Brad Zelnick: Okay. That's very helpful. And actually, I'm going to pivot. I was going to ask a Waymo question, but I'll save that for another time. But maybe a bigger picture for you, Daniel, not that you don't already have an enormous opportunity to pursue. But when you talk about leveraging billions of proprietary data points to bring AI to government and delivering LLM for cities, what's the even broader potential over time, perhaps even in addressing needs that are adjacent to transit? Daniel Ramot: Yes. Thanks very much, Brad. I think that's a great question. We are very focused on our current market, which, as you mentioned, you talked about a lot, is huge, and we're not seeing that kind of opportunity for durable growth diminish anytime soon in our view. I think the -- with AI and the ability to become much more efficient in developing products, which I feel like in the last quarter, we're starting to see an acceleration our product road map. And in part, I attribute that to our ability to develop code more quickly using these tools. You could imagine that given the customer relationships we have and the opportunity ahead of us, we could more quickly expand into other areas in the government technology space. So I don't think that's necessarily an immediate thing that we would work on, but definitely something on our minds as far as the broader opportunity and how quickly we can move into it. Operator: Next question comes from John DiFucci with Guggenheim. John DiFucci: And I'd like to offer my congrats to the team too. These are really impressive results across all metrics. And Clara, thanks for that customer example, going from 40% to 50%. It really helps with that bridge, a real-life example there. But my question -- my first question anyway is more on the growth. And it has been brought up several times here. This is the greatest sequential increase in customer count we've seen, and our model goes back almost 3 years. But if I wanted to look for anything that may raise questions from investors, the ARR per customer actually declined a little bit sequentially for the first time in 8 quarters. Is that simply because you added so many customers that didn't have a full quarter's worth of revenue in there since your ARR calc is just simply revenue times 4? Or is there something else affecting that we should be thinking about, perhaps the new school product and maybe that's a lower ASP? Or how should we be thinking about that? Clara Fain: Absolutely. Thanks, John. It's a great question and happy to give you more color on ARR per customer. First of all, we're very pleased with the customer adds this quarter, very strong demand across the board and the revenue growth as well. But you're right, platform ARR per customer did decline slightly quarter-over-quarter in Q3 versus Q4, some 1%. And that's generally driven by, one, normal seasonality patterns of our existing contracts. In Q3, we tend to have universities, schools, corporate contracts, that have lower volumes during the summer. So that seasonal -- that slight seasonality drives lower ARR per customer in Q3. And then the growth in our schools business, where we saw a significant increase in the number of customers and the schools product is relatively new. These customers launched their services in Q3, coinciding with the start of the academic year and, therefore, contributed to more limited revenue in that quarter. So that drove the slight decline in ARR per customer. Over time, we expect these customers to ramp up. John DiFucci: Okay. Great. And Daniel, you said there was no impact from the federal government shutdown in this quarter. But we've been just looking closely at all the government funding. And do you see any impact from like COVID era funding that I think, in some cases, is going to start expiring over the next year or so? Perhaps maybe you can share your experience in similar situations, when there are funding pressures, where does mass transit sit as far as priorities among competing alternatives for funding? Daniel Ramot: John, thanks. It's a great question. When -- maybe I'll try to answer that in a few different pieces. So specifically to the government shutdown, we haven't seen any impact at all so far. And we don't expect to see any impact from that. The way that funding for transit works, it's long-term funding typically appropriated at the federal level, appropriated every 5 years. This sort of -- it was a very long shutdown obviously, but we don't believe that it will have any impact on our business even as it ends and looking into this quarter and the next quarter. So that specifically to the shutdown. I think more generally, you're asking a general question of what is happening to -- with transit funding, especially some of those funding bills from previous administration start to expire and longer term. There's sort of, I'd say, some puts and takes there. There's some of this funding that's expiring. There's some other funding that we talked about, whether through ballot measures or other sort of state legislature approvals that is coming in that is growing the overall pot. Overall, I think what's key for us and what we've seen consistently is that we just need to identify, and it's a little bit on a city by city and transit agency by transit agency basis. We need to identify where they are in their budget cycle. At any point that you're going to look to see -- there may be an overall trend. We've talked about it maybe in Germany, there was a period last year or so where the overall trend was downward. There's still some cities that have more budget, some cities have fewer. The U.S., I don't think the overall trend is downward. I think it actually continues to go up overall. And then -- but within that, there's still individual cities or transit agency that may be in their budget cycles sort of up or down. And the key for us is to identify where they are in the budget cycle so we can honestly provide them with the right solution, adapt our pitch, if you will, if you think of it from a sales perspective, but in reality, find the right solution for them. If they're in a downward trend, we need to help them save money, we need to help them become more efficient. And I think we're extremely well positioned, sometimes kind of counterintuitively, that's our biggest opportunity because they have to change something. They're under budget pressure and that's where we can come in with our solution and really help them avoid service cuts while they're reducing their budgets. Obviously, in an expansion kind of phase, that's also a great opportunity. We can launch new microtransit services, we can do lots of stuff with them. So it's really about identifying where they are versus being worried about the budget going up or down. Does that makes sense? John DiFucci: That does make sense, Daniel. Operator: Your next question is from the line of Patrick Walravens with Citizens. Patrick Walravens: Let me add my congratulations [indiscernible], the perfect debut. Can you guys comment on -- and I know you'll guide next quarter, so we're not asking for that. But can you just comment on what the durability of the growth looks like in this model? And also what the pace of margin expansion looks like? Just sort of any broad points you can share with us would be super helpful. Daniel Ramot: Pat, thanks for the question. We feel very good about the durability of the growth long term. Just given the scale of the market, our very limited penetration. And the fact that it's not -- we don't see our current cohort of customers as being any different from the next cohort of customers, if you will. I think I talked about Springfield, Ohio and that opportunity. There are so many cities like Springfield. So it's not that there's something unique about our current customer that won't apply to the next 100, 200, 1,000 and 2,000 customers. We really believe that there's a tremendous opportunity to continue doing what we're doing today just at a much larger scale. Now if you add on top of that, all the product innovation that we're driving the new products, other opportunities, we're very optimistic about what's possible here. Patrick Walravens: That's fantastic. And Clara, maybe pace of margin expansion? Daniel Ramot: Yes. I'll leave that to Clara. Clara Fain: Thanks for the kind words as well. So in the immediate term, so we're focused on organic operational improvements to enable modest gross margin expansion, and we achieved that successfully this quarter with a 0.4% margin expansion. In the medium to longer term, we are working to improve gross margin to 3 levers. One, transitioning our lower-margin services to third parties; two, continuing to expand our platform with higher-margin products, notably our software offering, which we're investing heavily into; and three, continuing to explore strategic M&A. We've established this playbook with Remix and Citymapper acquisitions, which were both highly successful on all counts. And the industry continues to be highly fragmented. So there's an opportunity to acquire point solutions, which may not make it as a stand-alone companies, but have excellent products and teams and may be very accretive additions to the platform. We reiterated on this call the commitment to the long-term target of 50% and our commitment to margin expansion. And again, we'll take two phases, the first phase where we continue to land customers and with modest gross margin expansion, and then the second phase where we start to see the impact of those three levers, and have more meaningful step function expansion of the margin. Operator: Your next question comes from Scott Berg with Needham & Company. Scott Berg: Really nice quarter here out of the gate. I wanted to probably take Brad's Waymo question here. But I think the partnership is super interesting, but knowing how those contracts are constructed within the Microtransit area, how do your contracts change in that type of scenario? Are these contracts probably -- my guess is they're more weighted on the software side of what that offering looks like than some of the peer services side. But just trying to understand how that may or may not shift in that scenario. Clara Fain: Well, that's a great question, Scott. And that's absolutely right. When we partner -- so we think of Waymo as one of our potential fleet providers. We can have a human-driven vehicle with a fleet, we can have a Waymo vehicle. And those would be equivalent solutions for our customers, and we offer them both. And in that contract, basically outsourcing to Waymo, the fleet and the vehicle means outsourcing a large chunk of our COGS to a third party. So those contracts tend to be higher margin. Obviously, we have a small sample today, so there's some room to explore there, but they have very high margin and allow us to bring this incredible technology to our customers with our vertical software layer on top, so they can actually use it as part of their transit system. Scott Berg: Understood. Helpful. And then many comments on the strong customer additions in the quarter. I guess as you think about the growth algorithm over the near term, maybe 2 to 4 quarters out, does that algorithm kind of shift towards more net new customer opportunity, or more revenues coming from net new customers? Or the really predictable cross-sell model, is that still the way we should think about maybe the next several quarters? Daniel Ramot: Yes. Great question. From our point of view, the growth algorithm stays pretty much the same. We're very focused on continuing to grow within our existing customers and also add new customers in the same way that we talked about. And if I'm looking forward a few quarters, the feeling is that it should stay about the same as what you've seen in our historical results as far as the distribution between the two. Operator: The next question comes from Brian Schwartz with Oppenheimer. Brian Schwartz: Echo great results out of the gate. Two questions. First for Daniel on AI. I know it's early, but how do you envision discussing pricing for AI functionality with your clients? Clearly, it's a differentiator of the business. But is it all about stickiness of the platform? Can it help you take up price since you're giving clients more value? Just thinking about as you bring in more AI functionality into the product suite and your core offerings moving forward? Daniel Ramot: Brian, thanks so much. Great question. I think we can do so much with AI to continue to evolve and transform the product in something that's increasingly even more useful to our customers. So there's definitely a lot of value that we're delivering there. On price specifically, at least for now, we are trying to be extremely customer-centric. Our customer is very sensitive to feeling that they're in any way being nickeled and dimed. And so our approach has been for our entire history to say we deliver a solution, and we will continuously upgrade that solution for you so that you're extremely happy with that product. That makes it very sticky. It builds real trust with our customer. And we have so much other opportunity to grow with them beyond simple price increases to our software, that's been our philosophy. I think that should apply to additional AI features that we're adding into the platform despite the fact that I do agree they can contribute enormous amounts of value to the customer. Now that said, in parallel, we're able to use AI to launch, what I think of as sort of, new products. And those, I think we can sell separately as individual SKUs, increasing the revenue that we're able to generate from each one of our customers. These are also very high margin to Clara's point earlier. So I would separate from taking existing functionality, upgrading it sometimes very significantly with AI, at least in the short to medium term, that really isn't our philosophy to try to charge for that. And I think it's had -- add a lot of value. Some new products, I think, are real opportunities. Brian Schwartz: Thank you, Daniel. And one question for Clara. Following up on Pat's question, but maybe specifically about the gross margin line. We saw a nice lift to gross margin this quarter and over the past 4 quarters, too, for the business. Beyond scale, are there other drivers for greater gross margin efficiency that you can foresee taking hold for the business over the next 12 months, or maybe over the medium term? Clara Fain: Thanks, Brian. A very thoughtful question. So happy to address it. I think there are several drivers that we're looking at to continue to drive gross margin beyond scale and beyond the three levers that we just discussed. One is obviously the mix shift towards higher-margin contracts we're seeing, and you saw this great case study of a customer that went from 40% to 50% gross margin and is continuously improving. And that customer's growth -- revenue growth will drive further margin expansion. So continuing to look at the mix shift, which is a really nice driver of near-term margin expansion is quite interesting and focusing on those customers where we can drive an uptick in margin through changes in operational metrics. And second, we are continuing to work on cost improvement on our cost to serve our customers. AI has brought a lot of new opportunities to reduce costs in our cost of serve. So while on the top line, Daniel just discussed, we're just adding more value to our platform and bringing and continuing to penetrate our TAM, which will drive a lot of revenue growth going forward and hopefully, durable growth, strong durable growth. On the cost line, we're actually using AI to reduce our costs, and that is valid for, obviously, our COGS and our OpEx, and trying to continue to generate examples, obviously, customer support, customer success infrastructure costs, the ability to better manage and control all those costs has increased substantially with AI tools. So we're definitely focused on that. And I think that will drive margin expansion. Operator: Your next question is from the line of Brian Peterson with Raymond James. Brian Peterson: Congrats on the really strong results here. So I wanted to double-click on the schools opportunity. It's encouraging to hear the momentum there. Is there any way to help frame that opportunity relative to what you have today, either in terms of fleet size or spend? And as we think about that go-to-market, is that more of a net new dynamic where you're selling to a new buyer? Or is there a cross-sell potential relative to some of your existing public sector customers. Could you guys unpack that a bit? Clara Fain: Yes. Thanks, Brian. Happy to give more color on that opportunity. I would start by saying that we've been investing in the product and the technology for that end market for a significant amount of time. But the go-to-market motion is still very nascent for schools. So we're in the early stages of capturing this opportunity. And to answer some of your question and that opportunity is quite meaningful and it is part of our overall TAM, and definitely very attractive across all fronts. The way we look at it is the buyer is -- can be different, it depends. We're looking -- in general, we tend to go to school districts, or DOEs or head of schools. And they are definitely different than the mayor, or the head of the transit agency in terms of who is actually buying the platform. So that is definitely a new customer and a different buyer in most cases. However, there is a halo effect and the referenceability of our platform within a city. So there are certain cities where these may be kind of living together in these various functions and these people may be sitting together and discussing their solutions. There are other scenarios where they're quite separate. So I would say, there's a bit of a range of buyers. But I would say in most cases, it's a slightly different buyer, although once we have existing presence in that region or that city would definitely benefit from the network effect and the referenceability of our platform. More to come on that as we continue to grow that business. Brian Peterson: No, that's great to hear, Clara. And maybe just sticking on the referenceability point. Daniel, I know you mentioned the European Customer Advisory Board. You're very strong in Germany. The tone on the U.K. is not lost on us. But I'm just curious, as you think about those proof points in those markets, how do we think about a potential groundswell into other geographies? Congrats on the strong results. Daniel Ramot: Thank you so much, Brian. I think specifically within Europe, maybe I'll just give an example on the school bus. That's a market where school bus operates quite differently. They don't have yellow school bus as well. In the U.S., yellow school bus, there are more buses, if you just count the number of buses than there are transit buses. So it's a huge opportunity. In Europe, typically, school bus is much more integrated. They don't have yellow school bus, much more integrated into their sort of traditional public transit system. With a lot of special education, school transport being provided. So there, there's an opportunity and that gets the referenceability to sell the school bus product to the same customer, to the customer that we already work with. So that's a much more direct sale. There's a lot of product work that's still complete there to make that opportunity to accelerate, but I think that's an area that we can see some really good growth. And overall, I do think that while, yes, every place you go, they say, "Oh no, no, here, we're different than we are in this other country." There's no question that when we have success in one region, it influences all the other regions as well. Operator: Your next question is from Jonathan Ho with William Blair. Jonathan Ho: Let me echo my congratulations as well. Maybe just starting out with the strength you saw in the U.S. market this quarter, what maybe stood out, or maybe surprised you in terms of win rates or utilization? Just want to understand the drivers for that geographic strength. Clara Fain: Thanks, Jonathan, and good to connect. From our perspective, Q3 was business as usual. We saw very strong demand for the platform across all metrics and across all of our solutions. You can see historically, there's a cadence to the market, certain quarters that can be very strong, certain quarters are a bit slower. And this quarter turned out to be very strong with lots of additions and growth. But the growth algorithm is the same and the opportunity continues to be very large, supporting durable growth, and we'll continue to be very excited and confident in this opportunity. And I think Q3 is no different than the prior quarters and really a strong testament of that market opportunity. Jonathan Ho: Got it. And then in terms of the timing for ballot measures that you referenced. Like what is the time frame for that to translate into contracting and potentially RFP opportunities? It would just be helpful to understand what that process typically looks like. Daniel Ramot: Yes. Thank you, Jonathan. Great to connect. Great question. That's worth clarifying. That is a very long-term process. So it takes months, sometimes years for that funding to sort of really become available, then there's the procurement process and so forth. So we're looking at -- and then the funding is often over many years that it's available depending on the specific ballot measure. So we're looking at a very long-term impact. Generally, in our business, everything we're doing is fairly long term and we're always thinking ahead. And in many cases, we're increasingly finding ourselves involved in these ballot measures and helping to support them and maybe even initiate them in some cases. So I think that's something that we'll look to do more of and really thinking 1, 2, 5, 10 years ahead in some cases as to when it will have a material impact on the business. But that's just -- that's sort of the time scale that we need to think of... Operator: And your final question comes from Aleksandr Zukin with Wolfe Research. Aleksandr Zukin: Congrats. Maybe, Daniel, first one for you. The Waymo partnership feels like a seminal moment, partially because it seems like it enables you to kind of even more, maybe aggressively fulfill your vision for solving what seems to be an extraordinarily difficult kind of algorithmic and services challenge for your customer base? And maybe just elaborate, if you can, both the potential marketing and pipeline opportunity that, that partnership is driving from awareness in terms of your customer base? And then from both an accretion perspective to the contract, which I think you guys mentioned earlier, how do we think about as more of potentially these autonomous contracts roll out across your customer base, how do we think about the revenue uplift opportunity? And I've got a quick follow-up. Daniel Ramot: Thanks, Alex. I really appreciate it. I agree with you. I think there's a real opportunity in autonomous. It's just starting, but I agree with everything you said. I think there's a -- there can be a real impact, both in the way that our customers perceive this opportunity. I would say -- what I've seen from talking to customers, and that's true here and in Europe, as these autonomous vehicles become available, the demand for them from the public transit sector is very high. I think it's really just limited by the availability of these vehicles. And there are even some of our customers that have indicated that -- and sometimes it's not even yet a budget matter. It's just a matter of wanting to be ahead on this technology that they would be willing to launch certain services of autonomous vehicles that they're not -- it may take them a lot longer to agree to launch with human-driven vehicles. So I feel that the opportunity is very large, I totally agree with you, and it really is at the moment, depending on the availability of these autonomous vehicles. So as quickly they can become available in the different geographies, I think we'll see an acceleration. Aleksandr Zukin: Perfect. And then maybe, Clara, the large upsell that you guys talked about for Mobile, Alabama, it feels like that was also a competitive displacement of a larger -- or a large competitor. Maybe just talk through as you continue to take share, when does that kind of click happen in the mind of a customer to really move and scale from a legacy operator to Via in those situations? Clara Fain: Alex, thanks for the question. And you're absolutely right. This was a takeover. I mean that some of the expansion was a takeover from a legacy player in the transit space. It's a really interesting market that we're in, where it's probably the last pen and paper industry in terms of technology and you have a number of very large legacy players that are all, obviously, very large in scale that have been established in this market for a very long time. And so it is a process to displace them, and displace them with these very large contracts. I would say demand for these very large contracts is the strongest it's ever been. So we're starting to see a halo effect of some of the takeovers. We've taken over several of those contracts already, and the performance is extremely impressive in terms of both taking transit systems that actually do not work that our ridership are declining -- ridership is declining, cost is increasing, consumers, residents are not aware of it and not happy with it and turning that around within a year or 2. So we're starting to see outstanding results for those very large takeovers. And as we see more -- as we get more data around that, we are seeing the referenceability kick in and the flywheel effect work. And so today, we have probably the strongest pipeline in this type of opportunities we've ever had. And obviously, it's on us to execute on that, and there's a sales cycle, so it will take some time, but we're very confident in our ability to continue to push on that front and get very large contracts for the business over time. Operator: This concludes the Q&A session for today. I will now hand the call back to Via for closing remarks. Daniel Ramot: Thanks very much. So thank you all for listening and for the great questions. As we said, we're very pleased with our first quarter results as a public company, and we're excited for the road ahead. Look forward to doing many more of these calls with you. Thanks, everybody. Operator: Thank you again for joining us today. This does conclude today's presentation. You may now disconnect.
Operator: Good morning. My name is Sergio and I will be your conference operator today. At this time, I would like to welcome everyone to the Southland Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Alex, you may begin your conference. Alex Murray: Good morning, everyone. Welcome to the Southland Third Quarter 2025 Conference Call. This is Alex Murray, Vice President of Corporate Development and Investor Relations. Joining me today are Frank Renda, President and Chief Executive Officer; and Keith Bassano, Chief Financial Officer. Before we begin, I'd like to remind everyone that this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are uncertain and outside of South of control. Southland's actual results and financial condition may differ materially from those projected in forward-looking statements. Therefore, you should not rely on any of these forward-looking statements and we do not undertake any duty to update these statements. For a discussion of some of the risks that could affect results, please see the Risk Factors section of our Form 10-K for the year ended December 31, 2024, that was filed with the SEC on March 5, 2025 and discussion on Form 10-Q for the quarter ended September 30, 2025, that was filed with the SEC last night. We also refer to non-GAAP financial measures, and you'll find reconciliations in the press release related to this conference call which can be found on the Investor Relations page of our website. With that, I will now turn the call over to Frank. Frankie S. Renda: Thank you, Alex. Good morning, and thank you for joining Southland's Third Quarter 2025 Conference Call. Before we jump into this quarter's results, I'd like to highlight that this quarter marked the 5-year anniversary of our acquisition of American Bridge Company. This quarter, we also achieved substantial completion on the last of the 27 highly technical projects assumed to the acquisition. These projects included the Queensferry Crossing in Scotland, Edmonton Valley Light Rail in Canada, Queensboro Bridge in New York, and the SR 520 Montlake project in Washington. Closing out this final construction phase of the legacy AB backlog is a major accomplishment and testament to our operational expertise, technical knowledge, and ability to successfully execute some of the world's most complex infrastructure projects. Now to turn to this quarter's results. We reported third quarter revenue of $213 million to gross profit of $3.3 million. Consolidated gross profit margin was 1.5%, an increase from negative 29.5% in the prior year period. The improvement was driven by strong performance in our new core work and fewer impacts from legacy projects in this quarter versus the same quarter last year. Our new core work continues to perform at double-digit gross margins. Our Civil business continues to perform very well with 10.5% gross margin in this quarter. This was inclusive of unfavorable noncash adjustments from dispute resolutions that impacted revenue and gross profit by $8 million in the quarter. We continue to make progress resolving smaller disputes. A vast majority of our contract assets balance consists of money we are owed from legacy projects that were started prior to COVID where construction is complete. We expect our contract assets balance to continue to decrease and to collect a significant amount of cash from these legacy disputes. We have a clear plan to finalize the remaining legacy projects and are making progress towards their completion. As this work wraps up, we expect to significantly derisk our earnings profile as we progress through next year. We have some more work to do, but we are getting closer to putting these projects completely behind us and focusing solely on our high-quality new core backlog. During the quarter, we added approximately $151 million in new awards and contract adjustments. This was led by a $77 million bridge rehab contracts in our Transportation segment for a private client in the Pacific Northwest, and a $53 million water resource contract in our Civil segment in Texas, bringing our total backlog to approximately $2.26 billion. All indications are that the robust demand for infrastructure will continue for years to come. Our outlook on the market remains positive. We continue to successfully execute our strategy of targeting short duration, high-margin projects in both public and private markets. In private markets, we are seeing strong demand for large-scale data centers. We have been carefully evaluating data center opportunities over the last couple of years, maintaining a highly selective and disciplined approach to ensure we remain within our core capabilities. Many new data center sites are very large and are being built in rural areas, resulting in an ongoing need to build additional water resources to support these build-outs. Utility packages on the data center projects are getting larger and the margin potential is very attractive. We are in discussions on several data center opportunities to leverage our utility and site development capabilities. The construction activities we are pursuing are very similar to the scopes in our existing core backlog and match our team's expertise very well. We expect to convert some of these opportunities to backlog in the coming quarters. While data center projects present a unique opportunity, our strategy remains the same, and we will continue to pursue a mix of private and public market opportunities. We continue to see strong demand for public market projects from federal, state and local levels. The IIJA is well underway and driving strong demand for public market projects. Significant opportunities remain across our core business with hundreds of billions in authorized funds still to be spent under the IIJA. At the state level, last week, Texas voted in favor of Proposition 4, the amendment proposed by the House joint Resolution 7, which will allocate $20 billion to the Texas Water Fund over the next 2 decades. This is a major commitment to one of our core markets and we are positioned well to help expand Texas' water resources. Upcoming public market opportunities include numerous water resource projects in the Midwest and the Southwest. We are also excited about several bridge opportunities in the Southeast. We have great visibility into future demands. We will continue to be focused on improving margins first, and growing backlog and revenue. We will ensure we have the right resources to build the work and continue to pursue projects that align with our core capabilities. In closing, as we reflect on the quarter, we have a similar message to the past few quarters. While we have more work to do to get the legacy projects completely behind us, our core business is performing well. As we wrap up legacy projects, we expect to deliver strong and consistent results with robust opportunities across our end markets, we expect to win our fair share of high-margin projects. We maintain confidence in our long-term outlook and future direction of our business. With that, I'll now turn the call over to Keith for a financial update. Keith Bassano: Thank you, Frank, and good morning, everyone. I'll discuss an overview of our financial performance during the third quarter for 2025. You can find additional details and information in the financial statements, footnotes and management's discussion and analysis that were filed on Form 10-Q last night. Revenue for the quarter was $213.3 million up $40 million from the same period in 2024. Revenue in the quarter was lower than anticipated due to the timing of new project starts, impacts from dispute resolutions and project delays. Gross profit was $3.3 million, an increase of $54.4 million from the same period in 2024. Gross profit margin in the quarter was 1.5% compared to negative 29.5% in the prior year. Selling, general and administrative costs in the third quarter were $14.6 million, a decrease of $2.9 million compared to the same period in 2024. The decrease was primarily due to lower compensation expenses as well as a reduction in legal and professional fees compared to the same period in 2024. Interest expense for the quarter totaled $9.2 million, up $1.6 million from the prior year. This increase was primarily driven by an increase in interest rates on external borrowings. We anticipate interest expense to average approximately $9.5 million per quarter going forward. Income tax expense was $57.2 million for the quarter compared to income tax benefit of $17.1 million in the same period last year. Included in this quarter's income tax expense was a $57.3 million onetime noncash expense from a valuation allowance placed on our net deferred tax assets. This valuation allowance is required under U.S. GAAP. However, this does not limit utilization of the respective tax assets in the future. We expect our effective tax rate for 2026 to be in the 15% to 20% range based on current forecasts. We reported a net loss of $75.2 million or a net loss of $1.39 per share in the quarter compared to a net loss of $54.7 million or a net loss of $1.14 per share in the same period last year. It is important to note that approximately $1.06 per share of this quarter's loss was due to the onetime noncash tax expense related to the valuation allowance. In the third quarter, we produced EBITDA of negative $3.5 million compared to negative $8.7 million for the same period in 2024. Now to touch on segment performance for the quarter. Our Civil segment had revenue of $99.5 million compared to revenue of $55.8 million in the same period in 2024. Our Civil segment gross profit was $10.4 million, an increase of $28.7 million from the same period in the prior year. As a percentage of revenue for the quarter, our Civil segment had gross margin of 10.5% compared to negative 32.8% in the same period in 2024. In the quarter, we had unfavorable adjustments from dispute resolutions on 2 projects in our Civil segment that impacted revenue and gross profit by $8 million. These resolutions resulted in cash collections of approximately $6.5 million in the quarter, with an additional $3 million expected in the coming months. For the quarter, our Transportation segment had revenue of $113.9 million, a decrease of $3.6 million from the same period in 2024. Our Transportation segment had a gross loss of $7.2 million, an increase from a gross loss of $32.8 million in the same period in the prior year. As a percentage of revenue for the quarter, our Transportation segment had negative gross margin of 6.3% compared to a negative gross margin of 27.9% for the same period in 2024. The Materials and paving business line contributed $22.9 million to revenue and $3 million in gross loss in the third quarter. At the end of the quarter, we had approximately $89 million of remaining M&P backlog. This is down from $99 million at the end of last quarter. I'd like to highlight that one M&P projects contract value was increased by $21 million in the quarter. This was a result of ongoing discussions with the owner and is a positive outcome as we expect to get paid more to complete the remaining scope of work on this contract. Last quarter, we noted that we expected 3 of these projects to tail into 2026 and we now expect the final for paving projects to be completed in 2026. Our Transportation segment margin was also impacted in the quarter by an unfavorable adjustment of $7 million on a legacy bridge project in the Midwest. The project experienced delays and has significantly impacted results over the past several years. Our remaining non M&P legacy backlog is now $32 million, down from $40 million last quarter. excluding the impacts from M&P, unfavorable adjustments in our non-M&P legacy backlog and dispute resolutions, gross profit in our core business produced double-digit margins. We expect legacy projects to have less impact on the overall results in 2026 as we continue to wind down these projects. We finished the quarter with approximately $2.26 billion of backlog, of which we expect to burn approximately 39% over the next 12 months. Now to touch on the balance sheet. We are exploring debt solutions that would provide us with additional capacity and offer flexibility in accelerating work on the legacy backlog. We are currently in discussions and expect to be able to close the facility before we report next quarter's results. We will share more details as this process progresses. Thank you for your time and interest in Southland. I'll now pass the call back to the operator for questions. Operator: [Operator Instructions] Your first question comes from Adam Thalhimer from Thompson, Davis. Adam Thalhimer: I want to start with your comment on data centers. I was curious if you were looking at anything else on the private side? And what is the scope that -- or how big are those packages potentially for you? Frankie S. Renda: Yes. So what we're looking at, Adam, is stuff that's in our core market. So there are some larger data centers out there. The data centers are obviously a very active market right now, just tons of opportunities across the country. The past couple of years, these developments have just exploded. So we've spent time getting our arms around the scopes, and they're very similar to what we have done for public owners. But now it's just for a slightly different customer base. The opportunities on the public market side are still really strong. We see data centers as an opportunity to supplement our existing work and really turn some cash quickly. So we're excited about the potential and hope to talk more about these here soon. As far as other work on the private side, we've always had a mix of private and public, more heavily weighted to the public sector. But there's a lot of opportunities with new manufacturing coming to the U.S. that we're looking at as well. But our scope specifically would be in that water, wastewater site development type market on those developments. Adam Thalhimer: Got it. And then -- so you took an $8 million hit to gross profit from claims settlement in Q3, but that's going to lead to $9.5 million in cash, so not a terrible trade-off there. I'm just curious, you sounded like you had a little better sense and you had a little bit more, I don't know, momentum or it seemed like you had a higher confidence that maybe a lot more of these legacy claims would get settled, call it, in the next 12 months. Is that fair to say? Frankie S. Renda: Yes. We've made we've made some small progress this quarter on some of the smaller disputes, which leads to some optimism. It's good to see our contract assets balances coming down. But no, we're -- these things can't wait to be settled forever. We're at the table on numerous claims. And so yes, we expect to see some progress, some real progress over the next 12 months. Adam Thalhimer: And then just last one for me. The project delays that impacted you in Q3. Have those projects started in Q4? And I know you're not giving guidance, but just curious if you kind of expect to end the year on a higher note. Keith Bassano: Yes. So as it relates to some of the delays that we've encountered, we would -- so it's delays, and then we also had some derecognition in the revenue just due to some of the adjustments that we took in the quarter. I would expect the Q4 to be pretty similar to Q3 with maybe a slight uptick. Operator: Your next question comes from Julio Romero from Sidoti & Company. Julio Romero: I wanted to talk about the free cash flow outlook for the fourth quarter, just given the decrease in the contract assets, which is certainly notable, but also the increase in the receivables. I believe you called out the $3 million in cash collections expected in the fourth quarter, but just -- I keep looking at that increase in receivables. I'm just trying to see if you could help us out with kind of a finer point on free cash for the fourth quarter. Keith Bassano: Absolutely. So we did generate positive cash flow from ops in the quarter, and we're there year-to-date. We may see a decrease in Q4 and in Q1 of 2026, but we do expect to see some positive cash flow overall from ops in 2026. Julio Romero: Understood. And can you help us size up the pipeline for some of these additional quick turn projects in the Civil segment? And has the size and runway evolved at all since Texas's passage of Proposition 4 to fund order infrastructure projects? Alex Murray: Julio, you broke up a little bit there. Can you just repeat that? Julio Romero: Yes. Can you hear me? You broke up as well. So I couldn't hear you. I was just trying to see if the size and the runway of these quick turn, high-margin projects in the Civil segment? And has that changed at all since Texas's passage of Prop 4? Frankie S. Renda: Yes. No. Civil margins have been strong, and we expect this to continue. This quarter, Civil margins were 10.5% which included impacts of $8 million from dispute resolutions. If you look year-to-date, gross margins are roughly 17%, which is very strong. So overall, we're excited about the success we're seeing in the civil market, and we really like those $50 million to $150 million quick turn in cash projects on the civil side and that the bill that Texas passed, adding another $20 billion to critical water projects should be -- should provide some great tailwinds for us. But it will take $40 billion to be deployed, sorry. Julio Romero: No, you're fine. And then I know last quarter, you talked about those tunnel boring machines that you have that kind of give you a competitive advantage there. Are you guys kind of the only game in town with those? Or can you just speak to how that kind of differentiates you there? Frankie S. Renda: Yes. So there are quite a few total jobs out there. There we feel like we have a significant advantage, producing our own tunnel boring machines, in some cases, and we have we have a really good fleet, probably one of the larger fleets in the United States of existing PBM. So hopefully, we're able to really take advantage of the tunnel opportunities bidding over the next 12 to 24 months. So excited about that market as well. Great question. Operator: Your next question comes from Christian Schwab from Craig-Hallum Capital. Christian Schwab: Frank, I'm just wondering if you could give us an idea of the size of the projects for a typical data center that you're looking into? Frankie S. Renda: Yes. So for us, Christian, we're looking for data centers that are close to where we have existing projects in that water, wastewater market. But you can see projects as small as probably $15 billion to $20 billion. And as far as the top end, we're going to feel the market out around that $50 million, $75 million range maybe to start, but they could make it grow from there. Christian Schwab: Great. And then it sounds like we're finally coming to the end of legacy work and should finish that up in calendar '26. As we go into '27, would you expect your core business is to run at the current margin profile? Or do you think that could actually improve in '27? Frankie S. Renda: Yes. So '25, as we talked about, was kind of that reset year. We're really going to focus on cleaning up legacy projects and use that as a springboard into 2026, getting into more of our core work and then 2027, as you stated, being completely into our core market and we're excited to really improve profitability in the years to come. Operator: Thank you. Ladies and gentlemen, there are no further questions at this time. You may proceed. Frankie S. Renda: Thanks, everyone, for joining us. Look forward to speaking with you all next quarter. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect.
