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Operator: Good day, and thank you for standing by. Welcome to the Prosegur Cash Full Year 2025 Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Miguel Bandres, Head of IR. Please go ahead. Miguel Ángel Bandrés Gutiérrez: Good morning to everyone, and thank you for joining today's call. I'd like to welcome you to our 2025 Q4 and full year results presentation that will be presented by Jose Antonio Lasanta, our CEO; Javier Hergueta, our CFO; and myself. The presentation shall take around 30 minutes in which we will share the most relevant events that have taken place in the period for our business as well as our performance. We'll comment on our key financials, our geographical performance and our transformation effort as well as our sustainability initiatives and will end with key concessions. After, we will open a Q&A session. Should we not get to respond to everything in today's session, we'll get back on any open topics on an individual basis. I want to again thank you all for your attendance and just remind everyone that this presentation has been prerecorded and is available via webcast on our corporate web page that you can find at www.prosegurcash.com. But before I hand the floor to Jose Antonio, I'd like to share some news regarding cash that have lately appeared in the media. They cover interesting topics such as the importance of cash for lower income families in the U.K., the stance towards cash of North Americans, how often cash is used in Colombia or the resilience of cash payments in the Eurozone. There are all cases that show the relevance of cash in different geographies and for different purposes, be it privacy, inclusion or budgeting or expense control. In the first news we can read from the BBC that the UK government will grant cash payments to people that happen to be in financial need. This new funding scheme will provide emergency funds for low-income individuals across England. This highlights how important cash is for all segments of society, especially for those that are most vulnerable. To reach them effectively and to allow them to buy their expenses accordingly, no other payment means is as effective and as inclusive as cash is. In the second year, we crossed Continue continent towards the U.S. We read from MoneyWise, that 84% of Americans oppose having a cashless country, citing privacy and spending control as key reasons for their positioning. Once again, in different places around the world, citizens are rising to defend their privacy and their right to control their personal spending. 84% is more than a relevant amount as we take into consideration when regulators are working on warrantying basic economic premium for which cash, its acceptance and its availability are crucial. Next, and moving down to Colombia, we can read from the [indiscernible] that this country stands out amongst cash users since 7 out of 10 daily payments are made with physical money. Here, we can see that in Colombia, consumers stand behind their payment choice, backing cash as their most preferred option. When doing this, they show with their example, the relevance of cash for Latin American economies and the preference citizens have for it. And lastly, and coming back to Europe, we can read from Euronews that Europeans pay for more than half of their purchases in cash. In 14 of the 20 countries in the Eurozone, cash is the most widely accepted method of payment accounting for between 45% and 55% of all transactions. Again, here, we can see that because of the many positive attributes cash has, it's the preferred payment means in over 70% of Eurozone countries. All the above are a reflection of the many events and news that take place in the world regarding cash that underscore its unique attributes and the endorsement it gets from consumers and authorities alike. We are proud to assure that the availability of cash in society continues to run smooth and effectively in close collaboration with other relevant stakeholders such as financial institutions, retailers or regulators. After this news update, I will share today's agenda. Firstly, Jose Antonio will review the period's highlights. Second, Javier will share with us the key financials for the year, after which Jose Antonio will take the floor again to reflect our transformation initiatives, and then I'll share key developments per region. Finally, Jose Antonio will update us on the latest sustainability developments before sharing key conclusions and open the Q&A session. This being said, Jose Antonio, the floor is yours. José Antonio Lasanta Luri: Thank you, Miguel, for sharing interesting news in the world of cash. Good morning to everyone, and thank you for attending. 2025 has been a challenging year for our company, in which despite an unfavorable exchange rate environment in Argentina, a key market for us, having taken decisive steps towards its macro normalization we have managed to maintain a relative operating margins and improve our bottom line in relative and absolute terms based on our determined transformation and a sequential improvement in Europe and a strong performance in Asia. All of this demonstrates our business model resilience. Our top line has shown organic growth of over 5%, which has been tainted by an 11.1% currency impact that accelerated as the year progress. We must remember that 70% of our revenue is not in euros and is hence affected both by the evolution of U.S. dollar versus the euro and by local currency fluctuations versus the U.S. dollar. Combining both elements, sales declined by 4.9%. Despite the above, we have been able to maintain a 12% EBITDA margin, I would like to here highlight that the nonrecurring efficiency program we have carried out since Q2 to improve our operations and in which we have invested more than EUR 15 million has been finalized and offset by positive extraordinary items. To end the year, our EBITDA margin has improved in Q4 by 30 basis on a quarter-on-quarter basis, reaching 12.5% on sales. Net profit has increased by 3.3% and 30 basis points versus 2024 to EUR 94 million, showing the improved performance of the bottom part of our P&L. Regarding Transformation, we continue to advance at a very strong pace. Sales for these solutions now account for 35.2% of total revenue and the penetration has increased by 300 basis points year-on-year. Of particular relevance has been the performance of our Cash Today solutions that have behaved very well in our geographies. In terms of cash flow, our free cash flow reached EUR 108 million on the back of disciplined CapEx control as well as in strict working capital management. With this, we have been able to reduce our total net debt by EUR 36 million year-on-year, which is a clear proof of our commitment to debt reduction. Lastly, I want to share that we have effectively repaid the EUR 600 million bond we've had out outstanding and that our balance sheet is strong, flexible and well funded on to 2030. As well, our Board has proposed a EUR 62.5 million dividend for the year 2025 to be paid in 2026, which implies maintaining the same dividend per share as the prior year. Lastly, it's important for us to highlight that Standard & Poor's has included us in the demanding Global Sustainability Yearbook for 2026, which recognize our constant effort to have a sustainable company. With this, I'd like to hand over to Javier so he can share with us our key financials. Javier Hergueta Vázquez: Thank you, Jose Antonio. First, looking at our profit and loss account. Revenue has reached EUR 1,987 million. As we can see on the right-hand side of the page, Organic growth reached 5.3%, while inorganic at almost 1%. However, as Jose Antonio pointed out in the prior slide, foreign exchange has negatively affected us by 11.1%. When totaling all these effects, our overall sales have decreased by 4.9% in the year. Asia continues to be clearly our organic growth leader, and we foresee that to continue into the future. Our EBITDA totals EUR 356 million, which, together with depreciation of EUR 118 million in the period makes us reach an EBITDA of EUR 238 million, 5% less than in 2024. It is important to highlight that despite both the currency and Argentina's normalization impact on our country mix, we've been able to maintain our 12% relative margin. Looking at the bottom right-hand side of the page, the one-off impact from the extraordinary efficiency program that summed EUR 50 million and for which we expect a payback of 18 months has been offset by other positive extraordinaries fundamentally related to prior acquisitions deferred payments. As we continue down our P&L, amortization of intangibles reached EUR 22 million, EUR 3 million less than last year and with which we reached an EBIT of EUR 260 million, 10.9% of sales, which is 10 basis points improvement versus 2024. It is important as well to note that the financial results totaled EUR 47 million, EUR 13 million less than in 2024, mainly on lower currency impact with which we reached an earnings before taxes of EUR 169 million, EUR 3 million more than 1 year ago and allows us to improve our margin over sales by 60 basis points to 8.5%. Taxes totaled EUR 75 million in line with last year in absolute terms and results in a reduction of 60 basis points in the tax rate to 44.4%, a trend that should continue into the future. With that all, our net profit reaches EUR 94 million, growing 3.3% versus one year ago and represents 4.7% of total sales, a 30 basis points improvement year-on-year. I want to underline the resilience of our P&L that shows especially in its bottom part towards net profit. This all allows us to deliver earnings per share of EUR 0.0607, 1.2% better than the one achieved a year ago. Even in such an adverse environment, we have been able to not only protect but improved profitability for our shareholders. If we go to Page 5, we can review our cash flow and net debt position. Starting from the EBITDA I shared in the prior page of EUR 356 million for the year, provisions and other items deduct EUR 69 million, EUR 34 million more than the prior year, explained by the difference year-on-year in extraordinaries and other noncash items. Income tax implied a cash outflow of EUR 83 million, EUR 19 million more than in 2024 while CapEx has totaled EUR 82 million, showing our discipline towards CapEx management, which we aim at maintaining in relative terms over sales. Investment in working capital has totaled EUR 14 million despite growing organically at 5.3%, as we've seen earlier and representing a substantial reduction of EUR 21 million year-on-year as a result of an effective DSO and DPO management. With this all, our free cash flow reaches EUR 108 million, implying a 77% conversion over EBITDA in the year, improving 300 basis points over 2024. Interest payments reached EUR 19 million, slightly over a year ago despite the refinancing program carried out throughout the last part of the year. And M&A payments have totaled EUR 52 million contributing to reduce the M&A-related outstanding debt by EUR 70 million. Dividend outflow totaled EUR 61 million and treasury stock some EUR 8 million in 2025. Our net financial position at the beginning of the period was at EUR 643 million, to which we shall decrease the net cash flow and as well deduct the EUR 10 million negative impact from foreign exchange rate. These results in the net financial position for the end of the period of EUR 711 million, increased fundamentally due to M&A payments made and extraordinary efficiency costs to which we must add EUR 98 million of IFRS 16 debt, EUR 55 million in deferred payments and EUR 40 million positive of treasury stock achieving a total net debt of EUR 850 million, reducing EUR 36 million year-on-year and taking it below 2023 levels. Our resulting leverage ratio has reached 2.4x, 0.1x more than 2024 fundamentally driven by the effect of currencies on our EBITDA levels. As said, we are confident that into 2026, we will be able to continue our deleveraging. With this, I would like to hand over to Jose Antonio, so he can share with us on Transformation. José Antonio Lasanta Luri: Thank you, Javier. Looking into Transformation, I'm very happy to share that these solutions now represent 35.2% of our total sales. In 2025, revenue of our Transformation solutions reached EUR 700 million, which is a 4.1% increase in relative terms. Once again, this underlines that our products are very well received by our customers and continue to trust in us as a key service provider. This growth over 2024 is especially relevant if we take into account that in 2024, we undertook very relevant nonrecurring projects of ATMs in Latin America that have not been repeated into 2025. Together with the already mentioned currency impact that, of course, as well affects the sales. Penetration of our total sales, as I said, now reached 35.2%, implying an increase of 300 basis points year-on-year. If I am to highlight one especially key performer, this has been our Cash Today solutions but continue to deliver extraordinary growth in our geographies and to which we have increased our product type range. We are determined to continue the transformation of our company into the future, focusing on our key solutions. Cash Today, ATMs, banking correspondence and ForEx business. With this, I would like to pass over to Miguel, so he can share with us the key highlights of our performance by region. Miguel Ángel Bandrés Gutiérrez: Thank you, Jose Antonio. I would like to first start sharing with you the key developments in Latin America, our main region that accounts for 58% of group sales. Revenue in the region totaled EUR 1,145 million in 2025 and this implies a decline of 11.5% versus the same period achieved a year ago, driven fundamentally very strongly adverse 17% currency effect. The evolution of the U.S. dollar versus the euro as well as the local currency versus the U.S. dollar have taken negative toll on our sales. Very important to note that underlying organic growth has been 5.4%, which reflects a positive evolution overall in the region, save Argentina. Different elections that have taken place in the later part of the year and the measures taken in order to balance public spending have affected consumption as reflected in our figures. We're confident that as the country continues its change efforts, growth will restart, and we'll see strong activity back. Transformation products have experienced as well a very positive year despite the currency effect and they've managed to grow versus the prior year, reaching EUR 435 million, which is 38% of total sales, increasing thus the penetration by 490 basis points. Growth in the region has been fueled by strong performance of Cash Today and banking correspondent initiatives. In terms of margins, pro forma EBITDA, which excludes the one-off impact of the EUR 50 million efficiency program carried out in the region in the last three quarters and other extraordinary items related to prior acquisitions, payments has reached 16.1% of sales. That is an 80 basis point reduction versus one year ago, fundamentally due to the Argentina normalization as well as the effect of currencies and the country mix. we believe this margin should expand into 2026. Turning now to Page 8. Europe accounts for 33% of group sales. Revenue in the region has reached EUR 662 million. That's a 1.4% or EUR 9 million increase over a year ago. This growth is backed on an organic positive 1.5% growth that has been slowly by receiving the accelerating quarter-on-quarter and that we believe will continue into 2026. The region experienced a minor 0.1% drop back from currency effect. We have to underline that this growth has taken place in a year where Spain and Portugal have seen modest 2% increases in GDP terms, and Germany, our biggest market in the region has experienced no growth. Transformation in the region now reaches 33% of total sales, a 10 basis point improvement over one year ago. The main contributor to this Transformation product growth continues to be Cash Today, which we believe still has a lot of room for growth from our expanded product range. When we look at margins, pro forma EBITDA, which excludes extraordinary positive impacts due to prior M&A payments, has improved by 15.6% to reach EUR 35 million and in relative terms, totals 5.4% of sales, 70 basis points better than in 2024. We're confident that on a pro forma basis, the margins of the region will continue to grow and will actively contribute to the company's more balanced growth and margin profile. We now turn to Asia Pacific, a region that now represents 9% of group sales, up from 7% in 2024. Sales in this geography have reached EUR 180 million, a significant 26.4% improvement year-on-year. It's particularly important to note that this growth has been propelled by a 21.7% organic growth, which continues strong across the region. Such a growth is backed from strong economies, a significant outsourcing still to be developed and an increasingly high adoption of our transformation products. However, as we've already seen in prior quarters, currencies have reduced our revenue by 8.1% in euro terms. They've been affected by the decline in both local currencies versus the U.S. dollar and U.S. dollar versus the euro throughout the year. Looking at Transformation. These products have grown by 53.9% to reach EUR 47 million in 2025. The penetration achieved is of 25.8% of sales, a significant increase of 460 basis points year-on-year. Especially noteworthy, considering the strong push of the core business. This growth has been driven fundamentally by the ForEx business. In terms of margins, as anticipated, EBITDA significantly improved to double the territory, reaching 10.4% of sales and EUR 19 million in absolute euro terms. Thank you for your attention, and now I'll turn it to Jose Antonio. José Antonio Lasanta Luri: Thank you, Miguel. I would like to now share our key sustainability-related development. Regarding the environment, I am glad to share our achievements in terms of decarbonization. We have reached our goal of reducing our carbon footprint by 8.4% versus a reference year of 2023, and clearly beating our yearly target of 1.7% reduction. This shows our commitment to reducing the impact of our business and the environment in an always economically meaningful manner without jeopardizing quite the opposite of our financials. As well, I am pleased to let you know that we have been ranked in Standard & Poor's 2026 Global Sustainability Yearbook, it is noteworthy to reckon that this list recognizes a select group of companies recognizing us in the top 15% amongst over 8,000 candidates for outstanding sustainability performance. Turning to our people. I'm very happy to share that we've been able to reduce our workplace accident frequency rate by 9% versus 2024 as a result of the multiple initiatives in terms of training and prevention we have invested in over time and to continue improving our team's safety, reflecting the above rate, we have launched a Road to Safety training targeted at our fleet teams taking into account that a large portion of our colleagues are in the logistics area and that this is where most accidents take place. We are sure that this initiative will have a very positive impact. Lastly, in the governance area, I am proud to share that we maintained the highest rating on the AENOR Good Corporate Governance index reaching G+++ rate, a level granted only to the best-performing companies. And as well, I want to share that almost 2,500 employees have achieved our corporate compliance certification that assures that we are a more robust and trustworthy company. Lastly, this year, we have improved in almost all key ESG ratings we are in. We can see particularly significant improvements in the S&P Global and MSCI ratings showing that third-party independent agencies ratify our efforts and achievements in the matter. We are sure that by taking care of our people by decreasing accidents, reducing our impact on the environment and improving our governance, we build a more sustainable company. And now I would like to summarize my main conclusions. 