Operator: Thank you for standing by, and welcome to Bitfarms' Third Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Jennifer Drew-Bear from Bitfarms' Investor Relations. Please go ahead. Jennifer Drew-Bear: Thank you, and welcome to Bitfarms' Third Quarter 2025 Conference Call. With me on the call today are Ben Gagnon, Chief Executive Officer and Director; and Jonathan Mir, Chief Financial Officer. Before we begin, please note, this call is being webcast with an accompanying slide presentation. Today's press release and our presentation can be accessed on our website, bitfarms.com, under the Investors section. Turning to Slide 2. I'd like to remind everyone that certain forward-looking statements will be made during the call, and that future results could differ from those implied in this statement. The forward-looking information is based on certain assumptions and is subject to risks and uncertainties, and I invite you to consult Bitfarms' MD&A for a complete list. Please note that references will be made to certain measures not recognized under IFRS and therefore, may not be comparable to similar measures presented by other companies. We invite listeners to refer to today's press release and our MD&A for definition of the aforementioned non-IFRS measures and their reconciliations to IFRS measures. Please note that all financial references are denominated in U.S. dollars, unless otherwise noted. And now turning to Slide 3. It is my pleasure to turn the call over to Ben Gagnon, Chief Executive Officer and Director. Ben, please go ahead. Ben Gagnon: Good morning, everyone, and welcome to Bitfarms' Third Quarter 2025 Earnings Call. We made strong, steady progress in Q3, building on the momentum from the first half of the year as we advance our transformation into a leading North American HPC and AI infrastructure company. Today, I'll walk you through our investment thesis, value proposition and key developments, including updates on our energy portfolio and site-specific advancements, all of which gives Bitfarms a competitive advantage to capitalize on the surge in demand for HPC and AI infrastructure. Turning to Slide 4. I would like to kick off today's call by outlining our market thesis, one that we believe differentiates us from our peers and best aligns Bitfarms with long-term investors in our transition to HPC and AI. Infrastructure is not a bubble. Since the invention of modern compute, the supply of compute has increased exponentially. As compute grows, so too does the data center industry that powers it. This is a trend that has a trajectory of over 20 years of exponential growth and an annualized growth rate of 8.8% behind it. This isn't a bubble. It's a reflection of a new paradigm that showed no signs of slowing down before AI and now as AI rewrites the rules of how humans interact with computers, the demand for data center capacity is accelerating. But the demand for compute and infrastructure has reached an impasse. Data centers that used to be measured in kilowatts are now being measured in megawatts and gigawatts. Racks that used to support 10 kilowatts are now being designed to support 370 kilowatts. The exponential increase in demand for power can no longer be met at the pace of the market demands. And as a result, the lease rates for data center infrastructure, which have grown at an average rate of 3% over the last 20 years, are now growing at an average rate of 12% since 2022, and we expect this trend to continue. Turning to Slide 5. Infrastructure is a bottleneck. As manufacturers continually introduce newer, more efficient chips and increase production every year, this trend continues to accelerate. Next year, NVIDIA alone is expected to be shipping somewhere between 10 and 15 gigawatts of GPUs. And that doesn't include, of course, AMD, Intel, Qualcomm and others who are also producing their own hardware with over 100 gigawatts of chips expected to be produced by 2030. While the supply of compute chips continues to increase, the growth in data center infrastructure is happening at a much slower pace. It is not silicon nor capital that will be the real bottleneck for continued growth in HPC and AI, but power and infrastructure. Over the next few years, the gap between the amount of chips that are being produced and the megawatts and the racks available to plug them in and operate them will continue to widen significantly. We strongly believe that as this dynamic continues to play out, the value and the economics will continue to move in favor of those who own the energy and data center infrastructure. We've watched this play out in the market with the contracts that have been announced in the industry to date. When Core Scientific and CoreWeave announced their landmark transaction in April of last year, the rates were contracted around $120 per kilowatt per month. As we've moved further along this curve that's shown on the slide, those rates have continued to trend upward. Most of the contracts over the past few months have been around $150 per kilowatt per month. As time goes on, this trend is expected to continue with analysts predicting a massive shortfall of nearly 45 gigawatts of power for data centers by 2030. Just within the last 2 weeks, Satya Nadella, the CEO of Microsoft, confirmed the shortfall when he publicly stated on a recent podcast that they have GPUs they cannot deploy. We believe that over time, the companies who've allocated and will continue to allocate billions of dollars into compute will be increasingly economically incentivized to pay rising prices in order to deploy their compute faster and with greater certainty, because every day they do not deploy is a day of revenue they will never recover and because their customers will simply move on to a competitor. With direct operating margins for new GPUs typically in the 80s or 90% range, this infrastructure expense is a modest cost driver for those who own the compute, equivalent to a low single-digit percentage of OpEx. If this cost were to double, it would not impact direct OpEx for the customer by more than a low single-digit percentage. These rates, which are largely inconsequential for the customer are very significant for Bitfarms as the developer. With OpEx costs that are largely fixed, every additional dollar earned in a lease goes to the bottom line. This is what Bitfarms is aiming to optimize for, not the fastest contract, but the highest value per megawatt and the greatest margins for the longest period of time with great customers. We believe this will be the primary driver of our multiple expansion and what drives shareholder value creation long term. Our investment thesis is clear and backed by decades of data. Our conviction is high, backed by consistent incoming demand. We don't want to cap our upside by signing leases prematurely. Instead, Bitfarms plans to optimize and achieve higher lease rates and margins through the following 3 strategic actions: one, prioritize infrastructure development first by minimizing the time between signing a lease and generating revenue for a customer, we will minimize the discount that would otherwise be applied to the lease rates and locked into multiyear contracts; two, take advantage of the increasing gap between supply of data center infrastructure and data center demand to lock in higher rates and greater margins under multiyear agreements; and three, while the industry is focused on NVIDIA GB200 and GB300, Bitfarms plans to leapfrog NVIDIA's Blackwell architecture and lead the industry in developing infrastructure for NVIDIA's next-generation Vera Rubin GPUs across 99% of our 2026 and 2027 development portfolio. With Vera Rubin GPUs expected to begin shipping in Q4 of 2026, and the infrastructure requirements to support them largely incompatible with facilities designed for Blackwell GPUs, we believe Vera Rubin infrastructure will be in the greatest demand and shortest supply in 2027 and will command significantly greater economics. Turning to Slide 6. We are able to take this approach because we have a robust balance sheet to fund development and know the value of what we own. While we don't have the largest portfolio of power among the public miners who are transitioning to HPC and AI, we do have the largest portfolios of power in each of the regions in which we operate, none of which are in Texas and all of which are either existing or emerging data center hubs. With consistent inbound demand for our sites, we have high conviction in the value of our unique energy portfolio, the demand for our power and our ability to develop next-generation HPC and AI infrastructure. We believe that not all megawatts are created equal. Our megawatts are strategically located in high-value areas that have multiyear waitlist to secure the power we have today. Our campuses are close to major metros and existing data center clusters, have ample access to major fiber trunk lines and undersea fiber optic cables and benefit from temperate climate compared to places like Texas. While Texas is undisputably a great energy market and arguably the easiest market to grow and develop megawatts in the U.S., there are, of course, trade-offs. The trade-off to short-term development efficiencies is long-term operating inefficiencies. It is no secret that besides power, the primary challenge with data centers is cooling and cooling is becoming an increasingly more difficult problem to solve as energy density continues to increase with every generation of new hardware. Building and operating data centers in a hot, arid desert climate like Texas as opposed to cooler northern climates like Pennsylvania, Washington and Quebec means more CapEx and OpEx for cooling. This isn't an opinion. It's math and engineering. If we built our exact same data center for Panther Creek with the same design, equipment and materials in Texas, it would have a PuE of about 1.4 to about 1.5. Whereas in Pennsylvania, Quebec or Washington, it would be about 1.2 to 1.3. That means for every megawatt we are converting, more of those electrons are going to compute, which is the revenue-generating activity for customers as opposed to supporting revenue generation through cooling. Simply put, our megawatts are harder to get in higher demand areas, produce more value for customers and are worth more per megawatt. In Pennsylvania, we have the strategic foresight to acquire our 3 campuses and submit our energy applications in 2024 before the HPC and AI demand really came into play in the state earlier this year. This has positioned us with secured power at Panther Creek and Sharon and at the front of the queue with very well-advanced power applications at Scrubgrass. In Quebec, new power allocations are almost impossible to get with numerous data center applications denied by the province in the past year. Bitfarms has 170 megawatts operating with some of the cheapest power rates for data centers in North America and 100% renewable. 100% of these megawatts are currently being utilized for Bitcoin mining. And just in the last month, we confirmed that we will be able to convert our Bitcoin megawatts for HPC and AI. This means our Quebec portfolio represents a unique and strategic opportunity to increase total data center megawatts in the province by 25% from about 700 megawatts today, while fulfilling 2 strategic national and provincial objectives, the scaling back of Bitcoin mining megawatts while increasing HPC and AI infrastructure and data sovereignty. In Washington, we have 18 megawatts of secured power in the largest data center cluster on the West Coast with the cheapest power in the U.S. for data centers and 100% renewable. Because of this, the area has a 10-year wait list for power. Everybody is looking to grow here, and it is nearly impossible to do so outside of secured megawatts like ours. This means that despite the relatively smaller scale of Washington, sites in the area are in high demand by both enterprise and hyperscalers alike. I'd now like to spend a few minutes discussing Washington and the news we issued this morning in more detail. Turning to Slide 7. Earlier this morning, we announced plans for the conversion of our 18-megawatt Washington site to HPC and AI workloads. We signed a fully funded binding agreement for $128 million for all the critical IT infrastructure and building materials to develop the full 18 megawatts of gross capacity with anticipated industry-leading energy efficiency between 1.2 and 1.3 PuE. The state-of-the-art facility will feature: one, validated reference designs, ensuring compatibility and performance with NVIDIA GB300s; two, modular infrastructure, enabling phased deployment and scalability, reducing the downtime of Bitcoin mining revenues and ramping up our time to HPC and AI revenues; and three, proven thermal and power management systems critical for HPC and AI operations. The construction team is in Washington today with the general contractor and are kicking off the conversion of the Washington site, which is targeted for completion in December 2026. Turning to Slide 8. I would now like to discuss monetization strategy at Washington. With decade-long wait times for new power and the cheapest power in the U.S. for data centers, we are actively pursuing colocation for both hyperscaler and enterprise, where we can capitalize on the long wait times as previously discussed. This morning, for the first time, we announced we are also pursuing GPU as a service or cloud. While our focus is on developing next-generation Vera Rubin infrastructure across most of our portfolio, we believe there are some compelling reasons to potentially go with cloud as a monetization strategy at Moses Lake specifically. One, GPU as a service would enable us to capture the benefit of the lowest cost power for data centers in the U.S. for ourselves and generate what we expect to be above-market margins and returns for cloud. Two, the relatively smaller scale makes cloud at this site easier to execute and finance. We have more than enough liquidity to consider the site and strategy fully funded today and are in active discussions with leading GPU manufacturers on GPU sourcing and financing, which we believe could be done on very attractive terms. GPU financing could materially reduce CapEx requirements and enhance expected returns. Three, we expect that by demonstrating our ability to execute across the entire stack, we will also be able to better understand customer needs, provide better quality service and negotiate better leases at our other facilities. Lastly, but most importantly, despite being less than 1% of our total development portfolio, we believe that the conversion of just our Moses Lake site to GPU as a service could produce more net operating income per year than we have ever generated with Bitcoin mining, providing the company with a strong cash flow foundation that would fund OpEx, G&A, debt service and contribute to CapEx as we wind down our Bitcoin mining business. I will now walk through the rest of our sites in a bit more detail, starting with Panther Creek. Turning to Slide 9. Panther Creek is our flagship HPC and AI campus in Eastern Pennsylvania. As we've discussed previously, we have 350 megawatts of secured power with PPL. This power is contractually obligated to be delivered with 50 megawatts at the end of 2026 and 300 megawatts at the end of 2027. The site has sufficient acreage for the development of the entire 350 megawatts with capacity to go beyond that. Additionally, we have $200 million remaining on our project facility with Macquarie that is intended to finance Phase 1 of the project as well as a few long lead time expenses for Phase 2. We also have some exciting news around potential further capacity expansion at Panther Creek. Lately, there have been a number of developments, including the recent 403 letter from the Department of Energy and commitments to deploy more natural gas energy generation in Pennsylvania that have given us line of sight to expand beyond the existing 350 megawatts of secured power capacity. We have received positive indication on converting our existing interconnection service agreement, or ISA 60 megawatts to a firm energy service agreement, or ESA, of 60 megawatts to expand power to 410 megawatts and on a recent load study to expand power capacity to over 500 megawatts of growth capacity. With these positive developments that could meaningfully expand capacity at this campus and in line with our investment thesis, we are modifying our original Phase 1 designed for Blackwell GPUs and planning a new Phase 3 and Phase 4. The entire campus will now be developed for NVIDIA's Vera Rubin GPUs and their greater energy density to accommodate our new expectations on future expanded power capacity. This is expected to delay the energization of Phase 1 marginally from December 2026 into the first half of 2027, with no anticipated impacts to Phase 2 time lines. We believe this will enable the company to achieve significantly higher economics in line with our long-term thesis and strategy. Turning to Slide 10. Moving on to Sharon, where we have 110 megawatts of power secured by an ESA with FirstEnergy and PJM under development. We are currently operating 30 megawatts of Bitcoin mining on site, but have started development on an additional 80-megawatt substation, bringing the total available for HPC and AI uses to 110 megawatts. We expect to have the full 110-megawatt substation online by year-end 2026. We recently closed on the purchase of the land for the site, effectively ending our lease and enabling us to move forward with our planned development of HPC and AI infrastructure. Similarly to Panther Creek, we will be working to develop the campus for Vera Rubin GPUs, targeting site completion and revenue in the first half of 2027 for the full 110 megawatts of gross capacity. Turning to Slide 11. In Quebec, we have 170 megawatts of low-cost hydropower currently operating across multiple Bitcoin mining sites, almost all of which are within a roughly 90-minute drive from Montreal. This is an incredibly attractive opportunity for hyperscalers who are following what's called a regional campus strategy. This is something that was pioneered by Amazon, where smaller sites can be directly connected with direct fiber infrastructure in order to reduce the latency between sites below 2 milliseconds, enabling many sites to be connected together to function as one larger site. As I mentioned, it's almost impossible to grow organically in the province. And in October, we confirmed the ability to convert over our Bitcoin mining infrastructure to HPC and AI with regulators and utilities in the region. With that pathway clear, we are accelerating our plans in Quebec. We will focus our development efforts on the city of Sherbrooke, where we have 96 megawatts, robust fiber connectivity, a strong and developed local labor force and ample support from the local energy utility and municipality. We will be applying some of the standardized engineering and design plans completed for our Washington site to Sherbrooke in order to convert these facilities from Bitcoin mining into next-generation HPC and AI infrastructure adapted for Vera Rubin GPUs. Similar to Washington, Quebec has a cool climate and some of the lowest cost energy in North America for data centers. With strong unmet demand for GPU cloud in Montreal, Sherbrooke also represents a potential opportunity to scale up a cloud business in 2027 with VR200s, a strategy that we will evaluate as we work through the engineering and development plans for Sherbrooke. The remaining 74 megawatts of Bitcoin mining in the province are earmarked for potential expansion in 2028, and we look forward to providing more detailed plans for Quebec in 2026. Turning to Slide 12. Last, but certainly not least, we have our Scrubgrass campus in Pennsylvania. This is about 30 minutes away from our Sharon, Pennsylvania campus on the western side of the state. With the exception of the new Panther Creek Phase 3 and Phase 4, which I spoke to a minute ago, this is the only power in our portfolio that is not 100% fully secured today. This is a very, very exciting development opportunity for Bitfarms. We believe this is the only campus outside of Texas for public miners converting to HPC and AI that has over 1 gigawatt of potential capacity. And while we have made great progress on developing the power story for this giga campus, there are still quite a few steps to be taken in order to contractually secure the power, which falls into 2 buckets. First, we have completed 3 conceptual load studies with FirstEnergy, starting with 250 megawatts, 500 and then 750 megawatts, thus moving over to what's called a detailed load study with FirstEnergy, which would eventually be converted over to firm service in an ESA. Second, we have made substantial progress on evaluating the potential to add additional generating capacity on site. This could be accomplished by building a 3- to 4-mile pipeline from our campus to the second largest natural gas pipeline in the U.S., the Tennessee Natural Gas Pipeline, which we have confirmed could supply up to 550 megawatts of natural gas, multiplying our generation capacity on site. We're still in the early stages of evaluating how we would expand the generating capacity, and we'll provide more details as we progress. Combined, the 2 buckets could potentially provide 1.3 gigawatts of gross capacity. And additionally, there is very good fiber infrastructure in the area with our 8 fiber infrastructure networks nearby and is in close proximity to Pittsburgh and Cleveland as well as the other data centers, which are starting to pop up throughout the state. The earliest time that we anticipate we could have additional power at this kind of scale implemented at Scrubgrass is around 2028. Though this is a longer lead time campus for us, we believe that with the forecast on power and demand for HPC and AI infrastructure, the timing for our giga campus will play-in well with the cycle, our investment thesis and our other development plans. Turning to Slide 13. To sum up, we believe that we are incredibly well positioned to execute against our investment thesis in 2026 and 2027 and maximize long-term shareholder value. One, we have a very unique portfolio of energy assets that we aim to fully convert to HPC and AI infrastructure. Two, we have announced our plans to convert our Washington site to HPC and AI workloads and lead the industry in the development of next-generation data centers for NVIDIA's Vera Rubin GPUs. Three, we are actively evaluating a potential cloud monetization strategy for our Washington site, which we believe would be a meaningful driver of cash flows and could eclipse any Bitcoin mining cash flows we have ever generated. Four, we are well capitalized to make our currently planned investments with a financial flexibility that exceeds $1 billion across cash, Bitcoin and our Panther Creek project facility with Macquarie, all of which are going to fund CapEx. As we continue to produce strong free cash flows from our Bitcoin mining operations that fund OpEx, G&A, debt service and contribute to CapEx with no further planned minor CapEx. And lastly, we continue to execute on our U.S. pivot with the anticipated sale of our Paso Pe facility and our full LATAM exit. Our transition to U.S. GAAP for Q4, the establishment of our New York City office and working towards a U.S. redomicile in 2026. We believe this would give us significantly greater index inclusion and meaningfully improve the institutional composition of our cap table. I now have the pleasure to hand the call over to our new CFO, Jonathan Mir. Turning to Slide 14. Jonathan, over to you. Jonathan Mir: Thank you, Ben, for the warm introduction. I'm excited to join Bitfarms at this pivotal moment in the company's transformation. My principal objectives as the new CFO are centered around capital allocation, capital sourcing and capital structure. I'm working hand-in-hand with the operations and development teams on the ground to ensure we implement financing plans that are appropriate for the company and its assets, efficient and support long-term shareholder value creation and that we are also allocating capital to its best possible risk-adjusted returns. With an extensive background in energy infrastructure strategy and financing, I believe there's an extraordinary opportunity to use our strong balance sheet, unique assets and the talents of our people to create value in the high-growth HPC/AI space. I look forward to working closely with the team to deliver on our strategy and capture the exceptional long-term shareholder value that would accompany our successful execution. Turning to Slide 15. Today, Bitfarms has the strongest balance sheet and most available capital in the company's history. In Q3, we were able to execute across several initiatives. First and foremost, we recently completed a very successful convertible note offering, where we were able to upsize the offering to $588 million while improving on pricing, preserving upside and minimizing potential equity dilution through a 125% capped call. Bitfarms chose to issue convertible notes because they allow us to access capital at a lower coupon than straight debt and with less dilution than straight equity. The cash settled capped calls we purchased allow us to offset economic dilution up until $11.88 per share, representing a significant premium to the share price today. It is also important to highlight that investor commitment to Bitfarms is strong. 100% of institutional investors that management met with during the marketing process participated in the transaction and invested their capital in Bitfarms. We're thrilled with the outcome of this raise, and it will allow us to advance our pipeline in tangible ways. Second, we converted our previously announced $300 million debt facility with Macquarie to a project-specific financing facility dedicated to the development of our Panther Creek data center. Moving the debt facility from a corporate level to the asset level materially enhances financial flexibility for the entire company. In October, we drew an additional $50 million from the facility in order to accelerate development of the site for a total of $100 million drawn to date. Finally, we maintained steady and efficient mining operations throughout the quarter, achieving approximately $8 million in monthly free cash flow after G&A. We expect to use this cash flow to support our HPC/AI development projects. Looking ahead, we anticipate continuing to use a mix of both corporate level and project level debt and equity financing as we advance our project milestones. On an ongoing basis, we will evaluate a wide range of opportunities and choose those that we believe support both a strong, stable balance sheet and realize the full potential shareholder value creation that would accompany the successful execution of our plans and fund milestone objectives. Turning to Slide 16. Let's focus now on our third quarter financial performance. In Q3, we achieved a total revenue of $84 million from continuing and discontinued operations. With the intention to sell the Paso Pe site in order to complete our Latin American exit, all revenue from that asset is classified as discontinuing operations. From continuing operations, we earned 520 Bitcoin and achieved revenue of $69 million, representing a year-over-year increase of 156% in revenue. For our continuing operations, our gross mining profit was $21 million, representing a gross mining margin of 35% and an average direct cost of $48,200 per Bitcoin mined. During the third quarter, we introduced a new program for digital asset management, Bitcoin 2.1, which is designed to offset Bitcoin production costs and achieve higher value per Bitcoin sold as a low-cost and low-risk funding mechanism for the energy infrastructure investments that define Bitfarms going forward. It is important to highlight that we are not a Bitcoin treasury company. The goal of this program is not to accumulate Bitcoin, but rather to offset the production cost of Bitcoin and by doing so, contribute to cost effectively funding our HPC/AI initiatives. This is a multi-strategy program that primarily sells both short and long-dated out-of-the-money covered calls on the Bitcoin and treasury as well as for Bitcoin production. During Q3, we incurred an all-in cost per Bitcoin of $82,400 from continuing operations. When considering our net gain of $13.3 million from derivatives against our all-in production costs, it would bring the effective all-in cost down to $55,200. Cash G&A for Q3 was $14 million compared to $20 million in Q3 2024. The improvement was largely driven by lower professional services costs. Operating loss from continuing operations was $29 million for the quarter, including impairment charge of $9 million of nonfinancial assets. As a result, net loss from continuing operations for Q3 was $46 million or $0.08 per share. For the third quarter, our adjusted EBITDA from continuing operations was $20 million or 28% of revenue, up from $2 million or 8% of revenue year-over-year in Q3 2024 and up from $9 million or 15% of revenue in Q2 2025. Turning to Slide 17. Before we begin Q&A, I'd like to reiterate our strong financial position and review our expected capital investment plans for the next 12 months. We are extremely well capitalized to fund our HPC/AI growth initiatives. We have a war chest of over $1 billion, comprised of roughly $820 million in cash and Bitcoin and the remaining $200 million available to draw from our Macquarie facility. With these funds, we expect to be able to fully finance the build-out of our Washington site and the initial phases of construction at our Sharon, Sherbrooke and Panther Creek sites. As we advance our development, the actual investment in our projects will be dependent on a number of factors. We are currently focused on executing on the initial phases of our projects, beginning construction and securing long lead time items to ensure our project time lines. We will continuously evaluate a wide range of financing alternatives at both the corporate and project level, maximizing shareholder value with accretive financing will determine our choices as well as the need for a healthy balance sheet. In closing, I'll underscore that Bitfarms is in the strongest financial position in the company's history, and we have a clear vision of how we are going to best utilize this capital to advance our HPC/AI build-outs in North America. The entire Bitfarms team is incredibly enthusiastic and engaged about the opportunities ahead. With that, I'll now turn the call over to the operator for Q&A. Operator: [Operator Instructions] Our first question comes from the line of Mike Colonnese of H.C. Wainwright. Michael Colonnese: Appreciate all the color on the HPC strategy this morning. First for me, Ben, you mentioned that infrastructure for the Vera Rubin GPU should command a premium to the Blackwell infrastructure. Can you share more on how you guys are thinking about economics there and the CapEx differences? Ben Gagnon: Thanks, Mike. Yes, happy to speak to that a little bit. There's kind of 2 driving forces there with our expectations on Vera Rubin economics. The first is that as the dynamic continues to play out where the infrastructure is going to be an increasingly greater and greater shortage, there's going to be a driver there that will drive the economics. And the second part of this is that the economics around supply and demand imbalance are really specific to GPU models. So if you look at H100s, H200s, the GBs, the 200s and 300s and then what's going to be the next series, the VR, there's a lot more infrastructure available to support those older GPUs, which have less specific requirements. And when you look at what's going to happen with the VR series, the energy density is going up from 190 kilowatts per rack with the GB300s to upwards of 370 kilowatts per rack with the VR200s. And so a lot of the infrastructure that's being built right now is not going to be compatible with the next generation. And as companies allocate all this money into those Vera Rubin GPUs, they're going to be very economically incentivized to deploy them. And what I spoke to with regards to our investment thesis earlier today, is that as this dynamic continues to play out, would you rather sit on your GPUs and not deploy them? Or would you rather pay a higher infrastructure expense in order to deploy them and start monetizing the asset. And really, the margins are so high on these GPUs, especially when the GPU is the newest, most cutting-edge state-of-the-art GPUs as the Vera Rubins will be in 2027, that the economic incentive to deploy those faster with very few options available should drive higher economics. We don't have a firm price point of exactly where that's going to lie, but we think the trend is abundantly clear that the economics next year and in 2027, they're just going to continue to get better and better, especially as the shortfall continues to get exacerbated. Michael Colonnese: Really helpful color there, Ben. And how should we think about the wind down of your mining operations in the coming years, specifically as it relates to the pace and timing of hash rate coming offline as you start to convert and make further progress in converting your data centers over to HPC/AI? Ben Gagnon: Yes, happy to speak to that. I mean the first area is the LATAM export that we've been working on. We obviously shut down our Argentina facility earlier this year. And I think one of the big areas here is the Paso Pe facility, which is an asset that's being held for sale. That represents around a little bit under 20% of our hash rate. And so that will impact the hash rate for the company rolling forward. But when we look at transactions like this, just like how we looked at the economics around shutting down the Argentina facility, we expect to pull forward a significant amount of expected free cash flow from those operations today so that we can reinvest them more immediately in the U.S., in North American HPC and AI infrastructure to greater effect. So while it should have an impact on the free cash flow from operations, really the impact is very mitigated by the fact that we're taking 1 to 2 years' worth of free cash flow from operations and bringing it forward for reinvestment now. And then we also have the derisking factor with regards to having less and less Bitcoin exposure or Bitcoin mining exposure, I should say. So as we move forward through 2026, the next sites that would be coming offline, would be coming offline as we develop the HPC and AI infrastructure and they would get replaced. Washington would probably happen sometime in the -- probably middle of the year, and that would be about 1 exahash and everything else will kind of come off slowly as we convert over the facilities to HPC and AI. So it would be a bit of an orderly transformation, and we'll continue to update the market as we announce those plans. Operator: Our next question comes from the line of Brett Knoblauch of Cantor Fitzgerald. Brett Knoblauch: Thanks for a lot of the color on the different sites throughout the call. I guess when it comes to maybe your PA sites and getting additional power, I feel like that's kind of like the biggest catalyst maybe over the near term. I believe Stronghold was kind of in queue before you guys went out and acquired it, which was probably, I don't know, over a year ago now. Do you have any idea on an update of when you expect to maybe expand the power capacity at both Panther Creek and Scrubgrass. Is that a couple of months thing? Within 6 months thing? How should we think about the timing there? Ben Gagnon: Thanks, Brett. Yes, it's a pretty exciting development there at Panther Creek because just over the last couple of weeks, we've received positive indications on the conversion of the ISA to an ESA as well as the expansion with an additional load study. It's a little too early to say exactly when that would come on to site. What we're planning here is an additional Phase 3 and Phase 4, which would come likely after Phase 2. But it's possible that the conversion of the ISA to an ESA could happen very quickly because all of the infrastructure is in place. There is no investments that need to be made. It's really just subject to the regulatory approval and signings and paperwork for all of that to be converted over. So I would think within the Phase 3, it's not really clear exactly when that's going to take place, but it could happen quickly. It could take several months. When it comes to a Phase 4, that's likely going to be a 2028 deal. Brett Knoblauch: Awesome. And then on the GPU cloud as a service, the CapEx figure that you've noted on, I guess, maybe converting that Bitcoin mining to host GPUs, that was not including the GPUs, correct? Ben Gagnon: Correct. That's not including GPUs and some of the construction costs associated with converting over the facility. So there will be additional expenses at the Washington site. We've had several conversations now with some of the leading GPU manufacturers, and we think that there's very attractive financing options on the GPUs as well that would really keep the CapEx requirement down to basically the infrastructure expense, and we'd be able to fund potentially up to 100% of the compute through these GPU manufacturers, which could be done on what we believe to be really attractive terms. And we also think that it would provide a significantly greater return profile on doing GPU as a service or cloud. Brett Knoblauch: And from a capital allocation, I guess, standpoint, what is your guys' preference? Obviously, the PA sites appear to be leaning more towards colocation, Washington site cloud. Do you guys expect to kind of grow both businesses at the same time? Is there a preference for one to kind of get online sooner than the other? Ben Gagnon: The expectation is that the Washington site will be the first site that's fully online. The Sharon site will probably be the second site that's fully online because Scrubgrass -- sorry, Panther Creek is split out into those 2 phases in 2027 with additional Phases 3 and Phase 4, which still needing to be confirmed. Our priority is managing the critical path and all the project management time lines that we have across our various facilities. But when we're looking at capital and how we'd allocate it across, it's managing the critical path, and it's also making sure that when it comes to looking at the opportunities around cloud, we're doing so in a way that makes sense and is affordable. And one of the benefits of doing it at Washington is a relatively smaller scale does make it very cost effective to do it. It's something that we could consider fully funded today. It's something that we could get financing for it at scale, whereas when you're looking at the really large campuses that we have in Pennsylvania, a colocation strategy is going to be a lot easier to finance. Operator: Our next question comes from the line of Stephen Glagola of JonesTrading. Stephen Glagola: On the $128 million critical IT supply agreement for Washington, can you clarify the counterparty to that agreement? Is that T5? Or is that another firm? And then additionally, just a follow-up to the last one on the GPU cloud model potentially at Washington and Sherbrooke. Can you maybe elaborate on what factors make GPU as a service compelling relative to standard colocation in these markets? And sort of how are you evaluating both potential GPU risk and your, let's say, return on invested capital IRR hurdle for the cloud opportunity? Ben Gagnon: Yes. Thanks, Stephen. When it comes to the supply agreement that we have for the Washington site, it's not with T5., it is with a large publicly traded American national company who serves and supplies data center equipment and data center services. The facility is really an attractive facility for both colocation and both cloud. But when you look at the opportunities that we have here to go fully up the stack and what that might mean for the company, both in terms of a free cash flow perspective as well as our ability to really demonstrate ourselves not only as a developer, but as an operator, I think there's a lot of tangible benefits there that will pay dividends in the long run. The conversion of the site according to our modeling and similar transactions that have happened in the market over the last couple of months, indicate that this one site could be worth significantly more than the entire Bitcoin mining business that the company has been operating for multiple years. And so that would provide us with a really strong free cash flow foundation as the Bitcoin mining business winds down. It will also enable us to better understand and better learn these facilities as we're looking to provide service and work with hyperscale and enterprise customers and neocloud customers on really large campuses. And so the benefit of doing it at the smaller facility is that we should be able to extract a lot of knowledge and value that we can apply to a lot of our other facilities as well. Operator: Our next question comes from the line of Mike Grondahl of Northland. Mike Grondahl: Ben, just curious, what would you describe as the 2 biggest challenges to maybe meeting your time lines for Washington, Sharon and Panther Creek? Like what's going to be the potential bottlenecks and how are you dealing with them? Ben Gagnon: Mike, I mean the potential bottlenecks in construction are a little hard to forecast. I mean construction is something that is changing every single day on the ground. I think that the key way that you mitigate potential risk in construction is having great partners with your owners rep, your general contractors, having a great team of project managers internally who are making sure they're on track of everything, every step of the way, and they're trying to think forward on all the potential problems in managing that -- those critical paths. It's not possible, I think, to identify what would be the key bottleneck or the key risk. But I think with the team that we have in place, the strategic partners that we have in place and the kind of groups that we're working with on the contracting side or on the owner's rep side, we're in a really strong position to execute. Mike Grondahl: Great. And then any rough guidelines or framework you can give us for sort of like 2026 CapEx? Ben Gagnon: So when we're looking at 2026 CapEx, we've outlined some of the numbers for Washington. We're still working on clear path forward as we're revising for Vera Rubin. The real challenge with providing full CapEx figures for 2026 is that the Vera Rubin infrastructure is so new that even NVIDIA hasn't completed their validated reference designs to support that equipment and that infrastructure. So that's something that's adjusting in real time and still moving forward. We should expect to have a better indication of what CapEx looks like in 2026 in Q1. From our conversations that we're having with the various different engineering firms and suppliers and partners of NVIDIA, NVIDIA is going to be producing the first Vera Rubin GPUs and taking them for their own purposes in probably Q2 of next year. And so sometime in Q1, the reference design should be relatively final, and we should be clear in terms of what the CapEx implications are for 2027 and 2026. Operator: Our next question comes from the line of Nick Giles of B.Riley. Nick Giles: Appreciate all the detail here. Ben, you mentioned the higher rack density of the Vera Rubin gen and that it could make the rack density suited for Blackwells obsolete. And it wasn't that long ago that 100 kilowatts per rack was the high end of the rack density. So how are you thinking about future proofing as this trend continues? And are there any contract structures that could protect you from the need to upgrade later down the road? Ben Gagnon: Thanks, Nick. It's a great question. The evolution of hardware is happening at a rapid pace, right? The GB200s were 150, the GB300s were 190 kilowatts per rack. And now the Vera Rubins are going to be over 370. And what that means is that your cooling needs to provide a lot more capacity in a very small footprint. It also means that your electrical distribution is very different. Most of the networking is more or less the same. But on the cooling and the electrical, it's a really big challenge. And one of the things that NVIDIA is looking at doing is increasing the voltage and even going to direct DC systems for the Vera Rubin technology. So they're looking at switching over to 800-volt DC. That doesn't mean that you necessarily have to go upwards of 800 volts or switch over to DC, but it does mean that as the increasing energy density continues to accelerate, you need to be rethinking your energy infrastructure and how you're actually building out these facilities. I think one of the ways that you try and do this is you try and build for the hardware at the time and then you try and lock that in with multiyear agreements, which help you to recover your investment and capitalize those investments over a long period of time. When you're signing an agreement for 5, 10, 15 years, most of the time, those agreements don't anticipate material upgrades to the infrastructure or any upgrades to the infrastructure. And so you're locking yourself in, the customer is locking themselves in with the infrastructure that they have in hand. And so I think the best way to mitigate those risks is to spread out your facilities, make sure you have a pipeline that exists over multiple years and make sure that you're building to the technology that's coming, not to the technology that already exists today because if you're building for today's technology by the time the facility is done, it's obsolete. Nick Giles: I really appreciate that perspective. That takes me to my next question. You mentioned the pipeline. Obviously, you have a lot of growth in front of you, but how much time are you spending on M&A opportunities? And where does that ultimately rank in terms of capital allocation? Ben Gagnon: Virtually none, Nick. Our focus as a management team is execution, execution, execution. We don't believe that there is a tremendous value that comes for our shareholders for looking at opportunities that are 2029, 2030 and these kind of long lead time items. We believe the value comes from executing against our existing portfolio. And we continue to get inbounds in terms of new opportunities and growth opportunities, but none of them seem to compare at all with what we already have in hand. And so I think the best opportunity for us is to continue to execute against our existing pipeline. There will be a time in the future where we're going to want to continue to expand that pipeline. But that's probably an easy year or 1.5 years out from today. Nick Giles: Got it. That's good to hear. Maybe one more, if I could, just for Jonathan. Sorry if I missed any commentary around this earlier, but how are you ultimately thinking about the Bitcoin treasury? Would you look to liquidate these holdings around the time that mining operations wind down? Or would those be separate time lines? Jonathan Mir: So to be -- first, it's nice to meet you. So we are definitely not operating as a Bitcoin treasury company, and we don't want to be one. What we're doing right now through programs like Bitcoin 2.1 is offset Bitcoin production costs and achieve higher value per Bitcoin sold in a low-risk, low-cost funding mechanism for the energy infrastructure investments that define Bitcoin going forward. The program primarily sells short and long-dated out-of-the-money calls on the Bitcoin and the treasury as well as for Bitcoin production. So our efforts are focused around maximizing yield and minimizing costs. And we expect the Bitcoin treasury to wind down into strength as we allocate it to CapEx. Operator: Our next question comes from the line of Martin Toner of ATB Capital Markets. Martin Toner: Congrats on all this progress, guys. My question is around the GPUs. What's your confidence in being able to acquire them on a timely basis? And would you go through a distributor that comes with the financing or who might finance them? Ben Gagnon: Thanks, Martin. Yes, happy to speak to that. We've had quite a few conversations with leading GPU manufacturers. As you probably know, NVIDIA produces GPUs themselves, but they also sell chips to a lot of OEM manufacturers. When you speak with those manufacturers, they often have finance programs in place, and those finance programs are -- can be pretty attractive, especially if you have the right infrastructure to ensure the quality and the lifespan of those GPUs. So going with an OEM manufacturer has a lot of benefits. They'll provide a full turnkey solution with regards to the servers themselves, and they can often come with financing. With our time line for end of next year on Washington, we're highly confident in sourcing our GPUs, and we believe that there's a lot of financing options out there that we are evaluating and could really juice up those return profiles. Martin Toner: That's great. Is there a good exahash number to use for Q4? Ben Gagnon: Our exahash should stay relatively consistent in Q4 when you're looking at our continuing operations. It's not possible right now to really forecast the impact or when the impact from the Paso Pe sale is going to happen. But the site continues to run today. It continues to hash. It continues to generate free cash flow. It's just not classified there under normal revenue according to IFRS standards, we have to hold that under discontinuing operations. But I think if you just look at the hash rate associated with our -- the rest of our portfolio, that will stay relatively constant -- it will stay constant throughout Q4, and then we'll make adjustments to it throughout 2026 as we execute on the HPC and AI development. Martin Toner: Fantastic. Can you give us a sense for initial conversations with customers of the GPU as a service product, reaction and confidence in being able to like contract them on a timely basis? Ben Gagnon: So conversations on the GPU front are really new for us because we've only started evaluating this in the last month or 2 as we've seen the market dynamic really take hold. I think the inbound demands that we've had across Washington and specifically Panther Creek is a lot. And when we're looking at what's the best way to service those customers, what's the best way to lock in long-term value under those agreements, there's a variety of different customers who are coming to us, and some of them want the GPUs included in there, and there's an associated premium that could be potentially extracted from that. So it's a little too early to indicate exactly what we would expect with economics, but we do believe the economics from our conversations and from the internal modeling that we've done and from the transactions that a lot of the companies in the space have announced in the last couple of months is very compelling, especially when we can execute it at a smaller site like Washington, which we can consider fully funded today. Operator: Our next question comes from the line of Brian Dobson of Clear Street. Brian Dobson: I guess more broadly speaking about Bitcoin mining, as more and more miners transition megawatts to HPC? How do you see the global hash rate evolving over the next few years? Ben Gagnon: No, interesting question, Brian. Personally, I think the hash rate is going to continue to evolve at the same rate that it has been evolving. But if Bitcoin price is not moving up meaningfully, that would be a major headwind to further growth. I think what you'll see more likely is that Bitcoin miners will continue to rotate out to lower and lower cost jurisdictions. And I think one of the big dynamics that is taking place is that the public miners represented almost 1/3 of the entire network, and they all seem very keen on moving over to the higher economics associated with HPC and AI. So that removes a lot of the available and current existing infrastructure for Bitcoin mining. So there could be some potential headwinds in exahash growth for the network. But I think what you'll see is it's just going to rotate off to different jurisdictions. We've seen huge growth in the Middle East, in Africa. I think Russia is a very large booming market for Bitcoin mining right now. And I think the best opportunity for most miners in the United States really is this transition to HPC and AI. And the economics are really going to drive that forward because the U.S. is the best market to invest in for HPC and AI, whereas Bitcoin mining is largely location agnostic. And it's happy to go to cheaper locations, higher-risk locations, more remote locations than HPC and AI is. Brian Dobson: Yes, excellent. And then just a quick follow-up. So as you're reviewing your portfolio, do you see an opportunity to engage in this type of megawatt redeployment in a broader sense? Ben Gagnon: When we're looking at whether or not we could redeploy our Bitcoin mining assets somewhere else, I think the opportunities are really few. And really, I don't think that's a great use of management's resources or time. I think the best opportunity is to basically bring forward what should be estimated free cash flow for mining operations today into cash and reinvest those into HPC and AI. Operator: Our next question comes from the line of Michael Donovan of Compass Point. Michael Donovan: Ben, you mentioned dollar per kilowatt trends. Can you quantify a premium on dollar per kilowatt that you're seeing for power secured in Pennsylvania or Washington versus Texas? Ben Gagnon: Yes, it's a good question. There's a few variables that go into dollar per kilowatt on these leases. One is obviously time line, one is location. Another one is risk factors that go into the development time line. And so it's not really possible to pinpoint an exact price per location because there's multiple factors which come into play when you're looking at what the total lease rates can accumulate to. I think if you look around at the transactions that are here and you look around at kind of what Bitfarms could secure today at Pennsylvania before it's even really broken ground at our Panther Creek site, which we plan to do next month, we could probably lock in $140 to $150 per kilowatt per month. But I think when you look at that rate, that rate takes into consideration the location. It also takes into consideration the shovel has not been put in the ground yet. And what we don't want to do is we don't want to lock in a lot of discounts that would be associated with the build time line and the uncertainties around the build time line into a 10-, 15-year agreement. What we'd rather do is we'd rather execute against our construction milestones utilizing the substantial war chest that we have today. And the closer we can bring that window down from signing a lease to actually generating revenue from a customer, the more that we should expect to get. It's hard to put an exact price, but I would think that if that window was shorter, we could probably get upwards of $180 per kilowatt per month if we didn't have the risk and uncertainty priced into the time line that would bring it down to $140 to $150 per kilowatt today. That's internal estimates and modeling. So there's a lot of factors that go into that. And we also think that as you execute against 2026 and as the gap between data center supply and data center demand continues to exacerbate, those numbers could get even better. And when we look at how does the margins work out for these contracts, you're largely looking at pretty fixed OpEx. And so the difference for the company between getting $140 per kilowatt hour, $140 per kilowatt per month versus $150 or $180 is not only a huge increase in terms of the top line revenue, but it's an even larger increase in terms of the profit margin, in terms of what your adjusted EBITDA is going to be. And then not that all translates out into that multiple expansion that we're targeting with this transformation, right? So if you're getting a significantly higher free cash flow out of that operation, that's what the multiple expansion is going to be based on. So we really want to make sure that -- we're not pricing in those discounts. We're trying to maximize the dollar per kilowatt per month in the lease, and that's going to be the way that we achieve the highest multiple expansion for shareholders in the long term. Michael Donovan: That's helpful, Ben. And you talked about connecting data centers to be one campus, and I was hoping you can unpack this a bit more. How can we think about distance between hauls or pods versus theoretical loss and performance for compute? Ben Gagnon: Yes. There's a strategy that Amazon pioneered. It's called the regional campus strategy, and they've effectively determined that somewhere around 300 miles is the cost-effective range to build direct fiber infrastructure. But the real thing is the latency that you could get between your sites. Now obviously, when you're looking at these facilities, you're even concerned about the latency in rack and in between racks or inside the facility to go from one rack to another rack on the other side of the facility. So that latency is becoming an increasingly bigger bottleneck as you're looking at performance on the high, high end of GPUs. But what we've seen is that most of our facilities in Montreal, where we'd be looking at this regional campus strategy, they're much closer than 300 miles. They're all within 90 minutes of Montreal. Many of them are 15-, 20-minute drive apart from each other. And so it would be possible to reduce the latency below 2 milliseconds with direct fiber. It would be pretty cost effective to do so. And you'd get a lot of benefits from doing that in terms of the scalability, given it's just so difficult to scale up new megawatts in the province. Operator: I would now like to turn the conference back to Ben Gagnon for closing remarks. Sir? Ben Gagnon: Thank you very much. I would like to thank everyone for attending our earnings call this morning. The management team is very excited. Our long-term investment strategy, we believe, is fully aligned with long-term investors. And we are really, really excited about the future of this company and what we're building at Bitfarms, and we appreciate your continued support. Thank you. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good morning. I would like to welcome everyone to the Plaza Retail REIT Third Quarter 2025 Earnings Conference Call. [Operator Instructions] I would like to advise everyone that this conference is being recorded. And I will now turn the conference over to Kim Strange, Plaza's General Counsel and Secretary. Ms. Strange, please go ahead. Kimberly Strange: Thank you, operator. Good morning, everyone, and thank you for joining us on our Q3 2025 results conference call. Before we begin, we are obliged to advise you that in talking about our financial and operating performance and in responding to questions today, we may make forward-looking statements, including statements concerning Plaza's objectives and strategies to achieve them as well as statements with respect to our plans, estimates and intentions or concerning anticipated future events, results, circumstances or performance that are not historical facts. These statements are based on our current expectations and assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from the conclusions in these forward-looking statements. Additional information on the risks that could impact our actual results and the expectations and assumptions we applied in making these forward-looking statements can be found in Plaza's most recent annual information form for the year ended December 31, 2024, and management's discussion and analysis for the third quarter ended September 30, 2025, which are available on our website at www.plaza.ca and on SEDAR Plus at www.sedarplus.ca. We will also refer to non-GAAP financial measures widely used in the Canadian real estate industry, including FFO, AFFO, EBITDA, adjusted EBITDA, NOI and same-asset NOI. Plaza believes these financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Trust. These financial measures do not have any standardized definitions prescribed by IFRS and may not be comparable to similar titled measures reported by other real estate investment trusts or entities. They should be considered as supplemental in nature and not as a substitute for related financial information prepared in accordance with IFRS. For definitions of these financial measures and where to find reconciliations thereof, please refer to Part 7 of our MD&A for the third quarter ended September 30, 2025, under the heading Explanation of Non-GAAP Financial Measures. I will now turn the call over to Jason Parravano, Plaza's President and CEO. Jason? Jason Parravano: Thank you, Kim. Good morning. We appreciate you joining us today as we review our financial performance and key achievements for the third quarter of 2025. Q3 was a milestone quarter for Plaza, delivering our highest quarterly FFO per unit in recent years at $0.111, an 8.8% increase over the same period last year. This performance reflects the strength of our portfolio and the disciplined execution of our strategy, which we have been pursuing for the last year. Our total FFO rose to $12.4 million, up 8.6% year-over-year, driven by higher NOI from same asset growth, acquisitions and intensification projects. We stayed on track with strong same-property performance with same-property NOI increasing 1.7% year-over-year, driven by solid leasing activity and disciplined expense management. Had it not been for bad debt adjustments related to an unforeseen tenant closure, same-asset NOI for the 9-month period would have reached 2.3% and 2.7% quarter-over-quarter. Leasing fundamentals remain robust with blended leasing spreads of 14% over the renewal term. Notably, our leasing spreads on negotiated renewals over the renewal term were just over 18%. This underscores our ability to drive value from the existing portfolio and demonstrates the favorable delta between our in-place and market rents. Our committed occupancy rate remains at an all-time high of 98%. Excluding enclosed malls, our occupancy rate climbed even higher and is near perfect at 99%. These metrics continue to reflect all-time high performance levels, reinforcing sustained tenant demand and the strategic positioning of our portfolio in markets characterized by limited retail supply. As renewals continue to take effect during the year, we expect continued positive impact on same-property NOI, complemented by contributions from intensification and optimization projects currently underway across the portfolio. We delivered roughly 70,000 square feet of space to No Frills during the quarter at various properties in the portfolio for them to complete their fit up and construction. Benefits from these projects will have a greater impact at the start of 2026. In the meantime, we continue to work through other leasing and property enhancement projects that will further strengthen performance. AFFO figures are skewed as a result of our optimization initiatives, which are delivering significant FFO growth and value creation. We're currently in the preconstruction or construction phase of approximately 300,000 square feet of intensification, development and strategic optimization projects that we launched earlier this year. While many of the costs associated with our optimization projects are captured in leasing costs and have a short-term negative impact on FFO -- on AFFO, the resulting incremental NOI validates the investment. These projects are strategically designed to enhance long-term value and operational efficiency across the portfolio. Similar to last quarter, of the reported leasing costs impacting AFFO year-to-date, $2.4 million of that is related to projects, which will generate $650,000 of NOI for Plaza. There remains just under $1 million to spend in leasing costs subsequent to the quarter end to complete set projects. This represents an unlevered return of approximately 20% on these optimization projects alone compared to the 17% we initially budgeted. Excluding these impacts, leasing costs would have been lower than the prior year. We're looking forward to the opening of these stores as they will add significant traffic and complement the properties and existing tenants alike. As part of our 2025 capital recycling program, we have sold 19 properties at prices in excess of our IFRS values. We have, for the most part, completed our program for this year. As mentioned in prior quarters, strong purchaser demand converted to successful closings. Our capital recycling initiative is aligned with our ongoing efforts to increase the average property size in our portfolio, reduce the average age of the assets and enhance the overall quality of the portfolio. It also supports capital required to execute our 3-pillar strategy. As a result of the significant value creation on our optimization projects, our equity requirements are far less than expected, which has allowed us to put proceeds to use in paying down debt as well as consolidate our ownership position in certain properties. As Plaza's focus has always been retail, we know it very well. We remain focused on being a best-in-class owner and operator of retail properties. We're the only REIT on the TSX offering investors access to pure-play essential needs, value and convenience retail. I will now turn the call over to Jim Drake, our CFO. Jim Drake: Thank you, Jason. Good morning, everyone. Further to Jason's comments, we had a busy and successful quarter. On operating results, total NOI was up 4% for the quarter, 3% year-to-date. Growth is attributed to our optimizations, intensifications, developments and acquisitions, which have generated $4 million of NOI year-to-date. Same asset increases from rent escalations and strong lease renewal spreads also delivered growth. The result was the significant FFO per unit increase Jason mentioned. AFFO per unit was impacted by our optimization program, where the required leasing costs have a temporary impact on AFFO, but improves the quality of our assets and will result in increased revenues in the future. On the balance sheet, our debt-to-assets ratio is down 10 bps versus Q3 last year at 53.4%, including land leases. Net debt to adjusted EBITDA was 9.2x, consistent with Q3 last year. We maintain a balanced mortgage maturity ladder with $13 million of fixed rate mortgages rolling for the remainder of the year at a weighted average rate of 3.6% and overall loan-to-value of 48%. We continue to see strong interest in our mortgage offerings with competitive spreads generally at 170 to 200 bps over GOC bonds. Our liquidity at quarter end was $57 million, including cash, operating line and available debt facilities. This will allow us to take advantage of upcoming opportunities, including further optimization and intensification projects. Finally, for the fair value of our investment properties, we took a $2.9 million write-down during the quarter, generally due to a change in the development strategy at a property. Our weighted average cap rate is now 6.82%. Those are the key points for the quarter. We will now open the lines for any questions. Operator? Operator: [Operator Instructions] And your first question comes from the line of Tal Woolley from CIBC Capital Markets. Tal Woolley: Just wondering, obviously, you guys are almost full up on occupancy, but you have been calling out like some tenant failures. Are these just regular sort of run-of-the mill kind of like independent retailers? Or are there anything sort of you're seeing as a trend there that's developing. Jason Parravano: Yes. So Tal, it's essentially one tenant, and it's not a secret out there. It's Toys "R" Us. So we had one Toys "R" Us property in the portfolio. They did have term, and they vacated unannounced, I believe, in the month of May. Tal Woolley: Okay. And that was the same for last quarter, too? Jason Parravano: Well, it would only have affected one month in the last quarter, for the month of June. So this is a full quarter effect. Tal Woolley: Okay. Got it. And then the incremental leasing costs you're booking in AFFO, can you just talk a little bit about the nature of it? Like is it commissions, CapEx, TIs, like what's the -- what are you really putting into the ground... Jason Parravano: We're increasing the quality of tenants in certain locations. And obviously, some tenants are much more sophisticated. So HVAC requirements, electric requirements, partly TIs as well, but basically getting buildings down back to an acceptable base building form and the costs associated with that. Tal Woolley: Got it. And you're seeing healthy renewal spreads. You sort of talked about how you expect that to filter into your NOI performance going forward. Just wondering like if we're thinking about the next couple of years for same-property NOI, is 2% the right number? Or should we be thinking about something a little bit higher? Jason Parravano: Jim, do you want to take that one? Jim Drake: Sure. I think 2% is safe. As Jason mentioned, we are 1.7% reported this quarter, but would have been 2.3% without that bad debt. So I think 2% is certainly achievable and safe. Those renewal spreads, obviously, we're doing renewals, in some cases, 6 months to a year in advance. So those will filter through into next year and beyond. Tal Woolley: Okay. And on the ongoing sort of push to consolidate your holdings, how much of that activity should we be expecting next year? Jason Parravano: So we're targeting 3 portfolios within the existing portfolio to try to increase and consolidate our position in the next 5 quarters. In terms of a dollar amount, Jim, do you have that handy with you right now? Jim Drake: On the equity side, it might be $8 million or $9 million, but I think it really depends on the uptake from the existing investors in those LPs. Tal Woolley: Got it. And then finally, just wondering about sort of refinancing rates. Obviously, bonds have been jumping up and down here. I'm just wondering where you're sort of seeing your mortgages come in at right now. Jim Drake: So the standard would be, call it, 170 to 200 bps over GOC bonds. We're generally preferring longer 10 years, but we will do some 5-year if it matches lease term. So all-in rates today would be mid-4s to 5%, just over 5%. Operator: [Operator Instructions] And your next question comes from the line of Mark Rothschild. Mark Rothschild: Jason, can you talk a little bit about what you're seeing in the acquisition market and the pricing cap rates for any properties that you want to see? And maybe just how has that evolved over the last little while with increasing demand for your property type? Jason Parravano: I think seller expectation is at an all-time high, which bodes well for us. We haven't really seen a compression in our IFRS cap rates just based on the third-party cap rates that we've been provided with. But actual transaction activity, I think, is getting done at cap rates, which are lower than what we're valuing our portfolio at. Everyone is chasing grocery-anchored retail real estate right now. That is -- that has become again the most -- the hottest asset class in Canada. Mark Rothschild: And when you say bode well, I assume you don't mean for your ability to actually complete acquisitions. Jason Parravano: Correct. Our strategy is not -- well, look, we're always looking at potential third-party acquisitions. We have $1.8 billion in assets under management. Of that, $1.2 billion to $1.3 billion would be considered our share of those properties. We have $600 million -- that means we have $600 million of properties, low-hanging fruit that we already own a piece of that would be great targets for us to consolidate our ownership position in and own more of what we like. Mark Rothschild: And are you saying that you're able to get access to that at IFRS or at market? Or how should we think about the pricing on that? Jason Parravano: It's a case-by-case basis, but typically, we're buying that at market values, at IFRS values. Operator: Mr. Parravano, there are no further questions at this time. Please proceed. Jason Parravano: Well, thank you all for joining us today and your continued support and trust. We remain committed to creating long-term value for our unitholders, our tenants and the communities they serve. We appreciate your time and look forward to the journey ahead. Take care and talk soon. Operator: Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.