2025 has been a very demanding year in which we've been able to improve our bottom line profitability as well as continue to transform in an adverse exchange rate environment. Our business has weathered the normalization actions undertaken by the Argentina authorities as well at the dollar and other currencies devaluation. In this difficult environment, we have been able to both implement the efficiency program and capture growth and profitability in Europe. We have been showing a resiliently accelerating quarter-on-quarter improvement, while Asia continues to show a strong growth. We foresee these trends to continue into the future. Transformation has been at the forefront of our strategy where we are to focus on our four key families of solutions. Cash Today, ATMs, CORBAN and the ForEx business. Regarding them, we will continue to enlarge our offering and digitalize our portfolio. These efforts have resulted in improving our net profit by 3.3%, demonstrating our strong commitment to creating shareholder value and maintaining a strong shareholder remuneration while we reduce debt. In all, as said, 2025 and despite the evolution of currencies in Argentina's normalization, has been a transformative year for us. We have improved our bottom line, made our operations more efficient and continue to transform our company. We are sure that we are best prepared to face 2026, a year in which we are already working hard to continue delivering and where you should see an improved LatAm business and continued profitability and growth in Europe and a consolidation of our Asian performance. Thank you very much again for your attention. And now I would like to open the floor to any questions that you might have. Operator: [Operator Instructions] We will not take the first question from the line of Alvaro Bernal from Alantra. Alvaro Lenze Julia: I have three. The first one is regarding LatAm. We have seen it has suffered significantly this quarter with declines in organic growth. If you can explain a bit better the underlying behind this? Is it solely because of Argentina or Brazil is also suffering? And your view on this going forward into 2026, do you expect a recovery here? And also, if you can shed some light regarding the margins in the region, it would be very helpful. That's the first question. The second one is regarding investments. We have seen muted investments in both CapEx and leases this year. How do you see this going forward? Do you expect them to jump again as you renew, for example, opening stores for the ForEx business? Or if you can give us some color, it would be very helpful. And lastly, how do you see net debt for 2026? Do you have a specific target in mind? Leverage or whole number? It would be very helpful. José Antonio Lasanta Luri: Thank you, Alvaro. Going to your first question, it's true what you're saying. If we take out Argentina, the growth of LatAm has accelerated in the fourth quarter. So it's been mostly Argentina, I would say, 100% of the issue in the fourth quarter. How do we see it in the future? We see that is going to be an important improvement in Argentina back to the relative performance that was before year 2025. So we see margins stabilizing and getting to where we were in 2024. It's true that the mix is going to change in the mix of countries. So there will be some change in there, but there is going to be an improvement, and it's going to be an important improvement there in Latin America. Second question on CapEx. Again, it's true what you are saying. This year, we've been quite shy on the CapEx of ForEx. But this year, we are going to have a stronger boost where we have won two big airports, Frankfurt new terminal and JFK Terminal 1, Terminal 6. So we'll be investing on those two airports, and we'll keep investing on new retail branches. So there's going to be some boost in CapEx there on the ForEx business. At the same time, we are going to keep optimizing our CapEx in the rest of the areas. So I think we are going to see that there is going to be optimization on the -- what we call infrastructure CapEx. And we see some improvements there. But as you said, totally overcome by the CapEx we are going to undertake on the ForEx business. And on the third question, our commitment is to deleverage to keep bringing down the debt of the company. So we believe there is going to be a delivery on relative terms, but also in absolute terms as we have seen this year. This year has been mainly focused on three areas. And this year, I think it's going to be -- we are going to see deleveraging on banking debt as well. The bank also -- Yes. I think that's more or less the answer to your three questions. Operator: We will now take the next question from the line of Enrique Yaguez from Bestinver Securities. Enrique Yáguez Avilés: A bunch of questions about Argentina and then a couple of them [ other ] issues. Regarding Argentina, I don't know if you could give us what kind of organic declines suffered last year, how much are the Argentina worth over the total group revenue? In the first quarter, you see some signs of recovery. I mean, in the medium term, probably we will stabilize, but how is the situation now? Then on the restructuring plan announced in LatAm last year, I would like to know if all the costs have been already [ incurred ] or just provision and how would that cope with the recent labor reform announcing Argentina? If you could save some money or not [indiscernible] on this. Sorry, I was late at the conference, but I didn't now if you provided what was the net extraordinary impact of EUR 12 million in Q4 because I think on a gross basis, it could be higher here because probably more restructuring costs we are improving in LatAm. Thank you very much. José Antonio Lasanta Luri: Thank you, Enrique. Regarding your first question, in Argentina, there were three things that happened. The first one was a consumption came down because of the policies of the government, and although you see an increase on GDP of the country, the GDP growth has been mainly focused on the energy and our cultural sector. But the internal economy and the [ consumption ] is very depressed right now. Although the government has stated that this year is going to be a much better year. To tell you the truth, we have seen very small recovery. There's been some recurring but really small and not at such extent as government has stated. The second event that has happened is that the valuation has been much worse than inflation. So [indiscernible] more accounts of the valuation has been quite important. And then the third one has been the monetary policy restrictions that the government has put a constraint on the money that the banks have to hold that has been at 58% compared to 13% that is in Europe north of 58%. I think the government has said that we are going to open this year and they want to really make the internal growth, internal consumption growth much higher. And we are going to be very -- we are going to be expecting or looking forward to this very early. Although I think we have -- what has been really an achievement for us is that after some of the restructuring costs, we are now at the same relative terms than we were before 2025. So I think the country has done a tremendous effort in adjusting the cost structure, which is really difficult in our business. And really, the country has done very, very well on that front. Restructuring cost, it's true that it's been incurred like 90%, 95% of the whole program. So in February, we are going to do the last few weeks, but it's [ small bit ]. And why not in January? It's because non-January is a very strong month in Latin America and also a lot of people take holidays. So it's very difficult to adjust your last weeks during January and where we've done it during February, but everything is done in February. The plan is to have a payback of around 18 months. So we are going to see the -- all the savings, we are going to harvest the savings of this program during the year, we are going to see at the late part of the year, a very important kick back for the savings. And then the third question was about -- is we mainly -- some deferred payments that we have in some of the M&As. You know that whenever we do a transaction, we try to -- we record the business plan given by the sellers and normally is quite bullish. And there's been some adjustments on the deferred payments of [ the tail ] of the acquisition that we've done that we did in 2023 and then [ 2022 ]. Enrique Yáguez Avilés: [ The compensation growth from M&A ] José Antonio Lasanta Luri: Yes. Do you want to... Javier Hergueta Vázquez: Just to clarify, if you still have [ that ] it's basically the adjustment on the pending payments, which are recognized in our balance sheet. So as Jose Antonio was saying, we are typically recognizing it on the initial business case and there are typically some adjustments between that scenario and the actual performance, and this is reflecting that. So lower level of pending payments going forward in our balance sheet. Enrique Yáguez Avilés: Okay. And how much was the restructuring cost in Q4 in LatAm just to have the... Javier Hergueta Vázquez: So in Q4, we've undertaken EUR 3 million more of efficiencies programs in Latin America. So when you see the LatAm figures, I mean, in the adjustments, EUR 3 million come from the efficiencies program, EUR 3 million come from the M&A arena. Operator: We will now take the next question from the line of Joaquin Garcia-Quiros from JB Capital. Joaquin Garcia-Quiros: So the first one is in Europe, we've seen some recovery or acceleration throughout the quarters. Now the growth is almost up 3% for the fourth quarter. What can we expect for this year? Should we see this 3% more or less now as the trend going forward? Or was it just something specific for this quarter and Germany should continue to weigh down of that growth? And then for Asia Pacific, it's been growing fairly positive throughout this year. Should that growth continue? Or should we expect already a slowdown in 2026? And then lastly, assuming that Argentina recovers, would mid-single-digit EBITDA growth be achievable? Thank you. José Antonio Lasanta Luri: Thank you, Joaquin. How do we 2026 by region, as you said, I think the global business, we are going to see a growth of mid-single digits in terms of sales and some profitability enhancement above that. So I think that's the global picture. If we go by region, I think Latin America is going to improve, mainly because of Argentina. We are positive on that one because of the restructuring program. So we are going to see some earnings enhancing there. Then Europe, we are going to see some growth in the business. I think the 3% growth, I think, is going to be beaten this year. It's going to be a bit higher and also some earnings enhancing there. And in Asia, still a small region, but we are very positive on it. Indonesia is doing a fantastic job and also the Philippines, India -- we have seen a very strong growth there. And then I think the Australian issue that we have has been more or less solved. It will be completely resolved hopefully in June to September 2026, which will be signed a deal with the major customers for medium-term for medium term. So I think that's going to give us a lot of stability. And if we look at the lower part of the P&L, I think we are going to have also good news on the financial cost on the tax and the tax rate both in the P&L and in the cash flow because, as you know, in Argentina, taxes are paid -- made on previous year profits. So this year, our taxes have been -- our tax bill has been quite high for the profit that we have had in Argentina. So next year, we are going to have some tax bill cut because of that. So that will improve also our cash flow. So I think we are positive on the -- of achieving the mid-single digit growth in global terms then some earnings enhancing at EBITDA level has been a much better increase on the net profit level. I that's going to be more or less the summary. And this is going to be reflected on cash flow because of this tax bill that we just mentioned. So that's our -- and we will use this cash flow to deleverage a bit more. So this is more or less the summary that we have for 2026. Operator: There are no further questions at this time. I would now like to turn the conference back to Jose Antonio Lasanta, for closing remarks. José Antonio Lasanta Luri: Thank you very much for your attendance and for your questions, investing questions as always and we'll meet next year and as I said, I think we are very positive on 2026 because of the trends of the market. And because of the last issues on the industry that you know that yesterday, Brink's announced the acquisition of NCR. And I think this is going to be the confirmation of a strategy that we are seeing that CAD companies are going to take the lead and the forefront for bank ATM [indiscernible] of outsourcing that we are seeing in the market. So thank you very much for your attendance. Thank you very much. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good day, everyone. Thank you for standing by. Welcome to the Xperi Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Sam Levenson from Arbor Advisory Group. Sam, please go ahead. Samuel Levenson: Thank you, operator. Good afternoon, and thank you for joining us as Xperi reports its fourth quarter and full year 2025 financial results. With me on today's call are Jon Kirchner, Chief Executive Officer; and Robert Andersen, Chief Financial Officer. In addition to today's earnings release, there's an earnings presentation on our Investor Relations website at investor.xperi.com. We encourage you to download the presentation and follow along with today's commentary. Before we begin, I would like to provide a few reminders. First, I would like to note that unless otherwise stated, all comparisons are to the same period in the prior year. Second, today's discussion contains forward-looking statements about our anticipated business and financial performance that are predictions, projections or other statements about future events, which are based on management's current expectations and beliefs and therefore, subject to risks, uncertainties and changes in circumstances. For more information on the risks and uncertainties that could cause our actual results to differ materially from what we discuss today, please refer to the Risk Factors and MD&A sections in our SEC filings, including our Form 10-K for the year ended December 31, 2025, to be filed with the SEC. Please note that the company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after this call. Third, we refer to certain non-GAAP financial measures, which are detailed in the earnings release and accompanied by reconciliations to the most directly comparable GAAP measures, which can be found in the Investor Relations section of our website. Last, a replay of this conference call will be available on our website shortly after the conclusion of this call. I'll now turn the call over to Xperi's CEO, Jon Kirchner. Jon Kirchner: Thank you, Sam, and thank you, everyone, for joining us on our fourth quarter and full year 2025 earnings call. As we finish the year, it seems an appropriate time to look at the investments made over the past few years, appreciate our recent progress in hitting key metrics that set the stage for future growth and discuss the next phase of focus for the business, substantive revenue increases through advertising and data monetization. Let me first provide an overview of the progress we made during the quarter against this past year's goals. Progress that continues to give us confidence in our belief that we're reaching a key inflection point as a business. There are 3 key areas of progress over the past year. First, at the end of 2025, we reached 5.3 million monthly active users on our TiVo One ad platform, surpassing the year's goal of 5 million and registering an increase of over 250% over the course of the year. As I've noted in the past, footprint growth is critical for us to reach larger scale in the U.S. and the larger European countries, which in turn is expected to facilitate more effective monetization of our installed base. Next, in the Connected Car market, our DTS AutoStage footprint also continued to grow, reaching over 14 million vehicles, 40% growth when compared to the prior year. We believe AutoStage is a unique platform, both in terms of scale and reach, and we are already seeing signs of the platform's value as we progress advertising and data monetization trials with ecosystem partners. And finally, in our Pay TV business, our video over broadband subscriber count grew 25% year-over-year to reach 3.25 million subscriber households. Subscription-based revenue from IPTV continues to build, which we believe will provide a balance within our Pay TV business as revenue from our older Pay TV products is expected to continue to decrease. Thus, we expect the Pay TV business will level out over the next several years as our IPTV business continues to serve those customers that want a flexible IPTV streaming bundle in a modern, rich and compelling user interface. We also anticipate broadband households will provide additional streaming monetization opportunities. Turning to our summary financial results for the quarter. We recorded consolidated revenue of $117 million, a decrease of $6 million compared to last year as growth in Media Platform and Connected Car were more than offset by a combination of anticipated decrease in Consumer Electronics, driven by lower demand and memory cost and supply chain issues and Pay TV, which benefited from minimum guaranteed arrangements recorded in 2024 that didn't occur in 2025. During 2025, we proactively reduced non-GAAP adjusted operating expense, lowering it by 13% compared to 2024. This change was primarily due to workforce reductions that were implemented over the past year. We achieved adjusted EBITDA of $22 million for the quarter, bringing the year's adjusted EBITDA to $77 million or 17% of revenue, which was at the high end of our outlook range for the year. We also recorded operating cash flow of $4 million in the quarter, bringing operating cash flow close to neutral overall for the year. Let me now go through each of our 4 business areas, starting with Media Platform. As noted earlier, we reached a key milestone for our TiVo One ad platform by hitting 5.3 million monthly active users at year-end, a remarkable achievement for both growth on the platform and acceptance of our TiVo operating system into the market. We continue to add new capabilities for the TiVo operating system, including the deployment of Blacknut Cloud Gaming and demonstrations of the operating system directly on high-end mini LED smart TVs, set-top boxes and sound bars. We also deployed a video-based homepage ad unit to provide advertisers with more ways to reach our audiences. Within Media Platform, we achieved significant revenue growth in advertising when compared to a year ago, with average revenue per user for TiVo One finishing the year at $7.80, down slightly from the prior quarter due to our user base growing faster than related monetization revenue. We expect ARPU to take a bit of time to normalize as both revenue and footprint growth are expected to accelerate on the platform. Advertising partnerships continue to be an important foundation for our goal of accelerating revenue growth. And during the quarter, we entered into new agreements with Titan Ads, OpenGlass and Anoki, all well-known industry resellers of premium CTV inventory, such as home screen video ads in the European and U.S. markets. We also launched FreeWheel as a new supply-side demand partner and began generating revenue through the partnership. Our advertising business also saw progress through our direct sales efforts with homepage ad campaigns executed for clients, including Hallmark Media, Freeform, NBCUniversal and TNT. Moving to Connected Car. The momentum for DTS AutoStage continued with the signing of Mercedes Benz to launch DTS AutoStage video service powered by TiVo. This win adds another major OEM launching on our Connected Car video platform, which we believe cements our position as a leading supplier of Media Platforms to automotive OEMs. It's worth noting that Mercedes is the first car brand to offer all 4 of Xperi Connected Car solutions, HD Radio, DTS:X immersive sound, AutoStage audio and video powered by TiVo. As a leading brand that often sets direction for the automotive industry, we believe Mercedes support furthers momentum for our Media Platform and technology solutions. At year-end, AutoStage had a footprint of over 14 million vehicles from many automotive brands. Also during the quarter, we added a significant number of radio broadcasters across the U.S., Europe, Australia, Lat Am and Africa, further expanding the global services connected to the AutoStage platform. Our HD Radio solutions saw continued adoption with several new models from Toyota, Honda, Audi and others launching in the fourth quarter. We also signed a multiyear agreement with a large U.S.-based Tier 1 supplier that is expected to provide a cost-optimized HD Radio implementation over the next few years, which we believe will further propel the growth of HD Radio among major car brands. Finally, we also signed a multiyear DTS audio deal with a large Asian Tier 1 supplier, which is expected to secure our DTS decoder in a number of future car programs. Moving to our Pay TV business. As noted earlier, our IPTV subscriber base continued to grow, increasing by 25% year-over-year to hit 3.25 million subscriber households at year-end. For our managed IPTV service, we posted wins with [ Prism Fiber ] and MIDTEL in the U.S. and with Celerity and MOPC in Canada. We also continued to grow our broadband-only wins, including new deals with Blue Stream Fiber, Buckeye, [ Prism Fiber ], MIDTEL, Carnegie, Hickory and Velocity. During the quarter, we signed multiyear agreements with ClaroVTR for IPTV services in Latin America and with Frontier Communications in the U.S. for content discovery services. In addition, we signed a notable multiyear agreement for classic guides technology with Canadian-based telecom operator, Cogeco. Moving to our Consumer Electronics business. During the quarter, we continued to expand the IMAX Enhanced program with new product categories such as high-end earbuds. We also saw adoption of the program by Yamaha and the signing of a key renewal with Onkyo. Now all major audio-video receiver manufacturers are participating in the IMAX Enhanced program, which we believe reflects its position as the premium audio/video solution in the marketplace. We also signed a decoder and post-processing renewal with Sound United, which owns premium brands like Denon and Marantz. Lastly, we signed a multiyear agreement with a leader in the PC space, covering sound technologies for consumer products as well as extending audio technology penetration into its commercial products. In a few moments, I'll turn to a discussion of our pivot to audience monetization, advertising and growth. But let me first turn the call over to Robert to discuss our financial results in more detail. Robert? Robert Andersen: Thanks, Jon. Let me start by reviewing revenue results for the quarter. Overall, revenue finished at $117 million, lower by 5% when compared to last year. As Jon noted earlier, we had 15% revenue growth in Media Platform due to significant growth in advertising revenue, along with 5% growth in Connected Car revenue from higher minimum guarantee arrangements that were completed during the quarter. This growth was more than offset by a 21% decrease in Consumer Electronics revenue, driven by lower customer demand due to memory costs and supply chain issues, along with a 7% decrease in Pay TV revenue from minimum guarantee arrangements recorded in the prior year and due to lower revenue from our end-of-life consumer DVR business. Looking at overall financial results, our non-GAAP operating expense for the quarter improved by $10 million or 13% compared to the same quarter of 2024 due primarily to proactive personnel reductions implemented over the course of 2025. We posted $22 million of adjusted EBITDA or 19% of revenue, essentially in line with last year's numbers. Non-GAAP diluted earnings per share was $0.24, lower than the prior year by $0.15 due primarily to lower non-GAAP tax expense in the fourth quarter of 2024. Turning to the full year results. We finished 2025 with revenue of $448 million. This was a 9% decrease compared to the prior year due to 2 primary areas. First, we saw a 21% decrease in Pay TV revenue due to an expected reduction in core Pay TV revenue from overall industry trends, a challenging comparison with a significant multiyear minimum guarantee agreement that we recorded in 2024 and from the ongoing reduction in our consumer business as our DVR products have entered end of life. And second, our Consumer Electronics business decreased by 5% compared to 2024 due to disruptions in unit volumes from memory supply issues as well as the comparable of revenue from the divested Perceive business that was sold in late 2024. Our Connected Car business posted 12% year-over-year growth due to a higher volume of minimum guarantee arrangements where the revenue is required to be recorded upfront. Our Media Platform business was essentially flat year-over-year as growth in advertising revenue was offset by expected decreases in both middleware licensing and revenue from our Stream 4K device. Turning to overall financial results for the year. Our non-GAAP adjusted operating expense of $274 million improved by $60 million or 18% compared with the prior year due primarily to reductions in headcount implemented during the year, the divestiture of Perceive at the end of 2024 and the shifting of certain operating expenses to cost of revenue as newer products have begun generating revenue. We finished the year with adjusted EBITDA of $77 million or 17% of revenue, resulting in growth of 2 percentage points when compared to 2024. Turning now to the balance sheet and statement of cash flow. We finished the fourth quarter of 2025 with $97 million of cash and cash equivalents, which was level with our balance from the third quarter of 2025. We generated $4 million of operating cash flow in the quarter, which was $3 million higher than the same quarter in 2024. For the full year, operating cash flow was $0.5 million usage, right in the middle of our updated guidance range of neutral operating cash flow, plus or minus $10 million. Notably, achieving essentially neutral operating cash usage for 2025 demonstrates a significant improvement over prior year, where our operating cash usage was $55 million. We had $2 million of free cash flow usage in the quarter. Let me now turn the call back over to Jon to cover our key operating metrics and objectives going forward. Jon Kirchner: Thanks, Robert. Five years ago, when we began the journey to combine TiVo and Xperi, we recognized that the product business would need to go through a meaningful transformation, significantly changing cost structure and operating model as viewership shifted from traditional media to streaming. As we close out 2025, a few years into our journey as a stand-alone independent company, I'm pleased to report that many of our previously stated long-term goals have either been achieved or we have direct line of sight to accomplishment in the next 12 months. This includes our goal of growing our MAU platform from the more than 5.3 million users towards our goal of at least 7 million, something we expect to surpass during 2026. We also set an initial goal of 4 smart TV partners, which has now been exceeded for a total of 10, which we believe validates the market need for an independent TiVo OS platform. In addition, we sought to grow our IPTV subscriber base to at least 3 million subscriber households, a goal that has now been surpassed. In Connected Car, we had previously set a long-term goal of building the AutoStage platform footprint to at least 15 million vehicles. By year-end, we had surpassed 14 million, and we have line of sight to meeting and exceeding our goal of 15 million vehicles in 2026. With that scale, we expect to progress auto monetization trials with broadcast and OEM vehicle partners with the goal of enabling monetization-based revenue growth to accelerate in 2027 and beyond. So as we've made multiyear investments and seen tremendous progress in building the critical foundations for a long-term monetization business in both the home and the Connected Car, we feel confident in our belief that we've reached an inflection point in our business. With increasing amounts of audience engagement across our home and Connected Car platforms as consumers watch video and listen to radio content, we have the opportunity to connect advertisers with our unique audiences providing enhanced targeting and data solutions. We believe that being the only independent omnimedia platform with scale that can deliver high-value TV home screen ad units along with the opportunity to reach unique engaged audiences in the Connected Car is a combination that differentiates our Media Platform from others in the marketplace. This strategic positioning, combined with our established presence in both programmatic and direct sold advertising markets with anticipated growing demand for premium ad inventory gives us confidence in our expectation of successfully selling our owned and operated ad inventory to drive meaningful monetization revenue growth. We expect that during 2026, we'll see Media Platform revenue double, and that growth will continue to build in 2027 as our footprint continues to scale, and we have more sellers working with our platform. We also expect that as footprint scales and ad sales ramp up, ARPU will normalize as a result. As we exit 2026, we expect ARPU to exceed $10, growing over time towards $20-plus, driven by increased engagement and ad optimization. As we turn to 2026, let me provide a few business metrics we'll be using to gauge our progress this year. First, our goal is to grow our MAU footprint beyond 7 million. This, in turn, is expected to expand the opportunity for monetization downstream over the typical 5- to 7-year life of TV ownership. Second, as we expand our selling efforts, our goal is to double Media Platform revenue and exit the year with ARPU above $10, which will provide further evidence that we're selling ever more data and advertising across our media platforms. Third, with an installed base of over 14 million vehicles with DTS AutoStage, we expect to generate ads and data monetization revenue on the AutoStage footprint. Taken together, achievement of these goals will provide further visibility to the growth potential and strategic value of our Media Platform business. Let me now turn the call back to Robert to discuss our outlook for 2026. Robert Andersen: Thanks, Jon. Before I provide our outlook for the year, I think it would be helpful to understand how the parts of our business are trending. As Jon discussed earlier, we expect Media Platform revenue to double relative to 2025, reflecting our belief that we have reached the inflection point for advertising monetization. We believe this growth, in addition to continued growth in our Connected Car business will substantially offset anticipated decreases in our Pay TV and Consumer Electronics businesses in 2026. Notably, we believe certain legacy Pay TV product lines are nearing the end of significant decreases and the business is expected to level out behind IPTV subscription growth over the next several years. Also, we expect our Consumer Electronics business to face challenging comparisons in 2026 due to a number of multiyear deals recorded in prior periods that will impact revenue in 2026, but are expected to be recontracted in 2027. Now to our outlook for 2026. We expect full year revenue to be in the range of $440 million to $470 million. This range reflects our expectation of doubling Media Platform revenue and takes into account our current view of broader market risks across our business, including memory and supply chain challenges and other macro uncertainties. Consistent with the normal pattern of our business, we expect the year's revenue to be slightly weighted to the back half of the year. For adjusted EBITDA margin outlook, we expect a range of 17% to 19%, which reflects the benefit of expense reductions from 2025 with the range corresponding to the width of our revenue guidance range. Operating cash flow is expected to be between $15 million to $25 million and capital expenditures to be between $15 million and $20 million, yielding positive free cash flow at the midpoint of these ranges. On other items, we expect non-GAAP tax expense to be approximately $20 million and our diluted share count to be between 48 million and 49 million shares. Also, from a GAAP-based perspective, we expect stock-based compensation expense for 2026 to be approximately $31 million, lower by 25% from the $41 million incurred in 2025. Let me turn the call back over to Jon for final comments. Jon Kirchner: Thanks, Robert. As you can gather from our narrative on this call, we're pleased with the significant progress we've made on our key strategic objectives. We believe we are now at an inflection point for the growth of advertising revenue on our Media Platforms business. It's good to finally have some wind at our backs rather than facing consistent headwinds in our efforts to transform and reposition our business. That concludes our prepared remarks. Let's now open the call for questions. Operator? Operator: [Operator Instructions] And our first question comes from the line of Jason Kreyer with Craig-Hallum. Jason Kreyer: So just a quick question on the Smart TV side. Curious what the mix of that is between European markets and domestic markets and how that's trending or how you expect that to trend over the course of this year? Jon Kirchner: Yes. Jason, Currently, the TiVo One installed base is basically roughly 60% in Europe, 40% in the U.S. And keep in mind that, that not only reflects TVs, but reflects IPTV boxes that are running the TiVo One ad platform, which are predominantly in the U.S. I think over time, you'll see that mix start to change as we see a second TV OEM show up in the marketplace here in the U.S. But there's no question in the near term, it's going to be more European weighted. Jason Kreyer: And then you had a release earlier this year, you're launching home screen ads on TiVo. That's been a pretty big driver for capturing incremental spend for a lot of platforms out there. Just curious if you can frame your expectations for contribution there. Jon Kirchner: I think it's an important part of how we think about the monetization opportunities on our platform, in part because the home screen represents maybe the most valuable piece of real estate as people begin to engage with content and jump from one piece of content to another. We've got a robust offering there from a home screen capability in terms of what the ad unit can do. And I think along with, obviously, in video ads, along with data monetization, all 3 of which kind of combine to form the basis of our expected revenue growth this year and really that represents the revenue in the ad monetization business for us, I think we feel like we're pretty well positioned. The reactions we've gotten to our home screen ad unit from partners is very strong. Operator: And our next question comes from the line of Hamed Khorsand with BWS Financial. Hamed Khorsand: I'm just trying to get clarification on the ARPU for TiVo One. You said there was an acceleration in usage, but you only went up by 500,000 subscribers sequentially. In the prior quarter, you went up by 1.1 million, and you were able to achieve the ARPU -- a higher ARPU. So I'm just trying to understand why ARPU declined this time even though the growth was slower. Jon Kirchner: So Hamed, you've got a couple of things that are going on in the revenue calculation, which I think we actually published a definition of how you get there. There is remember, it's a lagging indicator over 4 trailing quarters. So depending on how that average moves relative to how dollars are starting to appear on the platform, there's also some dollars that are covered in certain campaigns that get amortized across your footprint in that calculation. So depending on the relationship between the growth of footprint to the growth of revenue, that's why the ARPU metric will certainly move around at the beginning. Over time, as you end up with a more normalized situation where there's more, let's call it, consistent growth on the platform, and there's obviously ever more the numerator to that calculation continues to grow, I think our expectation that you'd see it more consistently be up and to the right. Robert? Robert Andersen: And let me add in. I think for the denominator here for the average monthly active users, that the number has continued to increase pretty substantially. If you just look at MAU growth from Q3 to Q4, 10% sequential growth, so $4.8 million to $5.3 million. And over the course of the last year, it's grown from 1.5 million at the end of 2024 to $5.3 million at the end of 2025. So 250% growth. What we're finding is that our user base is growing faster than the attendant advertising associated with that base. It takes a little while for the new TV to start to generate revenue. So that might explain a little bit why you saw -- well, that does explain why you saw a slight decline in the ARPU, down to $7.80 at the end of the year. That's going to fluctuate a little bit just depending on the growth rates of the 2 pieces, the numerator and the denominator. Does that help, Hamed? Hamed Khorsand: That's helpful. And then the other question is, are you done with the cash expense side of the cost savings initiatives, the headcount reduction that you were undertaking? Robert Andersen: No, we'll have some costs in Q1 as well. We incurred some of the cash expense in Q3 -- excuse me, Q4, but we'll have some in Q1 as well. Hamed Khorsand: Okay. My last question was you were talking about monetizing the AutoStage platform, I'm assuming this year. Is it -- have you already started doing so? Or is there a time line as to when you expect to do so? Jon Kirchner: I think it will play out as you get more towards midyear, some of the beginnings of it. We are well engaged on a number of things. And I think the first part that we'll begin to see, Hamed, is data-related monetization, more so than ad monetization because we're generating a lot of data from the platform that is of tremendous interest to advertisers and broadcasters. And as I said, we're well into a number of conversations. And on the back of that is where you'll see the ads piece of that start to show up. There's continuing work there as well. So in short, we've got a very, very unique platform that is quite large. And from a from a perspective of thinking about the radio industry with lack of real targetability, et cetera, et cetera, and even measurement still being, let's call it, dated in its methodology, we have a real-time system that gives a tremendous amount of information to people about what consumers are engaged with, what content, et cetera, how trending is happening. And all of that, I think, puts us in a pretty interesting position. And one other adjunct to that, of course, is more effective advertising is almost -- is completely dependent on having ever better data. And one thing that's not lost on us is being one of the largest providers of contextual data around media assets, both music and video. It's part of the reason we think as you put all this together, we have a really unique opportunity to provide unique solutions that are value-added across not only in one environment like the car, but across environments as you think about the home and the car. Operator: [Operator Instructions] And our next question comes from the line of Matthew Galinko with Maxim Group. Matthew Galinko: Would there be a geographic bias to the Connected Car monetization as that starts coming in, I guess, midyear in '27? Jon Kirchner: I think certainly, you'll see -- I would expect you to see it more North America-based initially. But some of the work we're doing is with folks outside the United States already as well. So I think you'll see a European element of that and possibly further geographic expansion. It's broadly of interest to the industry at large across the globe. Matthew Galinko: Got it. And as we think about that $20 ARPU number, can you maybe talk about what you're seeing today that gives you confidence that we get there over time? And kind of what time frame are you thinking about getting to that number? Jon Kirchner: Well, I think what gives us confidence is there are robust markets and tremendous interest in better targeting solutions and premium CTV inventory. And I think being an independent provider plus having heavy using IPTV households that represent some unique audiences not typically part of the mix for many advertisers. We have the opportunity to, I think, optimize engagement on the platforms, which in turn, as the footprint continues to grow, those 2 things will drive higher ARPU where there's established markets for what we're trying to do. So -- and we're working, as we talked about on this call, in particular, with a number of partners who have tons of experience and in many ways, are making the market happen today with selling these ad products and connecting them with brands and advertisers who have an interest in reaching consumers. So I think everything about it gives us confidence that provided we continue to execute well and plug into the various ad markets, whether they be programmatic or with direct sellers, whether they be employed by us or employed by resellers, that if we have the ad units and we have the audiences that continue to grow as we continue to optimize engagement that you will ratably continue to see ARPU grow. The exact timing of getting from where we are today to north of $20, I think we're very interested in seeing how with more and more sellers coming online in the course of '26 and how all that plays out, that will give us a better sense of how and when we think we'll achieve that. But we know there's plenty of precedent for those kinds of numbers. We're a little bit different because our mix is Europe and the U.S., not just U.S. alone. But the one thing I would tell you about Europe that may be notable is that there's even larger dislocation between where the ad dollars are in Europe meaning far more ad dollars, roughly 75% of all your ad dollars in Europe are still connected to linear, even though streaming viewing obviously is an ever-growing percentage of total audience engagement. And so what does that mean? It means over the next few years, there's plenty of expectation that you're going to see more ad dollars aggressively move out of linear into streaming. And as that happen, the real estate -- as that happens, the real estate around home screen and streaming engaged audiences becomes more valuable, which in turn will drive up the ARPU associated with that in Europe as well. Matthew Galinko: Got it. And if I could just sneak 1 last question in. On the Consumer Electronics business, I guess how does the supply chain issue factor into 2026 outlook there? I think you mentioned a lower mix of minimum guarantees also impacting '26. But what is your expectation for supply chain and memory shortages? Jon Kirchner: Well, I think we know it's impacting how people think about their product planning in terms of what manufacturing planning looks like, what pricing looks like and in turn, what consumer demand ultimately looks like in the face of potentially more challenging pricing or availability. So I think we -- based on our conversations with analysts and with our industry customers, I think we're taking a cautious view of what that looks like. And remember, a good portion of our business is still unit-based. So depending on how that plays out, that will ultimately determine what the CE revenue in total looks like. So I think we're sitting here cautiously, just kind of watching carefully. We've also got people that are still grappling with an ever-shifting tariff environment and what does that mean for their own supply chains and where do they want to be and that kind of thing, which has the impact sometimes of impacting how think about -- how people think about production plans or even their partners as they -- if they're producing with partners. So I think all of that leads to some slight uncertainties that are factoring into how we think about CE. Operator: And that concludes our question-and-answer session. I will now turn the call back over to Jon Kirchner for closing remarks. Jon Kirchner: Thanks, operator. We're pleased with the meaningful progress we made last year, and I want to thank the entire Xperi team for their continued focus and execution as we work to deliver long-term value for our shareholders. We look forward to sharing further updates with you on our first quarter call, and that concludes today's call. Thanks for joining, everybody. Operator: And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.