Operator: Hello, and welcome to the Brookfield Corporation Third Quarter 2025 Conference Call and Webcast. [Operator Instructions] After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the conference call over to your first speaker, Ms. Katie Battaglia, Vice President, Investor Relations. Please go ahead. Katie Battaglia: Thank you, operator, and good morning. Welcome to Brookfield Corporation's Third Quarter 2025 Conference Call. On the call today are Bruce Flatt, our Chief Executive Officer; and Nick Goodman, President of Brookfield Corporation. Bruce will start off by giving a business update, followed by Nick, who will discuss our financial and operating results for the quarter. As a reminder, we completed a three-for-two stock split on October 9, 2025. Accordingly, all per share amounts that are discussed during the conference call are on a post-split basis. After our formal comments, we'll turn the call over to the operator and take analyst questions. In order to accommodate all those who want to ask questions, we request that you refrain from asking more than 2 questions. I would like to remind you that in today's comments, including in responding to questions and in discussing new initiatives in our financial and operating performance, we may make forward-looking statements, including forward-looking statements within the meaning of applicable Canadian and U.S. security laws. These statements reflect predictions of future events and trends and do not relate to historic events. They are subject to known and unknown risks, and future events and results may differ materially from such statements. For further information on these risks and their potential impact on our company, please see our filings with the securities regulators in Canada and the U.S. and the information available on our website. In addition, when we speak about our Wealth Solutions business or Brookfield Solutions, we are referring to Brookfield's investments in this business that supported the acquisition of its underlying operating subsidiaries. With that, I'll turn the call over to Bruce. J. Flatt: Thank you, and welcome, everyone, on the call. We delivered another strong quarter of financial results. Distributable earnings before realizations were $1.3 billion for the quarter, or $0.56 per share and $5.4 billion over the last 12 months. That was $2.27 per share. That was an 18% increase over the same period last year. Our outlook remains strong with each of our underlying businesses continuing to execute their strategic plans, driving strong organic earnings growth. Turning first to markets. Economic activity and corporate earnings remain healthy. Capital markets are open and transaction activity is picking up across most asset classes. For our business, that backdrop is constructive and highly supportive of real assets. So far this year, we financed $140 billion of debt across our operations and closed $75 billion of asset sales at attractive values, including over $35 billion in just the past few months. At the same time, the direction of monetary policy is turning. After an extended period of elevated interest rates, some softness in the labor market has started to prompt policy easing from the Federal Reserve to support growth and maintain balance across the economy. And while the current environment is influencing policy decisions today, it is important to consider the structural forces that shape where policy goes from here. Over the past 15 years, governments have relied on fiscal stimulus offset slowdowns, leading to a buildup of public debt that is difficult to sustain in a higher interest rate environment. Policymakers around the world are now evaluating the tools available to stabilize these debt burdens. The most constructive outcome of that and the one that we hope for is faster economic growth that outpaces debt, which can be helped by AI and innovation. Second, austerity is always possible, but not too many governments have shown the desire to push that. And third, if growth stays modest, policymakers may instead quietly manage rates below inflation to ease debt burdens, lowering short rates and guiding long rates down. If this path is pursued, it would likely lead to a period of declining real yields and low nominal rates. This environment will provide the optimal conditions for real assets we invest into. Our portfolio is built around inflation-linked durable cash flows backed by hard assets that protect real returns. The benefits of real assets are always evident, but in this evolving environment, they are becoming an essential investment product for every portfolio. A suppression of real yields will amplify these benefits and enhance long-term value across the franchise. Turning to the business. We are entering the final quarter of 2025 with strong momentum and a record almost $180 billion of deployable capital, position our business to invest for value in powerful secular trends that define the next chapter of growth in Brookfield, but also the global economy. First, AI innovation is fueling unprecedented demand for large-scale infrastructure. Second, aging populations are reshaping global savings and driving demand for new wealth and retirement products, which is going to last for decades. And third, the real estate recovery is well underway. Nick will cover that and gaining momentum. Each of these trends represent a multi-decade opportunity to invest where our scale and expertise gives us a major advantage. To that end, we advanced a number of strategic transactions during the quarter. In our Wealth Solutions business, we received shareholder approval for our acquisition of Just Group in the U.K., a region where growing retirement market is creating significant opportunities for long-term investment. We also announced a reinsurance agreement with a leading Japanese insurance company, marking our entry into Japan insurance market, the first of many expected opportunities in the region. We agreed to acquire the remaining 26% of Oaktree that we don't own already, which will bring our ownership to 100% upon completion of the transaction. From the outset, our partnership with Oaktree has been grounded on shared principles, including a value-oriented approach to disciplined investing with a focus on compounding capital over time. Our scale and real asset expertise combined with Oaktree's deep credit experience has created one of the most comprehensive and diversified credit platforms globally. Third, we continue to partner with leading institutions, corporates and governments around the world, and this is what makes our business different, combining capital expertise and our global reach to capture opportunities for all. We have several initiatives underway to deliver the next generation of energy transition in AI infrastructure globally, and I'll just mention a few. Through Westinghouse, during the quarter, we partnered with the U.S. government to deliver $80 billion of nuclear reactors. For context, that is the equivalent of 8 large-scale nuclear plants, enough, for example, to power the entire state of Utah. These projects will help rebuild critical supply chains in the U.S. revitalize the domestic nuclear industry and marks an inflection point for the growth of nuclear energy in North America. With Bloom Energy, we are developing 1 gigawatt of behind-the-meter power generation from fuel cells to meet the growing demand from AI data centers and other energy-intensive applications and we think this is just the beginning. And through our strategic partnership with Figure recently announced a leading developer of humanoid robotics, we are providing access to our portfolio of real assets to create the real-world environments needed to develop, train and deploy this technology safely and effectively, positioning us, most importantly, at the forefront of one of the most significant technological advances of the coming decades. Looking ahead, despite our size and scale today, our growth potential is greater than it has ever been. Our investment discipline, operating expertise and access to large-scale capital positions us to deliver another strong phase of growth for shareholders in years to come. As always, thank you for your support. We appreciate your continued interest in Brookfield and over to Nick. Nicholas Goodman: Thank you, Bruce, and good morning, everyone. We delivered strong financial results for the quarter, supported by continued momentum across our core businesses. Distributable Earnings, or DE, before realizations were $1.3 billion for the quarter or $0.56 per share and $5.4 billion over the last 12 months or $2.27 per share, representing an 18% increase over the prior year period. Total DE, including realizations was $1.5 billion or $0.63 per share for the quarter and $6 billion or $2.54 per share over the last 12 months with total net income of $1.7 billion over the same period. Starting with our operating performance, each of our businesses continues to perform well. Our Asset Management business generated distributable earnings of $687 million or $0.29 per share in the quarter and $2.7 billion or $1.14 per share over the last 12 months. Strong fundraising momentum led to $30 billion of inflows during the quarter and included over $6 billion from our retail and wealth clients. Fee-related earnings increased by 17% to a record $754 million as fee-bearing capital grew to $581 billion. During the quarter, we held the final institutional close of our second vintage flagship global transition strategy with total commitments of $20 billion exceeding our target and marking the largest private fund globally dedicated to energy transition. We also launched our seventh vintage flagship private equity fund focused on essential services and industrial businesses and are preparing to launch our inaugural AI infrastructure fund, which together will drive strong fundraising momentum going into 2026. Finally, jointly with Brookfield Asset Management, we announced the acquisition of the remaining interest in Oaktree, of which $1.4 billion will be funded by the corporation. The transaction expands our ownership in Oaktree's carried interest fee-related earnings and balance sheet investments and further strengthens our global credit platform. Transaction is expected to close in the first half of 2026, subject to customary closing conditions and regulatory approvals. Turning to our Wealth Solutions business. We delivered another quarter of strong growth with distributable earnings of $420 million or $0.18 per share in the quarter and $1.7 billion or $0.70 per share over the last 12 months. This represents organic growth of over 15% year-over-year, supported by strong investment performance, robust underwriting across property and casualty lines and disciplined capital deployment. During the quarter, we originated $5 billion of retail and institutional annuities, bringing our total insurance assets to $139 billion. Importantly, we continue to focus on raising long-duration liabilities with approximately 80% of new retail annuities written during the quarter, having durations of 5 years or longer. Our investment portfolio generated an average yield of 5.7%, contributing to spread related earnings that were 1.7% above our average cost of funds. As we continue to reposition the portfolio into higher-yielding real asset investments sourced within Brookfield, we are well positioned to sustain strong spread-related earnings. During the quarter, we deployed $4 billion into Brookfield managed strategies at an average net yield of 9%, which helped support a 15% return on equity, consistent with our long-term target. We also made meaningful progress internationally, expanding across the fast-growing retirement markets in the U.K. and Japan. In the U.K., we received shareholder approval for the acquisition of Just Group, which remains on track to close in the first half of 2026 subject to customary closing conditions and regulatory approvals. Upon closing, our insurance assets are expected to grow by approximately $40 billion to $180 billion. In Japan, we announced our first reinsurance agreement in the region with a leading Japanese insurance company to reinsure annuity policies on a full basis. These initiatives strengthen our position in key international markets and position us to capture the growing global demand for retirement solutions. Our operating businesses continue to deliver growing and resilient cash flows generating distributable earnings of $336 million or $0.15 per share in the quarter and $1.7 billion or $0.72 per share over the last 12 months. These results underscore the strength of our operating performance and the continued momentum across each of the businesses. Our infrastructure and renewable power and transition businesses remain at the forefront of secular trends, reshaping global investment opportunities. Recently, we announced new initiatives to advance next-generation power and AI infrastructure including our partnership with the U.S. government through Westinghouse to deliver $80 billion of new nuclear plants in the United States. In our publicly listed private equity business, we announced plans to simplify its structure into a single listed corporate entity aimed at broadening the investor base and improving trading liquidity. Our real estate business continues to perform well, supported by improving market conditions and strong fundamentals. Leasing activity remains concentrated in high-quality, well-located assets, driving strong operating performance across the portfolio. Our Supercore portfolio continues to outperform with 96% occupancy at the end of the quarter and our Core Plus portfolio, which shares similar high-quality characteristics ended the quarter with 95% occupancy. During the quarter, we signed 3 million square feet of office leases with rents on newly signed leases averaging 15% above those expiring. Notably, at Canary Wharf, leasing activity remains very strong with over 450,000 square feet leased year-to-date putting 2025 on track to be its best leasing year in the past decade. The leasing pipeline is also the strongest it has been in years, underscoring the depth of demand for high-quality space and Canary Wharf positioned as 1 of the world's leading business destinations. Turning to monetizations. Market conditions remain highly favorable for high-quality assets and businesses like the ones we own. To date this year, we have had $75 billion of monetizations across our franchise including $22 billion of real estate assets, $14 billion of infrastructure assets, nearly $11 billion of renewable assets, $7 billion from private equity and $21 billion from credit and other diversified assets. Two recent highlights to note are as follows. In our infrastructure business, we completed the IPO of Rockpoint Gas Storage, one of the largest independent natural gas storage operators in North America. The offering was well received and oversubscribed raising CAD 810 million, the largest IPO on the Toronto Stock Exchange since May 2022. Following the IPO, we have now realized a multiple of capital over 3x for retaining significant ownership interest in the business. And in our real estate business, we advanced the sale of the remaining assets in our U.S. manufactured housing portfolio for $2.5 billion, resulting in a total investment IRR of 25% and a 3.5 multiple on invested capital. Substantially all sales completed this year were at or above carrying values and have crystallized significant value for our clients at attractive returns. Through these monetizations, we realized $154 million of carried interest into income during this quarter. Importantly, because our earnings recognition follows European water for model where carried interest is recognized only after we have returned to funds invest the capital and achieved the preferred return. A number of the realizations have advanced our mature funds closer to that carried interest realization. Shifting to capital allocation. During the quarter, we reinvested excess cash flow back into the business and returned to the $180 million to shareholders through regular dividends and share buybacks. To date this year, we have repurchased over $950 million of shares in the open market at a roughly 50% discount to our view of intrinsic value. Moving on to our balance sheet and liquidity. We continue to maintain a conservatively capitalized balance sheet and high levels of liquidity with record deployable capital of $178 billion at the end of the quarter. We also maintained strong access to the capital markets, executing $140 billion of financing so far this year, including the issuance of $650 million of 10-year senior notes at the corporation during the quarter. Other notable financings include the successful refinancing of a $1.9 billion 5-year loan at a luxury resort in the Bahamas and 2 5-year CMBS issuances at New York trophy office buildings each over $1.25 billion, reinforcing the capital continues to flow to high-quality assets at attractive returns. Bringing it all together, our financial results continue to be very strong, and we expect continued growth in our results over the remainder of the year and into 2026. I am pleased to confirm that our Board of Directors has declared a quarterly dividend of $0.06 per share, payable at the end of December to shareholders of record at the close of business on December 16, 2025. On a post-split basis, the quarterly dividend is consistent with the previous quarter's dividend. Thank you for your time, and I will now hand the call back to the operator for questions. Operator? Operator: [Operator Instructions] And our first question will come from the line of Michael Cyprys with Morgan Stanley. Michael Cyprys: If we think about the pillars of your success over the years, I think it's been your ability to adapt the business and innovate in recent years. You've added wealth solutions, continue to grow that. But recently, you've made some partnerships around AI, humanoid, partnership with Figure as one example. So I was hoping you could talk about how you see humanoid and AI broadly potentially creating another leg of the stool for Brookfield over time. I remember at your Investor Day, I think, embedded in your 2030 DE guide was about $2.6 billion of DE from capital allocation. Maybe you could help unpack the components there and how you think about other different contributors over time. Nicholas Goodman: Good morning Michael and thanks for the question. I would break the answer into 2 parts. I'd say most of the capital deployment and the focus that we have today is around building the backbone infrastructure to support the build-out of AI. The growing demand, the secular trend of the growth of AI, the need for compute capacity and also the need for the power to drive that and be able to supply the electricity for the compute capacity is where we are investing most of our time in our dollars right now. And we have a very unique position around that, given our capability and our global reach and our operating expertise around renewable energy, nuclear and other energy sources and then our data center and AI fund that we're launching soon. So I'd say that, that offers great growth potential for the franchise, and we're very well positioned to participate in that and are investing in a disciplined way to drive really, really impressive results so far. I'd say the second component and the figure transaction that you talked about. Brookfield Corporation, what we're doing is looking to stay ahead of the curve and deploy capital for the benefit of the rest of the organization and for the benefit of our operations. And what we see with the developments in AI in humanoid robotics, we believe that over time, will have a material impact on the way that businesses are run an even broader society. And so I think this is about investing as a defensive investment and an opportunity to make money, but to really learn and be at the forefront for the benefit of the broader organization and we would look to do that, I'd say, over time, we'd look to do that selectively as we see good opportunities to do so. So I don't think of this as necessarily the next leg. I think it's a force and a trend that's driving broad growth across the organization, and we're well positioned to participate in it. Michael Cyprys: Okay. And then just a follow-up question on Wealth Solutions. So you signed the first reinsurance agreement in Japan expanding your global footprint. I was hoping you could talk about that arrangement? How you see that contributing. What's the scope for others in Japan as well as elsewhere around the world. Maybe you could just update us on your global ambitions. Clearly, you have that transaction underway in the U.K. . Nicholas Goodman: Yes. Thanks. My guess, as you mentioned, we made the transaction -- well, we've agreed the transaction in the U.K., and we're working towards closing that transaction in the early part of next year. That's a significant step for us, scaling PRT and giving us access to a long-duration local of low-risk liability -- sorry, long duration pool of low-risk liabilities. And so we're excited to close that. That really sets us up well in the U.K. market. And we identified Asia and Japan as the next market that we look to grow into and doing that in partnership with local players. This reinsurance, it's a flow agreement. So it's really a transaction that will build over time, month-to-month, quarter-to-quarter as we participate in the business that they're writing. So it has the potential to scale and then it also has -- we also have the potential to partner with other local players. So very much about continued growth in both markets. And those are the 2 markets we're predominantly focused on outside of North America today. Operator: One moment for our next question. And that will come from the line of Mario Saric with Scotiabank. . Mario Saric: Coming back to the Wealth Solutions business, Nick, I was wondering how long do you think it may take to get to your approximate 200 basis point target net investment yield spread? And then secondly, how should we think about the evolution of gross versus net insurance lows? I think in this quarter, it was -- the net was about 40% of growth. So just curious on what your thoughts are on those 2 items. Nicholas Goodman: Yes. I mean, listen, the 200 basis points is a long-term -- medium- to long-term target. So it will take time to grow into it. And as you know, as cash comes in, we're very disciplined on the deployment. And we're looking at a sort of barbell approach on deployment sitting in significant short-term liquidity and balancing that with investment into real assets or in credit and equity. So it just takes time for the deployment. But as we work through the plan, we do expect that spread to start to broaden out and work towards it. Importantly, we think about ROE, Mario, as opposed to just spread and the return on equity that we're generating and the capital is compounding at 15% plus, and that is in line with our long-term targets. We're very happy with the performance there. On the gross to net flows, it should stabilize out to about 1/3 outflows versus inflows in a quarter as we move forward. . Mario Saric: Got it. Okay. And then my follow-up, just with respect to the recently announced Oaktree acquisition, has the composition of the $3 billion purchase price between BAM BN shares and cash. Has that been settled? And how do you see the transaction impacting the velocity of BN share repurchases going forward, if at all? Nicholas Goodman: So yes, Mario, we do have the elections finalized. And the end result, what I'd say roughly was $250 million of BN shares elected. The balance will be in cash and almost 100% of the BAM consideration will be in cash. And it will have zero impact on our buyback. We will buy back the 250 million of shares that we issue, but it won't have impact on our broader buyback strategy. . Operator: One moment for our next question, and that will come from the line of Alex Blostein with Goldman Sacs. . Alexander Blostein: Just maybe zoning back to trajectory of the insurance business, so really good growth. So the sales are coming through nicely. On the spread, though, and I hear your comment around the ROE. But the spread, I think in annuities was 165 basis points this quarter. So maybe help us think through kind of the near-term dynamics over the last maybe 12 to 24 months on the trajectory of that spread as you kind of start to earn your way back towards the targets. Nicholas Goodman: Yes. So first of all Alex, welcome to the call. I know it's your first one. It's great to have you. I'd just say that the spread is right 165, and it's really because we're being disciplined in deployment. And you know the way we think about the business. We run it for the long term. And so we're being patient in the deployment. We are sourcing very attractive real asset investment opportunities in the credit and equity side, as I just said, and so as we look forward, we do expect it to work its way back up, but we're not running, as you know, the business quarter-to-quarter. We're running it long term. So we're going to be patient and wait for the right investment opportunities. And as they come in, you'll start to see that spread widen out. But again, what it all comes back to is the ROE. And so we're happy with the performance. . Alexander Blostein: Got you. And then for my follow-up, we will just maybe stay with insurance. Can you spend a couple of minutes maybe on how you're progressing towards closing the Just acquisition? I know there's probably a lot of limitations to what you could say publicly. But as you were to sort of frame the spread-related earnings contribution and then strategically, how you think this could accelerate growth of your presence outside the U.S. and PRT markets in U.K. and Europe broadly, which would be helpful to understand what this deal could mean financially for the business over kind of medium term. Nicholas Goodman: So I do apologize because we are limited in what we can say, and we haven't really talked to date about what the pro forma looks like as we work our way through the regulatory approvals. I would just tell you that we're working through it. We have the shareholder vote. We're working with the regulator. As you know, we previously were licensed under Bluemont in the U.K., so we have a good relationship with PRI, but we're working through that process. . I'd say that Just has got a good track record of issuing PRT on a consistent basis in the U.K., I think in the year before we acquired them about GBP 5 billion of origination. So we would expect to hopefully be able to continue that and scale it with our capital -- but as for performers, it will have to wait until we're further along in the process. Operator: One moment for our next question. And that will come from the line of Cherilyn Radbourne with TD Cowen. Cherilyn Radbourne: Ever since the framework agreement to build new nuclear capacity in the U.S. was announced. The biggest question we've been getting from clients is -- to the extent that Brookfield alongside LPs will invest capital in nuclear project development, what kind of downside protection would you be seeking -- and is that investment likely to occur in a discrete nuclear strategy or in the DGTF strategy? . Nicholas Goodman: Cherilyn, thanks for the question. So I'd say, first of all, I'd say that it's out it's been bought within Westinghouse. So the transaction that is being done is being done between Westinghouse and the U.S. government and the U.S. government is buying as the equity investor, $80 billion of nuclear facilities. Our role within that is to help deliver the facilities and then provide, as you know, the services that we provide, which is the fuel rods, the fuel and then the servicing of the facilities going forward. So the end result will look very much like the Westinghouse business that we have today, which is to service and provide the fuel to the nuclear reactors, and it's really scaling Westinghouse as a global nuclear champion, but it will be done through Westinghouse which is owned by BGTF 1. Cherilyn Radbourne: And maybe just extending that to the plans that are being evaluated in South Carolina, maybe you can elaborate on how that might be structured? Nicholas Goodman: Yes. So again, we're in a process there, and it's very early days. But what I can tell you is, as we think about the growth in the space, we are focused on downside protection. So anything that we would do in the space where we're looking to get involved in either bringing Westinghouse services or Brookfield Capital and would be structured in a way to provide strong downside protection. . Operator: One moment for our next question, and that will come from the line of Kenneth Worthington with JPMorgan. . Kenneth Worthington: You've talked in the past about 2025 being a transition year for carry. You've talked about the improved outlook going through 2030. Given what continues to be -- continues to look like a better M&A environment and a better realization environment with better valuations. Can you talk about how carry generation is shaping up for 2026 -- and then maybe wrapping the follow-up in the same question. As we think about realizations, how are -- how is the outlook developing for realization on balance sheet versus realization in the Brookfield funds as you think about the intermediate term outlook, I guess, I'll be vague like that. Nicholas Goodman: Thanks, Ken. So I'll just say that the outlook for carry hasn't changed. So this year, as we said, would be a bit of a bridge year and it's played out in that direction, largely consistent with last year. And with the monetizations that we have in the pipeline, either those that are progressed or that we plan on launching and through the end of this year or into the early part of next year, therefore, which should close in 2026. We do still see the potential for a step up in carried interest in 2026. So that is still continuing to step up in 2026 and then again into '27 and a strong year in '28. So that's the outlook, the expectation of what we can achieve in the next 3 years really hasn't changed from what we presented at Investor Day and we're still optimistic and we still believe that it is a very healthy transaction market and the strong capital markets is supporting that activity. As it relates to the split between the balance sheet and what's being done in the funds. As you know, we operate completely independently of each other. So we continue to advance the monetizations in the fund. It's a globally diversified portfolio of many assets in many geographies, so it has the ability to be a bit nimble around where assets are ready to trade and where the capital is there and the appetite is strong. On the balance sheet, we're talking about the office and retail assets in the U.S., and I can tell you that the capital markets are stronger now even than when we had our last call when we talked about the strength of the markets. We had very successful financings in the quarter at spreads and all-in rates we couldn't have achieved even a month ago, and that all lends itself very favorably towards increasing transaction activity. We've been able to dispose of a few smaller assets, which don't make a dent in the numbers, but they do show that appetite for acquisition activity is returning. So as that picks up, we expect to see continued activity into next year. Operator: One moment for our next question. And that will come from the line of Bart Dziarski with RBC Capital Markets. Bart Dziarski: Just wanted to ask on real estate. So within the LP, the NOI really ticked up this quarter. So $465 million versus, I think, last year is about $80 million. So apologies if I missed this in the prepared remarks, but anything to call out there in terms of the drivers of that step up? Nicholas Goodman: Hi, Bart. Yes. So listen, the performance of the LP portfolio is the running returns that we earn plus it's the disposition gains that we earned. So during the quarter, we benefited from disposition gains from monetization and that's what's driving the increase, sorry, in the FFO during the quarter. . Bart Dziarski: Okay. Got it. And then just a follow-up on carry. With regards to target carry framework that you have, could you help us kind of understand if there's a pickup that will -- like will the target carry increase once your Oaktree pickup deal closes? And if so, maybe a rough frame as to how much that could increase. Nicholas Goodman: So we will own more of Oaktree target carries represents the kind of the annualized carry that's compounding for us. On the carry eligible capital that we manage. So yes, when we do acquire Atrium, we have more carry eligible capital, it will pick up, but it won't be material. It won't be a significant adjustment to the numbers that we have today. Operator: One moment for our next question. And that will come from the line of Sohrab Movahedi with BMO . Sohrab Movahedi: Okay. I just wanted to go back to the earlier remarks about broadly speaking, the 3 types of economic environments that could play out. I think Bruce was talking to that. And I understand the implications of those from an investing perspective. Is any one environment of those three better than the others from a fundraising perspective? Nicholas Goodman: Listen, I think, Sohrab, we've been through a pre severe cycle in just the last 5 years, and we've experienced a few environments in a very short period of time. And I think through all of that, demand for alternatives has stayed strong. And I mean specifically real asset alternatives and essential service investing. So I think as it plays out -- the ones that we framed for you should still attract strong demand from the clients into the assets that we have, they've proven their durability the founder place in investment portfolios and investors now appreciate and like the characteristics of the income and the returns that they generate. And so I think that irrespective of where we end up demand for real assets will stay strong. Sohrab Movahedi: Okay. I appreciate that. I just wanted to see if there's a likelihood in a scenario, some of the targets that would have been discussed, let's say, at the Investor Day could actually get upgraded. Nicholas Goodman: Sure. I mean, listen, if you go into the environment of sort of lower nominal yields then I do think real assets have the potential maybe to become even more attractive in that scenario. So maybe it could be an upside. But not to the extent that we've changed our plans today, we continue to drive the business and think that the growth outlook is incredibly strong already. . Operator: And one moment for our next question. That will come from the line of Dean Wilkinson with CIBC World Markets. Dean Wilkinson: Nick, I guess, when you look at growth of the business over time, do you hit a point where you start to worry about the law of large numbers? I mean the ability for you to put out capital is seeming to exceed the rapid rate that you're growing, BN and BAM and everything together, is there a point where that sort of flattens out? Or do you think that those opportunity sets are going to continue to grow quicker than you can actually grow the underlying business? . Nicholas Goodman: I think it's exactly that. When we look today at the trends going on in the market and the amount of capital that is needed to deliver in the areas of the infrastructure renewable power we see that being a significant growth. And I think today, the scale of the opportunities are significant. I say the quality of the opportunities are probably the best we've ever seen. And so the ability to earn returns while deploying large amounts of capital is a great place to be, and I don't think we foresee in the short term any shortage of opportunities to deploy and probably even in the medium and long term. Operator: One moment for our next question. And that will come from the line of Jaeme Gloyn with National Bank. Jaeme Gloyn: Thanks, and sorry, I jumped on late, so I apologize if this was addressed. But in the Wealth Solutions business, just looking at the annuities distributable earnings from annuities stepped down a little bit quarter-over-quarter, year-over-year. hoping you can kind of talk through a little bit of the moving parts there. and as well as the -- looks like a 10 basis point step down in the yield on investments in that portfolio. Nicholas Goodman: Yes. I would say there's nothing significant. The year-over-year performance. We continue to drive strong earnings. We may have had some one-off small movements in the portfolio of the earnings, but nothing significant. The portfolio continues to perform incredibly well. The drop-down in the spread, which we touched on briefly earlier, is really just a product of capital coming in inflows coming really being parked in cash until we invest them. And the point I made earlier was that we're being very patient and waiting for the right real asset investment opportunities and getting the right time to put the capital to work and it will come. And as we put that capital to work, you'll start to see the spread increase again back towards long-term targets. Operator: That is all the time we have for question and answers today. I would now like to turn the call over to Ms. Katie Battaglia for closing remarks. . Katie Battaglia: Thank you, everybody, for joining us today. And with that, we'll end the call. . Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Eric So: Good morning, and thank you for joining us. This is an important quarter for Cybin, one that sets the stage for an active year of milestones. In September, Doug Drysdale stepped down as Chief Executive Officer. On behalf of the Board and the company, I want to thank Doug for his contributions. As Co-Founder and Executive Chair, I stepped in as Interim CEO while maintaining continuity and momentum. The Board's search for a permanent CEO is underway. Through this transition, our priorities remain the same: patient-focused rigorous science, disciplined education as our execution and clear communication. We have tightened operational cadence and disclosure discipline, and we'll be adding targeted talent and scientific advisory board expertise to support late-stage execution and launch readiness. Our strategy starts where care happens in the clinic. What I mean by this is that we are designing therapy days that fit within existing schedules with short predictable sessions and a staff-light workflow that clinic teams can run without new infrastructure. From there, we focus -- our focus turns to maintaining wellness. Durability is built into the plan with an efficient retreatment approach that aims to reduce visit burden compared with today's multi-visit standards, so clinics can scale capacity and patients can plan their lives. Progress with regulators follows the same discipline. We move step by step anchored in data rather than speculation, and we'll communicate milestones as they are achieved. The capital plan matches that pace. Following our recent $175 million financing, we are focusing on advancing our programs towards major data readouts. With that context, let me turn to the quarter and the progress we've made. Before we proceed to the agenda, a brief overview of our pipeline. For those of you who are new to the Cybin story, we have 2 lead programs. CYB003, our proprietary deuterated psilocin analog is in Phase III studies for potential adjunctive treatment of major depressive disorder. And CYB004, our deuterated dimethyltryptamine or DMT program for the potential treatment of generalized anxiety disorder is in Phase II. Clinically, our Phase III CYB003 program, which is an a breakthrough therapy designation in major depressive disorder has continued to progress, including being granted additional clearances to commence EMBRACE, our second Phase III study in new geographies. In generalized anxiety disorder, the Phase II 004 study completed enrollment and remains on track for our first calendar quarter 2026 top line readout. Amir will share more details about both programs shortly. At the same time, we advanced preparations for scale, including manufacturing and commercial groundwork aligned to a practical clinic workflow. We also strengthened our capital position with the closing of a significant registered direct offering, which provides flexibility to execute through upcoming milestones with clear internal decision dates by program. Across both programs, we are deploying capital with discipline. We are prioritizing global site activation and conduct for EMBRACE and APPROACH, database lock and analysis for CYB004 and manufacturing readiness for CYB003. With that framework in mind, I'd like to turn the call over to our Chief Medical Officer, Amir Inamdar, to review our clinical and regulatory process. He'll begin with CYB003 in major depressive disorder, focusing on that study status, global footprint and how the design supports real-world clinic operations and durable outcomes. Dr. Inamdar will then review CYB004 in generalized anxiety disorder, including trial design, operational status following enrollment completion and the timing and scope of the next data update. Amir Inamdar: Thank you, Eric. Our Phase III PARADIGME program is moving forward as planned. Dosing is underway in approach across U.S. sites and participants have rolled over into extend to generate durability data once the double-blind period concludes. In parallel, EMBRACE has been cleared to commence in the United States, U.K., multiple countries in the European Union and Australia, giving us a truly global footprint. The study targets approximately 330 participants across about 60 clinical sites and is structured with 3 arms to evaluate 2 active doses against placebo in patients with depression whose symptoms remain inadequately controlled on background therapy. The primary endpoint is the change from baseline in MADRS total score at 6 weeks after the first dose. The design is built for clinical reality. CYB003 is intended to run as a predictable staff-light session that fits within existing clinic infrastructure. Prior clinical data showed sustained response and remission at 12 months after 2 16-milligram doses, and our extension work is aimed at translating that durability into an efficient retreatment approach that reduces visit burden compared with today's multi-visit standards. On the regulatory front, our posture remains conservative and specific. Near-term touch points focus on clean study conduct, global site activation and data quality reviews as we advance towards pivotal readouts. In anxiety, the work is tracking on schedule. We have completed enrollment in the randomized double-blind Phase II study of CYB004 and remain on track for top line data in the first calendar quarter of 2026. The study evaluates 2 intramuscular doses given 3 weeks apart with efficacy assessed at 6 and 12 weeks and optional follow-up out to 12 months. The design permits concomitant antidepressants or anxiolytics and allows comorbid depression, which helps the results reflect real clinical populations. Just as important, intramuscular administration supports short, predictable sessions that fit a standard clinic day, so sites can manage throughput with existing rooms and personnel. The protocol also captures information to guide an efficient treatment -- retreatment approach if patients need it. aligning durability with practical clinic operations. I will now turn the call back to Eric to discuss the platform and commercial readiness. Eric So: Thank you, Amir. Our focus is to make these therapies workable in the real world, not just on paper. Achieving that goal begins with dependable supply. With Thermo Fisher in place for both drug substance and capsule drug product in the United States, we have a manufacturing footprint size for Phase III and commercialization, which gives sites the predictability to plan therapy days within their existing 4 walls. From there, we extend into the clinic. Through our partnership with Osmind, we have access to a broad network of psychiatric practices, point-of-care software and real-world data, so clinics can map out our protocols onto the schedules they already run. Staggered starts, defined observation windows and clear rule definitions are intended to support predictable session scheduling within existing rooms and teams without requiring new infrastructure. Throughput only matters if the session itself is practical. CYB003 is designed to live inside a standard interventional psychiatry day, offering predictable timing for patients and staff. CYB004 delivered intramuscularly targets a briefing clinic experience that simplifies room turnover and staffing compared with all-day alternatives. The combination is intentional, one program suited to establish clinic rhythms, another built for speed and simplicity, both aiming to raise capacity without raising complexity. Durability is the other half of practicality. Phase II CYB003 data showed sustained response and remission at 12 months after just 2 doses. And our extension work is there to translate that durability into an efficient retreatment approach. The goal is fewer visits and more efficient planning for clinics and payers alike with clear criteria for when patients should return, how long a session should take and how that fits across a full clinic day. We're advancing this platform with a conservative regulatory posture and a disciplined capital plan. Underpinning it all is steady leadership. We manage the CEO transition in an orderly way. The permanent CEO search is active and our governance cadence and disclosure discipline keep the organization aligned as we execute towards the next 2 major data events. Before I turn the call over to Greg Cavers, our CFO, let me touch on our capital structure. Last month, we closed a registered direct offering with participation from prominent institutional health care investors. The structure paired common shares with prefunded warrants with a partial warrant, aligning capital to near-term objectives and giving us the flexibility to execute. As noted earlier, this was an important step for Cybin. The financing provides the resource to advance our ongoing Phase II and Phase III trials towards key data readouts. We have used a portion of the net proceeds from the financing to repay the outstanding convertible debentures to High Trail. For the avoidance of any doubt, this debt has been fully retired in full. We believe that participation from such high-quality institutions in the financing reflects confidence in our science, our programs and our ability to deliver. I'd like to take this opportunity to thank our new investors as well as existing shareholders and investors for their continued support of our mission. We could not be happier with the partners that came into this financing and all prior financings that drive our programs forward. Capital deployment is paced to measurable milestones. For CYB003, funds support global Phase III execution and manufacturing readiness, so sites have reliable supply and predictable therapy days. For CYB004, resources moved to database lock, protocol-specified analysis and operational lift to top line. Corporate use remains limited and targeted. The plan bridges us to the next 2 major data events while preserving flexibility. From the path, we will adjust with discipline and continue to communicate clearly about our progress and next steps. I will now hand it off to Greg Cavers, our CFO, to walk through our second quarter financial results. Greg Cavers: Thank you, Eric. During the quarter, cash-based operating expenses consisting of research, general and administrative costs totaled $28.5 million for the quarter ended September 30, 2025, compared to $18.2 million in the same period last year. Net loss was $33.7 million for the quarter ended September 30, 2025, compared to a net loss of $41.9 million in the same period last year. Cash flows used in operating activities were $34.5 million for the quarter ended September 30, 2025, again, compared to $19.1 million in the same period last year. Operating loss was $28.9 million and net loss for the quarter was $33.7 million or $1.39 per basic and diluted share based on a weighted average share count of 24.2 million shares. We ended the quarter with cash, cash equivalents and investments of $83.8 million. Subsequent to quarter end, we closed a financing of $175 million, which together with our quarter end balance provides flexibility to execute our plan. We continue to allocate capital to measurable milestones and corporate uses remain limited and targeted. Based on our current operating plan, we expect our cash resources to fund key data readouts in 2026 and fund operations into 2027. I will now hand it back over to Eric for closing remarks. Eric So: Thank you, Greg. In the quarters ahead, our focus is execution against measurable milestones across the business. For CYB003, we will continue dosing and approach and expand EMBRACE site activation across clear geographies, keeping study conduct and data quality at the center of the plan as we progress towards a Phase III top line in Q4 of 2026. For CYB004, the path runs through database lock protocol-specified analysis and preparation of a clear top line package in the first quarter of 2026. In parallel, we will advance commercial and manufacturing readiness, so sites have reliable supply and a practical clinic day model as data matures, and we will continue to pace investment to milestones. This forward plan also includes leadership. The CEO search is active and progressing, and we'll provide an update when there is news. Day-to-day execution remains stable under the current structure with operating cadence and disclosure discipline intact. Taken together, clinical progress, measured capital deployment, commercial preparation and leadership continuity position the company to navigate the next 2 data events and the steps that follow. To summarize, we have executed through a leadership transition, advanced our late-stage programs, strengthened the balance sheet and prepared for scale with a model built for clinical reality. The work ahead is clear: deliver clean data on time, maintain a conservative and specific regulatory posture and keep capital focused on milestones that move the programs forward. I want to thank all of our employees, investigators, investors, partners and most importantly, the patients and families who make this progress possible. We look forward to updating you as we meet our milestones. Operator, please open the phone line for questions.[ id="-1" name="Operator" /> [Operator Instructions] And we'll take our first question from Pete Stavropoulos with Cantor Fitzgerald. Sarah James: This is Sarah on for Pete. Two questions from us. One on the CYB004 and the other one on the 003 program. First off, around 004 and GAD, you completed enrollment in early September. Congratulations on that. And you have a readout on 1Q '26, where you enrolled a total of 36 patients. What would you like to see from this study that would give you confidence to move forward into P3s? Is it statistical significance on the primary endpoint? Is it directional data suggesting improvement sufficient? And then what can we expect to see in 1Q? Are you going to provide the 6-week data for the primary endpoint, HAM-A? Or will you provide efficacy data through 12 weeks? Amir Inamdar: I can take that one. Thank you, Sarah, for the question. And yes, we've completed enrollment in that study. As you probably know, it's a study with 2 arms, 1 low dose arm, which potentially is sub-psychedelic and a full threshold dose. We look at that as a sort of dose response type of study. We would love to see some separation between the 2. As you state there, directional data is what we are looking for, a trend in change or trend in separation between the 2 and also within subject differences in change from baseline, at least with the threshold dose. This is a proof-of-concept study, not necessarily designed as a fully powered study. But if we see a statistically significant difference, we'll be thrilled. But as you say, directional data, trend in improvement and a dose response between the 2 arms is what we are looking for. And we'll share this in first quarter. We will aim to share HAM-A data out through 12 [Technical Difficulty]. Sarah James: Awesome. And then one more question from me. The P2 CYB003 data suggests that 2 doses may keep patients in remission for up to a year commercially. And then taking into account the psychologic experience associated with psilocin, what do you see as the minimum durability threshold needed to compete with SPRAVATO? And how are you thinking about the trade-off between durability versus time spent in clinics from both a payer perspective reimbursement? [ id="-1" name="Operator" /> One moment please while we reconnect Dr. Amir. Amir Inamdar: Can you hear me now? Sorry, I'm back. [ id="-1" name="Operator" /> Yes, sir, loud and clear. Amir Inamdar: Apologies for that. Can you repeat the question? Sarah James: The P2 CYB003 data suggests that 2 doses may keep patients in remission for up to a year commercially and taking into account the psychedelic experience associated with psilocin, like what do you see as the minimum durability threshold needed to compete with SPRAVATO? Amir Inamdar: Yes. I mean when you look at the guidance that the agency provides for evaluation of these therapies, they want data up to 12 weeks, which is 3 months. We will be thrilled to see effects that are maintained out to 3 months. We are hoping for better. As you know, with our Phase II data, we showed durability out to a year. But based on what is the expectation of the agency, 12 weeks at a minimum would be great. [ id="-1" name="Operator" /> Our next question will come from Patrick Trucchio with H.C. Wainwright. Patrick Trucchio: Congrats on all the progress. I just wanted to get a clarification on the CYB004 program, just in terms of what we should expect as far as statistical powering and the definition of clinically meaningful HAM-A improvement? And then separately, I'm just wondering for CYB003, what operational milestones remain to complete enrollment in APPROACH and our site activations tracking to plan? Amir Inamdar: [Technical Difficulty] As I stated earlier, it's not a formally powered study. We would, however, be looking at an improvement from baseline within subject within the arms. A clinically meaningful effect would be somewhere around 4 to 5 points on the HAM-A. A trend to difference between the 2 arms would be important as well because we want to look at some dose response between the 2 arms. [Technical Difficulty] study in the sense that it's not a pivotal study, those statistical significance would be amazing. You had a question on CYB003 as well. CYB003 is tracking as to plan. So we remain on target to complete enrollment by mid of next year and deliver top line data by the end of next year. Patrick Trucchio: Great. And if I could, just a separate question on -- as these programs are advancing into later stage and are in late-stage development, I'm just wondering what has been your engagement with payers at this stage and CYB003 and CYB004 and as well with the product profile that's emerging for both of these compounds, how you would expect positioning of them in the market relative to what's already available in TRD with SPRAVATO, given that this is with CYB003, we're looking at MDD, CYB004 GAD. But I'm just wondering how you're thinking about this early payer engagement and as well the product profile positioning against both compounds available, but also those that are in development. George Tziras: Thanks for that, Patrick. I'll take this one. So I mean, as you might imagine, at this stage, it's a little bit early, but payer engagement, of course, has begun. Commenting further, I guess, on how that develops and how ultimately with SPRAVATO, you could compare to the commercial... [ id="-1" name="Operator" /> All right. One moment. It looks like he has disconnected. If anybody else wants to take this question, while we reconnect him. Amir Inamdar: So while George is dialing back in, so we have been doing some preliminary market research. But as George reiterated, it is a bit early for -- at least for CYB004. And both the programs, we see them fitting into what is emerging now as an interventional psychiatry paradigm, which really has been spearheaded with SPRAVATO, creating the infrastructure out there. We see these as intermittent treatments that will fit right into that model where patients come in for treatment on an intermittent basis, have the treatment in the clinic and then return for their additional dosing as and when necessary. The infrastructure is there. And we believe with the GAD for CYB004 and with adjunctive and inadequate responder for CYB003, those kind of address the spectrum of the most burdensome or most resource-intensive patients that you typically see in a psychiatry practice. [ id="-1" name="Operator" /> And George has reconnected. We'll go to the next question from Jim Molloy with Alliance Global Partners. Laura Suriel: This is Laura Suriel on for Jim Molly. So for the ongoing APPROACH trial, you mentioned how you're planning to have a total of 45 clinical trial sites within the U.S. So you may just provide a bit more detail on the criteria behind choosing these sites and the activation process involved and also as well as when you might think you have all 45 of these sites fully activated and onboard for the study? Amir Inamdar: Yes. So I can take that. So we are using a mixture of sites that are experienced in clinical trials and a smaller proportion of sites that are less experienced in psychiatry trials. We also have a mixture of sites that are experienced in conducting trials with psychedelics. And then there are other sites that we have included that are experienced in CNS trials in general, but not necessarily psychedelics. As you can imagine, with the number of clinical trials ongoing right now in psychedelics, there is, of course, competition for resources at sites, and we've been very careful in selecting sites that one either have a proven track record of delivering high-quality data or have the -- if they are not experienced in psychedelics, they have the necessary experience and expertise in the psychiatry space in general in other trials, and we are confident that they will deliver good quality data. You referred to the number of sites. Yes, we've got 45 sites selected for this study. Virtually all of them are onboarded by now. What's important is with the number of sites that we have activated, we still remain on track to deliver or complete enrollment by mid of next year with top line data by the end of the year. Laura Suriel: Great. And then also, I know the current focus right now is on the CYB003 and the 004 programs. But can you just provide a bit more color on the preclinical 005 program, maybe just on the status of the preclinical studies and any potential partnership opportunities that you may be in discussions with? Amir Inamdar: Yes. For CYB005, we are doing a number of preclinical profiling studies to characterize the receptor profile, the brain penetration as well as the primary and secondary pharmacodynamics with a range of compounds in that class, which we believe would be well suited to -- actually with some of the neuropsychiatric conditions where there is significant unmet need. So that work is ongoing. And when there is information to share with the market, we will do so. [ id="-1" name="Operator" /> Our next question will come from Eddie Hickman with Guggenheim. Eddie Hickman: Congrats on all the progress. Just 2 for me. How much visibility do you have into the blinded baseline patient characteristic data from the APPROACH study? And can you talk at all about how this patient population will differ from a TRD population as it relates to baseline? And secondly, what agreement do you have with the FDA related to the safety database for 003 and what you'll need to provide a regulatory filing? Is there a minimum number of retreatments per year needed in extend? Amir Inamdar: I missed the second one. Can you repeat the second question? [ id="-1" name="Operator" /> Dr. Amir, you're cutting in and out. connect Dr. Amir... Amir Inamdar: Can you hear me now? Eddie Hickman: Yes, I can hear you. Amir Inamdar: Sorry, do you mind Eddie repeating that question? Eddie Hickman: Yes. So I was asking the first question is how much visibility do you have into the blinded baseline patient characteristic data from the APPROACH study and how this population may differ from a TRD population? And then on the safety database, what you'll need in a regulatory filing, is there a minimum number of retreatments per year needed in the EXTEND trial? Amir Inamdar: Yes. Thank you. So the safety -- as the trial is ongoing, the data is blinded. We are performing checks as necessary or as possible with blinded data, which essentially are quality checks in a blinded manner. And since this is a pivotal trial, we are, of course, being very careful with the data. There are other checks built into the database, which ensures that there any flags with respect to data quality. They are raised to us immediately if there is a reason for concern. So far, we haven't had anything flagged in the database. So we are confident that the data quality is being maintained. In terms of how this is different from the TRD population. So this group of patients is earlier in the treatment cycle. So these are patients who are inadequately responding. And they may have failed 1 treatment or they may have failed 1 and been on their second treatment, but not adequately responding, but not fully failed. So they are not that 1/3 of the patient population that remains after multiple treatment trials. So it's about 2/3 of -- if you think of the depression population as a whole, this is the first 2/3 of those patients in the treatment cycle, whereas TRD would be the last 2/3 left after multiple treatment cycles. In terms of ends, the -- or safety database, the safety database really is a function of the frequency of administration. Given that this is an intermittent treatment, what we have discussed with the agency as part of our BTD discussions is that the data that we will provide to them, the numbers that we provide to them across the 3 studies would be sufficient to support an NDA. But of course, again, it depends on what we find out in the long-term extension study with respect to treatment frequency. [ id="-1" name="Operator" /> Our next question will come from Elemer Piros with Lucid Capital Partners. Elemer Piros: Yes. I just wanted to get maybe just one tiny detail on the loan repayment. If you could clarify how much was repaid and what was the prepayment penalty or the early repayment fees? Greg Cavers: Thank you. Yes, we repaid High Trail $20 million and the repayment fee ended up being 10%. Elemer Piros: 10%, so it wasn't a $50 million loan. Greg Cavers: The loan -- yes, the loan was structured as a convertible debt, and they had converted the other $30 million. Approximately. Elemer Piros: Converted the other. [ id="-1" name="Operator" /> Our next question will come from Sumant Kulkarni with Canaccord Genuity. Sumant Kulkarni: Nice to see the progress. I have 3. On CYB003, during your pivotal trial program, how important is it that patients remain compliant with their background antidepressant use? Amir Inamdar: Sorry, I was speaking on mute, Sumant, taking that question. The -- so for our patients in the APPROACH study and EMBRACE because this is adjunctive, the instructions to the patients and requirements in the protocol is that they remain on their background antidepressant medication. We do not expect them or advise them to come off their antidepressant medication during the treatment period. Sumant Kulkarni: Got it. And then on 004, do you see an eventual pivotal program involving an intramuscular route of delivery? And what are some of the key challenges of developing an oral formulation? And my last question is, what are some of the specific qualities that you believe are must-haves for an incoming CEO? Amir Inamdar: I can take the first 2. Eric can take the last one. So right now, yes, intramuscular is the route of administration that we plan to progress in Phase III. It's a very convenient form of administration, which also gives us what we need in terms of the plasma exposures and the acute experience, which cannot be achieved with something like oral. With oral, the elimination is pretty rapid. And DMP or CYB004 does not reach the plasma PK levels, the threshold that is necessary for a breakthrough experience, which, as we know, is necessary for therapeutic efficacy. That we are achieving with intramuscular. It's well tolerated. So that is what we are going to take into Phase III. George Tziras: And maybe I can also add, Amir, that the intramuscular route is one that as we are aware from our market research with the interventional psychiatry clinics is one that is also being used currently by interventional psychiatrists administering ketamine. And so that gives us some confidence that it is a route that will get -- will reach adoption in the market. Eric So: And with regards to your question regarding CEO qualities, I mean, obviously, we've been at it for only about 8 weeks right now. The Board is spearheading that process. And at the moment, we're looking for the qualities that this company and its shareholders deserve, a successful steward of capital that investors can feel confident in, someone that has executed in the past, bringing a novel drug to market ideally through commercialization, an individual that has transacted and dealt with big pharma in the past as well. These are all table stakes for us and the next individual that will be sitting in the chair. [ id="-1" name="Operator" /> At this time, there are no further questions in the queue. So I'd like to turn the call back over to Eric for any additional or closing remarks. Eric So: No further remarks. I just want to thank everybody for attending the call today. It's been a very exciting time for Cybin, and we look forward to delivering some fantastic updates for everybody in the future. Thank you all for your support. [ id="-1" name="Operator" /> Thank you, ladies and gentlemen. This does conclude today's program, and we appreciate your participation. You may disconnect at any time.
Operator: Good morning, ladies and gentlemen, and welcome to the K-Bro Linen Systems, Inc. Third Quarter 2025 Results Conference Call. [Operator Instructions] This call is being recorded on Thursday, November 13, 2025. I would now like to turn the conference over to Kristie Plaquin. Please go ahead. Kristie Plaquin: Thank you, operator, and good morning, everyone. Thank you for joining us today, and welcome to our third quarter results conference call. On the line with me today is Linda McCurdy, President and Chief Executive Officer. Before we begin, I'd like to remind everyone that statements made during our prepared remarks of the conference call with reference to management's expectations or our predictions of the future are forward-looking statements. All statements made today, which are not statements of historical fact are considered to be forward-looking statements. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. Investors are also cautioned not to place undue reliance on these statements. Actual results could differ materially from those anticipated. Risk factors that could affect the results are detailed in the corporation's public filings. I'll now turn the call over to our CEO, Linda McCurdy, who will provide her insights and remarks on the quarter. Linda? Linda McCurdy: Thank you, Kristie, and good morning to everyone. Thank you for joining today to review our 2025 third quarter results. I'll spend time focusing on the main highlights of the third quarter, and then I'll hand it over to Kristie to provide more details on our financial performance and the balance sheet. So we are delighted to have reported record results for Q3 with revenue of $156 million and adjusted EBITDA of $33.5 million for the quarter. Q3 marks our sixth consecutive quarter of record results and includes early contributions from the Stellar Mayan acquisition. This acquisition has enabled us to establish a national footprint in the U.K. commercial laundry and textile rental sector and really enhances our revenue diversification by geography and business mix. Based on annualized consolidated revenue, K-Bro's combined business is now approximately evenly split between Canada and the U.K. with national platforms in both countries. We're excited to become a strategic supplier to the healthcare sector in the U.K. like we are in Canada. We believe the U.K. healthcare market shares similar characteristics and trends to the Canadian healthcare market. And while it's still early, we're pleased with the progress of our ongoing integration efforts as we work towards optimizing our local and national footprints and positioning K-Bro for long-term growth. So consolidated revenue in the third quarter increased by 49% compared to Q3 2024 with healthcare revenue having increased by 67% and hospitality revenue by 34%. Healthcare revenues represented about 53% of our consolidated revenues, which is higher compared to 47% in 2024 due to the acquisition of Stellar. A key point, of course, is that strategic acquisitions of high-quality operators with leading market positions in key regions have always been an important contributor to our overall growth profile, and we continue to actively pursue these growth opportunities. Of course, we will continue to incur certain transaction, transition and financing costs, which are reflected in our adjusted EBITDA number. And in this context, we do believe that adjusted EBITDA before adjusting items will assist investors to assess our performance on a more consistent basis as it's an indication of our capacity to generate income from operations. As always, we're focused on delivering industry-leading service, and we're proud of our talented combined team that focus tirelessly on being dependable partners to our existing and new healthcare and hospitality customers. I'll now turn it over to Kristie to discuss our detailed financial results for the quarter, and then I will come back to you and talk about our outlook. Kristie, over to you. Kristie Plaquin: Thank you, Linda. The information we are discussing today is also highlighted in our 2025 third quarter earnings press release issued yesterday and detailed supplemental financial information can also be found on our Investor Relations website under the heading Financials. As a result of the Stellar Mayan acquisition in June 2025, consolidated hospitality revenue for Q3 increased by 33.6% over the comparable period of '24, and the corporation saw a 66.8% increase in consolidated healthcare revenue for an overall increase in consolidated revenue of 49.3%. As we've discussed in previous quarters, when reporting adjusted EBITDA, we've revised our adjusting items to reflect certain amounts, which are not indicative of ongoing operating performance. This includes transaction costs, structural finance costs, transition and integration costs, restructuring costs, gains and losses on settlements of contingent consideration and any other nonrecurring transactions as defined within our MD&A. We believe adjusted EBITDA will assist investors to assess our performance on a consistent basis and details of the calculations and the adjustments can be found in our MD&A under terminology. Consolidated adjusted EBITDA increased in Q3 of '25 to $33.5 million or by 45.9% compared to $23 million in 2024. Adjusted EBITDA margin decreased to 21.5% in 2025 from 22% in 2024. The decrease is due to the combination of the lower Stellar Mayan margin profile. Consolidated EBITDA increased in Q3 '25 to $32 million or by 40.2% compared to $22.8 million in 2024. On a consolidated basis, EBITDA margin decreased to 20.5% in 2025 from 21.9% in 2024. For the Canadian division, the adjusted EBITDA margin in the third quarter of '25 increased to 22.8% compared to 20.8% in 2024. The increase in adjusted EBITDA margin was largely due to labor efficiencies and the elimination of the Canadian carbon tax in 2025. EBITDA margin increased to 22.6% in the third quarter of '25 from 20.7% in 2024. For the U.K. division, the adjusted EBITDA margin in the third quarter decreased to 20.3% in 2025 compared to 24.3% in 2024. The decrease is due to the combination of the lower Stellar Mayan margin profile. The EBITDA margin for the U.K. division decreased to 18.8% in the third quarter of '25 compared to 24.3% in '24. And the decrease in EBITDA margin is due to the adjusting items in the quarter related to Stellar Mayan's transaction and transition costs in addition to the lower margin profile. Net earnings increased by $0.8 million in the third quarter of '25 or 8.9% from $8.1 million in 2024 to $8.9 million in 2025. And net earnings as a percentage of revenue decreased to 5.7% in '25 compared to 7.8% in '24. Wages and benefits in the third quarter of '25 increased by $21.4 million to $60.6 million compared to $39.2 million in the comparative period of '24 and as a percentage of revenue increased by 1.4 percentage points to 38.9%. The increase as a percentage of revenue is primarily due to the combination of the Stellar Mayan cost structure. Linen in the third quarter of '25 increased by $5.3 million to $15.3 million compared to $10 million in the comparative period of 2024 and as a percentage of revenue increased by 0.2 percentage points to 9.8%. Utilities in the third quarter of '25 increased by $2.1 million to $9.5 million compared to $7.4 million in the comparative period of '24 and as a percentage of revenue decreased by 0.9 percentage points to 6.1%. The decrease as a percentage of revenue is primarily related to lower gas costs in the U.K. market and the elimination of the carbon tax in Canada in Q2 of '25. Delivery in the third quarter of '25 increased by $4.7 million to $16.9 million compared to $12.2 million in the comparative period of '24 and as a percentage of revenue decreased by 0.8 percentage points to 10.8%. The decrease as a percentage of revenue is primarily related to the combination of the Stellar Mayan cost structure, delivery route optimization and lower fuel prices in Canada. Occupancy costs in the third quarter of '25 increased by $1.3 million to $2.9 million compared to $1.6 million in the comparative period of '24 and as a percentage of revenue increased by 0.3 percentage points to 1.9%. The increase as a percentage of revenue is primarily related to higher facility operating costs. Materials and supplies in the third quarter of '25 increased by $3.8 million to $7.4 million compared to $3.6 million in the comparative period of '24 and as a percentage of revenue increased by 1.3 percentage points to 4.8%. The increase as a percentage of revenue is primarily related to the combination of the Stellar Mayan cost structure. Repairs and maintenance in the third quarter of '25 increased by $2 million to $5.9 million compared to $3.9 million in the comparative period of '24 and as a percentage of revenue increased by 0.1 percentage points to 3.8%. Corporate costs in the third quarter increased by $1.1 million to $5.3 million compared to $4.2 million in the comparative period of '24 and as a percentage of revenue decreased by 0.6 percentage points to 3.4%. The decrease as a percentage of revenue is primarily related to the combination of the Stellar Mayan cost profile. Now looking at our capital resources. Distributable cash for the third quarter of '25 was $19.6 million, and our payout ratio was just under 20%. The company paid out $0.3 per share in dividends during the quarter for total consideration of $3.9 million. The corporation had net working capital of $95.7 million at September 30, '25, compared to its working capital position of $54.1 million at December 31. The increase in working capital is primarily attributable to the acquisition of Stellar Mayan on June 11 of '25. With regards to credit and liquidity, we have a strong balance sheet and ample undrawn capacity on our syndicated revolving credit facility, which has an operating line of $175 million, and amortizing term loan of $134.3 million and a further $50 million accordion for growth purposes. At September 30, we had an undrawn balance of close to $54 million on our operating line without taking into account the accordion, which reinforces our strong liquidity. This results in a debt-to-EBITDA ratio on a pro forma basis, excluding leases of about 2.7x. Debt to total capitalization for the period ended September 30, '25, was 49.5%. Total debt net of cash decreased in the quarter from $228.3 million to $220.3 million due to repayments of revolving debt and the amortizing term loan. I'll now turn things back over to Linda for additional commentary. Linda, please go ahead. Linda McCurdy: Thank you so much, Kristie. So I just want to point out that K-Bro went public 20 years ago with a vision to deliver industry-leading essential service to healthcare and hospitality customers. At the time of our IPO, we had 4 Canadian facilities and aspirations for national expansion. Today, we've grown our footprint to 25 facilities with national platforms in both Canada and the U.K. Our coast-to-coast footprints in both countries give us strategic national presence, scale and efficiencies, and we're excited by our growth opportunities ahead. While still early, we're pleased with the progress of our ongoing Stellar Mayan integration efforts. Our U.K. Managing Director, who is an experienced K-Bro veteran oversees the combined U.K. operations, including the Stellar Mayan business integration plan. Our transition team is reviewing cost synergies, operational efficiencies and platform optimizations, and we anticipate run rate cost synergies will be realized over the contemplated 24-month time horizon. On a consolidated basis, we're excited about the future potential of our combined business. We have been market leaders in the Canadian healthcare sector for over half a century, and we're excited to expand the scale of our U.K. healthcare business. Both of K-Bro's healthcare and hospitality segments continue to experience steady growth trends. In the Healthcare segment, we expect activity levels to remain strong from continued focus on reduced wait times and enhanced patient care. In the hospitality segment, we expect solid activity levels from both business and leisure travel, reflecting historical seasonal trends. Going forward, we expect combined adjusted EBITDA margins will remain at similar levels to seasonally adjusted combined historical margins. In line with management's expectations due to the lower EBITDA margin profile of Stellar, the consolidated U.K. divisional adjusted EBITDA margins will be lower than seasonally adjusted historical margins. We continue to monitor evolving global and Canadian foreign policies, geopolitical events and economic conditions, which could have a direct or indirect impact on K-Bro. We're not currently expecting meaningful impacts on the business as key customers and suppliers are not U.S.-based. On November 5, you will have noticed we announced a new Board appointment. We are absolutely delighted to announce the appointment of the Honorable Rona Ambrose to our Board of Directors. Ms. Ambrose is the Deputy Chairman at TD Bank Group's Investment Bank. She's also served on several corporate and nonprofit boards. She's the Founder and Chair of the Council of Women's CEOs, Chair of Plan International Canada and a passionate global champion for the rights of women and girls. I'm sure most of you know that prior to her retirement from politics in 2017, she was leader of Canada's official opposition in the House of Commons and leader of the Conservative Party of Canada. She's held many cabinet positions during her time, and we are absolutely delighted to add her as a Board member to K-Bro. We are -- going forward, committed to a sustainable future, and we're proud to say that we have 7 decades of responsible, innovative growth. We are excited to publish our third annual sustainability report in the next month. It will be accessible on our website. We continue to collaborate with our shareholders to appreciate their priorities, solicit and receive feedback and align around common goals. Our services are essential to the continuity of our customers' operations, and we're embodying sustainability practices to support them for the long term. I'll now open it up to any questions you may have as it relates to the third quarter. Operator: [Operator Instructions] Your first question comes from Michael Glen with Raymond James. Michael Glen: Linda, just to start, with the U.K. division, if we're looking at the MD&A, there is this notable jump in wages and benefits, and you've explained that's related to Stellar Mayan. I'm just trying to get a sense here when you look at that particular line and cost structure, do you think you can eventually over time, get it back down to what your U.K. average was pre-transaction? Linda McCurdy: I would say that we'll certainly gain ground there, Michael. Getting it back to the historical percentage of revenue for wages and benefits we'll probably not get all of the way there, but we certainly will gain some ground. And that will come through operational efficiencies that we're working. Our Canadian team and our existing U.K. team is working with the Stellar team, both in terms of changing shift patterns, which will be helpful, eliminating night shifts, which are costly and not as efficient. It will come through improvements as a result of the CapEx plan that we announced as part of the acquisition. And it will also come from increased prices as we move forward as contracts renew. So there will be improvement, Michael. It won't be in a -- on a 1-quarter basis, but there are several key focuses that will result in improvements in that area. Michael Glen: Okay. And is there -- if we look back to Fishers, I believe there were some wages, some cost benefits you realized there from -- on wages and benefits. How -- could you just recall how long that took to be realized? Linda McCurdy: Up to the 24-month mark, which would be the plan. Michael Glen: Okay. And just moving over to Canada. So organic growth, as I'm calculating -- year-over-year growth was 4.5%. That number, as far as I can tell, that's a pretty clean read on what organic growth is because you're not including -- we're lapping all the M&A now. Can you just give a read on -- is that the right rate for organic growth in Canada going forward? And where are you seeing some of the pockets of strength within that organic growth figure? Linda McCurdy: I would say that from mid to mid-single digit is a reasonable expectation going forward or slightly higher. I think we've seen solid growth in the Quebec market, more to come there as well as in the Toronto market. So I'd say we're optimistic in both of those key markets, but we'll see consistent growth across the country, Michael. Michael Glen: And you would say that mid-single digit based on what you see in front of you that should continue through 2026? Linda McCurdy: Yes, yes. Operator: [Operator Instructions] Your next question comes from Derek Lessard with TD Cowen. Derek Lessard: Linda and Kristie, another solid quarter. So congrats to you and the team on your 20-year milestones. Just a couple of questions for me. So almost, I guess, 6 months into the Stellar Mayan acquisition now. Just curious if from when you guys, I guess, first bought the business and you did your due diligence to now, have you maybe identified any other opportunities there or maybe opportunities bigger than you might have originally thought? Linda McCurdy: I think what I would say is we always knew this was an asset that made so much sense for K-Bro to combine with Shortridge and Fishers acquisition. We're even more optimistic about it in the medium term. We have so much to offer that market in terms of our healthcare offering. I think I have relayed many times how we think new innovative products in that market to convert from disposable to reusables, it's even further reinforced. And having met with up to 15 customers since we have closed the transaction, they are very focused on sustainability. We do know that change doesn't happen, clinical change doesn't happen quickly, but there is a desire. There is an interest, and it has been -- the acquisition has been very well received with a healthcare player from a different market coming to the U.K. to offer new products and services. So I think it's further reinforcement of what we believed, but now having one-on-one interaction with customers, I think, further makes us optimistic and enthusiastic about the acquisition. On the hospitality side of the business, I would say -- I will comment quickly on the hospitality side of the business. And obviously, we service now the London market, one of the largest hospitality markets in all of Europe, if not the largest hospitality market, we have a huge platform for growth now there as well. And I think our experience of the Fishers team and the Shortridge team and our commercial expertise and relationships will enable us to grow that part of the business very successfully going forward as well. Derek Lessard: Awesome. That's great color, Linda. And I agree with you a great add to your Board with Ms. Ambrose. Curious if maybe if you can add some color or maybe talk about how that relationship came to be. Linda McCurdy: So the Board and several members of the Board, we obviously have been looking to add an additional Board member. And through existing relationships over a number of years, Rona had accepted to join us, and I think she brings an amazing skill set in terms of her knowledge of government, her knowledge of provincial and federal government and just her exceptional experience on corporate boards. So that's really the history there, Derek. Operator: We have a follow-up from Michael. Michael Glen: Just looking at the CapEx outlook for the next few quarters. I know the CapEx guidance is unchanged, but are you able to just maybe give some indications about how we should model CapEx over the next, say, 2 or 3 quarters with both the maintenance and the Stellar Mayan indicated CapEx? Linda McCurdy: 100% Kristie, I'll let you address that, if you could. Kristie Plaquin: Yes. No, absolutely. I guess -- so in terms of the -- maybe I'll take the 2 pieces separately. So in terms of our ongoing capital, not specifically related to the Stellar [ GBP 5 million ] investment that we had guided on. I would say that with respect to that CapEx, the balance, which is probably in the 2-ish million range would be spent over the balance of 2025. And I would anticipate in 2026 that our ongoing CapEx would be spent fairly evenly over the 4 quarters, Michael. And in terms of the Stellar Mayan CapEx, so specifically the [ GBP 5 million ] I would suggest we've committed to about [ GBP 4 million ] so far of that amount. [ GBP 3 million ] will likely be spent in Q4. Some of that may trickle into Q1. And then the balance of that [ GBP 4 million ] would be spent within Q1 with the further [ GBP 1 million ] to be spent in Q2 of '26. And in terms of -- just to go back to the first comment on maintenance versus strategic, I would say that you would see maintenance CapEx at typical levels that you've seen historically spent evenly over the 4 quarters. Michael Glen: Okay. And then for working capital, any thoughts on buckets of working capital, how they should trend over the next, say, coming year? Kristie Plaquin: We don't see any significant investment required in working capital. I would suggest that it would follow pretty much our historical trends. Michael Glen: Okay. And then can you update us on what type of tax rate we should be using for our modeling? Kristie Plaquin: Yes. So I would suggest in the 25% to 26% range would be a reasonable rate to use. Operator: Your next question comes from Justin Keywood with Stifel. Justin Keywood: Nice to see the results. On the Canadian federal budget, obviously, still some moving parts, but there's been some significant investments announced geared to Canadian hospitals. One mention of $5 billion for a new healthcare infrastructure fund. I'm wondering how that could impact K-Bro Linen. And would there be additional expansion within these hospitals as far as expanding capacity to help alleviate the strain and how you're seeing that impacting the growth profile for the Canadian segment going forward? Linda McCurdy: Yes. Thank you, Justin. We obviously see this as very positive, won't impact necessarily in the very short term. But every time we're adding beds, that has a very positive impact on more Linen required. So while it will take some time, it plays right into our shorter or our medium-term growth that will result in additional volume going through our plants. In terms of how it would impact new markets, I don't think that in itself. A new hospital in Halifax, for example, wouldn't necessarily change our strategy. It would require a larger commitment of larger volumes to enter a new market. But obviously, the operating leverage associated or as part of our existing plants will mean it will be higher-margin business as it comes online. Justin Keywood: Okay. That's very helpful. And then we saw a new laundry peer or comp have a substantial IPO, Alliance Laundry Holdings. A bit of a different business model more from the equipment provider side, but similar end markets to K-Bro. I'm just wondering your thoughts on maybe potential expansion beyond Canada and Europe into the U.S. and maybe how you're seeing that company as compared to K-Bro? Linda McCurdy: So I would say that we remain very focused at the moment on Canadian footprint and platform, and we still have work to do, obviously, with Stellar in terms of optimizing plants, securing and rolling out new products and services. That doesn't mean that we don't keep our eyes on other markets. The U.S. is one of them, which will continue. But we do remain pretty focused on our existing 2 platforms. The U.S. market, given the structure of healthcare is significantly different than the Canadian or the U.K. platforms. To your point on Alliance, similar end markets, but really, I would say, smaller, not necessarily focused on acute care hospitals. So I wouldn't say that there's a lot that is -- a lot of takeaways from Alliance that we could learn from. There are regional players in the U.S. that are of interest. But again, I temper that comment with the fact that we remain pretty focused on our 2 platforms in Canada and the U.K. Operator: We have a follow-up from Derek. Derek Lessard: Yes. I was just hoping you could maybe give us an update on sort of the hospitality trends that you're seeing in Canada, I guess, particularly against the -- still by Canada backdrop. Linda McCurdy: So in speaking with our hospitality partners, they have had very, very solid years, both as a result of staycations, the result of, I think, a weaker Canadian dollar as well as the conference market coming back. I think their expectations for next year remains very, very positive. I'd say -- so from a Canadian context, that works and is very positive for K-Bro looking into next year. I'd say in the U.K., the London market just always remains busy. There isn't -- obviously, outside of COVID or the pandemic, but it remains a very, very active market. Up into Scotland and Edinburgh, in particular, it as well remains a very high traveled destination market. We haven't necessarily seen it, but the Lake District where our Shortridge platform where our customers are from our Shortridge platform. We've had a solid year. Hard to predict what that means for next year. It is dependent on it's weather related, the overall economy in the U.K. is also a factor, but we don't see any warning signs for hospitality in the U.K. either, but we're pretty enthusiastic about hospitality in Canada for '26 based on our feedback from our customers. Operator: There are no further questions on the phone line. I will turn it back to Linda for closing remarks. Linda McCurdy: Well, thank you, everyone, for joining today. Kristie and I are available if there are follow-up questions. So please don't hesitate to reach out. And thank you again, and have a great day. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.