Teresa Urquijo: Good afternoon, ladies and gentlemen. Thank you for joining MERLIN's Full Year '25 results presentation. You can find all the materials that will be presented in today's call on our website. I will please ask you to abide by the disclaimer contained in it. Our CEO, Ismael Clemente, along with our two directors Ines Arellano and Francisco Rivas will walk you through the main highlights of 2025. We'll then open the line for Q&A [Operator Instructions]. With no further delay, I pass on the floor to Ismael. Ismael Orrego: Thank you, Teresa. Good afternoon, everyone. We are in front of a very interesting set of results, certainly, the best I have seen since we have been leading this company. It's been almost perfect year because the fantastic performance of the data center division has been accompanied by very, very solid performance also on the traditional asset classes. And all that has been reinforced by an excellent behavior of the share. So frankly speaking, what can I say? I mean the operating momentum is super strong. We are enjoying satisfactory rental growth in all asset classes, traditional and nontraditional, because in data centers, we are also achieving better rents than underwritten. We have a high occupancy, 95.6%, and continue solidly generating FFO with a plus 5.1% print in the year. In offices, we have a very remarkable like-for-like of 3.5%. But more importantly, an interesting release spread of 4.8%, which is probably the reflection of what we commented in past calls that the Madrid market particularly is now under a certain like short squeeze. I mean, there is distraction on the offer side, which is causing, of course, an effect on the pricing of the demand. The occupancy stays at all-times high, 94.2%, and this is particularly noteworthy in a year in which Barcelona has been a relatively softer market than it was in the past, and has lost occupancy. So Madrid has been able to compensate Barcelona, which will continue for the coming years to be one of our weak spots that we will continue working because sooner or later, the market will digest the current situation of oversupply and will come back to normality. In logistics, we have been positively surprised by the release spread, particularly because, as commented on a number of past calls, this is a market where we were seeing a little bit of less strength than we have been seeing in the past years. But this year has been extremely strong, particularly on the release spread. The reason why the like-for-like is low is simply because we have lost 3 points of occupancy, which is normal, because we were occupied at 99%. And we told you that there was only one way to go from there, which was down. And -- but we ended the year with a very good printing occupancy of 96.4%. Shopping centers, another super strong year, surprising us on the upside with a very good like-for-like of 4.7% and still with very affordable rental levels for our clients at 11.0% in occupancy cost ratio. So very, very strong year in shopping centers. On data centers, well, basically, we have achieved a full derisking of Phase 1. So Phase 1 is now water under the bridge. I mean, we will report it as assets in operation from now on in order to try also to simplify your lives, because if we continue reporting Phase 1, Phase 2 and soon Phase 3 is going to be -- is going to be a rubik cube. So that will convert into assets in operation with an occupancy of 100%. We have also achieved a very interesting derisking of Phase 2 with the lease-up of our Arasur 2 asset 48 megawatts, which is around 20% of the total capacity of Phase 2, but more importantly, it was the next Indian trying to attack the fort. I mean it was ready for service December 2026. And as such, now is done. The next ready for services are end of '27. So we have now plenty of time to work on those -- on the leads in which we are already working and starting exchanging technical documentation, and then we will need to come to terms in the economic side of the business and then move into documentation, which, in some cases, particularly with hyperscalers, can be a painful process. In terms of financial performance, the value uplift has been very strong, but this has been mainly boosted by data centers who have contributed close to EUR 360 million increase to the total revaluation of the portfolio. 4.7% GAV increase in the year. The total shareholder return, 10.2% is fantastic. But more importantly, we believe it's relatively sustainable, because we know what is coming, and we think unless the world goes upside down, which is another possibility, if 2026 is a relatively simply flat year in terms of performance of traditional asset classes, we believe we can achieve very similar figures at the end of December. Our financial situation remains very strong. The loan-to-value is low at 28.9%, 100% fixed rate. And we don't have maturities till November 2026, maturity which is already tackled. I mean with the existing cash at banks and a number of bond taps and bank lines that we are signing in the coming days, that maturity will be already tackled without affecting the CapEx needs of the data center department. And we have been able to maintain our rating, both with S&P and Moody's, which is always interesting because at the end, that cost is one of our raw materials. And we need to continue keeping our competitiveness in terms of rating. In terms of value creation, EUR 129 million in noncore divestments, as already disclosed to market, you were perfectly aware that we had this almost done. And then probably the most interesting thing is that we have another close to EUR 130 million already signed and to be executed in '26 and '27, which is very interesting because basically almost half of our targets for '26 and '27 are already covered in the absence of any accidents. It's important to pay homage to the activity of our different business divisions. The year has been excellent in terms of pre-lets. In offices, we have signed more than 56,000 square meters beyond the daily trading, I mean, the ins and outs that happen every day in the portfolio. In logistics, 73,000 plus and Head of Terms, which we believe is going to become a reality of another 55,000. So significant progress also in logistics. And in shopping centers, to me, the most salient activity in the year has been the inauguration with an almost full pre-let of the Marineda extension, 26,000 square meters, which has made the Marineda concept in La Coruna even more dominant than ever. I mean it's a center, which is really rock solid and is one of the jewels in our little crown. And in data centers, well, we are now at 112 megawatts IT versus 45 latest reporting. And therefore, when 66 new megawatts have been lit and the prospects for the derisking of the rest of the Phase 2 remain brilliant. So in terms of main financial magnitudes, the GRI print was EUR 541.9 million, plus 3.5% like-for-like in the year. The FFO, what we broke our own record is better than the one of year 2019, EUR 326.7 million plus 5.1% year-on-year. But it is important to note that in 2019, we had EUR 84 million of BBVA rents in our belly. So with a little bit of help from data centers, around EUR 30 million, we have been able to overcome the sale of the BBVA portfolio, which, with hindsight, I believe, was an excellent decision because we delevered the company in anticipation of high interest rate cycle. And that gave us also a sufficient financial muscle to be able to develop Phase 1 of our data center deployment program, which was absolutely necessary because have we tapped the market to develop data centers starting from scratch and the market will have been a little bit incredulous about our capacity to do. So we had to do it with our own money, and BBVA was instrumental for that. The EUR 0.58 achieved are plus 7% versus the initial guidance, although we updated to EUR 0.56 in -- I think it was in 3Q, we updated to EUR 0.56. In reality, we expected EUR 0.56, but in dataset, we have had little income from -- particularly from better margin in our data center operation and well, some income also from NRCs from the installation of machinery on behalf of our clients through remote hands agreements in our data center division. The LTV stands at 28.9%, which is pretty low, but more interestingly, net debt-to-EBITDA stands at 9.0x. Of course, it is growing, but it is growing as we are spending in the construction of new units in our Data Center division. The NTA per share is EUR 15.36. And for the first time, we are very, very close in our share price to our NTA, which is incredible to see. I mean, I'm really, really enjoying to see that when I shut on my computer, and I see the share price evolution, I am really humbled. The GAV like-for-like has gone up by 4.7%. But very importantly, with an EPRA net income yield of 4.6%, which is sound, because these days, improving NTA or improving GAV through asset revaluations is easy, but we have taken exactly the contrary way. I mean we have completely recalculated our prospects for particularly logistic pre-lets and part of the logistics division and we have decided to expand a little bit our yields in order to make sure that we repair the roof now that the sun is shining rather than doing it when the things start to get rough. TSR, as commented, and leads us to propose dividend per share of EUR 0.44 for the year, which is slightly above the 80% threshold, but I think we have to share a little bit with our shareholders the good operating momentum of the company. In terms of EPS, we have, after careful reflection for the moment, we have taken the decision to continue to not capitalize interest expenses. We believe it is cleaner. We believe it reflects better the real operation of the company. And therefore, as a consequence of that, we are indicating for 2026, a relatively flat figure in terms of EPS and DPS. But we will, of course, endeavor to bid it if we can. It won't be easy because it is mainly attributable -- the reason why it's flat is mainly attributable to the fact that all the growth in top line is absorbed by more financial expenses as we continue basically building. We continue building our inventory. And as a consequence, we continue employing our debt capacity. And this is, of course, raising the bar of our financial expenses. And for the moment, it is hitting in our top line growth. 2027 will be a different thing. I mean, in 2027, will be a year in which we will start seeing the first hints of what the DC division will bring in the future to this company and '28, '29 and '30 as commented on many other occasions, at least on the model, of course, you never know, but they look like a big party. That is it. I mean I pass the floor to Ines Arellano who is going to comment on the different asset classes and Francisco Rivas will comment specifically on the Data Center Division. Inés Arellano: Thank you, Ismael. So moving to what today represent 55% of our portfolio, offices. We've generated EUR 292 million of rents, and that is a 3.5% increase in like-for-like as commented by Ismael, very, very sound, with a very high release spread up 4.8%. It is true that if we were to take into account this one lease that we mentioned last year, it would have been 0.4%, but at least it's in the positive arena. The occupancy at 94.2% all-time high. Again, we'll watch very carefully how the evolution in Barcelona keeps ongoing, but we are confident that eventually this will be digested. It's been a very healthy leasing activity market with more than 275,000 square meters contracted. And in terms of valuation, we see a 1.2% like-for-like increase with an implied gross yield of 4.9%, not reaching 5 yet, which as you know, it's always been the number that we thought should be the right one for office. Ismael Orrego: 5.25%. Inés Arellano: Okay. And a net initial yield of 4.2%, and this implies a 2 basis points yield expansion. And as said, the little momentum continues, as demonstrated in Slide 8 with five very good examples of standout leasing deals spread across not just CBD, but also key peripheral corridors, and they all have secured very high-profile tenants. You have three assets here that are still in the work-in-progress portfolio, meaning these are not in operations yet. But you also have two like Castellana 278 and Las Tablas where we've secured very high tenants, very high-quality tenants like a university and a bank. Moving to Slide 9. We continue, again, to see a strong trend of reconversions. And we wanted to lay down what is the current stock of Madrid. You see a little bit of everything. So this number may seem a little bit big to you, depending on the source that you used to consider. We've taken the Belbex number -- this is not only made by pure office buildings. It's also taking into account the offices associated to industrial users, some residential buildings that are being used as offices as well and also administrative buildings. What we see is that there's more than 1 million square meters expected to go back to their original residential use, because right now, as we stand, the highest and best use for a lot of these space is actually beds, beds, because this is both living, resi, hotels. And there is an additional 1.5 million square meters that could be reconverted again to these other uses out of the pure office building. What are we doing? We have identified 7% of our stock in Madrid office, okay, not the whole stock, but just in Madrid whereby this doesn't mean that we're going to be selling the whole 7%. But we've identified 33,000 square meters that will be sold so that somebody else reconvert it plus another 27,000 square meters that we are going to suddenly refurbish or reconvert them for educational uses. Moving to Slide 10. What we see is that -- well, we still believe that unique assets deserve to remain as offices. And this is a perfect example, Alfonso XI. There's a clear scarcity of good space, 10,000 square meter size buildings in prime CBD, and we are fortunate of having owning these unique assets, is right in the middle of Madrid, and we know that there are best-in-class tenants looking for space like this one. So we are going to refurbish this asset. We are actually refurbishing this asset, and the expected yield on CapEx will be around 9.6%. So there's another example in Page 11. Again, super prime office building, Liberdade. As you know, this one we bought it on purpose to be converted into what it will soon be probably the best office building in the Lisbon market. And as of today, even if we have not started commercialization, we have fully let to a top luxury group, all the retail, the high street retail space. Then we have Adequa. This is to show you that there's no only demand for pure prime CBD assets. Adequa is one of those examples where a tenant of ours that was willing to expand to grow in a campus, very, very close to Castellana has actually signed an agreement with us, a turnkey project. And so again, the yield on CapEx around this one is around 10%, 10.4%. And we will soon in '28 and '30, we will have these two buildings built up and completing what today is Campus Adequa. And then finally, this is a jewel. This is a very small building, but a true jewel. and it's going to be even more valuable once Renazca project gets executed. As you know, it has been approved. And once it is executed, we know very well that a lot of tenants will be willing to pay very high rent for these unique assets, which for those who have visited Plaza Ruiz Picasso building is just next to it, you can actually monitor the works from that one. Moving to logistics in Slide 15. GRI like-for-like has been positive despite the loss of a tenant in 48,000 square meter warehouse in [indiscernible] that had an impact of 3% in occupancy. The sound 5.8% Release Spread, together with an average CPI of around 2.5%, has helped to increase rents by 2.5 reaching EUR 86 million. Gross yield at 5.7%, slightly higher than the average yield of the portfolio 5.3%, and net initial yield at 5. The leasing activity has been strong with more than 440,000 square meters contracted compared to only 100,000 square meters in '24, while valuation uplift has been moderate being only 1.2% on a like-for-like basis. This has been mainly driven by the increase in CapEx. Certainly more on future development, but a little bit as well on existing assets due to, for example, fire safety measures. In '25, we finished construction and delivered 21,000 square meters fully led to [indiscernible]. And we've also sold 73,000 square meters warehouse that was under refurbishment in Vitoria and have added a couple of projects to the committed pipeline, now amounting to 279,000 square meters. Yield on CapEx for all these projects remain quite appealing at 13.2%. The noncommitted land bank has therefore reduced by 61,000 square meters outstanding at 183,000 square meters located mainly in Madrid and Barcelona. If we move to shopping centers, well, this has been said already by Ismael. it's great performance in every KPI that you can look at, the GRI of EUR 133 million, it's an uplift of 4.7% like-for-like. It's a great combination of a very high Release Spread plus CPI. In terms of valuation, this EUR 2.1 billion portfolio has gone up by 2.9% with an implied gross yield of 6.4 and net initial yield of 5.7. And this portfolio, shopping center portfolio is shifting to adapt to market trends and customer needs, and we are seeing retailers demanding new formats, so fewer, but bigger and certainly better located. The synergies with logistics, they continue to be a reality, and this is value also for the largest storage spaces that they required and experience of our customers keep on being the main and main focus of everything that we do. And in Slide 21, you have a few examples of new retailers leasing space in our assets, mainly focused on health and beauty and leisure/home entertainment. And with no further delay, I pass the floor to Francisco who will explain where the future is coming from, the data centers. Francisco Gonzalez: Many thanks, Ines. Moving into the Data Center section, I would like to start by congratulating, Ismael did, our data center team and the vision for a fantastic 2025 year, which had a very strong workload and proved the excellent execution. Part of this effort, as you have seen, has been crystallized at the beginning of this year, 2026, with the signing of very significant contracts across our assets. Turning now to the presentation on Page 24, we provide as always an overview of the two phases under operation and/or construction with updated figures. On the one hand, we present the results of Phase 1, which we will now refer as Ismael said, as assets in operation, where the 64 meg have been fully contracted. The originally 14.5% gross yield on cost shared with you 12 months ago has now increased to 15.8% with a stabilized GRI of EUR 97 million above the previous EUR 88 million reported 12 months ago. Regarding Phase 2, which we will refer as work in progress WIP, we have been able to redensify the first two buildings in Lisbon moving from 36 meg to now 40 meg increasing the total size of Phase 2 from 246 meg to 254 meg as you have here in the presentation. And this has led as well to an update of both the total investment amount and expected stabilized GRI now at EUR 397 million, delivering a very attractive 14.4% gross yield on cost. And in terms of commercialization, moving now to Page 25, we have successfully completed the letting of the three assets of this Phase I, following the signing of an 18-meg contract with a very well-known new cloud operating [indiscernible] and first time in our portfolio reaching the full occupancy of our assets in operation. And for those of you who are more curious about the technical aspects, 34 meg out of the 64 are air cooled while 30 meg are liquid cool. And by the type of specification we have it means that these 30 meg liquid cool are targeting above 70 KV per rack. On our experience right now, they are more in the 120 KV per rack, which shows that the type of technology they are using is the last of one of [ NVIDIA ]. On Page 26, we show how the rental income will ramp up on a yearly basis with EUR 31 million already received in terms of rents in 2025 and a forecast of EUR 66 million for 2026, resulting in a stabilized GRI as we mentioned before, of EUR 97 million in 2027. From a value creation perspective, Page 27 shows the breakdown of total costs incurred. The valuation already captured, although it's a little bit more limited in [indiscernible] in the signing of this new contract that the appraisal was not aware of and the expected additional value to be accrued if the value assumptions remain unchanged as we are disclosing in the footnote. So this EUR 291 million estimated value, we expect to be captured in the next valuations if those are retained. Moving to Phase 2. On Page 28, we include a brief reminder of the commercialization status of our data center assets that we divided, as you know, in bookings, advanced negotiations and let or prelet. And with this in mind, in Page 29, we summarize the status of the different projects of Phase 2 with now a total capacity of 254 meg IT. Going one by one, in Bilbao 2, what we call ARA II, the construction is progressing on schedule. After 14 months of execution, we have gained sufficient certainty to enter into prelet agreement as the ready-for-service dates that we show in the presentation, December 2026 are very, very certain. This is a highly complex deployment because we will coexist the deployment of the equipment that we have as landlords, but also the client equipment, which are largely based on a liquid cooling solution. The kind is -- was already in our portfolio is very well, no new cloud operator focused on AI and the level of densities that the client is requesting allows us to know that they are using a state-of-the-art technology, as all of you know. The connection to the substation of this building 2 has been already completed with our first building, what we call ARA III and right now, we are just progressing with cabling of that -- of those that were created for our first asset there. Regarding Bilbao ARA I, as we will show in the following slides, the construction has started at the end of last year, beginning with piling works, and we have maintained our estimated ready for service by the end of 2027. Moving now to the center part of the page, in Lisbon Compos. At the end of 2025, we started the construction of the first two buildings following, believe it or not, 1.5 years of piling works. And please consider the Lisbon region is both flood-prone, as unfortunately, we have experienced some few weeks ago, but also is located in a seismic zone and which has required a significant soil preparation, reason why of this 1.5 years of previous works. And as an example, the piling works have reached approximately 35 meters in depth, just to avoid situations as recommended. And thanks to this preparation, none of the works were affected by the heavy rains experienced in the region earlier this month. From a construction point of view, we have once again redensified the buildings, increasing capacity to 40 mg per building IP, benefiting from the insights gained from client discussions that we have held over the last months. In parallel, substation works have also started with a ready for service in all these first two buildings by December 2027. In terms of leasing, we are in very good progress regarding the initiative that we will comment on the following slides, while keeping the buildings ready for the latest computing technologies in case the first option does not ultimately materialize. Moving into the 2 Madrid projects. In [indiscernible] approval, what we call [Foreign Language] in Spain of the land, and we are in the final stage of securing the organization permits to begin on-site works, which will run simultaneously with the building construction. The ready-for-service is currently planned for the first half of 2029. Regarding [indiscernible] located, as you know, on the same street as [indiscernible] we obtained environmental assessment approval at the end of last year and right after demolition works are started and are going and the construction permit has been already requested just to make sure that when we finalize the demolition works, we can immediately start. Given the previous timing experiences, we are still maintaining ready- for-service in the second half of 2029 although knowing that we have already power on site what in our naming we call power ready supplied, we have already entered in negotiations with several clients interested in this site precisely for the reason that power is already there. Regarding CapEx commitment planning for Phase II and now I'm moving into Page 30. 