Per Plotnikof: Hello, and welcome to this presentation of ALK's Q3 results and full year outlook, and thank you all for joining us. Let's turn to Slide #2 with the agenda and speakers. My name is Per Plotnikof. I'm Head of Investor Relations. And with me today are CEO, Peter Halling; and CFO, Claus Steensen Solje. We'll first share a couple of quarterly highlights, followed by a closer look at markets, products and financials. We will detail some of our strategic focus areas before we cover the new full year outlook. As usual, we'll end the presentation with a Q&A session. And to get us started, I'll hand over to Peter and Slide #3. Please go ahead, Peter. Peter Halling: Thank you, Per, and thank you all for joining this call. Q3 was characterized by a strong focus on execution of our key strategic initiatives. The pediatric tablet launches, a new partnership for China and the commercialization of neffy. Market responses to the tablet launches for children are truly encouraging. The rollout of the house dust mite tablet, ACARIZAX for children progressed well and continue to contribute to the inflow of new patients in Q3. Moreover, ACARIZAX is attracting new prescribers, not at least amongst pediatricians, suggesting that the children indications have the potential to expand ALK 's addressable markets. We also saw encouraging early uptake of the tree tablet ITULAZAX children and adolescents. In China, we entered into a partnership with GenSci, a strong local Chinese partner, committed to accelerating the uptake of ALK's house dust mite allergy products. GenSci has already taken over sales and marketing of ALUTARD, our SCIT product and skin prick tests. The partnership is projected to become margin accretive to ALK's midterm, largely driven by cost savings in China, combined with the income from product supply as well as upfront and milestone payments of up to DKK 1.3 billion. A couple of weeks ago, we introduced EURneffy, the adrenaline spray in the U.K., Europe's and ALK's largest anaphylaxis market. Meanwhile, EURneffy is gaining traction in Germany, our first market entry. The product was launched in July. Other market introductions are imminent, while still very early days, market response so far confirms the product's long-term potential despite long-standing clinical practices favoring traditional anaphylaxis products, which we will need to work carefully with. Financial results in Q3 were strong with double-digit growth across sales regions and product groups. Revenue grew by 18% and was higher than expected, while earnings were up 41% in local currencies, yielding an EBIT margin of 28%. Based on the Q3 result and the outlook for Q4, especially in Europe, we have adjusted the full year outlook. Revenue is now expected to grow 13% to 15%, while the EBIT margin is expected to increase to approximately 26%. Now we'll detail all of this later. But first, I'll hand it over to you, Claus, and Slide 4. Claus Solje: Thank you, Peter. So let's take a closer look at our 3 sales regions performance. Our main region, Europe reported 18% growth. The revenue growth was driven by sales of tablets, anaphylaxis products and SLIT drops. Q3 growth was, to a minor extent, positively influenced by some phasing of sales between Q3 and Q4. Tablet sales was up 23% on a broad-based growth across brands and markets. Let me also point out that we did observe that wholesalers carry slightly higher inventories, potentially indicating slightly increasing trading patterns, which is natural in a launch situation like we are in with the children tablets right now. Growth of the tablet business in Europe was, first and foremost, linked to higher volumes, driven by more patients on treatment, whereas prices and rebate adjustments had a much less impact. Volume growth was powered by new patients with the highest contribution coming from our house dust mite, ACARIZAX and the tree pollen ITULAZAX patients. The children indications for ACARIZAX contributed positively across markets, while the recent launch of ITULAZAX now has started to contribute to the patient inflow, especially in the key German market. Combined sales of SCIT, SLIT drops were up 7% in Europe. SLIT drops sales continued to benefit from an expansion of patient and prescriber bases in France. SCIT sales picked up temporarily due to one-off changes to patient supply patterns, but the underlying growth was still hampered by fewer patients starting up on our legacy products. Sales of other products grew by 39% in Europe, led by 44% growth in the anaphylaxis portfolio. Sales of Jext auto-injectors were driven by strong commercial execution, including newly won tenders in Southern European markets as a consequence of recent supply issues at our competitor. Revenue also included a modest contribution from neffy. If we turn to North America, then revenue increased by 20%. The U.S. business continued to bounce back from last year stagnancy, while the Canadian business sustained its growth. Tablet sales in North America grew by 20%. The pediatric indication for ODACTRA continued to drive a higher uptake among allergists and to a minor extent, new pediatric prescribers in the U.S. Growth in Canada was higher, driven by continued demand and volume growth, combined with some destocking at wholesalers. North American sales of SCIT bulk increased by 1%, while sales of other products were up 41% on higher volumes and better pricing of our life science products. Revenue from other products also included, as planned, a modest cost reimbursement from ARS Pharma related to our co-promotion agreement for neffy in the U.S. Revenue in international markets was up 14% due to the increased SCIT shipment to China. We resumed shipments to China in Q2 after the renewal of ALK's import license, and these continued in Q3, so that SCIT revenue in this region increased by 43%. In-market sales in China continued to grow by double digits. Tablet revenue in international markets was down 4% after decreasing shipments to minor markets, while revenue from the primary market, Japan, was unchanged. In-market sales in Japan grew by double digits, although capacity constraints still prevented our partner, Torii from fully meeting demand for the CEDARCURE tablets. Torii's new API manufacturing facility is now becoming fully operational, but it will still take some time before the extra capacity flows through the manufacturing cycle. Now let's turn to a brief update on the product lines on Slide 5. Global tablet revenue was up 17% on solid growth in Europe and North America, predominantly driven by higher volumes. All brands grew by double digits, except for CEDARCURE, which saw modest growth, as I just touched on. Combined revenue from SCIT and SLIT drops increased by 11% after progress in all sales regions. The main growth driver were the resumption of SCIT shipments to China and a very solid growth in SLIT drops in our big market, France. Revenue from other products increased by 42% and the anaphylaxis portfolio was at the front with 68% growth. It did actually very well across markets, and neffy also contributed to growth at this early stage of the commercial rollout. In conclusion, strong growth in all product lines and in all sales regions in Q3. After these quarterly updates, let's move to the year-to-date results on Slide 6. Revenue for the first 9 months of 2025 exceeded DKK 4.5 billion after 14% growth in local currencies. Growth mainly echo higher sales of tablets and anaphylaxis products. A gross profit of DKK 3 billion yield a gross margin of 67%, a big increase of 3 percentage points. These improvements reflected higher volumes, changes to the sales mix where especially European tablet sales contributed to the positive development. We also saw good production efficiencies coming through. The gross margin was also indirectly helped by the muted growth in tablet sales in international markets, which holds lower margins as a consequence of the partnership with Torii. In addition, we currently only have a minor contribution from the neffy business, which also holds lower gross margins compared to our European tablets. Capacity costs increased by 5% to DKK 1.8 billion. At the Q2 earnings call in August, after we upgraded the full year outlook, we said that we plan to take advantage of the higher-than-expected revenue to further invest in various growth initiatives. We started doing so in Q3, where R&D expenses were up 16%, while sales and marketing costs increased 3%. Still, the cost increase was lower than planned, meaning that you should expect higher capacity cost in Q4. I'll come back to that later. The operating profit, EBIT improved by 44% in local currencies to almost DKK 1.3 billion, raising the EBIT margin from 22% to 28%. The EBIT margin progressed due to higher sales, gross margin improvements and modest increase in capacity cost. Moreover, no one-off costs to optimizations were recognized, opposite to last year, where one-offs amounted to DKK 49 million. Free cash flow almost doubled to DKK 836 million. Higher earnings offset investment to scale up tablet production, upgrade legacy production and expand the anaphylaxis operation. We continue to use some of the cash generated to repay our debt. Cash flow from financing was minus DKK 736 million. This means our net debt-to-EBITDA ratio right now is down to minus 0.1, i.e., we do not have any debt at this stage. So all in all, a solid set of results, which further solidified ALK's financial position and confirm that we are on track to deliver on our long-term financial targets. So with this, I would like to hand it back to you, Peter, and Slide 7 for a status on our key strategic initiatives. Peter Halling: Thank you, Claus. Let me start by providing some additional insight into the important launches of our respiratory tablets for children. In September, the house dust mite tablet, ACARIZAX was made available for children in 21 markets, including 14 markets served by ALK and 7 partner markets. The more recent rollout of the tree tablet, ITULAZAX for children and adolescents now covers 11 markets with 2 more launches scheduled for Q4. So far, key indicators continue to perform well across metrics, including new patient interactions with caregivers, doctor visits, sales, prescribers, et cetera. In September, around 3,000 unique prescribers in markets served directly by ALK were estimated to have prescribed at least one of the two tablets for children. The prescriber base includes new pediatricians, indicating that we are gradually expanding markets. While it is still early days, the market response is encouraging. And if we are capable of sustaining these trends, the pediatric indications will become a very important contributor to ALK's future growth for many years. Within respiratory allergy, things also progressed in China. In China, we initiated a bridging trial to facilitate the approval of ACARIZAX. Recruitment of around 300 subjects is progressing well, and the trial is set to complete around '26, '27 turn of the year, so around January '27. Subject to approval, ACARIZAX could be launched in Mainland China in '28, where the tablet will be added to the portfolio marketed by our new partner, GenSci. Also a brief update on Japan, where our partner, Torii has become a subsidiary of Shionogi. Shionogi has expressed its commitment to our tablet portfolio and sees it as a core business pillar going forward. The ongoing Phase III trial with GRAZAX in Japan continues as planned. Now let's move to anaphylaxis and the commercialization of neffy, the nasal spray for emergency treatment of acute allergic reactions, branded EURneffy in Europe. We launched EURneffy in Germany in June and the market -- or the market share has increased steadily since while it is encouraging for longer-term potential of the product, it is still early days. A couple of weeks ago, EURneffy was also introduced in the U.K. So we now cover two of three key markets. The third market is Canada, where the regulatory review is still pending, but progressing as planned. Additional introductions like in Denmark are imminent and further launches are lined up for '26. In all markets where pricing and reimbursements have been settled, EURneffy has secured a price premium relative to adrenaline auto-injectors. We now also have real-world evidence from the U.S. supporting that neffy's effectiveness is consistent with the one of adrenaline auto-injectors, but neffy has advantages over auto-injectors in the form of user-friendliness, longer shelf life and temperature stability. Despite these positive achievements, it is most likely or will most likely take some time to secure market access and change long-standing clinical practices, such as automated renewal of prescriptions for traditional anaphylaxis products. That said, we are encouraged by the first indications that we've seen in Germany and the positive feedback we are getting from the medical community to this new treatment. We will build on this positive feedback, work to change the habits and behaviors and furthermore, allocate resources to pursue opportunities in other channels, including airlines and schools to name a few. Moving to food allergy. The U.S. FDA has granted a Fast Track designation to our peanut development program. This allows ALK to benefit from more frequent interactions with the FDA, and it highlights that the agency acknowledges that food allergy represents a significant unmet medical need. We expect this to support the time line for the program. The ongoing Phase II trial with the peanut tablet in North America is on track to report top line data in the first half of '26, most likely towards Q2. At the same time, the planning for Phase III is ongoing. So to sum up, then we, in general, see good progress across all disease areas. And with this, I'll hand it back to you, Claus, on Slide 8. Claus Solje: Thank you, Peter. So let's end with the outlook for the year. As Peter said previously, we adjusted the full year outlook slightly. We are now looking at 13% to 15% revenue growth in local currencies versus the previous outlook of 12% to 14% growth. The new outlook is based on a few things: double-digit growth in tablet sales, driven by more patients and prescribers. Single-digit growth in combined SCIT and SLIT drops sales, double-digit growth in sales of other products, particularly anaphylaxis. During the spring, we indicated that the children indications and neffy launches would contribute with around 1 percentage point of the growth in 2025. Based on what we have seen over the past quarter, we now believe that these 2 items will contribute with 2 to 3 percentage points of the anticipated revenue growth. In parallel, we adjusted the EBIT margin outlook to around 26%, up from the 25% we expected before. This corresponds to an improvement of 6 percentage points, fueled by sales growth, gross margin improvements and the optimizations. Also, we don't expect any one-off this year, opposite to last year, where our one-offs cost totaled DKK 75 million. The new outlook implies that total revenue is projected to grow by around 13% to 18% in Q4. We expect the strong underlying momentum for tablets to continue into Q4 with a strong inflow of new patients during the ongoing initiation season in Europe. However, please notice that Q4 growth in tablet sales is expected at a slightly lower level than in the first 9 months due to phasing of product shipments to Japan and potentially inventory fluctuation at European wholesalers. The Q4 EBIT margin is expected to be lower than in the first 9 months, reflecting what I mentioned before. We are increasingly allocating funds to growth initiatives like the children launches, neffy and the Phase II peanut trial. This includes new hires, which will lead to increased capacity costs in Q4. We will obviously carry these costs into 2026, but we will do so without jeopardizing our financial ambitions. A 25% EBIT margin target for the next years is still our expectation. We believe the new outlook for 2025 adequately balances risk and upsides. Hence, we expect 2025 to mark the seventh consecutive year of revenue growth and improved earnings, fully in line with ALK's long-term financial ambitions. And with this, I would like to hand it back to Per and Slide 9. Per Plotnikof: Thank you, Claus, and thank you, Peter. And we will now turn to the Q&A session, and I kindly ask the operator to go ahead, please. Operator: [Operator Instructions] The first question today comes from Thomas Bowers with SEB. Thomas Bowers: I have 3 questions here. So firstly, just if we look at your new patient starting in '25. So you are stating that it's well above 10% the outlook of tablets in '25. So what if you exclude the impact from the pediatric indications, would you still say that you are still above that 10% of new adults starting for this initiation season? And then second question, just on gross margin. And of course, now we're looking at 2 percentage points year-over-year. So that's, of course, quite impressive. But how much is -- first of all, how much is structural improvements, so the scrapping -- less scrapping and yields and compared to what you see here from the product mix? And also, how should we think about gross margin improvements in '26? Will this then be flat also because we are facing maybe some headwinds on product mix with Japan, China and neffy here? So any color would be appreciated. And then my final question here for now. So just on the R&D spend. So first of all, what is driving this extreme back-end loaded R&D spend phasing into today -- well, implied for the Q4 in order to stick to that 10%? And maybe also in regards to your midterm guidance or targets. So going for that 10% in '26, is that still achievable with the quite strong top line performance you have here? Because I guess most additional investment you can plug in is related to sales and marketing. So any color on how you are trying to keep that 25% EBIT would be appreciated. Peter Halling: Thanks, Thomas. This is Peter. So let me just start out with your patient question. And Claus, maybe you can jump in on the gross margin, and we can -- one of us can take the R&D spend as well. So just on the patients on the adults, we expect approximately 10%. Do keep in mind that it's still initiation season. So we're still kind of seeing the intake of patients and obviously learning, but we expect it to be around the 10%. And then to your first part of the question, yes, we saw, as we also stated, a positive surprise in terms of the intake of children. I think it's important to say that part of the reason for why we have been a bit conservative around this has been we had obviously an assumption that there could be this famous catch-up effect where you see a big inflow with people on waiting. But so far, it has continued, especially with what we've seen on the house dust mite. So that has obviously been positive and driving it upwards. So that's the patient side. On the gross margin? Claus Solje: Yes, Claus here, let me take that one. Thomas, it's a good question. And you're completely right that we are seeing a better gross margin improvement than what we had expected. And that's also why we have been able to lifting the outlook for the EBIT. To your question about what is it actually that are driving it, most of those 2% are actually, if you look at it, coming from the volume mix of products here. So we are simply selling products with a higher margin. And then you can say, so what about the yield and the scrap and variance improvements and so on. They are also there, but it's important to understand that we also have the inflation increase on our production inputs into the manufacturing area. And actually, as it stands right now, then we expect for this year that the increase in inflation to our manufacturing input is being counterbalanced by the improvements in the variances and the scrap and so on. So these two are actually outweighing each other. And that means that the approximately 2% net that you then see is coming from the product mix, selling more tablets to a higher margin. If you look into '26 on that one, we are not guiding on '26 right now. That's a bit early. We will do that in February. But I can put a bit more flavor on it. You are right that when we come with improvements, as you can say here, around 2%. Then remember, we have normally said that we would like to increase the gross margin 0.5% to 1% year-on-year. That's how we try to improve the gross margin year-on-year. But of course, with such a significant increase in '25, then there could be some headwind next year. And you're also pointing actually to the right reasons, and that's respectively our partner markets. So next year, you will see an increase in shipments to Torii for lower-margin products. You will see now our partnership with GenSci that also has a lower margin. And you will also see increase in neffy sales also to a lower margin in '26. So these trees are actually, you can say, a drag on our gross margin. We will still have increased tablet sales. So don't worry. We will also work on lower scrap and improvements in the yield and variances. So we will also have that to counterbalance. But it is a good idea to take those partner markets and partners into consideration when trying to forecast on the gross margin next year. Peter Halling: And I think, again, just repeating our long term is obviously the 25% EBIT, but we are making active choices in investing in the business back to what we also stated during Capital Markets Day. But obviously, we are happy with both where the gross margin is and also the ability to deliver above the 25% on EBIT. Just to your last question on R&D spend, I can start and also on the sales and marketing and Claus can chip in and Per. But basically, you see the increase due to the trial activity. We just talked about China. We also talked about the continuation of peanut et cetera, and the investments into those, that is naturally increasing. We are preparing for the next phases of the study. So overall, that is part of driving the cost upwards. We've said long term that we will be between 10% and 15%, but we also said that the 15% is more on the extreme end, we should expect more the 10% to 12% overall. Do remember that with the Phase III trials coming in, then obviously, R&D spend will go up. They are naturally more expensive. So anything to add, Claus? Claus Solje: No, I think it's very right what you're saying. And just to maybe add, besides the Phase III trials that we are starting up next year, and we are already starting to prepare for those even actually before we know the results from the Phase II because we, of course, feel comfortable around that. So we have to start planning and that will then hit the 2026 numbers. And then you are right, we will also see an increase into the commercial space next year, like we will see in Q4, children launches, neffy and so on. So when you combine both the Phase II and Phase III next year and the extra investments into our 2 very important commercial launches and activities rest of this year and next year, then we feel quite comfortable about the long-term financial EBIT around the 25%. So that is still the plan. I hope that explains Thomas, for all your questions. Thomas Bowers: Very good. Maybe if I can just ask a follow-up in regards to -- maybe we spill over to the product mix comment. So I'm just curious on Japan. So some very upbeat comments from Shionogi recently. But of course, there's a standstill. So anything we should look into in regards to product mix? Because I guess probably we could see still some low numbers in Japan already from the beginning of the year. So any comments on when that standstill will potentially end? Peter Halling: No. So I think that the short answer there, Thomas, is that we do expect to see growth in Japan. And the facility that Torii is inaugurating is expected to come online. So we actually believe that next year is going to be a good growth year in Japan. But obviously, there is a timing element to it, and that is key for us going forward. When will the cedar pick up based on the pass-through of the manufacturing of the API. So that is coming. But we do see that things are coming online. Shionogi committed to both the partnership, but certainly also to the market. And hence, we are very positive around the future trajectory in Japan. Operator: The next question comes from Jesper Ingildsen with DNB Carnegie. Jesper Ingildsen: I also have 3 questions. Firstly, coming back to the pediatric launch. So you highlight now that you are expecting to see 1 to 2 percentage point contribution from that launch in this year, considering sort of like the momentum we're seeing here and continuous rollout, any flavor you could provide in terms of sort of like what we should expect going into next year? I guess, Thomas' question to some extent in terms of new patient starts alluded a bit to that as well, but just any more -- if you can give any more flavor on that? And then secondly, on neffy, I think ARS Pharma the other day mentioned that the launch in Germany is off to a strong start. I think they even said the market share capture was 3x higher than what they have seen in the U.S. just in the first few months. If you could give a bit more flavor on that launch and what's potentially driving that faster share gain compared to the U.S. in your view? And then lastly, on capital allocation, your balance sheet is obviously looking increasingly strong. Just any update on what we should expect there in terms of buybacks, dividends and then just M&A in general. So like what's your view at the moment? Peter Halling: Thanks, Jesper. Let me -- it's Peter. I'll start out with the first 2, and Claus, if you take the capital allocation, then and chip in any time. But just on the first, as you know, we cannot guide on next year. But obviously, we have upgraded what we saw this year on the [ P ] side. This is, as we also stated, driven mainly by ACARIZAX, and we saw the continued influx of patients, obviously, positive. Early on the ITULAZAX initiation season in terms of getting data, we are positive. We have seen a good influx, but I think it's premature to say a lot more on that one at this stage. But I'll just say, overall, we remain positive also due to the fact that we've seen these 3,000 unique or new prescribers coming in. So overall, positive. But I'll just caution that we still have data coming in, and we need to be a lot wise on that one. So that's as much as we can say. Then neffy and ARS' comment on Germany. It is correct that we've seen a good start in Germany. The game right now is very much around market access. It is very much around securing that we also have an inflow or we make a move into the automated renewals. That is where a lot of the existing market lies. So we need to continue to focus on that. But we are also encouraged not only by the uptake we've seen in Germany and the market share gain we've had so far, smaller volume market, though, but actually also in terms of the mix of the prescribers, both a strong growth with general practitioners, which is not where we send our people physically. So our online effort and digital effort has worked well, but also in other prescriber groups. So that is obviously a positive. But I'll just again, especially because it's early days and the volumes are a little more up and down in markets -- in smaller markets, I'll also caution that we'll see some swings, obviously. But that being said, ARS and we appreciate the positiveness on their side, then it's absolutely good to see so far. So I'll leave it there. Claus, on the capital allocation. Claus Solje: Yes. Thanks for the question, Jesper. Good question. There's no doubt, as we have also said, then this is a quite unique year for ALK on the cash situation. If you go a few years back, then that was not a big challenge for us related to cash because we didn't have that much. This year, we are guiding for more than DKK 1 billion in free cash flow related, of course, to the much higher sales, the gross margin and the EBIT coming in. So a strong year this time. Related to how we are going to spend it and how we are looking at it, then we have already communicated around our long-term financial targets and when we had the New Allergy Plus strategy back at our Capital Markets Day that first, we would like to invest into our commercial opportunities, the children, the neffy and so on and then the R&D. We will, of course, also invest into tablet manufacturing and make sure that we invest for the future there. Right now, we have capacity. We are producing 300 million to 400 million tablets every year. We can go up to 800 million, and we need to make sure that we can continue to deliver the millions and soon billions of tablets to the market. We also have, as we have communicated, activities on the BD, business development part. You saw the neffy collaborations, you saw the China one. There could be some activities there where we would like to invest into. And then when we have looked at all this, then we have also said very clear that we don't want to be a bank. We will not sit with cash on the balance sheet for a long time. So if we are in a situation where we cannot spend our own cash flow coming in, including what we have in the bank already on the things I just mentioned, then we are, of course, looking into dividends, share buybacks or what it will be. But this will be a discussion with the Board, of course, here around the Annual General Assembly, and then we will come back with an answer there. I hope that explains, Jesper. Operator: [Operator Instructions] The next question comes from Sushila Hernandez with Van Lanschot Kempen. Sushila Hernandez: Just 1 on neffy as well. So you mentioned in Germany that there is a long-standing clinical practice favoring traditional adrenaline products. So what is your strategy to move away from this? And also any color on how this is looking for the U.K. market? Peter Halling: Okay. So I can start on the neffy. Firstly, thanks for the question. Good question. So this is obviously a -- for classical, I'll try to just dial it back. What we are seeing is, obviously, you have a pattern with the prescribers where they are doing automated renewals. So as a patient, you will call down once a year and you'll get your renewal on your adrenaline pen. What we're seeing, obviously, now coming in with a new product is that not only the doctor, but the whole practice needs to be educated and you need to get in the system, including also ensuring that the patient, on the sense, have seen the product. That is part of changing the existing prescription patterns. Then there's the whole influx of new patients created through patient awareness, a lot of attention from doctors in terms of new products, et cetera. This is where we obviously have a big focus, that is ensuring that there's education, training of doctors, KOLs, et cetera, ensuring that we are present at conferences, et cetera, and also that there's a general awareness in the public. This is back to my comment around the digital effort where we are putting a lot of focus on this. And then obviously, with the nurses and the other practitioners, this is where our team have an ongoing dialogue with the clinics, and we ensure that both KOLs and others are participating in the training. That goes not only for Germany, that goes for any of the markets we are present in. So that's the answer on neffy. Yes, Per, please jump in. Per Plotnikof: Maybe add on U.K., which was also part of your question. And as you know, we have launched in U.K. We secured pricing. And now the next step is to make sure that it's also anchored in the local formulary listings. And that is going to be the key focus here over the coming months in the U.K. So before we get a sense of how it fares in the U.K., I mean, we are into next year in reality also now considering that we are moving into the low season, the classical low season for anaphylaxic product in Europe. But here, in the short term, the focus is really on making sure that it's anchored in the local integrated care trust and systems on the formularies. Peter Halling: Did that answer? Operator: This concludes our question-and-answer session. I would like to turn the conference back over for any closing remarks. Peter Halling: Thank you, operator, and thank you for your good questions. Before we end the call, I would just like to draw your attention to our Q3 road shows, which brings us to Copenhagen, to Canada, to London, Oslo, et cetera. And we hope certainly to see you around some of these events. As always, you're most welcome to contact either one of us if you have additional questions. And with this, we will end today's session, and we wish you all a good day. Thank you very much.
Operator: Good afternoon, ladies and gentlemen, and welcome to Terna's 9 Months 2025 Consolidated Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I would like to hand the conference over to our host speaker today, Mr. Stefano Gamberini, Head of Investor Relations. Please go ahead, sir. Stefano Gamberini: Thank you very much. Good afternoon, everyone, and welcome to the presentation of Terna's 9 month results 2025. This call will be hosted by our CFO, Francesco Beccali. Following the presentation, there will be the Q&A session. So we kindly ask you to send your question to our e-mail address, investor.relations@terna.it. Please, Francesco. Francesco Beccali: Thank you, Stefano, and good afternoon, everyone. Before moving at the figures, I'd like to take a moment to highlight some of our most recent achievements. Let's start with grid development, where we have made significant progress across multiple fronts in the past few months. Starting with the Tyrrhenian Link, one of the flagship projects in our 2024-'28 Industrial Plan. Let me remind you that before the summer, we completed the laying of the first submarine cable of the eastern section. And on September 16 Terna and Nexans began the first installation phase of the western section, connecting Sicily and Sardinia. Once completed, it will set a world record for the deepest high-voltage subsea cable installation, reaching 2,150 meters below sea level. This project will also represent a significant step towards Italy's urbanization target. On October 21, the Ministry of Environment and Energy Security formally launched the authorization process for the Central Link project, which plans to rebuild the 220-kilowatt backbone between Umbria and Tuscany, a crucial step to enhance transmission capacity, grid robustness and renewable integration. Shortly after on October 27, the Ministry initiated the authorization procedure for the Sardinian Link, a project to reconstruct and modernize Sardinia's grid infrastructure, strengthening the island transmission capacity and ensuring a more stable and resilient electricity system. These projects are included in the development plan and are scheduled beyond the business plan horizon. A distinctive feature of both the Central and Sardinian Links will be the use of Terna's proprietary 5 phases technology in their construction, an innovative design that represents a major step forward in the evolution of transmission infrastructure. These new pilots are lighter, more environmental integrated and capable of increasing transport capacity while reducing electric and magnetic fields, contributing to a more efficient and sustainable growth of the grid. Moreover, with regard to the authorization update, we signed a 5-year memorandum of understanding with the Marche region to enhance the planning of new infrastructure and the ministry kicked off the approval process for overhauling in the city of Ferrara's electricity grid. Lastly, in September, Terna completed the acquisition of part of the high-voltage [ Rome ] from Acea for EUR 227 million, an operations aimed at strengthening the continuity and security of the electricity transmission service. These acquisitions will also allow for more effective decision-making for renewal and development investments across the Central Italy Transmission Network, while having only a limited impact on Terna's financial leverage and remaining neutral for our credit rating. Beyond infrastructure development, we have also made important progress on the procurement front. Let's move to the next slide. We continue to effectively manage potential supply chain risk through timing and efficient mitigation actions. As of today, around 88% of our 2024-'28 CapEx plan is already covered by procurement contracts, up from more than 80% in March. All major projects, including the Tyrrhenian, Adriatic and SACOI 3 Links are fully contracted. For the ELMED Interconnection between Italy and Tunisia, the [ camel ] portion is already secured, while tenders for the converter stations are currently underway. The residual and sourced portion of planned procurement contracts primarily relates to projects scheduled for the latter part of the period, which procurement will naturally be finalized over time. Turning now to regulation. A few days ago, ARERA published Resolution 476 of 2025, verifying whether the conditions for the applications of the trigger mechanism for 2026 were met. As the variation in market parameters of the formula remained below the 30 basis point threshold defined in the regulatory framework, the current WACC of 5.5% for electricity transmission will remain unchanged in 2026. As regards to ROSS mechanism, the regulator published in August, the Resolution 390 of 2025 launching the experimental phase of ROSS Integrale mechanism for 2026 and 2027 period. In October, Terna submitted to ARERA its 2026-2027 business plan and proposals for incentives linked due to operational and performance efficiency. The business plan will be the reference for the [indiscernible] mechanism and for the new incentive penalty mechanisms introduced by the regulator for the accuracy of CapEx. Still on the regulatory side, in October, ARERA also published resolutions 440, recognized Terna EUR 93 million of output-based incentives for additional interzonal transmission capacity and investment efficiency. Finally, regarding shareholder remuneration, today, the Board of Directors approved the 2025 interim dividend at EUR 11.92 per share, flat compared to last year interim dividend. Please note that the new dividend policy communicated to the market in March set a minimum dividend per share equal to the 2024 dividend for the entire duration of the 2024-'28 business plan. Now let me briefly give you the usual overview of the Italian electricity market, turning to the next slide. As you can see from the chart, in the first 9 months of 2025, national demand was about 233 terawatt hour, recording a negligible contraction of 1.2% in comparison with the same period of last year when national demand was about 236 terawatt hour. Over the period, renewable sources covered about 43% of national demand, in line with the level registered last year. For what concerns national net total production, this stood at 201 terawatt hour, up by 1% compared to the same period of 2024. In the period, renewable sources accounted for about 50% of the national net total production, essentially in line with the level recorded in the same period of last year when renewable energy sources covered about 51% of net total production. To conclude, let me highlight the remarkable increase in photovoltaic production, which grew by 23% versus the first 9 months of last year, compensating the reduction in hydro generation. With renewables continuing to play a major role in Italy's power mix, flexibility becomes crucial. So before moving to the financial results of the company, let's turn the storage to storage and the progress made under the MACSE mechanism moving to the next slide. As you know, storage is the next frontier of the energy transition, essential to ensure flexibility and the system increasingly powered by renewables. As of September 30, Italy's total electrochemical storage capacity stood at 17.4 gigawatts hour, mostly small-scale systems, of which around 4.4 gigawatt hours were installed since December 2024. While small-scale installations still represent the majority, we are now witnessing a sharp acceleration in large-scale battery projects. In September, we successfully held the first auction under the MACSE framework. The auction awarded a total of 10 gigawatt hour of storage capacity, fully covering the demand. Results confirmed strong market interest in the [ mechanism ] with bids exceeding demand by more than 4x and average clearing prices around 65% lower than the reserve premium. Around EUR 30,000 per megawatt hour a year compared to a cap of 37,000 units. The contracted facilities are expected to enter into operation by 2028, alongside renewable plants from the FER X auctions, helping to balance the system and reduce reliance on fossil fuels for power generation, in line with the national decarbonization objectives. On this, the first auction the so-called transitional FER X closed in September with final rankings expected by December 11. It saw strong participation awarding up to 12 gigawatts of wind and solar capacity to be commissioned by 2028. The second FER X auction, which focused on resilient photovoltaic system was held in October and offered an additional capacity of almost 2 gigawatts. The final rankings are expected by the end of December. Overall, these results mark a major step forward in Italy's energy transition. Now let's move to the main figures of the period as Slide #8. In the first 9 months of 2025, group revenues and EBITDA increased by 9% and 7%, respectively, versus last year, increasing by approximately EUR 235 million and EUR 134 million compared to the first 9 months of 2024. We also reported a group net income of EUR 853 million with a growth of 5% compared to the same period of last year. Group CapEx reached around EUR 2.1 billion, marking an increase of approximately 23% versus the first 9 months of last year and setting a new record in Terna's history. This confirms once again our effort to accelerate investments to serve system needs. To support this CapEx acceleration, at the end of September 2025, net debt stood at EUR 11.7 billion, slightly higher compared to the value recorded at 2024 year-end of about EUR 11.2 billion. Now let's have a closer look at the results moving forward. Let's start, as usual, with revenues analysis. In the first 9 months of 2025, total revenues increased by 9%, reaching EUR 2.882 billion, up by EUR 235 million versus last year. The growth was attributable both to regulated and nonregulated activities which contributed for EUR 135 million and EUR 99 million, respectively. Let's now take a closer look at the evolution of revenues, turning to the next slide. Regulated revenues reached EUR 2.357 billion with an increase of more than 6% versus previous year. The growth was mainly driven by the RAB growth deriving from the recognition in tariff of 2024 capital expenditure, including the update and revaluation of capital cost parameter. The early recognition in tariff of depreciation related to 2024 capital expenditure 1 year in advance compared to the previous regulatory framework. And the fast-money component set on the conventional capitalization rate defined under the ROSS application. These factors more than offset the weighted average cost of capital reduction from 5.8% to 5.5% in 2025 and the lower output-based incentives contribution versus last year. Non-regulated revenues reached EUR 525 million, recording a double-digit increase of 23% in comparison with the same period of last year. The improvement mainly reflects the higher contribution from the Equipment segment, which includes Tamini and Brugg Cables and from the Energy Services segment. Now let's go to operating cost analysis. As you can see in this chart, total operating costs stood at EUR 856 million, 13% higher than last year. The regulated activities cost increase is mainly driven by the rise in the headcount and the higher average cost of labor, partially offset by higher capitalization. The non-regulated activities were primarily impacted by higher costs for materials and services related to the development of activities, mainly in the Energy Services segment and Equipment segment. This increase were driven by higher volume of activities reflected also in revenues growth. Regarding EBITDA, moving to the next slide. Thanks to the acceleration in revenues, 9 months 2025 group EBITDA reached EUR 2.026 billion, 7% higher than the same period of last year. The improvement was mainly attributable to regulated activities, which contributed for about EUR 99 million more versus the first 9 months of the previous year, showing an EBITDA of EUR 1,923 million. EBITDA from non regulated activities increased by 51% to EUR 103 million, mainly driven by a stronger contribution from the Equipment segment with improving margins from both the Tamini and Brugg Cables groups as well as better results from the Energy Services. Let's now have a look to the lower part of the P&L, turning to the next slide. D&A amounted to EUR 679 million. The rise versus last year's figure was mainly related to the entry into service of new infrastructure. As a consequence, the EBIT reached EUR 1.348 billion, 7% higher versus the first 9 months of 2024. The net financial expenses amounted to EUR 132 million. The slight, year-on-year increase of EUR 27 million is mainly due to the draw donw of new financing and the lower financial income resulting from cash investments, partially offset by higher capitalized financial charges. Taxes stood at EUR 362 million, EUR 24 million higher versus last year, essential due to improved results. Our tax rate was 29.8% compared to 29.4% in the 9 months of 2024. As a result, group net income reached EUR 853 million, marking a 5% growth versus the same period of last year. Moving now to CapEx analysis. In the first 9 months of 2025, total CapEx reached around EUR 2.1 billion up by 23% year-on-year, confirming the solid CapEx acceleration in line with planned targets. We invested about EUR 1.972 billion in regulated activities. Among the main projects of the period, it is worth mentioning the Tyrrhenian Link, the Adriatic Link, SACOI 3, the modernization of the high-voltage grid in the locations due to the Winter Olympics in 2026 and the Chiaramonte Gulfi–Ciminna power line. Moreover, we should consider the investments planned under the defense plan, which play a crucial role in reinforcing the resilience of the National Transmission System through the installation of synchronous compensators, shunt reactors and dumping resistor systems. Among CapEx categories, development CapEx represented 57% of total regulated investments. Defence CapEx stood at 13%, while Asset Renewal & Efficiency was at 30%. Non-regulated and other CapEx stood at EUR 115 million. This includes capitalized financial charges and other investments. Turning to the next slide. Cash flow generation for the period amounted to around EUR 2.2 billion. This was the result of around EUR 1.5 billion of operating cash flow and around EUR 700 million of working capital and other items. Net debt at the end of September 2025 was about EUR 11.7 billion, around EUR 500 million higher than 2024 year-end level, primarily due to the CapEx acceleration and the dividend payment. Let's now make a deeper analysis of our debt profile, moving to Slide 17. At the end of September 2025, we registered a fixed floating ratio on gross debt of around 83%, with an average duration of approximately 6 years. Consistent with Terna's strategic approach of aligning capital allocation with sustainability goals to enhance long-term value, as of the end of September, Terna's sustainable financing portfolio included EUR 3.75 billion in senior green bonds and EUR 1.85 billion in perpetual subordinated hybrid green bond. On this, let me remind you about the successful launch of the first European green bond with a total nominal amount of EUR 750 million made in July. This bonds, which received a very favorable market response will pay an annual coupon of 3%. In addition, Terna can rely on EUR 2 billion in an ESG-linked term loans, 3 ESG-linked revolving credit facilities for a total of approximately EUR 4.300 billion and a EUR 2 billion Commercial Paper Program dedicated to the issuance of short-term conventional or ESG notes. To conclude, as already communicated to the market in July, the European Investment Bank Terna, Intesa Sanpaolo and SACE have signed agreements totaling EUR 1.5 billion to support the development and construction of the Adriatic Link, the submarine power cable linking the Italian regions of Marche and Abruzzo. Thank you for your attention. Let me now conclude this presentation with some closing remarks. First of all, I would like to emphasize that we remain strongly focused on executing our industrial plan. As highlighted during the presentation, alongside delivering a solid set of results we continue to make tangible progress across all our main projects, while keeping a disciplined approach on the procurement front despite a still challenging environment. All of this confirms once again our ability to deliver on our commitment. At the same time, the broader energy transition continues to advance rapidly. The recent FER X and MACSE auctions have shown clear evidence of this progress with over 12 gigawatts of new renewable capacity awarded under the FER X scheme and 10 gigawatt hour of storage capacity contracted in the first MACSE auction, both at competitive prices well below the respective caps. These results confirm the market's strong momentum and the soundness of the regulatory framework supporting the transition. To conclude, we firmly confirm our full year 2025 guidance. We expect to achieve revenues of EUR 4.03 billion and EBITDA of EUR 2.7 billion and a net profit of EUR 1.08 billion. In terms of investment, the group has set a target of approximately EUR 3.4 billion for 2025. Thank you for your attention. We are now ready for the Q&A session. Stefano Gamberini: Thank you, Francesco. Now we are ready to start with the Q&A session. Francesco, we received many questions regarding the press rumor about potential sale of transmission grid stake. Could you comment about it? Francesco Beccali: Despite we do not use to comment on press rumors, let me be clear on this point. At current stage, this is not an option on our table. We constantly analyze all the possible instruments available to finance the development and maintenance of the National Transmission Grid and the results of these analysis are always reflected in the decision set out in Industrial Plan. In this sense, let me confirm what we have been stating since we presented the update of our plan back in March. Our CapEx plan to 2028 is fully sustainable under a financial standpoint. The upgrade of our rating to A- for Standard & Poor's and the revision of the outlook to positive from stable by Moody's registered in April are for further confirmation of our financial solidity. As of today, the range of flexibility tools we could evaluate are the remaining hybrid issuance capacity, which is worth more than EUR 2 million as well as seeking additional public contributions to strengthen the financial structure and considering options to valorize and monetize our nonregulated activities. Stefano Gamberini: Now move about output-based incentive. What is the number of OBIs accounted in the 9 months 2025? Is your expectation for the full year confirm? Francesco Beccali: In the 9 months revenues, there is no contribution coming from the output-based incentives related to dispatch and services market efficiency incentives. This will be recognized in the last quarter when we will have full visibility and certainty in line with the accounting principle. In the 9 months, we have instead registered EUR 16 million relative to the interest incentives. With reference to the full year, our expectations reflect the update in the performance estimated for 2025, which allow us to reach and possibly exceed the guidance already provided after the first quarter of 2025 of more than EUR 50 million of OBI's contribution. Stefano Gamberini: Thank you. Still about guidance. Why are you not increasing the guidance for full year despite you are already at around 80% on full year net income guidance? Francesco Beccali: Well, the strong results we registered in the first 9 months increased the visibility and the reliability of the guidance we communicated back in March. However, as I've just underlined in the previous answer, we still miss full visibility on some elements, such for example, dispatching incentives for which we need to wait the end of the year to determine the early performance with full certainty. Let me remind that this is the first year of the new dispatching incentive framework renewal. So all the incentives we will account for this in 2025, will depend on 2025 performance. Stefano Gamberini: Given our Resolution 440/2025 on interzonal incentives recognized to Terna, do you upgrade guidance on OBIs? Francesco Beccali: As we have already stated in the presentation, we wish to highlight that this around EUR 93 million of interzonal incentives improved the visibility on EUR 900 million guidance of total OBI for the 2024-2028 period. As we always reported, these interzonal incentives will be accounted for over 3 years, starting by next one. In the first half of 2025, we have already registered EUR 16 million of interzonal incentives recognized from previous years. We did not disclose the breakdown of our OBI guidance among the different mechanisms. However, let me remind you that the overall amount mostly refers to existing output-based incentive framework with a bigger contribution from the dispatching service and for a residual part relative to instead the ROSS Integrale schemes back loaded. Stefano Gamberini: Okay. Can you comment on the ROSS Integrale expected incentives and potential time line? Francesco Beccali: The last resolution published by ARERA basically confirms ARERA's focus on the need to incentivize companies to deliver strategic high-value energy infrastructure in an efficient way. ARERA allows companies to submit proposals for new reward-only output-based incentives as part of the business plan, which will be subject to the regulatory scrutiny and approval. We do not rule out the possibility the regulator will issue new incentives before the end of the current regulatory period. Stefano Gamberini: Okay. Now on data centers. Do you see any significant acceleration in data center projects? Francesco Beccali: In Italy, the connection request to the grid associated with the construction of data centers have experienced strong and continuous growth in recent years. As of the 31st of October of this year, the total high-voltage connection request reached approximately 64 gigawatt with around 378 active requests. Geographically, around 80% of connection requests are concentrated in northern parts of Italy, especially in Lombardy around Milan, confirming the region as the primary hub for data center development. For this reason, data center will represent one of the drivers together with the electrification of domestic consumption and electricity mobility, underlying the expected increase in power demand in future years. Stefano Gamberini: Now could you please provide an update of authorization and procurement status over Industrial Plan horizon? Francesco Beccali: Sure. The procurement process for our investments is progressing in line with Industrial Plan. Projects currently still in the authorization phase with expected completion beyond the plan horizon are not strategic and have a limited impact on total CapEx. The authorization processes for major projects planned after 2028 will be launched in due course. As of today, all our main HVDC projects included in the current plan, have received the necessary authorizations and around 92% of the projects in the plan have completed the approval process. Moreover, we are actively working to complete all the authorization procedures according to the planned implementation time line, both for 2030 and for the longer-term horizon towards 2024. On procurement, we are fully aware of the potential supply chain shortages and bottlenecks affecting the industry. To manage this risk, we have taken several steps to ensure continuity. Thanks in part to the support of Brugg Cables and Tamini transformers around 88% of 2024-'28 CapEx is already covered by existing procurement contracts, up from the 80% in March. Stefano Gamberini: Very well. Now moving to the working capital. Could you give a bit of color on the dynamics in 9 months '25 and your expectation for year-end working capital figure? Francesco Beccali: In the third quarter, the working capital and other item reports a decrease of about EUR 700 million compared to the end of 2024. This variation has a positive impact, obviously, on our cash flow. This result is mainly attributable on the one hand, to an increase of about EUR 390 million in net pass-through energy payables mainly due to higher debt from the essential plant for the security and electricity system, the so-called [indiscernible] and the capacity market, partially offset by higher credit from the cost of procurement of procuring resources on dispatching market services. On top of that, we have to take account of the increase in other net liabilities, essentially due to the increase in security deposits received from operators participating in the capacity market and the higher planned subsidies received from third parties. Then we also have to take into account the decrease of about EUR 156 million in the receivables resulting from regulated activities attributable to the collection of the previous year's dispatching market efficiency incentive, partially offset by the higher receivables attributable to the transmission revenues due to the tariff update set by ARERA Resolution 579 of 2024. Finally, this amount includes also the effect of the closing of the acquisition of high-voltage grid portion from Acea. Regarding working capital forecast for year-end, due to the ordinary seasonality, let me remind that we expect a significant reduction in working capital liabilities, pending payment resolutions from ARERA. Stefano Gamberini: Thank you. Finally, about regulation. When do you expect new Board of ARERA? Do you see any risk of ARERA changing approach towards the energy transition and thus support for investment in the electricity networks? Francesco Beccali: Well, as we always say, the rationale underlying the energy transition in Italy is very strong because it basically allows to reduce the dependence of the country from imported energy and commodities. The energy transition could not go ahead without investment and we play a central role in such process. We understand that the new Board of ARERA should be appointed before the end of the year, and we do not expect a significant change in ARERA's approach towards the energy transition. Law 481 establishes that commissioners must be choosing among people of outstanding competence. We are confident that what we mentioned -- we just mentioned represents good rationale to prevent regulatory risk. Stefano Gamberini: Many thanks, Francesco. Francesco Beccali: Thank you. Stefano Gamberini: So the Q&A section is now over. As always, the Investor Relations team is available to answer any follow-up questions you might have. Thank you, everybody, for your participation, and have a nice evening. Francesco Beccali: Thank you, everybody. Nice evening.