2025 has been a record year for the company in terms of CapEx commitments. And this is significant because you need to know that a significant portion of this CapEx relates to equipment, which typically has shorter execution timelines once we commission it on site. Commitments have reached EUR 987 million versus the previously reported EUR 836 million, but also the next two years looks very strong in terms of CapEx commitments. So in the absence of any capital event, the company expects to tap the debt market, as Ismael was mentioning before, again, mainly during the second half of the year, once the equity that we raised in 2024 is fully deployed and at work. The target stabilized GRI is planned for 2030 as mentioned in the last quarter presentation, at EUR 387 million, delivering a 14.4% stabilized gross yield on cost. All these figures are reflected in Page 31, 32 and 33, which includes images showing construction progress in both Bilbao, Arasur and Lisbon campuses. And for those attending to our Capital Markets Day in the 9th and 10th of March, you will have the opportunity to see these projects at a human scale, which I think I can tell you that is pretty impressive. Finally, on Page 34, we would like to share the status of our EU Gigafactory initiative. As previously mentioned in the last year call, timelines of this initiative have experienced significant delays and based upon our latest information, the work resolution is now expected before year-end 2026. As we have stated several times, our Phase 2 projects were not conditional upon obtaining the EU Gigafactory award. In fact, this initiative was not even under consideration when we launched Phase 2 and we have always maintained discussions with traditional clients, both hyperscalers and new class operators in line with our original business plan. Nevertheless, as we always say, we've tried to be constructive shareholders -- stakeholders and good citizens, and we remain prepared for initiatives that could benefit the regions where we operate, particularly the Iberian Peninsula and we strong believe we continue believing that bringing the EU Gigafactory status to our region will create a lot of value, whether we are -- whether or not we are directly involved. As you may recall, we have set most of our capacity in Arasur, Capacity 1, and the full capacity of [indiscernible] for this initiative in Spain and the first two buildings for our Lisbon campuses of the Portuguese initiative. And we were always betting an Iberian consortium, so both Spain and Portugal, something that looks like were well received because most of the countries are doing exactly the same in other parts of Europe and offering several locations per country to allow synchronized computing and across the campuses. Situation as of today is that the Spanish government has shown a preference for another Spanish project. And thereby, they have released the capacity that we have reserved for that initiative in ARA II and [indiscernible] I, which, as you have seen, are both now fully let as following the -- what we have always commented to have one option and the other. With regards to ARA I, we are in advance negotiation with a particular client, and those negotiations, of course, will be more intensified and documented once the ready-for-service dates are becoming more and more and more closer. Regarding our Lisbon Campos, we remain committed to this EU initiative, which is now why we are moving forward with the first two buildings in connection with the Portuguese proposal. And once again, as we approach ready-for-service dates, the number of clients inquiring about availability continues to grow. For this reason, we will welcome clarity from the EU in terms of the timing because as soon as we are approaching and approaching delivery times, normally more clients are interested and we would want to have to take a decision there. And now Ismael will close this presentation with the closing remarks and outlook before we enter into Q&A. Ismael Orrego: Okay. Francisco, thank you. Well, on Page 36, closing remarks and outlook. Everything which is written here is pretty evident. So I'm not going to torture you with any more bulls***. The only thing that I will say is that the idea is to move in terms of lets and pre-lets from the current 112 to as close as possible to 100 megawatts in data centers. And this could be achieved through one of several combinations of facts. I mean, more normally, it will be through the documentation of the Lisbon lease which could come in the form of formalization of the EU Gigafactory program or otherwise, through an alternative route. I mean we have been lately adapting our -- the design of our campus there to the specific requirements of a certain client. You must have noticed that the total capacity has increased by 8 megawatts. Well, this came at the cost of 12 additional million in construction cost that I believe makes sense. And now the white rooms conform to the specifications of concrete SOQ of a concrete client. But more importantly, are perfectly flexible to adapt to the requirements of either other neo hyperscalers or neo cloud clients. So with that, I believe the 2026 should be the year of Lisbon. We will work -- we will endeavor to achieve that target. And that's it, dividend and FFO, we have already commented on it. And I believe the best thing we can do is move into Q&A so that you can make your questions in the line. And we will do our best to be able to reply to your questions. Operator: [Operator Instructions] The first question comes from the line of Marios from Bernstein. Marios Pastou: I've got a couple of questions from my side. So firstly, on the lease-up and the pre-letting of your data center pipeline. I think you mentioned that Bilbao building 2 was pre-let to existing neo cloud tenant and that Madrid say, was to a new neo cloud operator. So can you comment on the occupier type you're having discussions with across Phase 2 and whether we should anticipate a diversification of your tenant base across that phase? Ismael Orrego: Okay. Look, Marios, basically the leasing of Bilbao 02 has been closed with an existing client of ours. The one in Madrid, however, was a different one. At present, the diversification of our tenant roster is perfectly distributable. You can imagine with only 112 megawatts let, that I will beg you all to wait till we are 1 gigawatt in operation in order to calculate the real diversification of our portfolio, because have you calculated our diversification in logistics in 2014, you will have come to the -- this main conclusion that it was 72% DHL. But now no client -- individual client represents more than 10% of our rent. So we need to continue building if we want to continue leasing. What I can tell you, talking about Phase 2 and preliminary conversations for Phase 3 is that we are talking to every kind of clients you can imagine. You love hyperscalers. We are talking to all the hyperscalers except one, which is a self-builder. But the other three, we are talking to them. And we are talking to no less than 5 Tier 1 neo clouds alike. So sooner or later, we will end up closing an agreement with a big hyperscalers and you all will breathe with tranquility. But I need to remind you that closing deals with hyperscalers is not an easy thing. It comes at a cost, because they are the fastest cowboy in town. And as such, they have a big pistol. And you have to be very, very careful because that pistol can kill you. So it's big organizations, complicated organizations, you can engage in very fruitful and healthy conversations with the infrastructure guys, with the cable guys, with the first-line guys, but when you move into middle office and back office, it can be complicated. And at times, it is as frustrating as reaching contractual status and then stopping conversations because the conditions can turn abusive very quickly. So we will end up closing deals or reaching agreements with hyperscalers, but probably already in Phase 2 and more surely in Phase 3, but you need to bear with us for a second because we also need to defend our financials, which are your financials. So let's not be childish on this, and let's not -- let's be careful about what we wish for because closing an agreement with one of these is very easy. However, the fact that this agreement is good is a very different thing, okay? So we have to continue working in that respect. What I can tell you is that we are now technically qualified with 3 out of the 4 hyperscalers, so at least we know that our facilities conform to their technical specifications. And sooner or later, we will end up closing. Operator: The next question comes from the line of [ Veronique from Kampen ]. Unknown Analyst: Maybe first on just the other business lines. I was hoping could you give some additional color on what you expect in terms of occupancy rate, any big departure planned in '26, especially for offices and logistics? So your view towards '26 for those business lines? Ismael Orrego: Okay. Well, in offices, the idea is to remain relatively flat. So we have finished this year at 94.2%. The idea is to finish this year between 93% and 94%, which is already a significant effort because you have to take into account that in April, we are losing 11,000 square meters from Meta in Barcelona in the middle of '22 at. Yes, in a building, which is a winner, clearly winner in the market, but replacing 11,000 square meters in today's market in Barcelona is not an easy task. So we have to be prudent, taking into account the situation of the market there. In logistics, our idea is to improve a little bit the occupancy or compared to the 96.4% we have. It's quite binary because it depends a lot on whether we are able to lease one big shed in the Henares corridor or not. If we lease it up, then it's going to be very close to 100% again. But let's not plan for that, at least for the moment, we will inform in due time. And then in shopping centers, we are going to remain relatively flat, because it's almost impossible to go higher. I mean, yes, I mean, you can go 20 basis points higher or that it is complicated to go significantly higher. In shopping centers, in fact, what we are trying to do now is to yield manage a little bit our portfolio, because we are the cheapest shopping center owner in Iberia in terms of OCR. And that is always a very interesting position to start from, and we will yield manage a little bit our shopping centers, although the behavior is impeccable for the moment. Unknown Analyst: Okay. That's clear. And then one question around data centers. So your gross yield on costs went up again. And you also mentioned that the margins actually were better than expected, but I see that's a number that you haven't changed in the slides. So could you give some color on the movements on those numbers and why you still report a 70% margin if it was actually better so far? Inés Arellano: Because Veronique, this is Ines. What has been better is the today's margin. While we are on ramp-up, we do not achieve the 70%. So 70% margin is on stabilization. And so we were expecting lower than what we have achieved margin during the ramp-up. 70% remains as the stabilization margin. Ismael Orrego: Okay. And regarding the growth yield on cost, it is simply a reflection of the fact that the market is helping us. I mean, yes, of course, I mean, there are -- the teams are doing a fantastic job, but we are operating in a market which is quite favorable at present. So this is why we are improving -- if you look at our forecast in data centers, both in terms of cost per megawatt and delivery times, we have been absolutely bang on compared to the numbers we gave you. So our construction cost has been exactly the one we forecasted. Even though you might notice that in Phase 2 is higher than in Phase 1, the only reason is that in Phase 2, we had to buy 2 of the 6 plots of our data centers. And also Phase 2 is fully liquid, while in Phase 1, we had some air, okay? So that is the reason why we have a higher cost. Also Lisbon, as commented by Frank, is a slightly more costly construction to make because of the strict seismic regulations similar to Japan or California. We expect -- I mean, the -- we have already raised by 20 basis points the expected yield on cost on Phase 2. let's see how the leases come up. We might be able to bid it or not. I mean, that we better say than sorry. I mean we prefer to underestimate a little bit rather than being absolutely bullish, particularly when there is so much to be done before inaugurating those assets. I mean the RFSs other than Bilbao, Arasur 2 are expected for the end of '27. And between now and the end of '27, there is a lot to see. So let's continue -- let's remain prudent. Unknown Analyst: Okay. Clear. Sorry, one small follow-up on Lisbon. I just wanted to double check. It says now advanced negotiations on the slide for the Lisbon asset. Is that referring to the EU effect? Or is that concerning something a different tenant? Ismael Orrego: That one is concerning the EU Gigafactory. Then with different tenants, it cannot be -- it is not advanced negotiations. It's simply leads, bookings. The Portuguese government is conscious of that. They are honest people, and they are also trying to find a way to firm up part of the commitment rather than leave everything conditional upon obtaining the EU program. They are looking at ways to firm up part of their commitment so that we can close an agreement and we don't need to go through an alternative route. Operator: So the next question comes from the line of Florent Laroche from ODDO. Florent Laroche-Joubert: So actually, I would have just one question on data centers. So we can see that -- so you have made a lot of progress on Phase II. So congratulations, but we can see that you have also a lot of work to do before completing Phase II. Why is it today the right timing to present us the Phase III in 2 or 3 weeks? And why it is the right timing maybe to start to launch this Phase III in terms of risk? Ismael Orrego: Well, the reason is twofold. On one side, we have a number of internal definitions, and we report as we reach the milestones of those specific definitions. But in my mind, I see Phase 2 significantly derisked. Let's leave it that way. Second, power land is a scarce asset in Europe. I mean everyone is dying to get powered land. We are lucky enough to have a lot of power land in our ownership, because we started asking for power in 2021 and '22 when nobody else was asking for that. So I think it is in the best interest of all of our shareholders that we make full use of that powered land. And then the future only God knows, but at least make use of everything we currently have because we continue enjoying very interesting yields on cost. And what is more important, we continue commercializing in clear market. At the beginning, when we explained this new venture of data centers to all of you, our prediction is that we will commercialize maybe Phase 1 in clear market, there will be no competition. But certainly, we were expecting competition for Phase 2. The truth is that the market is full of noise, full of bull****, but in reality, very few people are really building or building to the exact specifications of AI, and therefore, very few can really meet the requirements of AI clients. And to our surprise, we are commercializing Phase 2 almost on a clear market basis. The next reasoning is that if we go fast with Phase 3, we could achieve a very similar result. So basically, I believe it will be extremely unfair to our shareholders not to move. We know it's a lot of complication. We know it's a lot of construction yards. We have recently incorporated one executive just for the control of our works. But I think the best thing we can do if we want to be responsible managers is to move on and continue developing capacity because we are in a situation in the market which is as favorable as you can probably think. Operator: The next question comes from the line of Celine from Barclays. Celine Huynh: I just have two questions, please. The first one is on the beat on the FFO this year. It was driven by better gross to net margin in DCs. Can you explain how you achieved that and whether we could expect the same in 2026? And secondly, it's about retail. Your name popped up in the news regarding a large Spanish shopping center portfolio. Can you provide any comments if you can? And if you can't comment, we've seen the expansion into DCs, but there wasn't much mention about retail. So can you clarify your appetite for shopping centers going forward? Ismael Orrego: Okay. Well, starting by the easiest, which is the FFO gross to net. Well, as commented by Ines, we have basically improved compared to our projections, because we had a better margin. And talking about margin, the margin we expected for this year, that was not the stabilized margin, okay? It was not 70%. It was well below 70%. That was the margin we expected for this year that we have beaten that margin a little bit because we have been able to operate more efficiently our data centers. And then we have, as commented before, we have also benefited from a number of little tweaks and things that we have been doing on behalf of our clients. Many of our clients do not have a super big established presence in Europe. And as such, they rely on our own engineers in order to install equipment or make offices fit-outs, do improvements to their equipment once installed. I mean we are helping them to do that, and they are paying us for that service. And as a consequence, we have improved a little bit the gross to net margin in our data centers, but not to a point in which we are in a position to reforecast the 70% stabilized, which we are -- we will very soon reach. But we cannot reforecast that because, first, 70% is already a very good gross to net margin, particularly compared to what our peers in the U.S. are getting. And second, because we still do not have all the information in order to be able to reforecast that. And then retail... Inés Arellano: Celine, just to be clear, can you please repeat the question that you made? Celine Huynh: There was just a news that you were about to bid on a Spanish portfolio, retail portfolio. So could you comment on that? Ismael Orrego: Well, basically, we are very happy with the performance of our retail. We have in a number of occasions commented with you that being a listed company, sometimes you cannot be too contrarian to the market because if we had, we would have loved to bid for 1 or 2 assets in the past 3, 4 years, but we have been being -- we would have been slaughtered in a public place, I mean had we done it. So now there is a retail portfolio available in the market that we have analyzed in depth in a number of occasions already. It was very difficult to reach an agreement with the sellers because it was a relatively convoluted situation. But now it's out there. What I can tell you is that the assets are high quality. They will make a perfect fit with ours. But I can also tell you that this will be a capital recycling exercise. So if you are afraid about us using one penny out of our data center spending capacity, this is not the case. I mean if we are to bid for this portfolio, which we will only do if we can achieve a positive capital recycling figure, I mean if the capital recycling disappears, we will not bid. And we are not going to participate in an investment banking auction. So we will do our best. We have a number of pros and cons. Our main con is that, of course, we don't control the French connection. Our main pro is that the Spanish staff, we know them very well. They are colleagues in the market and they will be probably very happy to join the family. So we will see what comes out of that process. But if one day, we end up bidding for that and we are successful, what I can assure you is that we will rotate internal capital, try to sharpen the pencil a little bit in terms of ROA, I mean, try to obtain a positive print, positive arbitrage in ROA and make sure that the data center effort is not even disturbed by this acquisition. Remember, there is a big hype in the market about resi transformation, et cetera. We have a number of levers that we could action in order to make sure that we can rotate capital in an efficient way, okay? Celine Huynh: Okay. Ismael, just to be sure, we're talking about a portfolio that is worth more than EUR 1 billion, right? So you would have to sell more than EUR 1 billion. Is that correct? Ismael Orrego: Yes. That is... Celine Huynh: Okay, that is a big amount. Ismael Orrego: Yes. Operator: The next question comes from the line of Fernando Abril from Alantra. Fernando Abril-Martorell: I have 3, please. First on the recent [indiscernible] rent. So it was clearly above your expectations. I think correct me if I'm wrong, but it was around EUR 140,000 more or less per megawatt month. So I know it is Madrid, but how should we interpret your embedded 130 assumption for the entire Phase 2 because it seems a bit prudent probably to me. Also on the contract terms of the Bilbao 2 and Hefata, I don't know if there were any material changes to duration or escalator structures compared to previous agreements. And then last, you know that the Spanish grid operator, and also several Spanish utilities have recently announced increased CapEx plans for the power network. So I would like to know your view on this and whether you believe or not that these investment plans will meaningfully alleviate grid congestion and improve the power availability in Spain or not? Ismael Orrego: Thank you, Fernando. Well, first, on the price of Hefata 2, we are not going to be very specific because it's our client, and of course, the terms of engagement of our contracts have to remain secret. But it is true that in the global underwriting of Phase 2, we were relatively conservative at 118.5% on average, and we are beating those figures. But it's always good to remain prudent because there could be deviations in course. There could be many things, equipment that could vary. So we have to be -- we have to remain prudent, but it's true that in that particular contract, it's been better than expected. And then in terms of contract, basically the same that we have been doing up to now in the region of 10 years and with fixed escalators, which are now slightly higher because the 10-year inflation swap is also higher. So we are happy with the contract to all terms. Remember that one of the reasons among many that why we moved into data centers is because they were able to improve our WAULT once we sold the 3 portfolio. That, of course, was a secret weapon. I mean it was clearly improving our average WAULT across the portfolio. One of the reasons why we moved into data centers was because the WAULT were pretty attractive. They remain so. And in fact, not only that remain, so the clients are now wanting longer terms if they can, in exchange for rent because they are trying to lock up IT capacity in a market which is starved of IT capacity. There is very few, very few places where you can land 20, 30 megawatts of AI capable equipment. It's -- there are not so many places in the world. Colocation is a different thing. But AI is very special, and there are not so many places in the world where you can do it. And one thing also that the clients like a lot and why they are ready to compromise for longer terms is expansion capacity. I think it was a good vision in our side to bet from the very beginning on super large plots with a lot of energy in which we could grow with the client doing one building, another building, a third building and a fourth building. That has been probably a very good decision and clients like it because once they send their experts, their engineers to a certain location, they achieve significant synergies if they can operate a more significant capacity than simply just one data center and move to another place within the country. So this is the situation. And regarding [indiscernible] and the increased CapEx, it's a much welcome piece of news. Of course, our stance with the regulator has always been that they need to improve the grid. The Spanish grid is, believe it or not, because all of you are affected by the 28th of April blackout last year, but that was a different thing and happened for different reasons. That the Spanish grid is super high quality. It is very well designed, very well duplicated and wet and is very robust. Of course, it will need investment in order to adapt to the new demand because at present, we are coming from a world in which the consumption was going down year after year because many households were incorporating self-generation. And as such, the consumption was going down and down and down. But we are in front of an era in which consumption contrary to some of the official estimates that were made a long time ago and probably wrong with the new circumstances, consumption will go up and will go up very significantly, if only because of the effect of the data center industry. As a consequence, the country has to make an effort in terms of bringing together generation and consumption. So that means investing in distribution and transport. And any news in that respect are very much welcome. The alternative is to allow and probably could be a very interesting complement, the alternative will be to allow private grids. But that is always complicated in Europe. As you know, it's the world -- the word private is not very much allowed in Europe. And private grids are only a reality for very small distances. I mean when you are bringing a certain generation mainly from renewable sources into a certain point that bigger grids are not that common in Europe. So very happy to see that they are starting to move. The only problem is the speed of movement, which, as you know, is a problem always with the public sector. For the moment, the only entry door we have found to the grid is through agreements with renewable producers. And this is what we are doing. I mean we are engaged in a number of negotiations with a number of renewable generators and you will be keeping abreast of our evolution over the coming months/years because it is the only practical way to access the grid as of today. I mean one day, there will be a bigger grid and electricity eventually will be widely available. But if you want to continue honoring your demand request from your clients, the only way is through agreements with renewable generators. Operator: The next question comes from the line of Stephanie Dossmann from Jefferies. Stephanie Dossmann: I would have two questions. The first one regarding data centers and the appraisal values. I understand that appraisers recognize the value creation closer to the time of the lease signing. But could you say how much of Phase 2 is currently factored into the appraisal values? Francisco Gonzalez: So what the appraisers are doing is they're just incorporating into their valuation the assets that are under construction. So once we start construction, then those assets come into the perimeter. You have seen June 2025 that we have incorporated several assets, mainly ARA II and Lisbon 1 because they have already started construction. And then in December 2025, we have incorporated -- we started construction as disclosed before in ARA I and Lisbon 2, which means that the appraisal takes that into the appraisal. The rest of the power land that we have is not being -- so it's hold at cost. And only when we start construction, then is when we -- when the appraisal enters into that valuation. From a valuation point of view, then you need to differentiate between the assets which are under operation and the assets that are considered as WIP. In the cases of assets in operation is exactly what like an office building or shopping center or logistics that we have. So they do normally a DSF of 10 years. And that's the reason why they arrive at this value. And regarding WIP, as you may remember in logistics, appraisers tend to wait until the very last moment when the asset is completed and you have a tenant to reappraise the asset and then we're holding at cost the different development. But also, you need to be aware that those type of exercises normally were carried out over a period of between 9 months and 15 months only because the construction of logistics is much, much quicker. In the case of a data center, it's different. First one is, first, the land that you hold at cost already just because you are starting a construction there. It means that this power land all of a sudden becomes more -- becomes a reality first. And second, you are incurring a lot of cost and approaching pre-lets over the period of the 2 years that normally 2.5 years that takes us to build this type of assets. So I would say that the value is little by little absorbed until delivery times. Of course, the fact that we have pre-lets or not pre-lets of course, give more certainty to the projects, but this is how they are normally approaching it. Inés Arellano: Stephanie, just to add to what Francisco commented, it is very important for you to know that the 4 land plots that are -- that have been included in the scope of work for the appraisers, they were on land that belong to us. So just by putting the market value, which is powered land and not raw land, they were sitting in our balance sheet at almost nothing, just by consider them as powered land that it's a significant uplift on a relative basis, of course, right? So Phase 2, as Frank said, the first thing to know is or the first thing to bear in mind is how that land -- the market value of that land stands. In our case for what we had before, is certainly an uplift, not -- it is not the same for the land that we buy, of course, because that's the market value. And then as the different milestones of CapEx keep on going and as you approach the cash flow, you will get more value crystallized. But for this 4 particular projects, there's obviously been an uplift because they're sitting in our balance sheet for long at almost 0. Stephanie Dossmann: All right. And my second question relates to more traditional business. The office market in Barcelona. You said it is softer, of course. I was wondering what you expect on the midterm. I mean I understand you expect no oversupply shortly, but will the demand be strong enough to see higher Release Spread going forward? And what's your view generally speaking on the Barcelona office market? Ismael Orrego: Okay. Look, the Barcelona office market is in a digestion crisis. 320,000 square meters without client joined the market at the end of '24 and that hit is still being felt across the market. So this is taking a hit on the tension, the demand tension in the 22 ARA, more noticeable in occupancy than for the movement in rents but clearly noticeable. Our expectation in a normal world is that we had positive Release Spread overall in Barcelona this year, not brilliant, 1.7%, but still positive. So rents are holding for the moment. The market has corrected itself, as you can expect. So no new construction starts have happened since 2024. And in normal circumstances, unless the Afghanistan, Pakistan war expands to Iran, Israel and U.S., Russia, normally, within 18 to 24 months, Barcelona should be able to absorb the excess offer and come back to a certain normality. That would be what we would normally expect. Could be a little bit more, could be a little bit less, but Barcelona remains a strong small city, I mean, very specialized in certain submarkets within offices. A little bit of pharma, a little bit of gaming and tech. And as a consequence, we expect the city to continue performing robustly once they have been able to absorb this little blip caused by a situation of oversupply and touristification of the office development. Operator: And the final question comes from the line of [indiscernible]. Unknown Analyst: I have a couple of questions, if I may. One is in relation to your guidance for 2026. I'm trying to understand what assumptions are going in there in terms of additional debt funding. I think you said that in the second half, you're going to raise some more debt. In terms of share count, if you assume any change in that? And also in terms of the logistics, whether you assume that, that big asset that has been vacated by the client is going to be lifted up at any point during the year. So that's my first question. Ismael Orrego: Okay, Daniela. Look, regarding the guidance, the guidance stems out of our modeling of the year. We believe that the top line, the income could go up by around EUR 40 million easily, but it's going to be eaten by bigger financial expenses mainly. Why is that? Because there will be two events during the year. Money is fungible, so EUR 800 million will disappear when we have to repay our bond. And second, the speed at which we are spending or investing money in CapEx because of our Phase 2 deployment is significant. Already in 2025, we exceeded our original budget. I say ever, I believe the original budget was like EUR 830 million and we ended up spending like EUR 980 million. So we have spent more money in CapEx commitments, okay, in the year than -- commitment, meaning when we commission a certain equipment, we pay between 20% and 40% upfront, and then we pay the rest upon the reception of the equipment. However, that money for us becomes untouchable because we need to phase that payment if and when the equipment is received. So in our models, this is what we are seeing. Whether that could be achieved, I mean if we are quick in leasing up some logistic gaps, we should be able to improve it. They wouldn't move that much the needle because if you take into account that logistics account for around EUR 84 million of our rents and the rents expected for this year are going to be in the region of EUR 600 million, it's not going to move the needle that much. What share count considered for the guidance, same share count. And that is, of course, a very tricky question, I know, because you are already assuming that there is going to be capital issuance at some point. But this is -- I mean, we are talking apples-to-apples. The 58 is with the same share count we have at present. Unknown Analyst: Second question, if I may. And that's on Phase 3. I wonder whether there's been any investment, even minimal infrastructure preparation in Lisbon. If I'm correct, Lisbon is Part 1 of your Phase 3. And given what you mentioned about the earthquake risk and all that kind of stuff. I wonder whether there's already been a little bit of investment in infrastructure into that and related to also Phase 3, what would be the earliest date that you would like to start ordering equipment or start properly deploying into Phase 3? Ismael Orrego: Okay. Regarding the commissioning of equipment for Phase 3, et cetera, we will inform in detail about Phase 3 on the Capital Markets Day. But you will see what is basically the cash flow schedule in -- for Phase 3, and you will see it significantly overlaps with Phase 2. Regarding whether we have already advanced infra investments for Phase 3, yes. I mean, in Lisbon, we have been preparing the ground for plots 3, 4, 5, and we might start precharging land for plots 6 and 7. But we are talking about relatively humble investments. I mean we are not talking about significant things. Likewise, we have spent money in the licensing of a number of projects, including, for example, the one in [indiscernible] where we are already requested construction license, and we have already applied for specific planning status by the autonomous region. We are building up electric capacity in anticipation of Phase 3. For example, the whole purpose of the Solaria agreement in November was that, was to illuminate plots 5 -- 4 and 5 of Arasur and some of the other agreements that we might be reaching in or have reached in as we speak, are also related one way or another to Phase 3 or pipeline. But we will inform about all that in the Capital Markets Day. The only thing that is important for you to keep in mind is that Phase 3 will be defined with everything that is being licensed and has power. So it will not include any pie in the sky or talking about things in which we could get the electricity, et cetera. We will be very specific about that on the Capital Markets Day. Operator: Thank you very much. There are no further questions. Just a quick reminder, many of you already know, but we'll be hosting our Capital Markets Day in Bilbao the following 9th and 10th of March. It won't be broadcasted. It will be recorded and then uploaded into our website. But all of our material will be published on our website that morning, the 10th of March. So hopefully, all of you can make it so you get to enjoy a nice wine. And you know where we are in case you have any other questions and have an excellent weekend.
Operator: Greetings, and welcome to the Diversified Energy 2025 Annual Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Douglas Kris, SVP, IR and Corporate Communications. Thank you, Douglas. You may begin. Douglas Kris: Good morning, and thank you all for joining us today, and welcome to our fourth quarter and full year 2025 results conference call. With me today are Diversified's Founder and Chief Executive Officer, Rusty Hutson; and President and Chief Financial Officer, Brad Gray. Before we get started, I will remind everyone that the remarks on the call reflect the financial and operational outlook as of today, February 27, 2026. Certain statements made on today's call are forward-looking and may be subject to risks and uncertainties relating to future events and the future financial performance of the company. Actual results could differ materially from those anticipated. The risk factors that may affect results are detailed in the company's most recent public filings with the SEC, including the annual report on Form 10-K for the fiscal year ended December 31, 2025, filed on February 26, 2026. During this call, we also reference certain non-GAAP financial measures. Our disclosures regarding those items are found in our earnings materials on our website and in our regulatory filings. I will now turn the call over to Rusty. Robert Hutson: Thank you, Doug, and thank you all for joining the call today. Before diving into the recap of the year and the fantastic operational and financial results that we posted last night, I want to start the call today with some opening remarks around our strategy, our culture and the theme that we believe fits well with our accomplishments in 2025, we are proven. I believe we are at an inflection point for our industry and for our company. The landscape is changing rapidly, not only in upstream but the entirety of the energy value stream. Consolidation is accelerating. Volatility in commodity prices, especially natural gas, is increasing. Competition has never been more intense, and the choices we're making right now matter more than ever. But in the 25 years since I founded Diversified Energy, I believe we are in the best position we have ever been in. I'm truly excited for the future and the next 25 years of Diversified. As the founder and CEO of our company, I'm extremely proud of the business we have built, the professionalism of our team, the quality of our assets, our sound financial condition and the strength of our business model. Importantly, a ticker symbol doesn't drive results. People do. Diversified is a leader, an innovator, a pioneer because of the talent, skill, tenacity and capabilities of every member of our team of professionals. Whether in the field or at a desk, Diversified is a leader because we trust our people and empower them to do their very best work. Our people are the track record. They are the results. They are the proof, and we are proven. For those of you following along with our year-end 2025 results slide deck, which we posted to our IR website last night, I plan to cover a few slides and then turn the call over to Brad to discuss highlights from our financial results. After Brad's remarks, I will provide some closing thoughts before opening the call for your questions. Starting on Slide 3. Given current market dynamics, especially related to the energy sector, I believe it's important for analysts, investors and all stakeholders to understand in simple terms, the investment opportunity we offer. As the founder, I was the first investor 25 years ago. I used my home equity to purchase a small package of wells in West Virginia, which led to a $50 million initial public offering in 2017. Today, I still hold all my shares as the largest individual shareholder with company insiders holding approximately 6% of the shares outstanding, demonstrating the team's belief in the quality of our company and the future prospects for our business. I will not go through all of the investment qualities listed on this slide but the 6 simple attributes that Diversified possesses are not only what we provide but also what we deliver and ultimately tie back to a simple statement listed here as number one. Diversified is the first and currently only publicly traded company focused on acquiring, operating and optimizing established cash-generating energy assets. We believe the first-mover competitive advantage we built continues to bolster our business and is a key component in the record results we achieved in 2025 while allowing us to continue creating value as a proven business model and a compelling investment thesis. For the past 25 years, we focused on acquiring and operating cash-generating energy assets so that we could provide our investors with a consistent and reliable return. We know that this proven focus provides investors with a unique and lower-risk method of investing in oil and gas assets, and I am proud that we were and are the leader in this strategy. Turning to Slide 4. As we look further across the subsectors of the energy investment landscape, it's important to recognize that diversified exhibits several of the positive investment attributes of these subsectors, while notably delivering a significantly higher free cash flow yield. We believe these attributes represent a straightforward thesis for a multiple re-rate in our shares as we currently trade on average 3 turns below those other cash-generative subsectors of the overall energy industry. Given this low relative valuation, we believe our shares offer a triple threat of attractive investment style. As a value stock that trades at an attractive 4x EV to EBITDA multiple and over 25% free cash flow yield, as a growth stock with attractive top line revenue growth of over 140% and free cash flow growth of over 110% year-over-year and as an income stock with an attractive current dividend yield of approximately 8%. Our company remains a unique yet consistent and proven investment opportunity. Turning to Slide 5. When we view the high-level recap of the past calendar year, 3 words come to mind: innovation, transformation and focus. Innovation from the Mountain State Plugging Fund and Carlyle strategic financing partnership, transformation from the approximately $2 billion in accretive acquisitions, inclusive of Maverick Natural Resources and Canvas Energy, focus from delivering on goals to improve financial leverage, expand our investor universe and achieve multiyear sustainability performance. It's impressive to know that we delivered success during a time of commodity, geopolitical and financial market volatility and equally impressive that it was all done in 1 year. Once again, it illustrates we are proven. Turning to Slide 6. We are kicking off 2026 continuing to execute on our proven acquisition playbook, and I will spend a few minutes on the specifics of the deal we announced last evening. We are excited to announce the acquisition of Sheridan Production Partners, a privately held company with assets in East Texas, including a bulk of its leasehold and production in Panola and Harrison Counties. As you can see from the map, the acquisition is a true bolt-on to our existing operations and has the potential to create significant value above the purchase price through the combination of high-quality assets with our proven operating model. We are acquiring an additional 61 MMcfe per day of natural gas production in the sought-after Gulf Coast region and notably in proximity to our 120 MMcf per day Black Bear processing facility. We are acquiring Sheridan for approximately $245 million, which represents a PV-15 valuation. The acquisition is being funded with our current liquidity, which we announced last evening was approximately $577 million. This established producing asset has an extremely low corporate production