Peter Dietz: I'm happy to lead you through today's call in which we will be presenting our financial results for the third quarter and the first 9 months of '25. After the presentation, we invite you to submit your questions via the Zoom Q&A function. Joining me on the call today are our CEO, Tobias Wann; and for the first time, our new CFO, Hansjorg Muller. As usual, Tobias will begin with an update on strategic highlights and relevant business developments. Afterwards, Hansjorg will guide you through the financial results in more detail. And of course, we'll also provide an outlook and look forward to answering your questions at the end. And with that, over to our CEO, Tobias, who will give you an update on the world of tonies. Tobias Wann: Thank you, Peter, and a warm welcome also from my side. Thank you for joining our earnings call. Today, we are looking back on a quarter that was eventful and even historical for tonies because we opened a new chapter by launching Toniebox 2, our biggest innovation since introducing Toniebox 1 back in 2016. We've done so very successfully and by staying true to our mission. Across the world, we have strengthened our position as the largest audio platform for kids. With Toniebox 2, we are not only redefining how children grow through listening, touch and play, we're also unlocking additional growth potential for tonies with new audiences and use cases. We also reached another milestone in the third quarter documented on this slide. We sold our 10 million Toniebox. Fittingly, it was a Toniebox 2. Overall, Tonieboxes have been activated in more than 100 countries with over 134 million Tony sold. In the third quarter, we not only expanded our reach with 282 minutes, our average weekly play time also remained on a high level. This is an important KPI. It shows the positive impact our screen-free product has on families and it's highly relevant for our business as it underscores a deepened engagement with our platform. Let's now take a look at our Q3 in financial numbers. We had an exceptionally strong third quarter, and we are very satisfied with our performance in the first 9 months as well. Q3 was not only historical, but also highly successful. We increased revenues by more than 52%, growing our year-to-date performance by 33% or EUR 322 million on a group level. And I'm pleased that all markets contributed to this increase. In DACH, we recorded double-digit growth. After 9 months, revenue was up 16%. North America continued its strong momentum with 36% growth year-to-date. And in Rest of World, revenue surged 80% compared to the first 9 months in 2024. As I said, the launch of Toniebox 2 was a key driver behind this strong performance, also accelerating our annual performance. Our sequential growth from Q2 to Q3 was obviously supported by phase-in effects as the first Tonieboxes 2 hit the shelves in September. But our new core device has also hit the Spirits of the Times, generating significant momentum across markets. We have seen impact both from upgraders, so that's households already owning a Toniebox as well as first-time buyers of a Toniebox 2. So we are on a good trajectory to continue our long-term platform growth. And we are not only on track to reach our long-term, but also our midterm goals. With Toniebox 2 off to a good start and a strong Q3 business performance, we are pleased to confirm our full year guidance for financial year 2025. More on that later, but let me already state that this underscores our resilience in a challenging macro environment. In the next few minutes, I'll dive a little bit deeper into our business update for Q3. Our strong performance is the direct outcome of several major steps forward that we took over the past few months. Today, we look at some highlights. After a deep dive into the launch and early performance of Toniebox 2, we'll cover relevant developments in our major markets and exciting new partnership. And naturally, Hansjorg will introduce himself. And what I want to reiterate, not only have we worked to drive immediate results over the past month, we've also focused on preparing the road ahead. Therefore, we are well positioned to deliver another strong Q4. We'll be taking a look at that as well. But now let's dive in. Toniebox 2 is the champion, leading the next chapter of our platform and growth strategy. Most of you are very familiar with Toniebox 1. For over 9 years, it set the benchmark for creative screen-free play, earning the trust of families in over 100 countries. That has made us the global #1. And Toniebox 1 never became out of fashion. It was a huge success among different cohorts selling as well as or in most cases, even better than in the year before for nearly a decade. Toniebox 2 is built on this unique success story. It has everything that made Toniebox 1 highly popular. But with Toniebox 2, we are adding new use cases, enhanced features and even more immersive interactive experiences. At the same time, Toniebox 2 unlocks entirely new possibilities to shape and expand our business with new verticals in a broader age group. In a nutshell, we carry forward our legacy while setting the stage for a future with more imagination and more growth. Toniebox 2 is both continuing and enriching the experience millions of kids and families have fallen. At its heart, it's a screen-free audio-first experience. But with Toniebox 2, it's becoming even more engaging. tonies has always said right at the intersection of tech, toys and content. All of that still holds true, but now we are adding something new to the mix, gaming. Alongside Toniebox 2, we've introduced Tonieplay, a whole new expanding product category that brings interactive games and quizzes to our platform. This hands-on experience perfectly complements our successful audio offering. The combination of Toniebox 2 and Tonieplay will be a key driver of our growth going forward. Let me explain why. We are expanding our platform, driving growth across a much broader target group with entirely new growth vectors. We are reaching families earlier, engaging children for longer and creating more opportunities for cross-selling and ecosystem participation. This broader appeal increases our total addressable market and strengthens our long-term growth trajectory. Specifically, Toniebox 2 unlocks 3 key growth vectors. Growth vector #1 are younger children. For the first time, Toniebox 2 is certified for use by children 1 and up. We've developed new age-appropriate content like My First Tonies, allowing us to welcome families into the tonies ecosystem earlier and build more loyalty from the very start. Growth vector 2 is our core target. The 3 to 6 age group remains central. And with Toniebox 2, they benefit from enhanced features while the familiar tactile play experience is preserved. In established markets, this also creates a strong upgrade incentive for existing Toniebox families. Growth vector 3 are older kids. We are now offering formats and interactive games designed for children up to age 9 or even older. By activating these 3 growth vectors, Toniebox 2 enables us to attract users at an earlier age, engage with them more deeply and retain them for longer. This expands our installed base, increases customer lifetime value and opens new opportunities for licensing partnerships and recurring revenue. In summary, Toniebox 2 is a catalyst for the sustainable growth. While it's still early, we are already seeing some very encouraging signals from our global community that our strategy is resonating. Those who already love the Toniebox are embracing the next generation. Early data shows that around 40% of Toniebox 2 buyers at launch are upgraders from our current platform that is owners of Toniebox 1. As we approach the holiday season, we expect this share to shift with Toniebox 2 increasingly becoming the entry point for new families replacing Toniebox 1. It's also clear that parents recognize that Toniebox 2 is a great toy even for the very youngest children. If we only look at Toniebox 2 activators that did not own a Toniebox before, nearly 1 in 3 have 1-year-old kids at home. At the same time, we are seeing that Toniebox 2 is appealing to older children as well, thanks to Tonieplay. Let's look at the DACH market where our new device has been available since September, which provides us with a more solid database. There are 55% of all households with kids 5 years or older that activated the Toniebox 2 have played at least one of our new games. Yes, these are early indicators, but these figures show that the design of the platform is working as intended also because we made a concerted effort to showcase our innovation. To celebrate the launch of Toniebox 2, we hosted events in Berlin, London, New York, Paris and Sydney. Our aim was to connect directly with our communities, inspiring those who already love or who are just now discovering Tonies. Having witnessed the event in Berlin firsthand, I can tell you seeing the excitement of kids and parents interacting with Toniebox 2 is one of the best parts of my job. But that was not all because both in New York and Paris, Tonies was on full display on oversized billboards even after our launch events had ended. These billboards were part of our first truly global multimedia campaign to strengthen our global brand equity. Brand and mission visibility are essential to bring our story to more and more hearts and minds in households around. In addition to our own channel, we also saw global buzz across major news outlets, confirming we introduced the right product at the right time. In total, media coverage on the launch of Toniebox 2 generated over 1 billion impressions worldwide. We are building on this momentum and continue to see new levels of excitement and attention across the global media landscape and also in the broader tech community because less than 2 months after launch, Toniebox 2 already won an award. It's a great honor for us that our new core device was named as CES 2026 Best of Innovation Award winner by the Consumer Technology Association. Global buzz in the media and from peers is important to reach even more families. However, what matters most is that the product truly resonates with those who we created it. The feedback from our community is what drives me and the team every day. The numbers speak for themselves. We are seeing a strong 4.6 average rating, nearly 9 in 10 users would recommend Toniebox 2 to a friend. And the volume of online conversations about Tonies has surged dramatically. But it's not only the sheer number, the sentiment is also overwhelmingly favorable. Parents tell us their children are absolutely loving the TB2 experience from its foundational promise of screen-free time to particular new features such as Tonieplay or the sleep timer. In true Tonies fashion, we even listened to our community and in turn, we've delivered to quote one of our customers, a really well-designed product. For us, this is fascinating feedback, but first and foremost, a source for inspiration to do even better. The launch was about making a strong first impression. And we've done exactly that by ensuring that families everywhere know about Toniebox 2 by creating excitement and by earning our customers' trust. Now the holiday season is about activating our platform at scale and turning that strong first impression into growth. We are entering the holidays with strong foundations, high demand and a platform that's already -- that's ready to perform. And this is particularly true for North America, where our Toniebox has been available for not even 6 weeks now. North America is a key engine for our growth, and we are fully prepared to keep the momentum going. We've secured exceptional visibility. In over 1,500 American Target stores, we are prominently placed with 12 feet of shelf space. Quite literally, no shopper can miss us. Tonies will be front and center this year for families as they browse for gifts. The same is true at Walmart, where over the past year, we've moved from the electronic section to the toy section. Our presence at our retail partners even goes beyond the shelves. We are honored to be featured in Walmart's holiday season video and TV spot alongside household brands like Apple and Nespresso. And here, maybe we can roll the video real quick, Peter? [Presentation] Thanks, Peter. Let's be very clear, this is no paid partnership. Walmart chose us putting our brand in the spotlight during the most important time of the year. With these and more initiatives in place, we are set to drive continued awareness, engagement and sales in North America as we close out the year. Another key to our portfolio's success are local heroes. That's also true for the U.S. A prime example for our ability to secure the hottest licensing content is the Ms. Rachel Tonie. Here's an example. With its launch, our approach and instincts were clearly validated again. Ms. Rachel is a true social media superstar in the U.S. with over 13 billion views and more than 17 million subscribers on YouTube. The response to launching a Tonies with her has been overwhelming. Restock sold out within just 1 single day and almost 130,000 customers signed up for back-in-stock e-mail notifications. The Ms. Rachel Tonie has enabled us to expand into new customer segments, especially households with kids between 1 and 3 years old. This clearly demonstrates how much of an impact securing the most relevant and authentic licenses has for the North American market. And we're moving on to DACH, which is not only our home, but also our continued growth market for Tonies. This year, we are up 16% revenue year-to-date, which shows just how much trust and excitement there is for Tonies in Germany, Austria and Switzerland. Our brand is as hot as ever. 82% aided brand awareness is a fantastic achievement. In addition, we are seeing encouraging feedback from retailers who are eager to promote the Toniebox 2 and their point of sale prominently as shown by the photo in the bottom right. And one recent example for this are our Christmas Tonies. The hype was real before Santa could even think about settling up his rain deer. Our Christmas Tonies have been flying off the shelves with sales doubling compared to last year. And our advent calendar sold out again in just a few hours. And we are not standing still on the channel side either, whether people prefer buying Tonies on the street or on social media, we are there. Turning to a strategic lever that is relevant not only in DACH but globally, partnerships. With Toniebox 2, we set up our platform to be more open than ever to partnerships also now in gaming. One area where we see special potential is bringing globally recognized brands and characters into the world of Tonies. For our partners, this is attractive because in turn, we are introducing the Tonies community to these brands, creating a win-win-win situation for families, for our partners and for us. In the past few weeks, we've taken a major leap forward into our partnership strategy, expanding our collaboration with Hasbro to Tonieplay. In the second quarter of 2026, we'll introduce 3 iconic Hasbro board games, including Monopoly in brand and new audio-first Tonieplay formats that only our platform can deliver. It's a perfect match, 2 trusted brands coming together to unlock new worlds of discovery, connection and joy for families everywhere. With that, I'll now hand over to Hansjorg, who will take you through our financials. Hansjorg, I'm very happy to have you on the earnings call for the very first time today, take it away. Hansjorg Muller: Thank you, Tobias. Excited to be here. Let me take a moment and briefly introduce myself to the ones who haven't had the chance to connect with me yet. I joined tonies as CFO on September 1. Prior to that and for more than 25 years, I held leadership roles in finance, strategy and operations across various global markets. Most recently, I was CFO of Netflix's APAC business. My positions before included roles at Electronic Arts and Procter & Gamble. In other words, I think I both know entertainment and digital platforms and business models as well as what it takes to bring a physical product to the shelf and the homes of consumers and customers while driving profitable growth. tonies is a special company with fantastic global growth potential. My first 2 months have been super inspiring. I've already had the opportunity to meet many of you and engage in valuable dialogue about the company's strategy and outlook. The openness that I've encountered in our discussions so far have really impressed me. So I'm super excited about what lies ahead and look forward to working closely with you as we continue to deliver our growth ambitions. Please do know, my door is always open for direct conversations and closing exchange. So please don't hesitate to reach out to me at any time. But with that, let's move directly into our results. Looking at our year-to-date performance, we've delivered strong growth across all markets from 16% to 80%, depending on market, a stellar result. For this, together with pulling off the Toniebox 2 launch, a big congrats to our teams. Our growth momentum has picked up considerably in Q3. As Tobias said, this was partly due to phasing effects as we prepared retail partners for the Toniebox 2 launch, obviously, already way before we introduced it to the broader market. This affected the DACH market in particular. Our 9 months revenues came in at EUR 322 million in constant currency, an increase of 33%. In DACH, we're continuing our usual double-digit growth track as we showed in full year 2024. And both North America and Rest of World performed strongly, too. Two other things I'd like to highlight here. First, on top line growth. We anticipated the strong phase-in in Q3. And as a result, our full year guidance remains unchanged. And second, regarding our market split. For us, it's really important to grow globally. So an important KPI here is our share of international revenues, those outside of DACH. And we're pleased to see that we continue to gain momentum here with an increase of 6 percentage points year-over-year to 59%. This confirms our international expansion strategy works, where we grow significantly ahead of the still double-digit growing DACH market. Overall, we're seeing a very healthy balance of growth across all regions with international markets clearly making up the majority of our business. Looking at the category split year-to-date on this slide, you remember -- you might remember that we saw a somewhat skewed mix in half 1 of the year due to the anticipated launch of Toniebox 2 and Tonieplay. The share of Tonieboxes sold at the time reduced a bit year-on-year simply because the launch created that temporary shift in sales patterns, which we already explained in August. In Q3, we've now seen that normalization as expected. And for year-to-date, we're back to our usual seasonality pattern. I'd also like to point out the performance of the Tonies category here, where we have seen a 36% year-over-year growth in revenues in constant currency, resulting a slight increase in overall share of the business. That is now developing exactly as we expected and how we want it to be. This disproportionate growth is the result of the successful extension of our portfolio. So particularly fueled by new products such as Tonieplay, Book Tonies, My First Tonies as well as the milestone launches like Tobias mentioned, Ms. Rachel or the Christmas Tonies. So in short, after some temporary shifts earlier in the year, our year-to-date overview shows that Q3 brought us back to our usual healthy balance with continued momentum coming from our growing content portfolio. So, picking up from what I just shared regarding our 9 months figures, let's zoom in on Q3 because this quarter really stands out. Looking at these growth numbers, you can clearly see how much momentum we had in the third quarter. Q3 was exceptionally strong across every region, every new product category helped us reach a new level of growth. And while it's fantastic to present such a performance in my first earnings call, it is an exceptional benchmark. It was partly driven by phasing effects, as mentioned earlier. But for now, it's great to see such a strong performance driven by our latest innovations and the excitement that they have created in the market. Now let's come back to something we've spent a lot of time on in our last call, how we're handling unpredictable macro effects, especially around U.S. tariffs. But today, we can say with confidence, we've got clarity for 2025. But more so, we've done our part to become more resilient. We have now sourcing flexibility across both figurines and box manufacturing, the latter of which we bolstered this year by opening a new production site in Vietnam already in April. Also in regards to foreign currency, we're in a good place, even with our international business growing because we are naturally hedged via our supply chain and other expenses. When it comes to consumer sentiment, our business model continues to prove resilient. We're seeing healthy demand, strong pricing power and support from our partners as we head into Q4. So I'm glad that resilience is something that's showing up in the numbers and how we're able to move forward largely unaffected by what's happening around us. Let me hand back to Tobias now, who will present our outlook for the full year. Tobias Wann: Thanks, Hansjorg. Building on the resilience we just talked about, you won't be surprised that this closing section in which we present our guidance is without surprises. And I say this with confidence also for us, the most important time is now. Traditionally, Q4 makes up close to half of our annual revenues with the holiday season and special commercial moments such as Black Friday and Cyber Monday being key to our performance. This year is no different despite some intra-year phasing effects that are quite natural when you have such a big launch as ours. Something that also hasn't changed is the fact that we are approaching high season, well prepared. Over the past years, we have learned to deliver at scale consistently recording more than 45% of our full year revenues between October and December. With 53% of our revenue target already in the books after 9 months, we are well on track to achieve our guidance and finish the year on a high note again. And as a result, we are reiterating our full year guidance for 2025. Profitable growth continues to be at the core of our story. We expect group revenue to grow by more than 25% this year in constant currency, taking us above EUR 600 million, with North America set to deliver over 30% growth in constant currency. For our adjusted EBITDA margin, we are guiding in a range of 6.5% to 8.5%. 2025 is shaping up to be another great year for Tonies. We are confident in our momentum and are well positioned to deliver strong profitable growth yet again. And with that being said, we are now happy and ready to take your questions. Peter Dietz: Thank you, Tobias. Let us now begin with the Q&A session. As a reminder, if you have any questions, please post in via the Zoom Q&A function and as I've seen, some of you already did. So, let's jump into the first question which we already received. Could you calibrate the Q3 growth rate versus the full year guidance? Does this mean that you will increase your guidance in the weeks to come? Tobias Wann: Happy to take this one. So, I hope it became also clear throughout the presentation. We have no plans to change our existing guidance for the year. And as communicated before, all impacts from TB2 tariffs and everything are already included in our guidance. I want to reiterate, Q3 was exceptionally good due to phasing effects from the TB2 launch and substantial retail preorders, especially in September. Q4 will be, for sure, again, our best quarter of the year with almost 50% of revenue share. We have always delivered on our promises since the IPO in 2021, and we are confident that this is going to be another successful year for tonies. Let me put it this way. Peter Dietz: Thanks, Tobias. The next question is an interesting one. Can you please give us a first indication regarding your expectations for '26? Will the growth dynamics be comparable to '25? Tobias Wann: Yes, it's a great question. But let's be clear, at this very moment, it's too early to provide you with any details regarding expectations for 2026. But I would like to frame this a bit because I'm getting this question a lot, and I can understand it. We have a very large and growing sticky installed base. And we have a resilient, highly scalable business model. So, we are absolutely confident that next year will be another year with substantial growth and higher profitability. So, we are not changing anything to our business. And that said, I think you and I, we wouldn't expect anything different there. So, I think what I want you to take home, we have all ingredients for a successful and exciting year ahead. We have an exciting innovation pipeline. Some of the elements we have already announced today, others will be announced later and next year, and I am personally very excited about that. We have a continued strong momentum in all our geographies. And as I said, we have a really, really, really good business model. So, we will give a detailed outlook for 2026 for sure, when we do our financial year 2025 review on April 14. And then I think also something you should put in your calendars at least pencil it in for Q2 next year, we are planning a Capital Markets Day. And during that Capital Markets Day, we will provide more details about the growth potentials, not only for '26 then, but also for all the years to come. Peter Dietz: Okay. Thanks. I hope that covers everything. I think we have the first question for Hansjorg now, and we can split it in 3 parts. So, how was your profitability in the first 9 months? That's the first part. And how do you think about EBITDA margin guidance now the tariff impacts are clear. And there's already a follow-up question in there. What will free cash flow be? So, Hansjorg, the floor is yours. Hansjorg Muller: Thanks, Peter. That's 3 questions for me. Thank you. Happy to take them. So, profitability year-to-date, I think you're aware, we don't provide information regarding profitability in our Q1 and Q3 announcements. But you have seen that we've been profitable for half of -- first half of 2025 on a comparable level to the prior year. And we are happy how this is developing further in Q3. We have -- also need to add, we do have a special year with the launch of Toniebox 2 and equally tariffs. But despite this tariff uncertainty at the beginning of the year, we have shown that we've managed the business with foresight. So, I mentioned previously, Vietnam production. And we have a toolkit at hand that now allows us to navigate this macro environment. And now thanks to the, call it, calmer environment with regards to tariffs, we believe we have sufficient clarity on our profitability for the remainder of the year, and that's why we are confirming our guidance, as I said before. So, coming out of these 9 months with strong confidence to achieve the guided adjusted EBITDA margin between 6.5% and 8.5% in fiscal 2025. And you had a question about cash flow. We don't guide or comment on free cash flow. But what I can say, positive free cash flow is inherent in our business model. And but then also second, given we operate this year in a broader inventory environment due to the launch, right? We're launching a new box. We're expanding the portfolio, and we're growing strongly plus the volatile macro environment, we've decided for more safety in terms of a higher inventory. So this will affect our free cash flow in this period. But we are confident for structurally strong cash flow generation in the years to come. And again, this year's decision, growth -- weighing growth decisions are of strategic nature to support our content and product expansion. I hope that clarifies? Peter Dietz: Thanks, Hansjorg. A different topic regarding the partnerships. Can you quantify your expectations for the extended partnership with Hasbro? When can we see the first impacts? Tobias Wann: I can't and I don't want to quantify them. I can share again my excitement, but I hope you understand that we cannot provide detailed figures for individual partnerships. But it's -- let me take this question as an opportunity to explain again how important partnerships like this one with Hasbro are for us. They are part of a multiyear portfolio and product planning strategy that we clearly have, but they are also clearly fueling our growth and our relevance as a brand in the next coming months and years. And this is because we are building a very -- continue to building a very diverse and engaging content with very interactive formats, both, by the way, in licensed and owned and now for children aged from 1 to 9 and even older. And I think I said this a couple of times, the partnership with Hasbro is a great example, and it's also one I personally find very, very exciting because I do like the games that we are going to tonify in 2026. We see a lot of economic potential clearly. But another thing that is important to me and also for my team is the fact that we are now also moving on the family table with the Toniebox and families, friends sitting around the Toniebox, playing with the Toniebox, multiplayer mode, single player mode, this is a complete new thing for us, and this is exciting, and I can't wait for this to happen. Peter Dietz: Okay. Thanks. One regarding the TB2 feedback. How do you assess customer feedback on TB2 so far? What do you say about the negative feedback related to TB2 launch one can find on the social media at some places? Tobias Wann: So, I mean, I've shared the numbers with you. The feedback on TB2 and Tonieplay has been overwhelmingly positive. It's nothing we are making up here. These are pure true numbers. So both, by the way, from consumers as well, importantly for us as well, from retailers, and you saw media as well. So the reviews that we are seeing are very promising. The sentiment that we are measuring is clearly on our side, by the way, both from upgraders as well as new joiners into the Tonies ecosystem. So, the first learnings we take from that is that we have, I think, done an excellent job to launch a flagship product that takes everything that's been great about our previous Toniebox 1 and improves it in many ways. Also very important, the play extension and with it, obviously, with Tonieplay and all the technical improvements we have done, sound quality, design, haptics, that's something I'm really, really proud about and also what the team has done here over the last couple of years. There's an important technical feature that excites me a lot, and I think, I guess, also a lot of you, we are going to take over-the-air updates in the future to continuously make the product better. So, this is already a fantastic product, has a lot of positive consumer sentiment and reception, but we are continuously working on new features, new exciting things that we are then going to launch over the next couple of weeks, months, even years to increase the interactivity of Toniebox 2. And yes, there is here and there also feedback that we are taking close to our heart that we want to continue and want to improve the box in its experience. There's one thing I want to take this opportunity because I've heard it so many times, the cable that is included with TB 2 and it's actually also the #1 critics, if you read it online, is very, very short. But no, we are not saving money on cable length. This is a regulatory requirement for the box to be 1 plus certified. And if we would have actually had a longer cable, we would have not gotten this 1 plus certification. We have probably -- we can improve the communication about this and explain to our consumers why the cable link is as it is, but it is certainly nothing we have done to save money or, yes, create frustration. So, for almost all of the feedback points, we are very confident that we will have solutions or that we are communicating better on it. The overall sentiment, the overall reception of Toniebox 2 and Tonieplay was absolutely overwhelmingly positive. Peter Dietz: Okay. One regarding consumer sentiment. How sustainable is the current demand trend into Q4? Are you seeing any changes in consumer sentiment in your core markets? Tobias Wann: So, I think I said it in the presentation, our business model proves continuously to be very, very resilient. And that also obviously speaks to the way we look at consumer sentiment. We are seeing very healthy demand. But then there's a second data point that you all know that we have that is important to us and that we measure very, very closely that is activation data. So, the number of Tonies and boxes that are being activated. And year-to-date, we are seeing very encouraging patterns. So, that is a good signal and a continued forward-looking signal also for us about consumer sentiment. And apart from that, as you've seen this year, again, we have very strong pricing power, and we have support from our partners, retailers and also our marketplace partners as we head into Q4. So, I'm personally really glad that this resilience is something that is showing up in the numbers that I've just presented today and Hansjorg have presented today. And we are currently unaffected by consumer sentiment, and we are walking into Q4 with a high level of confidence. Peter Dietz: We received 2 more questions for Hansjorg, I think. One is, you're talking about phasing for Q3, but this should only be true for the boxes. Why you think the figurines and accessors are so strong? Hansjorg Muller: Yes. Thanks for the question. I think the way to think about this is the fact with the launch of Toniebox 2, we launched into a whole new category, right? Toniebox 2 comes with play, which is the attach to Toniebox 2. And with that, there is a significant phasing, namely all the games that come in the Tonies category. So, that's the phasing part. But of course, we also have organic growth, so to say, in that category from the products that I mentioned earlier that contribute to that 36% year-over-year growth in the Tonies category. Peter Dietz: And another typical CFO question, I guess, can you break down the content licensing costs for figurines in Q3? And are there new licensing agreements that could materially increase costs in '25 or for the rest of '25, I suppose? Hansjorg Muller: Yes. Breaking it down would probably go into a lot of detail. But at a high level, there is typically 2 licenses, one is for the figurine, one is for the audio for the content. And for the new formats, that is very similar for Tonieplay. But you can assume that we negotiate with our partners for new or rates for new products that will match or come in at similar levels versus where we're coming from. So, I wouldn't expect any distortions or significant volatility. Now having said that, licensing cost ratio always depends a bit on our product mix as we've seen historically, but it's hovering around a very stable ratio. Peter Dietz: Okay. How sustainable is the Q3 growth run rate? What would be a sustainable growth rate in the coming quarters, indication on current trading would be helpful. Tobias Wann: I'm happy to take that. I think Hansjorg has spoken to it, and we have touched this in the presentation a couple of times. If you look at Q3 in isolation, clearly, the growth rate is influenced by the seasonal shifts we have seen due to the TB2 launch. And then that makes it clear, therefore, it is unique. We have guided a full year growth rate, and this should give you an indication for Q3. Peter Dietz: Another one for Tobias, which product categories do you still want to penetrate? And what R&D costs are expected in Q4 and in '26? Tobias Wann: I hope you understand I'm not going to explain our product road map to the public. There are many things that we are working on that creates a lot of excitement. And I think those of you who know me, they also -- you also can confirm that I personally stand for acceleration of our innovation speed. There's a lot more and sooner than obviously waiting another 9 years that I want to achieve with the team. I'm personally extremely excited. I can tell you that for what it's coming in '26, in '27 and '28, and I think probably the best way to look at this is and building some excitement, hopefully, with you is the Capital Markets Day because that is a good opportunity for us to also look into a bit of a broader strategy that holds for a couple more years. Peter Dietz: Okay. As I can see, we have 3 more questions at the moment. One is regarding the Rest of World development. In Rest of World, we saw significant growth in Q3. You mentioned better product accessibility as the main driver. How do you achieve better product accessibility in those regions? Tobias Wann: Product accessibility. So, I think if you look at the growth in Rest of World in every market, it's sustained by scaling our operations and the installed base, right? So, what we are doing is we are expanding the channel. We have more retailers, more doors, more shelf space and then all results in more velocity at the point of sales. And we have product expansion, right? So, we have above-the-box product expansion that continuous innovation, and we presented a few over the last couple of earnings calls. So, I mentioned pocket Tonies before. So that's Clever Tonies and Book Tonies, I mentioned My First Tonies. There's a lot happening and continues to happen on above-the-box innovation as we call it. And now obviously, with Toniebox 2, there is also innovation that is happening at the box level. And as I said, there is clearly also our desire to continue working on innovation like that. And if you combine all these things in this recipe, there is continued accessibility in all region, not only in rest of world. Peter Dietz: Okay. Thanks. We have a question from an investor who also seems to be a customer of us. As a parent, I'm excited about Toniebox 2 and plan to upgrade. From an investor perspective, could you clarify whether Toniebox 2 includes any design or manufacturing changes that are expected to reduce unit production or maintenance costs and thereby improve gross margin or operating profit? Tobias Wann: Hansjorg, do you want to take that one? Hansjorg Muller: Happy to take that, and thank you for considering to upgrade. I'm also a parent and I have upgraded. I think we have talked to this to an extent at the TB2 call. We currently do not plan with improvement in margins for this year. We rather plan with directionally similar levels as with TB1. Of course, we're working on initiatives to continuously improve our bottom line through product levers, design-to-value levers as we've shown in the past years, and we're good at it. But right now, we're not able to comment further details on that. Peter Dietz: Okay. Here's the one related to the revenue share of TB1 and TB 2. How does it compare between the 2 Tonieboxes? How does the share of each Toniebox looks like? And what could be the rough steady-state estimate for '26? Hansjorg Muller: Yes, happy to take that one, too. But a simple answer, please understand we're not breaking out this detail at the highest level or simply said TB2 replaces TB1. Peter Dietz: That was quick. Another follow-up to the free cash flow question we already received. Can you explain what free cash flow you think tonies can achieve in Q4? Tobias Wann: Hansjorg? Hansjorg Muller: We're not providing a free cash flow guidance, as you know, as mentioned before. And then, yes, I can add 2025 is marked by high investments, right, associated with the market launch of TB2 and Tonieplay. We're expanding our portfolio. So, the strong figure that we showed in 2024 is maybe not the exact or the right comparison. But as I mentioned before, we are confident to deliver sustainable positive cash flow in the years to come as we are able to deliver on our substantial growth potentials our business model has. So free positive cash flow is inherent in the business model, but now we manage growth and product and category expansion first. Peter Dietz: Okay. And I think we're coming to the last question we received, and this could be a question I have sent in because I'm most interested in this one. How likely is [ SDAX ] inclusion in '26? Tobias Wann: Happy to take this one. And I'm interested in this one as well. I'm following this personally. But I have to tell you, it's difficult to answer. All of you know how it works. There are clear criteria for companies to be included in SDAX. We do qualify from -- clearly qualify from a market cap perspective. Turnover rate is the other important criteria. And based on the trading in the past few months, I would say it's increasingly likely. But I cannot predict this. And so, I would probably recommend you do your own calculation and your own estimations and follow it, and then we'll look at it again early 2026. Peter Dietz: Okay. Since there is no other follow-up question, this concludes and wraps up our Q&A session. And as far as I have the microphone already, I continue a bit. And this is maybe also helpful for the inclusion into the SDAX in the weeks and months to come. So, it shows you a bit what we plan to do in the weeks and in the next quarter. The first glance on our financial calendar for '26 and the next official announcement date will be, as in the last years, we already did this the same way. We have scheduled the communication of Tonies preliminary results for beginning of February. And before that, we will be on the road with roadshows and conferences. We provide the presentation anyway on our web page or it's already on our web page, so you can check yourself. And if you are available around in the cities mentioned here, we would be happy to meet you personally. So, please ask the accompanying bank or the [ Ion ] Capital Forum will be a big one end of November to show up yourself. And we will continue this with the auto conference in Lyon and another big conference in Frankfurt. So, we're happy to meet you there and continue the conversation and whenever feel free to contact us for any additional questions you have following this conference call. And now we come to the end, as usual, with the key takeaways of Tobias, and over to you. Tobias Wann: Thank you, Peter. Maybe before I get to the wrap-up, I just want to -- thank you again for the great questions we got from you today. I also realize we didn't get to all the questions. We actually received quite a lot, which I appreciate. But maybe that's also a great connection to what you just said, Peter. If you are in one of the conferences, please make sure that you ask the question again, and we are very, very happy to answer them. Of course, you can always also reach out to Peter and our Investor Relation team, and we'll make sure that we follow up after the call. Okay. Let me briefly state the 5 key takeaways that have defined our performance so far this year and obviously also set the stage for Q4 and beyond. First, looking at our results year-to-date, we delivered strong growth across all markets with a truly exceptional Q3. The launch of Toniebox 2 drove growth and our footprint continues to expand. Our strategy is working, and we can deliver growth even under uncertain macroeconomic circumstances. This is important. Second, Toniebox 2 is a fantastic launch success. Let me be very, very clear here. It was important to land our biggest innovation to date, and we did. We are already seeing the first traction along our planned growth vectors that I explained and the product resonates with families, the momentum is real. Third, we are heading into the most important time of the year, well prepared and with confidence. Our team is ready to deliver powered by the strong feedback Toniebox 2 has received. Fourth, just like Tonies, our leadership team is stronger than ever. With Ginny, Christoph, Hansjorg on board, we have a group anchored in both Germany and the U.S., combining global experience, deep functional expertise and a shared commitment to driving Tonies next chapter. And finally, we are well positioned for '26 and beyond. Our new platform around the Toniebox 2 ecosystem sets us up for continued profitable growth and long-term success. I'm proud of what the team has achieved, and I'm excited for the crucial final stretch of the year, as well as for everything that lies ahead for Tonies next year, this year, even today because today is going to be an amazing day. Peter? [Presentation] Thank you, Snoop. A fantastic partnership we are really, really enjoying. So, I sincerely hope that you all have an amazing day, and I thank you for your continued interest, your trust and for joining us today. Take care. Bye-bye.