decline profile of approximately 6% and is anticipated to contribute approximately $52 million in next 12 months EBITDA during calendar year 2026. We believe this accretive acquisition offers a tremendous opportunity, adding contiguous acreage in the operating region, delivering strong, stable production with estimated reserves of approximately 397 Bcfe and immediate line of sight to operating efficiencies from our smarter asset management and the ability to capture meaningful synergies from the increased asset density in field operations, integrating processes and systems under our DEC platform and consolidating corporate functions. We anticipate the acquisition closing during the second quarter of 2026 and look forward to integrating these high-quality assets into our asset base. Turning to Slide 7. As we discussed throughout 2025, we established a goal to move our primary listing, reincorporated in the U.S. and publish U.S. GAAP financials as an SEC regulated accelerated filer. With our SEC 10-K filing last evening after the New York Stock Exchange market close, we fully achieved our listing and reporting objectives going hand-in-hand with our 25-year milestone as an operating company. This achievement and formal move to the U.S. markets mark a new chapter and provide the company with a larger stage to further expand its investor base and ultimately create the opportunity to increase the value of our business. As I reflect on the history of our public company journey as a public company over the past approximately 9 years, the sheer magnitude of our growth in operational and financial scale and capabilities reinforces the art of the possible with our get stuff done culture, and I'm excited for what we can accomplish in the future. Turning to Slide 8. Our proven business model continues to deliver on our 4 key pillars of our capital allocation priorities, which are as follows: Systematic debt reduction; return of capital through dividend distributions and share repurchases; and growing our portfolio of cash-generating assets through accretive strategic acquisitions. As you can see here on this page, we reinforced our track record on all of our priorities for shareholders in 2025. During 2025, we repaid approximately $277 million in principal. We returned approximately $185 million to shareholders through dividends and strategic share repurchases, representing approximately 16% of our current market capitalization. Worth noting, we have demonstrated a track record of robust and disciplined capital allocation with approximately $2.3 billion in shareholder returns and debt principal repayments since our IPO in 2017. Importantly, we believe our shares remain a compelling investment at current levels, and we will continue to take advantage of the current cycle and market dislocation to opportunistically repurchase shares. Together, these actions demonstrate the power of our disciplined and flexible capital allocation priorities and the quality and consistency of the cash generation capabilities of our portfolio of assets. We will remain focused on our key strategic pillars. With that, I'll turn the call over to Brad to discuss our financial performance and portfolio optimization results in greater detail. Bradley Gray: Thank you, Rusty. I share Rusty's excitement for Diversified's future and my confidence in our teams, in our assets and in our ability to generate consistent, reliable cash flow has never been higher. I appreciate the dedication and commitment of our teams to deliver quality results each and every day. We'll now turn to Slide 9. Before sharing the highlights of our financial and operational results for the full year 2025, I would like to focus on the right side of this slide. This presentation very simply illustrates how our accretive growth of cash-generating energy assets paired with best-in-class operational and corporate infrastructure translates into material bottom line growth. I'll start with production. The daily production exit rate for December was approximately 1.25 Bcfe per day, and our production for the year averaged approximately 1.1 Bcfe per day. The growth in our low-decline resilient production base has put the company in a great position to participate in LNG exports and data center energy demand and to benefit from the growing demand from our products while continuing to supply energy to our local communities and our commercial customers. And our vertically integrated marketing team provides us with a terrific strategic advantage to get our products to market at the highest possible margin. Total revenue was $1.83 billion, and adjusted EBITDA was $956 million for the year, beating our stated guidance and with our adjusted EBITDA margin landing at 58%. Our adjusted EBITDA was a record for our company. And as the one member of our leadership team who joined Rusty before our public offering, I'm very proud of the quality and scale of the company that we have built. Notably, our portfolio optimization processes or better known as the POP allowed us to generate approximately $170 million in additional cash proceeds. These results are exciting to reflect on, but the real excitement is about the opportunities in front of us and the capabilities of our team to capture those opportunities. Our adjusted free cash flow for 2025 was $440 million, which was burdened with approximately $55 million of transaction costs. Our net debt stood at approximately $2.8 billion at year-end, and we improved our overall leverage by over 20% to 2.3x since year-end 2024, which would allow us to achieve a leverage ratio within our target level of 2 to 2.5x net debt to EBITDA with approximately $577 million in liquidity. Our balance sheet strength is providing us the optionality and the flexibility to navigate and take advantage of the opportunities that we believe are available, notably the Sheridan acquisition. Additionally, our investment-grade rated nonrecourse ABS notes helped contribute to our financial resilience and ensure we maintain our discipline to consistently repay outstanding debt, of which we repaid approximately $277 million in 2025. In summary, our team's strong execution of our strategy to acquire and optimize stable, consistent cash-generating energy assets enabled strong free cash flow generation and allowed us to continue to prioritize returning capital to shareholders and paying down debt. Turning to Slide 10. One can simply describe Diversified Energy as the E&P company without the E. Our model provides a derisked option, which focuses on optimization and innovation in order to deliver outsized results and longer-term financial resilience in any commodity price environment. And on this page, we are zooming out on that multiyear track record of several key financial metrics and bottom line fundamentals that have created per share value for our investors. Notably, a prudent and disciplined strategy to capitalize and integrate acquisitions has delivered a 12% compounded annual growth rate in EBITDA per share. an 11% growth rate in cash flow from operations and an 8% growth rate in free cash flow per share. We believe that these metrics reinforce that our business model is proven. This slide also illustrates how we've been able to generate a solid return of capital for investors by utilizing a more flexible capital allocation framework, which incorporates both strategic share repurchases and consistent dividends. Turning to Slide 11 now. One of the main benefits of our disciplined acquisition strategy is that we have created multiple drivers of cash flow generation and growth. Our expanded asset portfolio benefits from a low decline production profile, commodity diversification, a disciplined hedging program and material upside from anticipated operational and administrative synergies that we generate from our scale and vertical integration. The key metrics at the bottom of this page highlight the impact of our disciplined acquisition framework and the power and advantage that vertical integration and scale provide meaningful value to our shareholders. We have delivered year-over-year growth in free cash flow while also reducing overall leverage. And this was a terrific achievement for our team in such a short period of time. This simple yet proven strategy of acquiring assets at attractive valuations using low-cost investment-grade rated financing allows us to capture a spread and with our operational excellence and portfolio optimization, improve our return on investment. With this proven playbook, we have and plan to continue building a resilient platform of cash flow generating assets. Turning to Slide 12 now. Our proactive portfolio optimization program or our POP is a continuous evaluation and execution process for us. Since 2023, we have taken advantage of increasing opportunities to monetize the large inventory of undeveloped acreage that we have accumulated, which notably was ascribed 0 value as part of our acquisition processes. We utilize our deep operator relationships and market experience to generate additional unlevered free cash flow to deploy toward value-creating opportunities. During 2025, we have generated approximately $160 million in divestment proceeds, and we repositioned that cash for strategic share repurchases and 2 highly accretive acquisitions, which meaningfully lowered our leverage. Moreover, the cumulative $314 million in proceeds from portfolio optimization in the last 3 years has enhanced our return on investment by approximately 10% for the $3.7 billion of acquisitions that we completed since entering the Central region in 2021. Collectively, the numerous optimization opportunities provide cash-generating levers to grow our business, increase free cash flow and bring forward the hidden or unrealized value of our portfolio of assets. And by reallocating the incrementally generated cash flow from our POP programs, we can also support superior shareholder returns. Turning to Slide 13. We continue to see robust results and additional value creation from our non-op joint venture partnership, specifically in the Western Anadarko Basin. This capital-light approach with an industry-leading development partner offers an elegant solution for adding reserve replacement and ultimately free cash flow while delivering a compelling return profile. During 2025, we saw an approximately 60% rate of return on these new wells, which are trending approximately 75% liquids. This additive production meaningfully offsets our approximate 10% annual corporate production decline. For example, we anticipate that non-op production to exit 2026 at just over 12,500 BOE per day. Additionally, we have recently added a new Permian Basin non-op partnership, which provides additional commodity diversification and the potential for even higher project returns. And notably, the upfront proceeds from the sale of the land and the working interest to our Permian development partner offset our capital spending and further increase our ultimate rates of return. Now to Slide 14. Our stewardship operating model is supported by our long-tested smarter asset management practices, which optimizes the cash flow from the assets we acquire through production enhancements and expense efficiency. And our daily priorities require us to look for, find and execute activities that enhance margins. Our daily priorities drive additional cash flow and in the long term, do and will create value for shareholders. These daily priorities, which are safety, production, efficiency and enjoyment are unique to Diversified, and they allow us to continue to generate resilient, consistent free cash flow as the PDP champion. The subtitle on the cover of our earnings presentation says, proven, stepping up when others step away. This statement is about responsible stewardship. We were innovators in buying PDP assets that other companies neglected or lost focus on. Our proven business model steps up to own these assets and make them safer, efficient and more profitable. Simply stated, optimization is stewardship. So to wrap up my comments, I want to say thank you to all of our teams for their excellent work over the past year. Our company is well positioned to grow and generate consistent cash flow for our shareholders. This positioning of strength is due to hard and smart work from our skilled team of professionals. I will now turn the call over to Rusty for some final thoughts. Robert Hutson: Thanks, Brad. Before we take questions, I want to provide some final thoughts on our outlook for 2026 and the milestone of our 25th anniversary. Turning to Slide 15. We continue to emphasize we are a differentiated energy producer that seeks to optimize established, often overlooked and undervalued cash-generating U.S. energy assets. We maximize value in a unique way by minimizing traditional E&P risk, growing our revenue streams, optimizing our asset portfolio and being good stewards of our capital while generating real, consistent, meaningful cash flow. In 2025, our results were impressive, and we were able to exceed or achieve our guidance on important financial metrics, adjusted EBITDA and adjusted free cash flow. Notably, all of our additional guidance metrics were also within the guidance range. As we embark on our 2026 journey, we have published full year 2026 guidance seen here on the slide using the same operational and financial metrics. I would note that these guidance metrics do not incorporate the Sheridan Production acquisition announced yesterday. Also, as a reminder, we continue to include cash generated from our portfolio optimization programs in adjusted EBITDA and adjusted free cash flow and is anticipated to be approximately $100 million for the full year 2026. Turning to Slide 16. When the founding father set out to build America, they aim to create something that would last, something rooted in hard work, responsibility and the belief that what was created must be cared for and nurtured for it to endure. That same belief defines Diversified Energy. As our nation celebrates its 250th anniversary, we celebrate our milestone 25th anniversary. For 25 years, Diversified has stepped up when others stepped away, investing in established energy assets and committing to their full life cycle from production to responsible retirement. We are, at our core, adaptive out-of-the-box thinkers, innovators and trailblazers. We pioneered a new way of working using scale and vertical integration, leveraging technology and flipped the narrative on natural gas and oil production while also maintaining the discipline and predictability required to make our work profitable. This culture, this mindset, this belief has allowed us to transform one company's divestiture into our consistent cash flow. What started as an idea and one small well package acquisition in West Virginia in 2001 has evolved into a 2,200-plus person organization, a sizable publicly traded entity that generates over $2 billion in revenue annually, a top 3 landholder in the Lower 48 and the largest owner of wells in the U.S. We took a different approach to responsible energy production. We were the underdogs, but we proved ourselves. For 25 years, we made our own rules, crafted our own strategy and created enormous value for stakeholders and shareholders along the way. Now is the moment to consider what we've done and how we got here, what we set out to do, how we were unique and what we proved. Now is the moment that we give each other a collective high five because we are proven and now others follow us. As America looks ahead, Diversified does the same. We are grounded in our values, focus, experience and our commitments. With that, I'd like to turn it over to the operator for the Q&A portion of today's call. Operator? Operator: [Operator Instructions] Our first questions come from the line of Neal Dingmann with William Blair. Neal Dingmann: Nice details. Rusty, my first question just on capital allocation. In the prepared remarks, you kind of gave the rankings but I'm just curious how you think about -- you've always had a good dividend. Is there a sort of an optimal dividend yield that you all target? And then in that same vein, with leverage, you've been able to take that down. Is there an optimal or kind of a leverage goal as well? Robert Hutson: Yes. No, I don't think we really sit around and think about what our dividend yield is. We have a dividend -- fixed dividend that we feel comfortable that the free cash flow will support that will give our shareholders a good return. And then that's where we stay. We don't really look at the dividend yield. That's going to be based on the share price and where it goes, and we just kind of try not to focus on that. We focus on what we feel like we have the financial capabilities of paying with free cash flow. On the other hand, as it relates to leverage, we've stated our business with the type of funding that we use with the ABS, asset-backed securitizations, we're very comfortable having that 2 to 2.5 range. There's times when it could come down closer to 2, and there's times where it may go a little higher than that at 2.5. But staying within that range is a real -- is a goal for us and really important for us as we grow the business through acquisition. Bradley Gray: And Neal, one thing I would add as it relates to leverage, one fact that I would not want anybody to just skate over is the fact that we paid down $277 million worth of debt last year. So our business continually deleverages. It should be close to $300 million this upcoming year. So we continually deleverage and build up equity value in these ABS notes. Neal Dingmann: Great point. And then my second question, just on non-op activity. It seems like you have a lot of -- I was going to ask on acquisitions but I'm just excited on your non-op activity. It seems like there's a lot of upside potential. I mean, whether that's Mewbourne and Mid-Con or others. Could you talk about just what you're currently seeing in the non-op. Are you seeing where -- I know there's a sort of non-operator talked about some private sort of shutting things down. It seems like you're having just the opposite where you're having some sort of fantastic activity. Could you talk about potential upside around your non-op activity? Robert Hutson: Yes. Our Western Anadarko, you mentioned with our -- in Oklahoma with Mewbourne. Neal, we've just seen tremendous results there. The commodity prices haven't affected those IRRs to a level where we would ever think about shutting that down. They're just that good. And we've seen great success there. We still have a runway to go. And so we're going to continue to invest alongside of Mewbourne in that program. We're also seeing -- we mentioned it in our comments, we're the largest leaseholder, one of the largest leaseholders in the Lower 48. That gives us a lot of flexibility and a lot of optionality. And so we're leaning into that in our Permian acreage with another non-op partner and fully expect to invest as we move into 2026 and see some pretty good returns there, especially with the uptick in oil that we've seen here recently. So we're excited about the non-op piece. It allows us to have some organic growth within our portfolio without having to put the G&A cost that running a program ourselves would do. And so it's a big piece of what we're going to be doing moving forward. Operator: Our next questions come from the line of Charles Meade with Johnson Rice. Charles Meade: Yes, I'd like to start off with -- ask for a little more color around this, the Sheridan acquisition you guys announced yesterday. It looks like to me, that's an area that has a lot of historic Cotton Valley production, but also it's more recent in the last few years, there's been a lot of horizontal Haynesville production there. And so I wonder if you can talk about -- when I look at the 6% decline you gave us for that though, it really suggests to me that there hasn't been a lot of recent drilling or at least a lot of recent horizontal drilling there. And so I wonder if you could talk about the nature of that production, what zones is coming from? How much is horizontal versus vertical? And really, one of the things I'm aiming at is an idea of how much undeveloped acreage you guys might have there that's a candidate for your portfolio optimization? Bradley Gray: Charles, the way we've really looked at this acquisition opportunity, it is a perfect strategic bolt-on to our business franchise there in East Texas. We've got tremendous overlap with our field operations, with our midstream business. And so it is a great tuck-in where we can add in highly -- high-margin production into that area. Along with it, it does come some additional acreage, and I think we highlighted that in the press release. So we'll have some opportunities there. And as we've done with our POP program, we'll look for the best ways to bring value forward, whether that's through some type of development or some type of just sale or some type of non-op relationship. So this is a perfect tuck-in acquisition. It's only $245 million for us. It's adding reserve replace -- it's adding reserves, and it's also adding incremental cash flow to just the overall corporate cash flow that we produce. Robert Hutson: And just to add on to that, it's kind of a mix. It obviously has horizontal wells in the package. To your point, they haven't been drilled in the last few years. But the other real important factor here is this is in the proximity of our processing facility in that area. And so it gives us some potential upside there to move gas maybe down to our processing facility and get the liquids exposure as well. The other thing I would say is, too, is that this is an area that's gotten really, really active and hot pretty much the whole area down there. But -- so as Brad was mentioning, we'll look to find the best value for that undeveloped acreage, whether it be a JV like he was saying or a sale or whatever. So there's lots of optionality here, lots of synergies that we can lean into and really key to our acquisitions, take an acquisition, pay for it and get additional value that brings what you pay for it to a better valuation. Bradley Gray: Yes. Charles, last comment I'd say is just there's a page in our presentation that talks about the strategic value of in-basin acquisitions, that framework. This one hits every box there. Charles Meade: Yes, it definitely seems like it could be a good fit. On the financing of it, is this already in process with the Carlyle, ABS