Operator: Good morning all, and thank you for joining us on today's Bioceres Crop Solutions Fiscal First Quarter 2026 Financial and Operational Results. My name is Drew, and I'll be the operator on the call today. [Operator Instructions] With that, it's my pleasure to hand over to Paula Savanti, Head of Investor Relations, to begin. Please go ahead when you're ready. Paula Savanti: Thank you. Good morning, and welcome, everybody, to Bioceres Crop Solutions Fiscal First Quarter 2026 Earnings Conference Call. Our prepared remarks today will be led by our Chief Executive Officer, Federico Trucco; myself as Head of Investor Relations. Both of us as well as will be available for the Q&A session afterwards. We're also joined in today's call by our General Counsel, Jose Roque. During this call, we will make forward-looking statements. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. I refer you to the forward-looking statements section of the earnings release and presentation as well as the recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed circumstances. In today's presentation, we will be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP measures can be found in our earnings press release. This conference call is being webcast and the link is available at our Investor Relations website. It is now my pleasure to turn the call over to Federico. Federico Trucco: Thanks, Paula, and good morning to everyone. Thank you for joining us today. Please turn to Slide #3 for an overview of the highlights of our first fiscal quarter. Despite the drop in revenues in the quarter compared to the year ago numbers, gross profit remained almost equal at $36 million with a gross margin expansion of 650 basis points. This shows how the seed business model transition as well as a lower emphasis on opportunistic third-party product sales are resulting in a similar aggregated gross profit at a much lower working capital expense. In fact, we have seen a sequential improvement in working capital despite the first quarter's seasonally high needs as we'll discuss in a minute. On the cost front, we continue to see the results of our cost reduction initiatives as well as business model transition with both variable and fixed SG&A declining significantly, resulting in meaningful improvements in operating profits and adjusted EBITDA. Please turn to the next slide. This quarter reflects clear progress on the priorities we set for the year, improve the quality of our revenues, protect margins and operate with discipline, while we continue to pursue our core purpose, which is to enable a better, still highly productive agriculture. This slide shows the 3 main KPIs that we'll track throughout the year. In our last call, we committed to operating above the 40% gross margin level, getting closer to 4 months of working capital in terms of annual sales and targeting profitability above 20% of adjusted EBITDA over sales, for which we needed not only to expand margins as we are doing, but also to reduce costs, targeting a $10 million to $12 million reduction in annual SG&A. As you can see in the numbers here, we have operated well above the gross margin limit we established for ourselves, doubled our percent adjusted EBITDA compared to that of fiscal year '25 and already got to the same level, 17% that we achieved in fiscal '24. We have done this while remaining close to our working capital target of 4 months in a seasonally demanding quarter. One important highlight is our SG&A improvement. Both variable and fixed SG&A have improved significantly, achieving 50% of our top of the range expected annualized savings in just 1 quarter. I will now pass on the call to Paula for a more in-depth analysis of these and other aspects of our financial performance. Paula? Paula Savanti: Thank you, Federico. Let's look at the financial results for the quarter. Please turn to Slide 5, starting with revenues. Total revenues for the quarter were $77.5 million, a 17% decline versus the same period last year. The decline reflects to a large degree, the strategy communicated in previous quarters, transitioning our seed business toward a more scalable and capital-efficient model and deprioritizing lower-margin working capital-intensive sales. Results were also shaped by sales timing effects in some Latin American countries, particularly Uruguay and an uneven recovery in Argentina. Looking at performance by segment, most of the reduction came from Crop Protection and Seed and Integrated Products. Crop Protection revenues were $39.9 million, a 16% decline with respect to the same quarter last year. This decline is explained by still sluggish demand in Argentina, where while there are generally signs of normalization compared to an unusually weak prior year, tight credit conditions and uncertainty ahead of the midterm elections that were held in late October implied that normalization was slower to materialize despite favorable weather and planting conditions. Outside Argentina, lower sales of bioprotection products in the U.S. and adjuvants in Brazil also weighed in on segment results, reflecting timing of sales that is expected to even out over the coming quarters. In Seed and Integrated Products, revenues were $12.6 million, a 37% decline compared to last year. This performance is an expected outcome from the unwinding of the HB4 downstream program. We expect this revenue decline in seeds to continue for at least 2 more quarters as we compare against quarters where seeds inventory was being sold off. While this transition is temporarily lowers revenue recognition, it improves working capital and supports a more profitable business model going forward. Finally, in Crop Nutrition, revenues were $25.1 million, broadly in line with last year. Within this segment, higher biostimulant sales in Argentina and Brazil were offset by weaker fertilizer dynamics. In contrast to the past year, demand for micro-beaded fertilizers improved in Argentina, particularly in terms of volumes, supported by strong corn planting intentions. But there were delayed purchases in Paraguay and Uruguay that offset these gains and resulted in a modest 2% year-over-year decline for the segment. Let's move on to the next slide to look at profitability. Gross profit for the quarter was $36.2 million, a decrease of 3% year-over-year, much smaller than the decline in revenues, reflecting improved product mix and margin expansion. As Federico mentioned, gross margin expanded significantly this quarter at 47% versus 40% in the same quarter last year. Looking at this by segment. In Crop Protection, gross profit was $17.6 million, a 5% decrease with respect to last year, with gross margin improving from 39% to 44%. This reflects a more favorable product mix within the portfolio, where there were stronger contributions from adjuvant and bioprotection products as well as efficiency gains that reduced unit costs in products such as adjuvants. In Seed and Integrated Products, gross profit was $7.5 million, slightly higher than last year despite the lower revenue. Segment margin expanded substantially from 36% to 60% as very low-margin seed sales were nearly phased out and higher-margin seed treatment packs represented a greater share of total segment sales. Margins on these packs also expanded during the quarter, further lifting profitability. Finally, gross profit in Crop Nutrition was $11.1 million, a 6% decline with respect to last year, with gross margin decreasing from 46% to 44%. Margin compression resulted mainly from competitive pricing in fertilizers in Argentina, where sales volumes increased, but market prices declined. In addition, revenues under the Syngenta agreement included a higher proportion from the supply agreement relative to the profit sharing agreement. Increased products supplied to Syngenta typically precedes revenue recognition under the profit sharing agreement, creating some quarterly lumpiness that evens out on an annual basis. Please turn to the next slide to look at EBITDA. Adjusted EBITDA for the quarter was $13.6 million, a 61% increase compared to $8.5 million in the same period last year, reflecting a material improvement in operating performance. The increase was largely driven by the $5.9 million reduction in operating costs described earlier by Federico. Joint venture results also contributed positively, adding $0.9 million as the fertilizer business began to recover from prior quarter's weakness. Gross margin expansion further supported the results with the contribution from gross profit only $1.1 million lower despite a much larger decline in revenues. Finally, let's turn to the next slide to review our balance sheet, cash position and a brief update on the debt situation. For that, I will hand the call back to Federico. Federico Trucco: Thanks, Paula. As of September 30, 2026 (sic) [ 2025 ], total financial debt stood at $242.5 million, down from $260.2 million at the end of the previous quarter, mainly due to the repayment of working capital loans in Argentina. As we have disclosed in our 6-K filings of October 2 and yesterday, we are undergoing a dispute with holders of our secured convertible and nonconvertible notes. As a result, we've decided to show the noncurrent portion of that debt as current as well as include the prepayment fees that would be owed under an acceleration event. Consequently, current debt totaled $188.7 million, of which $103.6 million are classified as accelerated debt, including $7.4 million of additional costs related to the acceleration process. The company disputes the allegation made by our noteholders and intends to vigorously defend its position. Importantly, all principal and interest payments remain current. Cash, cash equivalents and short-term investments totaled $16.6 million, resulting in net financial debt of $225.9 million, essentially flat versus the prior quarter. The net debt to adjusted EBITDA ratio improved to 6.8x. We continue to actively manage liquidity and debt maturities, maintaining constructive dialogue with lenders and prioritizing financial flexibility and disciplined capital allocation. To wrap up, we are operating in a complex environment, but we continue to execute with discipline and focus on the fundamentals we control, profitability, liquidity and capital efficiency. We believe these actions are building a stronger and more resilient company over time. With that, let's open for Q&A. Operator: [Operator Instructions] Our first question comes from the line of Austin Moeller from Canaccord. Austin Moeller: So just my first question here. There's been some discussion of higher beef imports to the U.S. from Argentina. And now that the election is over, is there any potential for either raw crops or inputs like fertilizers and pesticides to be imported from Argentina into the U.S., which would either create demand for your farmers or for you? Federico Trucco: We've seen sort of the news as well and beef production, milk production in Argentina are booming currently. So profitability is probably at an all-time high. I think the news about U.S. imports or exports from Argentina to the U.S. are obviously further fortifying that process. In terms of ag inputs, I think also that Argentina being classified on the low tariff end, if you will, on the current trade situation is a benefit to us when we are trying to serve that market from Argentine-manufactured ag input products. Remember that we also hold manufacturing capacity in the U.S. So we are manufacturing most of our bioprotection solutions in-country in the U.S. So that has also been beneficial for us in addressing that particular market. Austin Moeller: Okay. And the previous quarter, we had discussed that the company expected some Corteva sales of biopesticides into Europe would likely fall into Q1. How is that playing out with relative to what you expected? Federico Trucco: So we currently don't have bioprotection products registered in Europe. What we do have is the biostimulant package where Corteva is our main customer in Europe. And we've basically historically had a very significant contribution from Europe in the last quarter of each fiscal year, which we didn't see last quarter and we have only achieved some marginal sales of biostimulants in Europe in the current quarter. I think most of the biostimulant improvement has been in Argentina and Latin America, as Paula alluded to in the call. And the Corteva Europe sales are due to come later in the year. Operator: [Operator Instructions] It looks like we have no further questions registered at this time. So with that, I'll hand back over to Federico Trucco for some closing comments. Federico Trucco: Thank you, and thank you, everyone, for joining us today. I think this was a quick earnings call. We remain available for follow-ups if required. And I hope you all have a great rest of the week. Thank you. Operator: Thank you all for joining. That does conclude today's call, and you may now disconnect your line.
Matthew Chesler: [Audio Gap] A U.S. based Investor Relations firm supporting Eran Yunger, TAT's Internal Head of Investor Relations. Hosting today's call is Igal Zamir, TAT's President and CEO; and Ehud Ben-Yair, TAT's CFO. Before getting started, we would like to draw your attention to the fact that certain matters discussed on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other provisions of the federal securities laws. These forward-looking statements are based on management's current expectations and are not guarantees of future performance. Actual results could differ materially from those expressed in or implied by these forward-looking statements. The forward-looking statements are made as of the date of this call, and except as required by law, TAT assumes no obligation to update or revise them. Investors are cautioned not to place undue reliance on these forward-looking statements. For a more detailed discussion of how these and other risks and uncertainties could cause TAT's actual results to differ materially from those indicated in these forward-looking statements, please see our annual report on Form 20-F and other filings we make with the SEC. The financial measures discussed today include non-GAAP measures. We believe investors focus on non-GAAP financial measures in comparing results between periods and among our peer companies that publish similar non-GAAP financial measures. Please see this morning's Form 6-K, our earnings release and the Investors section of our website for a reconciliation of non-GAAP financial measures to GAAP measures. Non-GAAP financial information should not be considered in isolation from as a substitute for or superior to GAAP financial information, but is included because management believes it provides meaningful information about the financial performance of our business and is useful to investors for informational and comparative purposes. The non-GAAP financial measures that we use have limitations and may differ from those used by other companies. And now with all that, I'd like to turn the call over to Igal. Igal Zamir: Good morning, everyone, and thank you for joining us for the TAT Technologies Third Quarter Earnings Call. I appreciate your interest and continued support as we review our performance and discuss our strategic direction moving forward. TAT continues to deliver organic growth that exceeds the broader MRO driven by intentional diversification and strategic positioning serving in-demand and often underserved areas of the commercial aviation industry. We delivered another solid quarter in Q3, highlighted by double-digit revenue growth, record EBITDA margin and increased cash generation. These results reflect disciplined execution, strong demand across our core business lines and importantly, the operational leverage we have worked hard to build into our business model. Incremental revenues is now flowing through the bottom line in a more meaningful way, representing a significant accomplishment and foundation upon which we can continue to build. Our consistent growth and expanding profitability demonstrate that our model is performing as intended, efficient, diversified and designed to capture value across multiple segments of the aviation market. The broader aviation market continues to benefit from a constructive operating environment. Fleet utilization remains high, aircraft retirements are occurring at a lower pace than past cycles and OEM deliveries constraints are extending the service life of existing aircraft. Together, these dynamics are driving sustained demand of maintenance, repairs and overall activities as well as components, parts, distribution and leasing. This backdrop reinforced the importance of our diversified MRO platform and flexibility -- the flexibility that we provide to both commercial and cargo operators. As I stated in previous calls, normal quarterly fluctuations are expected in MRO industry, especially since the substantial portion of our MRO activity involve discretionary maintenance. Airlines tend to shift work between months and quarters based on budget cycles, expected flight loads and other operational considerations. External factors occasionally influence intake timing as well, particularly in defense-related work, though these factors typically affect timing rather than underlying demand. For these reasons, we believe in a multi-quarter year-over-year view as best captured the strength and the momentum of our business. We believe that this perspective, supported by the year-to-date and trailing 12 months trend provide a clearer picture of the consistency of our growth, margin expansion and cash generation. Over the past several years, we've added capabilities, strengthened operation and diversified revenue stream. These strategic initiatives has positioned TAT to sustain performance and long-term value creation. In particular, we have expanded into several underserved MRO markets, adding in-demand capabilities. And looking ahead, potential inorganic growth through the acquisitions of accretive bolt-on capabilities will further expand this proven foundation. With an increasingly stronger balance sheet and the leadership bench in place, we are sharpening our focus on identifying strategic opportunities to accelerate our existing growth strategy. We have recently added experienced corporate development executives to help us evaluate strategic M&A activities, and we are continuing to broaden our governance structure. At last week's Annual and Special General Meeting, shareholders elected 3 new independent directors to the company, Sagit Manor, Eitan Oppenheim and Amir Harel, each bringing deep financial and corporate development experience from leading global companies. These appointments enhance our governance and leadership capabilities as we position TAT for its next phase of growth. With this context, I'll turn it over to our CFO, Ehud Ben-Yair, to talk -- to take us through the financial results in more details. Ehud Ben-Yair: Thank you, Igal, and good morning, everyone. I will review the key financial results, balance sheet highlights and cash flow performance for the third quarter and for the first 9 months of 2025. Third quarter revenue increased by 14% to $46.2 million, up from $40.5 million in the same period last year. For the first 9 months of the year, revenue was up more than 18%. This growth was fueled by strong demand across our core businesses line, along with market share gains. Even while delivering another quarter of double-digit revenue growth, we essentially maintained our backlog and LTA value at $520 million -- this robust backlog validates our belief in durable customer demand and reinforce our business strategy of expanding our addressable market by adding new capabilities. From the beginning of the year, the backlog grew by close to $100 million, representing a huge increase compared to the increase in the revenue, which is representing a strong signal to our capabilities to further grow our revenue line. Gross profit increased by 37%, and our gross margin expanded by 410 bps to 25.1% compared to 21% in the third quarter last year. This improvement reflects our ongoing effort to optimize cost structure, improve operational efficiencies and enhance product mix. Operating income reached to $5.2 million, up by 52.6% year-over-year, demonstrating the leverage in our model as volume growth translated to profitability. Our net income for the quarter was $4.8 million compared to $2.9 million a year ago. Taxes on income for the quarter were $800,000 versus minimal amount in the same period last year. The new U.S. tax legislation enacted under the One Big Beautiful Bill Act had only a modest effect on our results, while changes such as the restoration of 100% bonus depreciation and updates to the R&D expenses alerted certain deferred taxes positions. The overall impact of our effective tax was not significant. However, the main benefit of implementing the new Act is an increase in the carryforward losses that will enable us to deduct them through the first 3 quarters of 2026, preventing us from paying any taxes in the U.S. for additional 4 quarters. While prior to the new act, we were supposed to start paying taxes by the end of this year, by the end of 2025. Our net financial expenses are close to 0 this quarter, mainly due to a favorable exchange rate differences between the Israeli shekel and the U.S. dollar, which were offset by the ongoing interest on our long-term loans. And finally, adjusted EBITDA increased by 34% to $6.8 million, translating to an adjusted EBITDA margin of 14.6% a record adjusted EBITDA margin and a notable improvement from 12.4% margin in the same period last year. That continues to deliver operating leverage as a result of our disciplined expense management. Moving to the cash flow. Cash flow from operation in the quarter was $7.5 million, driven by improved profitability and working capital efficiency and disciplined cost management. For the first 9 months, cash flow from operation was $9.5 million, representing an EBITDA cash conversion of 51%. Turning into the balance sheet. We ended the quarter with $47.1 million in cash and $12.1 million in total debt, resulting in a low debt-to-EBITDA ratio of 0.5x. Shareholders' equity stood at $170.7 million, supporting a strong equity-to-asset ratio of 76%. I'm going now to discuss a little bit about the results by the key product segments. In our APU businesses, after a modest sequential decline from Q1 to Q2, we saw a surge in intake in the third quarter with revenue increased by 39% year-over-year and 27% on a sequential basis. On a year-to-date basis, APU revenue is up by 26% from last year, aligned with our expectation and market penetration plan. Heat exchanger revenue increased by 6% between Q3 '25 and Q3 of 2024 -- on a year-to-date basis, revenue grew by 14%. The increase in OEM is very stable and aligned with the industry growth, while MRO growth was a little bit slow in the last 2 quarters, but expected to increase in the coming following quarters. In the landing gear area, revenue more than doubled year-over-year and nearly doubled on a sequential basis, reflecting a surge in intake and operational ramp-up, validating our strategy of supporting this underserved market. As communicated in the past, the E170 cycles started, and we are well positioned with contracts that needs to be served in the next 3 years. And last, trading and Leasing. After a particularly strong second quarter, we're down both sequentially and year-over-year basis, reflecting normal quarterly volatility as we explained in the previous earnings call. On a year-to-date basis, trading and leasing revenue is up by 17%. In summary, TAT delivered another period of solid growth and improving profitability, supported by disciplined expense management and strong cash conversion. Our balance sheet remains a strategic asset, providing flexibility to invest in both organic and inorganic growth opportunity. And by this, I'm returning the call back to our CEO, Mr. Zamir. Igal Zamir: Thank you, Ehud. The broader aviation market continues to experience viability, but our diversification helped offset these dynamics. While we are not immune [Audio Gap] is our agility. We have built the ability to adjust capabilities and capacity resources in real time, ensuring that we meet customer needs and sustain operational efficiency even in a changing environment. That adaptability remains one of our competitive advantages. We plan to leverage our strong balance sheet to pursue acquisitions that expand our addressable market, deepen customer relationship and natural adjacencies to our platforms. Over the past 2 years, we significantly increased our long-term backlog. I expect this overall trend to continue as customers seek nimble partners to support their maintenance needs. RFPs activity has its own cadence with quarter-to-quarter volatility, much like our intake volume. But the overall trend is encouraging, and I continue to believe that we are well positioned to capture more market share. In summary, TAT continues to deliver performance that exceeds the industry and our operational discipline is driving greater earning power. Supply chain dynamic continue to require active management, and we have made significant progress in relationship to our inventory levels, helping to increase our cash generation capabilities, and I remain optimistic about the years ahead. Before opening the call for questions, I'd like to thank our employees for their professionalism and hard work. Their commitment continues to set the standard for the industry and sorry, and underpins everything we've achieved. I also like to welcome our new independent directors. Their additional reflect our broader efforts to strengthen and diversify our Board as we prepare for the next phase of our growth. Over time, we expect to further expand the Board with additional U.S.-based and industry-oriented expertise to complement our strategy. I would now like to open the call for questions. Matt? Ehud Ben-Yair: Matt, you are on mute? Matthew Chesler: Thank you. Thank you for telling me about that. And thank you, Igal, for those remarks. As you know, we're now going to open up to the Q&A session. We're going to be taking live questions as well as submitted questions as I know a number of you have been submitting them already. [Operator Instructions] Please go ahead and raise your hands. Jonathan Siegmann, would you like to raise your hand or would you like me to read your question? I'll go ahead and read Jonathan Siegmann's question from Stifel. Congrats on the strong quarter, strong results and strong cash. Last quarter, you explained how TATT was able to make use of the tariff-driven slowdown in MRO intake activity and switched to repair APU. Can you talk about how TAT was able to flex your operating platform to manage this quarter's change in demand. We were particularly surprised by the more than doubling in landing gear. How should we think about TAT's revenue capacity for landing gear MRO activity? Igal Zamir: I think that I would like to answer this question in a more broader perspective. As I stated every quarter, I remember starting to make the same statement since Q4 of last year and being very consistent about it. I don't know that we can look at TAT on the MRO portion of TAT business on a quarter-to-quarter basis. There are many, many variables and things are changing based on the factors that I stated earlier when I -- in my opening remarks. I don't think that we need to look at it year-over-year. The lending gear was -- the lending year increase was expected. We stated it in previous calls. We are getting into a new cycle of lending gear overall with expectation to substantial growth in revenue going into the coming few years. Nothing is new here. We saw it coming and it came. There may still be fluctuations between quarter, but the overall trend is very strong. And going back to the flexibility and how to adjust, and I think that I truly think that this is our biggest advantage as a player that is not a huge player like many of our competitors. It's our ability to shift focus and to shift employees and manpower from one area to the other as needed. There is fluctuation. And the question is what do you do when the intake is surprising you comparing to the plan, which happens quite often. And we became pretty good in diverting a workforce and making sure that we adjust fast and that we don't just accept things as they are. Last quarter, we've been asked about the APUs and what happened for those of you who attended, how come that last quarter was strong. And I said the same thing. I have no concerns whatsoever about the APU intake, and we see this quarter with a substantial increase in APU. So I think that when we look year-over-year and the growth in all the segments, it's very promising. It's encouraging, and we see a continuing trend moving forward, especially when we look at the backlog. There's another submitted question. Matthew Chesler: This one is from Ben Klieve with Benchmark. Congratulations on another outstanding quarter. You mentioned your increased interest in looking at underserved MRO opportunities. I understand that you cannot get specific about what these opportunities are, but can you please discuss the characteristics of these opportunities and discuss why you think they've been underserved historically? Igal Zamir: So I think that the industry is in overall, especially over the last few years, is going through a post-COVID crisis. And part shortages and big players that are struggling and ramping up and many -- as an outcome, there is a -- it represents a big opportunities for fast companies, fast-moving companies, I would say, more flexible that can get ready and demonstrate that they have the ability to adjust to the situation and provide great service. One of the things that we are really proud of as a company in the last 2 years is the dramatic improvement that we have made comparing to many of our competitors in our on-time delivery, availability of parts. We made major investments in inventory to make sure that we will have the right parts on time. And we are performing well as an outcome and the new capabilities that we added on the APU side when the market is struggling and when airlines around the world are suffering from lack of capacity and you have the capacity and you are ready and you can demonstrate performance, you gain momentum. When it comes to the acquisition, just the M&A activity, we are not just looking -- just to be clear, and I would maybe elaborate on this for 2 minutes. We are not -- we are looking in several verticals and not necessarily just on the MRO, but also on the OEM side. When it comes to MRO, though, we are looking to add value to our customers. I think that what we hear from airlines around the world is that one of the challenges that they are facing is with a relatively small supply chain management team, they need to manage hundreds and hundreds of vendors around the world. And everybody is looking to consolidate work and to grow to work with a larger vendor that can support them across more product lines. So our M&A strategy when it comes to MRO will be to look for companies that can add high-quality, meaningful MRO services that we can add to our portfolio and be more meaningful to our customers kind of a general answer to the question. Having said this, as I said before, we are also looking for acquisitions on the OEM side to expand our thermal system capabilities, expand into new segments of thermal systems where we are not active today and become a more meaningful player in the thermal system world. Matthew Chesler: I'm going to summarize a question around backlog that I received from a couple of investors. Thank you, Tal, and thank you, Yuval, for submitting them. Essentially, it's -- that the backlog declined by a few million sequentially from last quarter. Can you comment on that? Igal Zamir: Yes. I almost -- I don't want to -- basically, it's a nonissue. I think that if you look year-to-date, we are way above where we started the year. We showed a huge growth. We cannot -- you need to remember that we publish wins and add them to the backlog and LTA value only when we sign them. And we cannot -- there are several factors. We cannot control when the airlines are opening the RFPs. We cannot control when they determine who is the winning bidder. And in many cases, even after we win, we cannot control when our legal team and the airline legal team will eventually sign the contract so we can publish. So as I stated before, we are enjoying a very strong opportunity pipeline larger than ever in the past. And we will keep on announcing and adding to the LTA new wins as we get them. And we remain very optimistic about it. That's the only thing that I can say right now. In the last 3 months, we have -- we were not -- we didn't sign any win yet. So we saw a tiny reduction, but it's a nonissue. Matthew Chesler: Next, there is a question from Chen and a question from Othick that I think relates to your exposure to potential external disruptions. For example, how are your operations affected by the federal government shutdown that apparently just ended? Or is the grounding of some of the UPS and FedEx aircraft found the incident in Kentucky expected to affect any loads and schedules at your service centers? Igal Zamir: I think that everything can have a -- every one of these interruptions or disruptions can cause some short-term hiccups. But when you look at the overall trend, none of them represent -- obviously, unless something turns into a macro global issue or challenge, none of them should have any sustained impact on our growth patterns for the future. I don't see right now any -- there is no drama here or any big impact with the exception of short hiccups here and there. And again, that we can easily -- in reality, we are overcoming them because we have different product lines coming from different customers and a very large customer base and OEM versus MRO and other factors. So, so far, we haven't seen any major impact or concern that should be noted here. Matthew Chesler: Okay. I have a follow-up question from Ben Klieve at Benchmark that relates to the landing gear business, which is scaling and seeing some lumpiness. Do you expect that the lumpiness is going to decrease or perhaps even get more pronounced? Igal Zamir: I'm expecting it to stay as it is through the -- again, the volatility between the quarters, but the overall trend is very strong. Matthew Chesler: Okay, next… Igal Zamir: Maybe I can add to it. On the landing gear side, we are trying to be more proactive with our customers, and you always try to come up with a predetermined schedule of removals and when exactly they are going to park the aircraft to remove the gear and to replace. And looking at next year on paper, it looks great and very little volatility from my 10 years of experience at TAT, the plan is great until the year starts. And there are always changes and unexpected events. It can be that, I don't know, a catering truck hit a gear in another aircraft, and now they have to change there. I'm giving it as one example. But there are always changes in and surprises. So I'm expecting volatility, but the overall trend and looking at where we are in the plan for next year, we expect to continue and to grow very nicely. Matthew Chesler: The next question is from Michael Ciarmoli from Truist. Operator, can you assist in activating Michael? Operator: Yes. Matthew Chesler: Michael, I think if we can hear you. Michael Ciarmoli: Okay. Perfect. Nice results. Just on the margins, really nice margin performance. I mean it looks like at the operating level incremental is about 31%. I think you've kind of talked about the EBITDA margins, 15%. You're basically almost there. Can maybe we think about or can you share with us how you're thinking about further operating leverage as you get some more volumes? And maybe even -- do you think you can get some pricing to be additive as well? Igal Zamir: Yes. So for those of you who listened to the calls in the last 2.5 years, 3 years, I've been pretty consistent about saying that I believe that the best-in-class company in our line of business should be at the 15% EBITDA and above. And yes, Michael, as you stated, we are very -- we are getting there, mainly due to operational efficiencies initiatives that we had and things that we are doing. I'm happy to say that now that we are almost there, we still have a lot of opportunities and a lot of initiatives to continue and improve the margin moving forward. And I'm not even before increasing revenue or before increasing pricing. And it's a very high priority for us on our plans for next year to continue and improve our efficiency to remove waste and to become -- to reduce purchasing costs and to become more effective company. Some of it may be used to be more competitive in RFPs and some of it will result in increasing -- in further increasing the EBITDA. Regarding pricing, we typically -- we try to be very careful about not using it as just as a tool because we are in a very competitive landscape. And we have -- obviously, we have escalation -- price escalation built into our contracts, but they are tied into predetermined indexes and like labor and materials. So prices are -- traditionally, if I'm looking years back, they were increased year-over-year, but that's not something that we are using as a tool for margin. Michael Ciarmoli: Got it. Okay. Helpful. And then just if I may, you guys break out your percent of revenues by MRO and OEM. And it looks like if I look at the OE percentage, it was up year-over-year, maybe close to 3%. And I just wanted to know your products on the thermal side, where you've got 737 exposure, what are you seeing there now that Boeing has gotten the FAA approval to rate break higher? Is there any destocking? Do you see any inventory? Or do you think that side of your business starts to grow as we see the volumes increase on the MAX? Igal Zamir: Yes. I think that -- Michael, I think that specifically, if you talk about the MAX and our effect, there is a minimal impact, but not something that will have any dramatic impact on the future business one way or the other. I can say that if you look at overall aircraft production rate in our OEM business, our OEM -- obviously, our business is growing in a linear line together with the increase in production rates. So again, without going into any specific platform, if you look across the board, if you look at the book of orders and planned capacity for Boeing, Embraer, Textron and others, we are enjoying it. And we plan to -- hopefully, we will continue to enjoy it in the years to come because we see more -- we see an increase in NPOs. Matthew Chesler: The next question is a 2-parter from Richard Kay, who said, you generate strong cash flow, again, is that sustainable? And how would you characterize your balance sheet strength today? Igal Zamir: So I'll answer the first question about the cash flow and Ehud, if you may want to answer about the balance sheet. I think we spoke about it last quarter. We were in a very fast growth in a very unstable market with gigantic supply chain issues and other challenges with customers. And we wanted to make sure that we will be ready to the customers. So we made strategic decisions to dramatically increase inventories and a few other things to support our customers that were -- as they were struggling. And last quarter, I mentioned that we are in a very healthy situation today that we don't believe that we need to increase and we can turn more of the EBITDA into cash. Our collection is better. We don't need to continue increasing inventories. As long as we don't go into a new product line that will require a new line of inventory, spare inventories, we are now at a position that we can start moving the inventory faster and increase inventory turns rather than inventory -- overall inventory increases. From a CapEx perspective, we made substantial investments over the last 4 years and getting ready for the growth facilities, equipment and everything else that was required. And I think that we are moving more -- we are scaling back because we already -- we feel that we are ready with what we need for the next year or 2. And so the substantial investments are kind of behind us. There is always going to be a certain level of investment, mainly focused on 2 aspects, the maintenance, let's call it, maintenance CapEx and the second type is CapEx associated with continuing to improve our efficiency. And we are -- but all in all, we see a substantial reduction in CapEx needs, and this is also going to impact the cash. So again, cash may fluctuate mainly based on collections versus payments from quarter-to-quarter, but we do expect to continue and enjoy very strong cash flow. And Ehud, I wonder if you would like to address the balance sheet. Ehud Ben-Yair: Yes. [indiscernible] I'm expecting the balance sheet to continue or the equity ratio to balance sheet to continue to stay very high and very strong in the area of 70% to 75% in the coming quarters, given the profitability forecast and the capital -- the working capital needs that we're seeing. I must say that, however, as we indicated in the past that in case we'll execute an acquisition deal, part of financing of this deal will come from debt leverage, and this will change a little bit the ratios in the balance sheet. Matthew Chesler: We have a follow-up question from Michael Ciarmoli from Truist. Michael Ciarmoli: Okay. Perfect. Just a follow-up. I think last quarter, I mean, you had a really good landing year performance, assuming that the internal supply chain challenges and inefficiencies you've had are kind of totally resolved. And then just one more on the APUs. I wanted to know what you're seeing on penetrating the market for the 131. Igal Zamir: You are asking about the 131 specifically. We are currently -- we have several opportunities that we are trying to bid on. We haven't won any meaningful in the last -- so far, I would say we haven't won any meaningful RFP. The opportunities are out there. And we still have some learning curve. The demand is there. The RFPs are coming. And I believe that with time we start showing substantial growth there. We're just -- we are basically at the beginning, if you will, as we stated in the last few quarters. Matthew Chesler: We have an additional submitted question, which is asking about the supply chain and whether conditions and capacity utilization are improving or how are they trending? Igal Zamir: I would say it depends on the product lines. I believe that on the thermal components supply chain, where we purchase basically raw materials, supply chain pretty much stabilized to where it used to be pre-COVID. No major stories there. And APUs and landing gear still -- APUs is more reliable, but still very long lead times from the vendors. And on the landing gear is still unstable, both on the lead time and reliability of the vendors. So different phases. All in all, I can say across all product lines, the trend is very positive, but we are not there on the APUs and landing gear, the industry is not where it needs to be. Matthew Chesler: Here's a question from Ehun [indiscernible]. Asking about gross margins, can you -- I guess, I'm looking at the question, can you talk about the sort of the mix of gross margins across your businesses because he's observing that some of the gross margins, excluding leasing and trading did increase substantially over the quarter. And I'm just wondering what that mix looks like across the businesses? Igal Zamir: Ehun, would you like to address it? Ehud Ben-Yair: Guys, do you hear me? Yes. I'm sorry, my line is not so good. Could you please repeat the question, Matt? Matthew Chesler: Yes, the question would be just maybe a comment on how gross margins varies across the various business lines because there was an observation about the increase in gross margins this quarter, excluding leasing and trading. Ehud Ben-Yair: Yes. So obviously, what you saw -- and again, I don't want to make a long-term point on one quarter. We need to look at the trend of the couple of quarters in order to determine our mind what's going to be -- what is the right gross margin because product mix is playing on the level of each revenue within the segment is also determining the gross profit due to our operational leverage. But in general, I would say that in this segment, we see an improving -- we see a trend of improving in the gross margin. And then again, looking for the long term, we expect the margin in this segment to go up a little bit. And it is mainly due to all of the things that were mentioned during the pitch by Igal and me, where we have many plans of improving operational efficiencies. We are also leveraging our employees' utilization and also, again, having more work, more revenue on the same labor is improving by itself the gross margin. Igal Zamir: If you look at -- maybe just to add a few things. First of all, just to add to what Ehud said, looking at gross margin from quarter-to-quarter is almost impossible because even within the same product line within everything, if you compare apples-to-apples between the quarters, you have different customers with different margin. We need to remember that on the MRO side, there are lots of variations. On the OEM, once you have a deal and it's closed and you have the supply and you know the cost, it's pretty much stable gross margin. You know what to expect. When you receive an engine for an overall with hundreds of different parts that needs to be inspected, there is a huge variance between one engine to the other. Sometimes you get the engine and it's very easy and you replace few parts. And sometimes you get what we call a very heavy shop visit with many parts. And you need to remember that in many cases, our pricing to our customers are fixed customer -- fixed pricing. Basically, it's built on a statistical model over time. But sometimes you get -- all it takes is 2 engines or 3 engines with very heavy replacement and the margin this quarter is going to look less favorable. And the following quarter, you got some light engines and everything is going to look great. So it's very risky to -- or not the right approach in mind, mind, I would say, to compare quarter-to-quarter, but rather to look at the long-term trend. Matthew Chesler: The final question before we turn it back to Igal, for concluding remarks is from Robbie from [ Essex Fs Capital ], asking how should investors think about Q4 and 2026? Ehud Ben-Yair: So as I stated in the beginning, I'm going to talk only about 2026. We are very optimistic. The trend is strong. We have a very strong backlog, as you see in the numbers. We have a very large pipeline of opportunities in different stages, significant amount of potential business that we believe that we are going to -- some of it at least, a substantial portion of it we can secure. The market trend is continuing to be strong. Both OEM demand is growing and the MRO needs are there. So all in all, all the indicators are very positive, and we are continuing to increase our internal efficiency. So we remain very optimistic about the ability to continue to grow the business next year. I think this is the best answer that I can give right now. Matthew Chesler: Igal, now turning to you for concluding remarks. Igal Zamir: So just as final remarks. First of all, thank you for joining us today. The financial performance in the quarter further validates our business model and strategy. We are currently participating in multiple RFPs, as I said 2 minutes ago, and the growth opportunities we are pursuing giving us the confidence in long-term growth trajectory for TAT. On top of this, we believe these are -- there are opportunities to accelerate our growth and increase our scale through targeted and strategic M&A activities. And I continue to think we are better positioned than many others in the industry for long-term growth. And I'm increasingly confident in our future. So with that, I just want to thank everybody again for joining us today and happy to answer further questions via... Matthew Chesler: Thank you, everyone, for joining us today. You may now disconnect your lines. Igal Zamir: Thank you. Bye.
Operator: Greetings, and welcome to the Pelthos Therapeutics Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Mike Moyer. Please go ahead. Mike Moyer: Good morning, everyone, and welcome to the Pelthos Therapeutics Third Quarter 2025 Financial Results Conference Call. Pelthos issued a press release today announcing its financial results for the three and nine months ended September 30, 2025. A copy can be found in the Investor Relations tab on the corporate website at www.pelthos.com. Before we begin, I'd like to remind you that during today's call, statements about the company's future expectations, plans and prospects are forward-looking statements. These forward-looking statements are based on management's current expectations. These statements are neither promises nor guarantees and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from our current expectations expressed or implied by the forward-looking statements. Any such forward-looking statements may represent management's estimates as of the date of this conference call. While the company may elect to update such forward-looking statements at some point in the future, it disclaims any obligations to do so, even if subsequent events cause its views to change. As a reminder, this conference call is being recorded and will remain available for 90 days. I'd now like to turn the call over to Scott Plesha, Chief Executive Officer. Scott, you may now begin. Scott Plesha: Thank you, Mike. Good morning, and welcome, everyone, to today's call. We're delighted to be with you today and share with you our third quarter operating results and highlights. Joining me today are Frank Knuettel, our Chief Financial Officer; and Sai Rangarao, Pelthos Therapeutics Chief Commercial Officer. To start the third quarter of 2025 marked a significant advancement in Pelthos corporate development. In the beginning of the quarter, we successfully closed both our acquisition of the Pelthos business, at which time we commenced trading on the New York Stock Exchange and a $50 million PIPE with Ligand Pharmaceuticals, Murchinson Limited and other investors to support the launch of ZELSUVMI. Shortly thereafter, that launch occurred with the introduction in mid-July of ZELSUVMI, the company's first commercial product. ZELSUVMI is a novel topical nitric oxide releasing product indicated for the treatment of molluscum contagiosum or MC, in patients one year of age and older for up to 12 weeks. ZELSUVMI is an important advancement in the treatment of MC as it's the first and only FDA-approved therapy that can be applied by parents, patients or caregivers in the home or on the go. Additionally, we are pleased to follow up the launch of ZELSUVMI with the recently announced $18 million convertible notes financing and the acquisition of Xepi. This financing funded our acquisition of XEPI and will provide additional support for the launch of ZELSUVMI. We entered into the convertible financing agreement with Ligand, Murchinson and other investors, the same lead investors that invested in July PIPE. Frank will provide more details on the convert, but I want to note that our investors' continued support show their strong confidence in the successful launch and growth metrics of ZELSUVMI and our strategy to build a portfolio of topical treatments for cutaneous infections. Xepi is a novel FDA-approved topical treatment for Impetigo that addresses a critical unmet need in antibiotic-resistant skin infections caused by staff and strep infections and most commonly affecting children. We believe that ZELSUVMI and XEPI are highly complementary products with the diseases they treat mostly affecting children, and they are treated by the same health care providers. Importantly, this allows us to leverage our commercial infrastructure, including our sales force. We'll share more details on Xepi later, but for now, our focus is on the continued strong growth of ZELSUVMI. Frank will provide a more detailed look at the quarter's reported financials. But before we get into further detail about MC and ZELSUVMI's commercial launch progress, I would like to share a brief overview of our top line results. As of September 30, 2025, we had $14.2 million in cash on the books and $8 million in accounts receivable. On an operating basis, for the three months ended September 30, 2025, we generated $7.1 million in net product revenue, driven by strong initial demand for ZELSUVMI and an operating loss of $15.4 million. Our GAAP net loss was $16.2 million, representing $5.30 per basic and diluted common share. On an as-converted basis, reflecting the conversion of our Series A and Series C shares, this is a loss of $1.83 per share. In addition, Frank will break down the onetime and noncash items as well as other financial metrics included herein. But importantly, we currently expect that with ZELSUVMI's strong growth rate and a focus on responsible spending that we will achieve cash flow breakeven from operations before the end of 2026. Turning to the disease state. Molluscum contagiosum is a highly infectious condition caused by a poxvirus that primarily affects children one year of age or older with ICD-10 claims indicating that 75% to 80% of MC patients are 10 years of age or younger. Roughly 17 million people in the United States are affected by molluscum, and on average, there are 6 million new cases annually. The literature also reports that in a multi-child household, if one child contracts MC, 41% of the time, the other child or children will as well. While the disease is self-resolving, the mean time to resolution is approximately 13 months and can last up to 5 years. During that time, children are often ostercized and be forced to miss school or sporting events and cover their lesions with band or clothing. This leads to considerable child and parental anxiety, which is the primary driver for patients being seen by health care providers. ZELSUVMI is a topical treatment that is applied once a day at home, which represents an important shift in the treatment paradigm for MC due to the fact that it is the only FDA-approved molluscum treatment that can be administered at home or on the go by parents, caregivers and patients. Prior to the launch of ZELSUVMI, other topical treatments or destructive modalities would require patients to make multiple visits to a health care practitioner. These in-office treatment alternatives include curettage, cryotherapy and blistering agents that can sometimes be uncomfortable and painful, especially in the sensitive areas of the body that MC often presents. In this current treatment landscape, our launch of ZELSUVMI has gone very well and has exceeded our expectations in many key performance indicators. It's our continued vision that ZELSUVMI will revolutionize the treatment of MC, become the first-line treatment of choice, resulting in it becoming the clear market leader for the treatment of MC. Based on my interaction with key opinion leaders and other practitioners, I believe this will be driven by physician and parent caregivers preference for a safe and efficacious at-home prescription-based treatment solution. With our strong initial launch performance where the cost of the sales force was covered within nine weeks and now having an understanding of the uptake curve, we have made the strategic decision to expand our sales force. In our current sales force structure of 50 sales representatives, there are many large metropolitan areas in the country not covered. We believe that by adding 14 additional sales representatives in these markets, we can further accelerate the growth of ZELSUVMI. We expect these incremental team members to be hired, fully trained and in the field by mid-January. Finally, a note on manufacturing and our intellectual property portfolio. Unlike many smaller pharmaceutical companies, Pelthos owns and operates a purpose-built manufacturing facility for ZELSUVMI's active pharmaceutical ingredient known as API. ZELSUVMI is a nitric oxide releasing treatment based on the Nitricil platform technology we licensed from Ligand, and we are, we believe, the only company that has successfully reduced to practice the ability to reduce this gas to a topical gel. The know-how and trade secrets associated with our manufacturing process complement our patent protection, which currently runs to mid-2035. In addition, we have a patent term extension on file and may receive an extension of the patent life to Q3 2037. Based on our trade secrets and patent protection, we have a broad IP moat around our technology, which we believe provides us a lengthy runway to build ZELSUVMI's revenue. In closing, we are very pleased with the receptivity to ZELSUVMI to date and the $7.1 million in net product revenue generated during Q3. Sai and the commercial team are doing an outstanding job of educating our customers on the benefits of ZELSUVMI, which has led to a high number of prescribers and the strong prescription growth of ZELSUVMI. We remain fully committed to maintaining strict financial discipline, and we'll continue to evaluate and optimize our commercial strategy as we want to seize every opportunity to deliver sustainable long-term shareholder value for Pelthos shareholders. We feel strongly about the launch in these early days and continue mapping our strategy for the growth of ZELSUVMI in 2026 and beyond and the introduction of sales of Xepi commencing in late 2026. I'll now turn it over to Sai to provide more specifics on the results of the ZELSUVMI launch and key performance indicators. Sai Rangarao: Thank you, Scott. Good morning, everyone. I'm pleased to provide details on our Q3 launch and metrics. While we are still underway in the launch, our progress to date has gone better than expected. Shipments and prescriptions are running ahead of expectations with several HCP and patients sharing their positive experiences with ZELSUVMI. Digging into the shipment and prescription details, we shipped over 4,900 units to wholesalers and close to 3,000 units to pharmacies during the third quarter. 2,716 units were prescribed of ZELSUVMI written by 1,169 unique prescribers as reported in Symphony [Indiscernible] data. We carried this growth trend into Q4 with 2,189 units prescribed for the full month of October. That represents over a 41% increase in units prescribed from October over September. In fact, with 7 weeks remaining in this quarter, we have already had more prescriptions written this quarter than in all of Q3. Our growth continued strongly through the month of October with an all-time high of 516 units dispensed during the final week. With our wholesale acquisition cost, WAC for short for ZELSUVMI at $1,950 per unit, we had an annual gross revenue run rate of approximately $52 million during that last week. Importantly, we are closely and steadily managing our channel load to make sure there is ZELSUVMI available for patients and to minimize stockouts at the wholesaler level, led by our stellar market access and trade team. We ended the quarter with approximately 4 weeks of inventory on hand throughout the distribution system. We anticipate managing inventory on hand to the level of 3 to 4 weeks for future quarters. Digging into the payer landscape, our Q3 activity does not include any payer contracts, and we have experienced favorable prior authorization approvals. This is very healthy for a noncontracted drug, which is supported by the fact that our drug largely treats children, is the first and only at-home treatment option and is acute. Due to ZELSUVMI being an acute treatment, payers have limit to their overall cost exposure and therapeutic programs largely aimed at children have a better approval profile in general. While we have not initiated any commercial contracts, we have seen a number of favorable Medicaid wins with ZELSUVMI being added to Medicaid formularies in the states of New York, along with Texas and Alabama with no prior authorization form required. From a GTN perspective, we had very good GTNs during the third quarter. We anticipate exiting 2025 with GTNs slightly under 30%, While we expect that our GTNs will remain favorable, we do not expect to experience this level of GTNs over the long term. With that said, we still anticipate that our GTNs will still be well below other dermatological products in our experience. Specifically, our current GTNs largely revolve around distribution costs, Medicaid discounts, payer contracts and our co-pay card program. With the latter, it is our goal to pay down with the co-pay card program, so the prescription costs are 0 or close to 0 in almost all instances for the patient. This supports a strong patient onboarding experience through our ZELSUVMI GO patient onboarding program. Next, I would like to speak about our sales team and its geographical alignment, as Scott mentioned. We commenced the launch with 50 territory managers concentrating on the successful launch of ZELSUVMI. We opened these locations based on the ICD-10 data of most prevalent MC cases, but it's important to note that MC is an underreported indication largely because there has been no at-home FDA-approved product until ZELSUVMI. Now with the success of our launch, we are moving forward with the addition of territory managers in other prominent territories. This will result in an additional 14 territory managers joining Pelthos in opportunistic territories around the country, where ZELSUVMI is already being utilized. We expect to add these positions at the beginning of January and expect that this will provide further lift to our sales and growth rate. Finally, we continue to grow awareness for ZELSUVMI as the first and only at-home prescription treatment option for MC through various channels and venues. The awareness and stimulation to prescribe is occurring through the following tactical deployments. We launched highly engaging materials educating HCPs and patients on ZELSUVMI at the field level. We also launched national level and local level speaker programs, mostly virtual fitting into HCP schedules, providing education on ZELSUVMI. We deployed strong digital marketing awareness through social media, HCP platforms and digital advertising. We recently launched the moms against molluscum movement, an opportunity for moms, parents and caregivers to share their journeys, battling molluscum and finally having an impactful at-home treatment option like ZELSUVMI. Pelthos also had strong attendance and detailed engagement with hundreds of health care practitioners across the country at key congresses, exchanging scientific education and promotional communication about ZELSUVMI. We will continue to build off the great success of these tactics, and we'll be adding more to keep the momentum going. I'm very pleased with our performance and strong launch success to date, alongside a highly passionate and hard-working commercial team. And with that, I will now turn the call over to Frank to discuss our financials. Frank? Francis Knuettel: Thank you, Sai. Good morning, and thank you for joining us on today's call. As a precursor, we're going to focus on the results for the third quarter of 2025 as prior periods and year-to-date results do not reflect the current operations of Pelthos. With that said, we are delighted to report $7.1 million in net product revenues in our first full quarter of commercial operations. I'll discuss our channel inventory in a moment, but this reflects the strong initial sales of ZELSUVMI following the commercial launch in mid-July. For the quarter ended September 30, 2025, our cost of goods sold was $2.3 million, which includes expenses associated with manufacturing, the supply chain, quality assurance and other costs related to customer order fulfillment. A key item here for your consideration is that it also includes the fair value step-up of the inventory, both API and finished goods on hand at the time the merger was closed. Under the terms of the agreement, Pelthos was the acquiree, which necessitated a fair value determination of the inventory, resulting in a stepped-up basis for the value of our COGS. The normalized cost of goods is a fraction of the reported amount as set forth in the adjusted cost of goods table in the press release we issued this morning. We expect to run through the finished goods inventory by the middle of 2026, after which point, we will have a couple of quarters where there will be an impact from the fair value of the API in hand at the close of the merger. After that, we will be at our normalized cost of goods value. Similarly, we're also in the process of moving towards the expected long-term costs associated with our GTNs. Our Q3 GPN was 25.3%. And to make sure we're looking at this the same way, it means that 25.3% of our gross revenue was allocated to third-party distribution, Medicaid, co-pay cards and other similar fees. I want to stress, however, that we do not expect this to be our long-term equilibrium rate. For that, I expect that we will move to a GTN in the mid- to high 30% range by Q1 of 2026 with Q4 of 2025 expected to be between the 2. The bulk of our expenses during the quarter were for SG&A with low levels of expenses associated with R&D. We provided a table in the 10-Q that provides the detailed breakdown of our SG&A expenses, but at a high level, the bulk of the cash expenses can be attributed to personnel, marketing, professional services and royalties. Of the $19.6 million in SG&A, approximately $3.2 million are noncash charges associated with equity compensation expenses and depreciation. A further amount of approximately $1 million are onetime items associated with the merger, and we booked a royalty obligation of $1.2 million, resulting in a steady-state cash amount for operating expenses of $14.2 million for the quarter. This will go up slightly in 2026 with getting ZepPI ready to commercialize, the increase in the size of the sales team we recently discussed and of course, the royalty amount will grow in direct proportion to the growth in net revenues. This resulted in a net loss for the quarter ended September 30, 2025, in the amount of $16.2 million, equating to a net loss of $5.30 per basic and fully diluted common share. On an as-converted basis, reflecting the conversion of our Series A and Series C convertible preferred stock, we had a loss of $1.83 per share. On a non-GAAP basis, removing noncash and unusual items, we had a net loss of $9.6 million for the quarter. The largest adjustments are the a fore mentioned equity compensation expenses, noncash interest and the inventory basis step-up. The $9.6 million loss is $3.14 per basic and fully diluted common share and on an as-converted basis, reflecting the conversion of our Series A and Series C convertible preferred stock, we had a non-GAAP loss of $1.08 per share. Based on our revenue forecast, we expect the net loss to decline every quarter, and as Scott mentioned, expect to reach cash flow breakeven by the end of 2026. Our balance sheet at September 30 was strong with $14.2 million in cash and $8.0 million in accounts receivable. As of that date, we had no debt, but the recently announced convertible note financing strengthened further our balance sheet. A couple of the liability items I would like to specifically highlight. The $5.6 million in other short-term liabilities and the $26.2 million in other long-term liabilities are solely the result of the fair value assessment of the future royalty obligations. These are not general obligations and the amounts related thereto will be recognized with the payment of actual royalties resulting from actual net sales. The convertible note in addition to cash on hand and receivables provide substantial working capital and support for our expansion. To the extent we raise any additional capital over the short or midterm, we would endeavor to do so in a nondilutive manner. With respect to inventory and channel, our channel level at the end of the third quarter was approximately four weeks. Going forward, we expect de minimis variability in our net revenue related to changes in the inventory channel. Following up on our announcement last Friday, concurrent with the Xepi acquisition, we closed on an $18 million convertible notes financing with our existing lead investors. As previously mentioned, the financing will be used to acquire and relaunch Xepi, accelerate the commercialization of ZELSUVMI and for general working capital purposes. The notes will mature on November 6, 2027, unless redemption occurs earlier or converted into shares of Pelthos common stock in accordance with their terms. The notes pay interest at a rate of 8.5% per annum and will be convertible at an initial price of $34.44, which represented the five-day closing price average prior to the close on November 6th. In addition to interest, the investors will be entitled to a low single-digit royalty on the net sales of Xepi in the United States and certain milestone payments and royalties on ZELSUVMI's net sales in Japan. Ultimately, the convertible notes transaction demonstrates the ongoing confidence of our existing investors. And the additional capital from this transaction allows management to add a highly complementary product to our portfolio, strengthen the balance sheet and help support the growth of ZELSUVMUI. Regarding our capitalization, prior to the convertible financing, we had approximately 8.9 million shares of stock outstanding on an as-converted basis. This is comprised of approximately 3.1 million shares of common stock outstanding and 5.8 million shares of common stock underlying our Series A and Series C convertible preferred stock. The bulk of the preferred is in the Series A, which were the shares issued pursuant to the merger and PIPE closed on July 1st. Both of the Series A and Series C have fixed conversion prices with no down round protection, no special voting rights and no paying or accruing dividends. Were the convertible to convert to common stock at the initial price, we would issue a little over 500,000 shares, leaving us with approximately 9.4 million total shares of common stock outstanding on an as-converted basis. I will now turn it back over to Scott to discuss the rationale and expected synergies with respect to the Xepi acquisition, the legacy channel programs and our thoughts on the fourth quarter. Scott Plesha: Thank you, Frank. I would now like to spend a little time speaking about our recent Xepi acquisition and the legacy channel assets. As noted in the Xepi acquisition press release, we announced that we acquired the U.S. rights to market and sell Xepi. This acquisition adds a complementary dermatology product to the Pelthos portfolio anchored by ZELSUVMI. Xepi itself is a novel FDA-approved topical treatment for impetigo, which affects approximately 3 million people in the U.S. every year and is among the most common bacterial skin infections seen in pediatric offices. Under the terms of the acquisition agreement, Pelthos paid Biofrontera $3 million and Ferrer $1.2 million upfront with additional payments on the availability of commercial quantities of Xepi and the achievement of sales-based milestones. Pelthos will pay royalties on U.S. net sales of Xepi to Ferre, Ligand and the investors. Xepi is well positioned to address antimicrobial resistance in pediatric dermatology, and we believe it will provide physicians with an important alternative to first-line impetigo treatments. Offering another novel product to the pediatric and dermatology communities creates an increasingly favorable opportunity for Pelthos as it allows us to leverage our current commercial infrastructure to promote multiple innovative brands. Ultimately, we believe this is a fantastic acquisition and represents an excellent investment opportunity, marking an exciting new chapter in the Pelthos growth story. Finally, a short note on the legacy channel therapeutics programs. As background, the legacy channel programs are clinical stage drugs for the treatment of various types of pain through the modulation of NaV1.7 sodium chain. Specifically, we have one program for the systemic treatment of acute and chronic pain, one program for the treatment of eye pain and one program for the treatment of pre and postsurgical pain. These programs are not our focus, but they are important and valuable, and we are working on various funding options dedicated to one or more of these programs. Importantly, this means that whatever funding we obtain, it will not be from our available cash. More to come as we continue working on the strategy. Regarding our Q4 results and future expectations, I want to emphasize that we are in the early days of the launch and as such, need to have more data before providing detailed annual guidance. With that said, our performance to date during Q4 has been strong, and we're very pleased to report that our growth trajectory has continued. As Sai mentioned, based on the number of prescriptions during the last week of October and only 16 weeks into our launch, we are on approximately a $52 million annual gross revenue run rate. Further, we had an all-time high of units shipped to pharmacies the week ending November 7th, and we expect our efforts with HCPs, parents and caregivers and the expansion of the sales team will increase the growth rate we have experienced to date. With the strong sales trends we are seeing, we are currently projecting a significant increase in net revenue for the three months ending December 31, 2025, over the three months ending September 30, 2025. I want to thank you for joining us today to learn more about the Pelthos story, and I'll now turn the call over to the operator for any questions. Operator: [Operator Instructions] And our first question comes from Jeff Jones with Oppenheimer. Jeffrey Jones: Congrats on a fantastic start to your launch. And congrats on your first call as a public company as well. First question, I guess, you mentioned 1,169 unique prescribers at this stage. Can you comment on how many are writing multiple prescriptions? And then what portion of your target accounts does that cover? So with your current sales force, how many target accounts do you have and sort of what penetration are you looking at? Scott Plesha: Thanks, Jeff. I appreciate the compliments to begin with. And just, I guess, first starting out our coverage right now. We're covering about 8,000 targets with our current sales structure. We mentioned an expansion that will get us up to about 10,000 or so when all is said and done. And then as far as repeat prescribing, we gave you the unique numbers for the quarter. When we look at kind of where we are right now, probably a little bit more than half, 60% have written one script, but we've seen almost just under 500 write two or three. We have some as high as 22 to 27 range, actually three doctors in that range. So there's a wide range of prescriptions written by the HCPs. Jeffrey Jones: Okay. Appreciate that. With the upcoming holiday season with Thanksgiving, Christmas, how does that impact patient visits, prescriptions? How should we sort of think about that impact given, obviously, a really nice growth trend already in October? Scott Plesha: Yes. So I think it varies by holiday. But one of the things, like for example, over like Labor Day, we did kind of grow through that a bit that week. But we do think because this is an acute medication, you have to be in office to get a prescription. We're not as dependent upon refills here. This is about new patients coming on therapy. So I do think -- we do feel that the impact of the holidays, while we're growing, could soften it a little bit because of that... When offices aren't open, it's really difficult. We just don't see as many prescriptions. Jeffrey Jones: Sure, sure. Totally makes sense. Then the last question, as you just mentioned refills, the first the first set of tubes is for a 30-day coverage. Any color on how many patients are getting a refill? So is 1 patient typically 1 unit or 1.5, 2 otherwise? Scott Plesha: Yes. So I guess the first ground on it, everything here. When you prescribe it, it's indicated for up to 12 weeks of therapy. So if you get that initial unit, that should last up to 30 days if there are 40 lesions or less. And if they use it as directed. So if you look at it and somebody required to go to the full 12 weeks, we're probably looking at 3 units. We're seeing some prescriptions. It's a small percentage, but there are a number of prescriptions that are actually going out with more than 1 unit. So obviously, they wouldn't have a refill if that was the case. And then on the refill side, you also have to think about when you're looking at the numbers and kind of calculating, you have to go back 5 to 10 weeks really to look at like where we are now to understand what's eligible. We think we're probably in about the 1.2 range right now, give or take a little bit. And we do think that could track up over time. Yes. I'd say the other thing we're hearing that this is a good news thing is that anecdotally that the HCPs and patients have been quite happy with the efficacy they're seeing. The quickness at which they're seeing resolution, just the whole experience, I guess, has been very positive across the board pretty much of what we're hearing from HCPs. So that could affect our refill rate if they're seeing really good results. But ultimately, I think that's a great thing for patients and the brand. Operator: Our next question comes from James Molloy with Alliance Global Partners. James Molloy: Congratulations on an excellent launch. Could you just walk through -- I know you mentioned the overall -- the reps overall are profitable. Could you walk through how many the reps of the 50 are currently profitable and sort of the expectations for the additional 14, how quickly for them to cover their own costs? And clearly, it seems like the product is priced correctly. Do you think there's opportunity for taking price going forward? Scott Plesha: So I'll answer the price one first, Jim, and then I'll let Sai weigh in on the sales force and productivity. So right now, we mentioned this in our script, but we don't have any active commercial contracts. So we haven't been paying rebates. So typically, those plans, you'll have price protection clauses in there, and so we haven't. I think our goal is to be responsible on price going forward. I think we're priced at the right point right now, and we'll take responsible price increases going forward. At this point, we're not disclosing what that might look like, but it is something we can do. And without having the commercial contracts, if we do take price, and if you go above those commercial contracts, it impacts Medicaid. So that's what's good about not having the commercial contracts is it doesn't really impact the rebates at the Medicaid level. So anyways, we're going to be thoughtful about price going forward. And more to come on that, I guess. I'll pass it over to Sai. Sai Rangarao: Yes. Thanks, Scott. Thanks for the question. So when we think about our field force and the productivity analysis that we look at really on a daily to weekly basis, we're seeing some strong growth trajectory across the multitude of quarters that we have divided up around the country and the regions in specific. When we look back on the analysis week-over-week, obviously, there's performance metrics that we work towards to ensure that we're getting higher growth, higher trajectory at each territory level. As Scott mentioned in his prepared remarks, we are moving towards an expansion, which really tells us that the field force activity and the productivity at the territory level has been profitable for us going forward. So that's where we see our growth trajectory and our growth trends increasing over time based on our current footprint and the one that we intend to expand into. Scott Plesha: Yes. And Jim, I'll add. When we went into the market initially, we wanted to get in market, see the uptake, see what the market access landscape looked like. We have had really good growth across the sales force. And really, it's an opportunity here to add these 14 reps. I mean, there are large metropolitan areas we don't have reps in like Seattle, Portland, Las Vegas, Salt Lake, St. Louis, Kansas City, Memphis. So some pretty large cities that we don't have coverage. So this is an opportunity to now invest. And the way we look at this always is we had to earn the right to do that, to have that expansion, and we feel like we have a proof of concept now that it makes sense to kind of add incrementally going forward. James Molloy: Can you walk through, is there seasonality? I know you mentioned that you expect it to be a little softer when people aren't taking the office visits over the holidays. Is this sort of a back-to-school did you guys launch at a perfect time? And then would you look to sort of any thoughts on peak sales guidance? And then I have one last follow-up. Francis Knuettel: I'll take the question on seasonality. So when we look at the ICD-10 data, as Scott mentioned, that really tells us about the overall diagnosis of molluscum, there is no real kind of peak season or sort of valley that you might see over any of the quarters and in particular, any of the months. In pediatric sort of conditions, you might see a little bit more of an influx of prescription activity, like you mentioned, during back-to-school only because there's an influx right before that time frame of pediatric visits, et cetera. But from a seasonality perspective, the data does look pretty, I would say, standard and static from what we've seen as we built out our overall approach to commercialization. Scott Plesha: Yes. And I'll add a little bit and then answer your peak revenue question, Jim. But the other thing to think about is when patients contract this disease, it could take months for them to go into the office. So somebody could have really started 4 or 5 lesions could have popped up on a child back in July, but they didn't seek care at the time. So it may not be going into now. So our thought leaders are kind of split on whether there's seasonality or even regional differences. So we think it's pretty steady throughout the year. Absent when offices are closed, again, patients are not being seen and we're an acute medication. Regarding peak revenue, we've stated publicly in the past that we're looking at a base case of $175 million peak revenue in 2028. And we're not prepared to change that at this time. We, again, while we're happy with where we are and how we've gotten out of the gate, we want to get more data before we make any adjustments. I think that's the wise thing to do. James Molloy: That makes a lot of sense as well. Last question then, the Xepi acquisition, I think that makes a ton of sense. Can you walk -- are there any additional compounds you guys are seeing for potential acquisitions to bring in over the next 2 to 3 quarters to slip into the bag like Xepi? Scott Plesha: No, I appreciate that. Xepi is a highly complementary product to ZELSUVMI in that we don't have to change our sales force. It's calling on the same targets. Our targets see a lot of Impetigo. And even some of the KOLs did our studies for ZELSUVMI that did them for Xepi. So a lot of overlap and synergy there. We'll continue to look for the right opportunities. I'll also point to the fact that we do have the rights after post-merger, we have the rights, if we'd like to pursue external general words using our NitroCil platform. It's actually a like formulation to ZELSUVMI. So that's something we're evaluating. And the rest of the NitroCil platform still sits within Ligand. So we're evaluating it. There's a lot of work done by our predecessor company around NitroCil and different indications, and those are things we're evaluating as we speak here basically. Operator: And this now concludes our question-and-answer session. I would like to turn the floor back over to Scott Plesha for closing comments. Scott Plesha: Great. Thank you, operator. I want to reiterate that even though it's early days, Pelthos is well positioned to capitalize on a large addressable market with the first FDA-approved at-home therapy for MC. We've built a strong foundation for the growth of ZELSUVMI and with ZEPI, a second highly synergistic product in the bag by the end of 2026. We believe there are strong growth opportunities before us. Finally, I wanted to thank the Pelthos employees for all their hard work and dedication in supporting patients, caregivers and health care providers. Thank you again for joining the call, and we look forward to updating you on our continuing progress in the future. Have a great day. Operator: And ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.
Operator: Welcome to Vecima Networks' First Quarter Fiscal 2026 Results Conference Call and Webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions] Presenting today on behalf of Vecima Networks are Sumit Kumar, President and CEO; and Judd Schmid, Chief Financial Officer. Today's call will begin with executive commentary on Vecima's financial and operational performance for the first quarter fiscal 2026 results. Lastly, the call will finish with a question-and-answer period for analysts and institutional investors. The press release announcing the company's first quarter fiscal 2026 results as well as detailed supplemental investor information are posted on Vecima's website at www.vecima.com under the Investor Relations heading. The highlights provided in this call should be understood in conjunction with the company's unaudited interim condensed consolidated financial statements and accompanying notes for the 3 months ended September 30, 2025 and 2024. Certain statements in this conference call and webcast may constitute forward-looking statements within the meaning of applicable securities laws from which Vecima's actual results could differ. Consequently, attendees should not place undue reliance on such forward-looking statements. All statements other than statements of historical fact are forward-looking statements. These statements include, but are not limited to, statements regarding management's intentions, beliefs or current expectations with respect to market and general economic conditions, future sales and revenue expectations, future costs and operating performance. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict and/or are beyond our control. Vecima disclaims any intention or obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise, except as required by law. Please review the cautionary language in the company's first quarter earnings report and press release for fiscal 2026 as well as its annual information form dated September 25, 2025, regarding the various factors, assumptions and risks that could cause actual results to differ. These documents are available on Vecima's website at www.vecima.com under the Investor Relations heading and on SEDAR at www.sedarplus.ca. At this time, I would like to turn the conference over to Mr. Kumar to proceed with his remarks. Please go ahead. Sumit Kumar: Thank you. Good morning, and welcome, everyone. Thank you for joining us. Please excuse my voice as I'm just getting over a cold today. Fiscal 2026 got off to a strong start with multiple achievements in the first quarter. I'm going to start today with an overview of the quarter's highlights. Judd will follow with a review of our financial results, and then I'll return to discuss our outlook before we take your questions. To start, I'm pleased to report we delivered another quarter of sequential quarterly revenue growth. Our consolidated revenues were up 3.4% quarter-over-quarter for Q1, building on the 7.5% sequential growth we achieved in Q4. Importantly, we paired this higher revenue with stronger gross margin performance as our product mix returned to a more favorable balance and we experienced less foreign exchange-driven volatility. Combined with our steadfast commitment to operating discipline, we achieved adjusted EBITDA of $11.5 million, an excellent result and up 71.2% as compared to Q4. Notably also, adjusted EBITDA margin increased to 16.2% from 9.8% in the fourth quarter. In our Video and Broadband Solutions segment, we delivered another quarter of strong performance as operators continue their transition to next-generation DAA platforms using Vecima's Entra solutions. By the end of the first quarter, our customer engagements for Entra had increased to 140 from -- up from 123 a year ago. To date, 68 of those customers have purchased Entra from Vecima. Our revenues, meanwhile, are coming from many different parts of the Entra portfolio, underscoring the depth and breadth of our industry-leading cable and fiber access solutions. One of the newer contributors in Q1 was our Virtual Cable Modem Termination System or vCMTS. As you know, we recorded first revenue for vCMTS in Q4, and we built on that in Q1 as we continue to advance towards the program with our lead Tier 1 customer. We also significantly increased engagement with additional customers during the quarter, including adding a new customer win in Europe in Q1. While Vecima is still in the early stages of our vCMTS journey, this technology represents a transformative achievement and advancement, virtualizing and substantially improving traditional hardware-based CMTS and CCAP systems to deliver far greater scalability, flexibility and operational efficiencies. It also offers much greater cost efficiency, reliability and performance together with a cloud-native architecture built entirely in software. Dell'Oro Group forecasts that the annual vCMTS market will reach about USD 350 million by 2028. Vecima is now firmly positioned as one of just 3 vendors worldwide that can offer a vCMTS solution of the quality and sophistication that's demanded by Tier 1 broadband service providers. We see a very exciting future for this technology and product line as the most significant additions to our revenue profile are still to come. We also achieved strong contribution again in Q1 from our EN9000, the industry's only GAP node, which is gaining deep adoption with customers. The EN9000 is a future-proof platform capable of being upgraded with multiple successive generations of DOCSIS for fiber-to-the-home technology. I'm pleased to report that we also received initial orders for the new Entra EN3400 version of the GAP node, which is a more compact and condensed variant of the EN9000. While this new node shares the vast majority of the design DNA of the EN9000, it's specifically targeted to multi-dwelling unit and enterprise applications that demand a streamlined variant. Related to that, it also represents new and incremental use cases above the Residential Cable Access segment and is expected to generate meaningful incremental revenue annually. Q1 also included growth in the Remote MACPHY category with a network expansion with a large U.S. Tier 2 customer occurring. Additionally, we won a new customer for a shelf-based Remote MACPHY device in the EMEA region. And on the fiber access side of the portfolio, Q1 was another particularly successful quarter where we saw ongoing strength from Entra Optical. We also continue to successfully roll out our newer Entra Principal Core and Access Test Platform solutions during the quarter. Principal Core again, is a virtual orchestration technology that aims to enable operators to converge cable, fiber and even mobile networks into a single seamless access platform. The Access Test Platform and simulators allow operators to validate and deploy DAA software upgrades at scale, dramatically speeding time to market for next-generation rollouts. During the quarter, we announced an important customer win with Liberty Global for the Access Test Platform, and we see more to come for both the Entra Principal Core and the Entra Access Test Platform. Another product group I want to mention is our Power Holdover Modules, which have also been enjoying strong adoption since we first began to roll them out in Q4. We see growing contribution from these innovative new products through fiscal 2026 and beyond. And on the topic of innovation, I want to comment on Vecima's impact at this year's SCTE Tech Expo in late September, far and away the industry's premier annual event. We had a standout presence at the show, drawing major attention and excitement as we revealed multiple industry and world-first innovations. This included a demonstration of concurrent 50-gig PON and 10-gig EPON over the same optical port in a live setting. This is a world-first achievement, which will give broadband service providers the ability to add 50-gig PON when and as needed while continuing to scale 10-gig PON and preserving those investments. Also on the fiber access side, we demonstrated our Entra EXS1610 All-PON Platform and vPON Manager, which delivers scalable, open interoperable and vendor-agnostic PON deployments through our open network ecosystem or Entra ONE Platform. And we showcased leading advances in DOCSIS 4.0, including live demonstrations of the cloud-native Entra vCMTS, powering the world's first dual downstream service group, DOCSIS 4.0 Remote PHY device, the Entra ERM422. Without question, we cemented our reputation as an innovation solution and technology leader in the industry. The response was exceptional and served as a fitting culmination to an impressive first quarter. Looking at our other business segments. In our Content Delivery and Storage segment, we had an excellent start to the year with revenues of $11.2 million and a gross margin of 60.7%. This was up both year-over-year and quarter-over-quarter, driven primarily by increased managed IPTV expansions with our customers. Importantly, we also saw increased dynamic ad insertion or DAI sales during the quarter, kicking off the implementation with a key customer while also securing Phase 2 orders. Other highlights included the introduction of our DAI Ingest Manager, which streamlines the management of advertising file assets. We view DAI as an important growth driver for its ability to empower customers to further monetize video. We also continue to advance our Open CDN platform as we develop the platform and engagements. Open Caching again allows operators to monetize the millions of over-the-top streaming video packets that are crossing their networks for free today, while at the same time, greatly increasing viewing quality and reducing caching costs for content providers. We expect this technology will evolve into a material growth driver in the long term. Turning to Telematics. We had another profitable quarter, which included the rollout with a large mobile asset customer with over 1,300 vehicles that we won recently, and we added another 14 new customers for our NERO Asset Tracking Platform. By quarter end, the Telematics segment had over 120,000 assets under management, including over nearly 22,000 vehicles and over 100,000 asset tags. As always, Telematics was a strong performer with gross margins of 67.6%. So overall, it was a quarter marked by significant achievements that further strengthen the foundation for Vecima's future growth. I'll return to talk about what we see next for Vecima in just a few moments. But first, I'll pass the call to Judd to provide our Q1 financial review. Judd? Judson Schmid: Thanks, Sumit. Good morning to everyone who's with us on the call today. I'll be reviewing our first quarter financial performance in more detail. And for the purposes of this call, I'll assume that everyone has seen our Q1 fiscal 2026 news release, MD&A and financial statements posted on Vecima's website. Starting with consolidated sales. We generated first quarter revenue of $71.1 million, which is up $2.3 million or 3.4% from Q4 of last year. Our Video and Broadband Solutions segment first quarter sales for fiscal '26 accounted for $58 million on par with sales of $58.1 million for the fourth quarter of last year. Our next-generation Entra DAA products generated $55 million, slightly higher than the $54.6 million last quarter and 19% lower than the $68.3 million in Q1 of fiscal '25. Commercial Video contributed $2.9 million to the VBS balance for Q1 as compared to $3.4 million last quarter and $4.5 million in the same period last year. Results for this product line are keeping with expectations as they reflect the continued transition to next-generation platforms and as some of the newer DAA-driven commercial video solutions are being accounted for as part of the Entra family sales. In our Content Delivery and Storage segment, we experienced a significant quarterly revenue jump in Q1 of fiscal '26 to $11.2 million from sales of $7.2 million in Q1 fiscal '25 and $8.6 million in Q4 of fiscal '25, an increase of 55% and 30%, respectively. And as always, we note that quarterly sales variations are typical for the CDS segment. The year-over-year increase reflects a significant increase in product sales and slightly higher service revenue. Segment sales for the first quarter of fiscal '26 included $5.1 million of product sales and $6.1 million of services revenue as compared to $1.4 million in product sales and $5.9 million in service revenue in the same period last year. In our Telematics segment, first quarter sales grew 10% year-over-year from $1.7 million in Q1 of fiscal '25 and were 9% lower than the $2.1 million in the fourth quarter of last year, with the year-over-year gains reflecting the increase in the number of tags and assets now being monitored. Regarding gross margin, rebounding to our expectations, our reported first quarter gross margin increased to 42.1% from gross margin of 27.3% in Q4 of fiscal '25 and 41.7% in Q1 of fiscal '25. As adjusted for inventory reserves and warrant expense, first quarter adjusted gross margin increased to 43.9% from adjusted gross margin of 37.4% in Q4 and adjusted gross margin of 42.3% in Q1 of last year. The increase primarily reflects a more favorable product mix in this first quarter. Turning now to first quarter operating expenses. These decreased by $7.9 million quarter-over-quarter to $28 million from $35.8 million, which included a $6.9 million impairment charge related to our intangible assets and decreased by $1.6 million from $29.6 million year-over-year. Notable year-over-year changes in the first quarter of fiscal '26 are as follows: G&A expenses decreased to $6.6 million or 9% of sales from $7.7 million, also 9% of sales due to lower salary expense resulting from our Q2 fiscal 2025 restructuring. Lower fixed asset depreciation and lower subcontractor expenses also contributed. Sales and marketing expenses decreased to $8.8 million or 12% of sales from $9.4 million, also 12% of sales, reflecting lower salary expenses again from our Q2 restructuring as well as decreased commission expense and conference costs. Research and development expenses increased to $12.1 million or 17% of sales from $11.6 million or 14% of sales. This is primarily a result of higher amortization of our deferred development costs, additional research and development costs from our Falcon acquisition, partially offset by the savings of our restructuring program implemented last year. As we continue to note, some of our R&D expenditures are deferred until product commercialization. And so reported R&D expense in a period is typically different than the actual cash expenditure. Adjusting for this, our actual cash R&D investment was $14.4 million or 20% of revenues in the first quarter, down from $14.8 million or 18% of revenues in Q1 of last year as we continue to emphasize our investment in our innovation pipeline and future product developments. We continue to show that we can monitor and control our operating expenses to contribute to our bottom line results. And looking at our bottom line results, we reported first quarter operating income of $1.9 million compared to operating income of $4.5 million in the same period last year. The decrease of $2.6 million primarily reflects lower revenues from our VBS segment, combined with additional inventory allowances and an increase in the amortization expense just noted for our deferred development costs, these being partially offset by the reduction in operating costs as a result of the restructuring in Q2 of last year. Lastly, we reported a first quarter net income of $0.2 million or earnings per share of $0.01 compared to net income of $2.1 million or $0.09 per share in the same period of fiscal '25. Additionally, our adjusted EPS for the first quarter was $0.05 per share compared to adjusted EPS of $0.12 per share in the same period of last year. Turning now to the balance sheet. We ended the first quarter with $8.6 million in cash, up from $3.4 million at the end of last quarter. Working capital of $53.8 million increased from $51.2 million at the end of last quarter. As we discussed in our MD&A, the components of working capital can be subject to significant swings from quarter-to-quarter. Product shipments can be lumpy as they reflect fluctuating requirements of our major customers. Contract timing issues like those with greater than 30-day payment terms also affect working capital, particularly if shipments are back-end weighted for a quarter. Lastly, cash flow provided by operations for the first quarter decreased to $6.6 million from $24.4 million during the same period last year, primarily as a result of the changes in working capital components just noted. During the current quarter, we also closed on the second tranche of our EDC debt of $10 million. Despite this additional debt, our net debt position is down from a high of $92 million in Q3 of fiscal '24 to $60.7 million for the first quarter of fiscal '26. On a final note, the Board of Directors approved a quarterly dividend of $0.055 per common share payable on December 22, 2025, to shareholders of record as of November 28, 2025. It's important to note that this dividend will be designated as an eligible dividend for Canadian income tax purposes. Now back to Sumit. Sumit Kumar: Thank you, Judd. As we move forward into Q2, we're tracking towards continued strong financial and operational performance in fiscal '26, supported by our broad Era product rollouts in the VBS segment and growing demand for our IPTV and DAI solutions in the CDS segment. We expect to pair this with improved gross margins through the year, reflecting a more balanced product mix and continued normalization of foreign exchange volatility. We anticipate our VBS segment will lead our performance in fiscal '26. As our customers' network upgrades roll out, their existing inventories come into better balance and our new Entra products and platforms provide added revenue. I want to note, however, that we expect that recent industry consolidation activity is likely to lead to some timing lumpiness between third and fourth quarters, accepting the more powerful demand acceleration we've been anticipating into early fiscal '27. In our Content Delivery and Storage segment, we continue to see a stronger year ahead, supported by contributions from our new DAI solutions as well as continued IPTV expansions with new and existing customers. Although as we always know, quarter-to-quarter performance and lumpiness in this segment tends to be of a lumpy nature. And in our Telematics segment, we're anticipating steady and profitable performance from the Recurring Software Subscriptions business on vehicles and assets. Overall, we expect full year results in fiscal 2026 to include solid revenues, a steady improvement in gross margins and strong adjusted EBITDA performance, well above last year's levels. We're moving forward, highly confident in Vecima's future. We boast the industry's broadest and deepest portfolio of innovative interoperable cable and fiber access products. And we have multiple growth engines supporting our momentum as global adoption of DAA ramps up and IPTV continues to expand. Our innovation and our significant achievements in both DAA and IPTV have laid the foundation for growth and increased profitability, not just this year, but for years to come. This concludes our formal comments for today. We'd now be happy to take questions. Operator? Operator: [Operator Instructions] Our first question today is from Steven Li with Raymond James. Steven Li: Can you comment on RDOF deployments? Like how is it going? And will that also be impacted by the industry consolidation you referred to? Sumit Kumar: Yes. No, thanks, Steven. I think RDOF has been a very successful program for the customers that are using Vecima's Remote royalties and our Entra Optical platform to penetrate and achieve those passings. And it's been a strong contributor of growth -- of growth for our customers, especially some of the larger Tier 1 customers we have. And that program has been a source of continued progress and commitment to the rollout. I think that the pace has been very steady and growing over the last several years. There's quite a bit left to do. So from the kind of influence of the consolidation activity, I don't think we see that as having any influence on the RDOF program considering that it's such a valuable expansion for our customers. Operator: [Operator Instructions] As there appear to be no further questions, this concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.