structure? Or what's the state and path forward for the financing? Bradley Gray: Yes. We're -- we've got the liquidity on our credit facility to finance this acquisition, and that's our initial plans to close it with that. Operator: Our next questions come from the line of Jonathan Mardini with KeyBanc Capital Markets. Jonathan Mardini: Just on the non-op side, you said the 2 non-op partnerships together, they're expected to offset about half of the natural decline in 2026. Just looking forward, how are you thinking about the scale that you'd like to get for these non-op partnerships? For example, would you look to have enough partnership activity to offset all of your base decline? Robert Hutson: Well, we'd love that. We'd love it. But you ultimately have to have the programs that make sense and that are -- have good rates of return. So these 2 that we've mentioned have that. And so these would be the 2 that we're going to lean into. There could be more coming in the future. And we're -- as I've stated, I believe, the last call that we did, we're high-grading our acreage. We're looking at multiple opportunities to lean into all that value. These are 2 that are extremely important to us and that are already kicked off, but there could be more coming in the future. Bradley Gray: Yes. And one thing I would say, we did this Canvas Energy acquisition at the end of 2024 that came with a lot of acreage and a lot of opportunity. And so with commodity price movement, if there is any commodity price movement upward, that price movement will unlock additional development opportunities for us. So like we said in our comments, we've got a lot of cash-generating levers in our portfolio. Robert Hutson: The last thing I would say there as well is that don't underestimate Appalachia. We have some acreage in Appalachia that has some really, really good prospects at some point. We're kind of monitoring the situation that's going on there but it could end up being a big, big win for us up there as well. Jonathan Mardini: Understood. That's helpful context. I just want to ask about the asset sales. You previously talked about maybe a $40 million or $50 million run rate of asset sales is a good baseline. We saw 2025 come in over $160 million. With the 2026 guidance, including about $100 million of these proceeds, how do you just think about the updated run rate for these land sales? And are you seeing more buyer interest today? Robert Hutson: Yes. I mean I would say there's buyer interest. Again, we're high-grading our portfolio. We're looking at all of our acreage positions. Last year was the first year with all the acreage that we had acquired through Maverick and Canvas. This year, we'll have a little more -- we've seen a little more interest levels in a couple of things that we didn't anticipate last year. But I think -- and Brad, you can comment on this as well. I think $40 million to $50 million is a run rate type expectation on a normal year. Bradley Gray: Yes, post 2026, we've already issued expectations and guidance on '26 at $100 million. But on a go-forward basis, we believe that $40 million to $50 million is a comfortable number. We have a vast portfolio of assets and acreage. And so opportunities come our way very often. Robert Hutson: And I find it interesting that a lot of the areas that people didn't think about or didn't really put a lot of attention, all of a sudden are regaining interest levels and people are starting to come back and look at different things. So that's what gives us comfort in the guidance. Operator: Our next questions come from the line of Paul Diamond with Citi. Paul Diamond: Just drilling down a bit more on the Permian JV. In the Central Basin, we have a bit more of the details. Is there anything else you can disclose on locations, working interest, expected production run rate through the year, anything like that? Robert Hutson: I would say we'll have more data around that after the first quarter. Give us a little time on that. But no, look, it's really close to moving forward here and getting kicked off. And so we'll have better data to kind of help you to drill down more so at the end of the first quarter. Paul Diamond: Got it. Understood. And then jumping over, can you talk about the bigger news or news last year was the plugging funds. Can you talk about the status of where that sits and the potential opportunity set and I guess how you go about potentially extending that to other states? Robert Hutson: Yes. I'm still surprised at how that got kind of gotten -- just kind of blown over by most people. But that was a big win for us as it relates to asset retirement. We're on a -- we have a really, really good financial assurance policy there now that we've made our first payment into that. That will go on for 20 years. We'll continue to plug the wells that we have committed in the state already for the next 20 years as well. We want to utilize that in some of the states where we have the higher well counts for sure, especially in Appalachia, mostly. And so we're working to try to get inroads there. I would tell you that there's a couple of states that would probably do it very quickly, and we'll probably circle back to them this year. But we're working on one as we speak and really want to get that one squared away. So it's a great product. It really -- the whole industry should be looking at this as a way to deal with asset retirement obligations long term. And I think even the states themselves with their orphan well program should be looking at something similar. But no, it was a big win for us. Obviously, my relationship with the politicians in West Virginia gave us the ability to take advantage of that there first. And so we'll continue to work with some of the other states and probably you would probably -- you'll probably see us do something else with a couple of the other states this year. Bradley Gray: And Paul, I would just add, this program, as Rusty indicated, we're very excited about. This program, when it works as designed, and it will because it really is just math and time, moves the financial liability for plugging our West Virginia wells off of our balance sheet and away from future cash flows of this business. It is a significant victory for our company. Operator: Our next questions come from the line of Sam Wahab with Peel Hunt. Sam Wahab: Congrats on another great set of results. A lot of my questions have been answered but one that still stands out is sort of linked with the Sheridan transaction and the strategic partnership with Carlyle. I noticed, obviously, the Sheridan deal is very much gas weighted compared to Maverick last year, where we introduced a lot more liquids. I mean is that a signal of intent in terms of strategy? You talked earlier about data center demand, LNG opportunities. Would that partnership be more gas weighted going forward? And what does the landscape look like for opportunities? And is gas at the moment a better deal than potentially oil given the uptick in prices? Robert Hutson: Yes. Good question. We are -- I've said this before, we're not really focused on whether it's liquids or gas. What we're focused on is the value that we can get from the acquisition. In this case, it was mostly gas, obviously, but it was sitting right in our geographical operating area and just gave us all kinds of opportunities to drive the cost down, increase the -- we bought it on a margin. We think we can increase that margin. And so that's what made it so attractive to us. The Carlyle partnership, they don't really care whether it's liquids or natural gas either. And so -- but they do have a size -- they obviously want to do deals of a little larger than this one. And so that's primarily the reason why we just did this one on our own through our own liquidity. But they are -- they don't have a preference, whether it's liquids or natural gas. We're all about where can we get the best return. That's what we're focused on. And whether it's liquids, whether it's natural gas, it doesn't matter to us. Operator: Thank you. We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Rusty Hutson for closing comments. Robert Hutson: Thank you all for attending today. Obviously, if any other questions or have any additional information that you need, please reach out to Doug in his numbers in the press release for you to reach out. Thank you all, and have a great day. Operator: Thank you, ladies and gentlemen. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time, and enjoy the rest of your day.
Teresa Urquijo: Good afternoon, ladies and gentlemen. Thank you for joining MERLIN's Full Year '25 results presentation. You can find all the materials that will be presented in today's call on our website. I will please ask you to abide by the disclaimer contained in it. Our CEO, Ismael Clemente, along with our two directors Ines Arellano and Francisco Rivas will walk you through the main highlights of 2025. We'll then open the line for Q&A [Operator Instructions]. With no further delay, I pass on the floor to Ismael. Ismael Orrego: Thank you, Teresa. Good afternoon, everyone. We are in front of a very interesting set of results, certainly, the best I have seen since we have been leading this company. It's been almost perfect year because the fantastic performance of the data center division has been accompanied by very, very solid performance also on the traditional asset classes. And all that has been reinforced by an excellent behavior of the share. So frankly speaking, what can I say? I mean the operating momentum is super strong. We are enjoying satisfactory rental growth in all asset classes, traditional and nontraditional, because in data centers, we are also achieving better rents than underwritten. We have a high occupancy, 95.6%, and continue solidly generating FFO with a plus 5.1% print in the year. In offices, we have a very remarkable like-for-like of 3.5%. But more importantly, an interesting release spread of 4.8%, which is probably the reflection of what we commented in past calls that the Madrid market particularly is now under a certain like short squeeze. I mean, there is distraction on the offer side, which is causing, of course, an effect on the pricing of the demand. The occupancy stays at all-times high, 94.2%, and this is particularly noteworthy in a year in which Barcelona has been a relatively softer market than it was in the past, and has lost occupancy. So Madrid has been able to compensate Barcelona, which will continue for the coming years to be one of our weak spots that we will continue working because sooner or later, the market will digest the current situation of oversupply and will come back to normality. In logistics, we have been positively surprised by the release spread, particularly because, as commented on a number of past calls, this is a market where we were seeing a little bit of less strength than we have been seeing in the past years. But this year has been extremely strong, particularly on the release spread. The reason why the like-for-like is low is simply because we have lost 3 points of occupancy, which is normal, because we were occupied at 99%. And we told you that there was only one way to go from there, which was down. And -- but we ended the year with a very good printing occupancy of 96.4%. Shopping centers, another super strong year, surprising us on the upside with a very good like-for-like of 4.7% and still with very affordable rental levels for our clients at 11.0% in occupancy cost ratio. So very, very strong year in shopping centers. On data centers, well, basically, we have achieved a full derisking of Phase 1. So Phase 1 is now water under the bridge. I mean, we will report it as assets in operation from now on in order to try also to simplify your lives, because if we continue reporting Phase 1, Phase 2 and soon Phase 3 is going to be -- is going to be a rubik cube. So that will convert into assets in operation with an occupancy of 100%. We have also achieved a very interesting derisking of Phase 2 with the lease-up of our Arasur 2 asset 48 megawatts, which is around 20% of the total capacity of Phase 2, but more importantly, it was the next Indian trying to attack the fort. I mean it was ready for service December 2026. And as such, now is done. The next ready for services are end of '27. So we have now plenty of time to work on those -- on the leads in which we are already working and starting exchanging technical documentation, and then we will need to come to terms in the economic side of the business and then move into documentation, which, in some cases, particularly with hyperscalers, can be a painful process. In terms of financial performance, the value uplift has been very strong, but this has been mainly boosted by data centers who have contributed close to EUR 360 million increase to the total revaluation of the portfolio. 4.7% GAV increase in the year. The total shareholder return, 10.2% is fantastic. But more importantly, we believe it's relatively sustainable, because we know what is coming, and we think unless the world goes upside down, which is another possibility, if 2026 is a relatively simply flat year in terms of performance of traditional asset classes, we believe we can achieve very similar figures at the end of December. Our financial situation remains very strong. The loan-to-value is low at 28.9%, 100% fixed rate. And we don't have maturities till November 2026, maturity which is already tackled. I mean with the existing cash at banks and a number of bond taps and bank lines that we are signing in the coming days, that maturity will be already tackled without affecting the CapEx needs of the data center department. And we have been able to maintain our rating, both with S&P and Moody's, which is always interesting because at the end, that cost is one of our raw materials. And we need to continue keeping our competitiveness in terms of rating. In terms of value creation, EUR 129 million in noncore divestments, as already disclosed to market, you were perfectly aware that we had this almost done. And then probably the most interesting thing is that we have another close to EUR 130 million already signed and to be executed in '26 and '27, which is very interesting because basically almost half of our targets for '26 and '27 are already covered in the absence of any accidents. It's important to pay homage to the activity of our different business divisions. The year has been excellent in terms of pre-lets. In offices, we have signed more than 56,000 square meters beyond the daily trading, I mean, the ins and outs that happen every day in the portfolio. In logistics, 73,000 plus and Head of Terms, which we believe is going to become a reality of another 55,000. So significant progress also in logistics. And in shopping centers, to me, the most salient activity in the year has been the inauguration with an almost full pre-let of the Marineda extension, 26,000 square meters, which has made the Marineda concept in La Coruna even more dominant than ever. I mean it's a center, which is really rock solid and is one of the jewels in our little crown. And in data centers, well, we are now at 112 megawatts IT versus 45 latest reporting. And therefore, when 66 new megawatts have been lit and the prospects for the derisking of the rest of the Phase 2 remain brilliant. So in terms of main financial magnitudes, the GRI print was EUR 541.9 million, plus 3.5% like-for-like in the year. The FFO, what we broke our own record is better than the one of year 2019, EUR 326.7 million plus 5.1% year-on-year. But it is important to note that in 2019, we had EUR 84 million of BBVA rents in our belly. So with a little bit of help from data centers, around EUR 30 million, we have been able to overcome the sale of the BBVA portfolio, which, with hindsight, I believe, was an excellent decision because we delevered the company in anticipation of high interest rate cycle. And that gave us also a sufficient financial muscle to be able to develop Phase 1 of our data center deployment program, which was absolutely necessary because have we tapped the market to develop data centers starting from scratch and the market will have been a little bit incredulous about our capacity to do. So we had to do it with our own money, and BBVA was instrumental for that. The EUR 0.58 achieved are plus 7% versus the initial guidance, although we updated to EUR 0.56 in -- I think it was in 3Q, we updated to EUR 0.56. In reality, we expected EUR 0.56, but in dataset, we have had little income from -- particularly from better margin in our data center operation and well, some income also from NRCs from the installation of machinery on behalf of our clients through remote hands agreements in our data center division. The LTV stands at 28.9%, which is pretty low, but more interestingly, net debt-to-EBITDA stands at 9.0x. Of course, it is growing, but it is growing as we are spending in the construction of new units in our Data Center division. The NTA per share is EUR 15.36. And for the first time, we are very, very close in our share price to our NTA, which is incredible to see. I mean, I'm really, really enjoying to see that when I shut on my computer, and I see the share price evolution, I am really humbled. The GAV like-for-like has gone up by 4.7%. But very importantly, with an EPRA net income yield of 4.6%, which is sound, because these days, improving NTA or improving GAV through asset revaluations is easy, but we have taken exactly the contrary way. I mean we have completely recalculated our prospects for particularly logistic pre-lets and part of the logistics division and we have decided to expand a little bit our yields in order to make sure that we repair the roof now that the sun is shining rather than doing it when the things start to get rough. TSR, as commented, and leads us to propose dividend per share of EUR 0.44 for the year, which is slightly above the 80% threshold, but I think we have to share a little bit with our shareholders the good operating momentum of the company. In terms of EPS, we have, after careful reflection for the moment, we have taken the decision to continue to not capitalize interest expenses. We believe it is cleaner. We believe it reflects better the real operation of the company. And therefore, as a consequence of that, we are indicating for 2026, a relatively flat figure in terms of EPS and DPS. But we will, of course, endeavor to bid it if we can. It won't be easy because it is mainly attributable -- the reason why it's flat is mainly attributable to the fact that all the growth in top line is absorbed by more financial expenses as we continue basically building. We continue building our inventory. And as a consequence, we continue employing our debt capacity. And this is, of course, raising the bar of our financial expenses. And for the moment, it is hitting in our top line growth. 2027 will be a different thing. I mean, in 2027, will be a year in which we will start seeing the first hints of what the DC division will bring in the future to this company and '28, '29 and '30 as commented on many other occasions, at least on the model, of course, you never know, but they look like a big party. That is it. I mean I pass the floor to Ines Arellano who is going to comment on the different asset classes and Francisco Rivas will comment specifically on the Data Center Division. Inés Arellano: Thank you, Ismael. So moving to what today represent 55% of our portfolio, offices. We've generated EUR 292 million of rents, and that is a 3.5% increase in like-for-like as commented by Ismael, very, very sound, with a very high release spread up 4.8%. It is true that if we were to take into account this one lease that we mentioned last year, it would have been 0.4%, but at least it's in the positive arena. The occupancy at 94.2% all-time high. Again, we'll watch very carefully how the evolution in Barcelona keeps ongoing, but we are confident that eventually this will be digested. It's been a very healthy leasing activity market with more than 275,000 square meters contracted. And in terms of valuation, we see a 1.2% like-for-like increase with an implied gross yield of 4.9%, not reaching 5 yet, which as you know, it's always been the number that we thought should be the right one for office. Ismael Orrego: 5.25%. Inés Arellano: Okay. And a net initial yield of 4.2%, and this implies a 2 basis points yield expansion. And as said, the little momentum continues, as demonstrated in Slide 8 with five very good examples of standout leasing deals spread across not just CBD, but also key peripheral corridors, and they all have secured very high-profile tenants. You have three assets here that are still in the work-in-progress portfolio, meaning these are not in operations yet. But you also have two like Castellana 278 and Las Tablas where we've secured very high tenants, very high-quality tenants like a university and a bank. Moving to Slide 9. We continue, again, to see a strong trend of reconversions. And we wanted to lay down what is the current stock of Madrid. You see a little bit of everything. So this number may seem a little bit big to you, depending on the source that you used to consider. We've taken the Belbex number -- this is not only made by pure office buildings. It's also taking into account the offices associated to industrial users, some residential buildings that are being used as offices as well and also administrative buildings. What we see is that there's more than 1 million square meters expected to go back to their original residential use, because right now, as we stand, the highest and best use for a lot of these space is actually beds, beds, because this is both living, resi, hotels. And there is an additional 1.5 million square meters that could be reconverted again to these other uses out of the pure office building. What are we doing? We have identified 7% of our stock in Madrid office, okay, not the whole stock, but just in Madrid whereby this doesn't mean that we're going to be selling the whole 7%. But we've identified 33,000 square meters that will be sold so that somebody else reconvert it plus another 27,000 square meters that we are going to suddenly refurbish or reconvert them for educational uses. Moving to Slide 10. What we see is that -- well, we still believe that unique assets deserve to remain as offices. And this is a perfect example, Alfonso XI. There's a clear scarcity of good space, 10,000 square meter size buildings in prime CBD, and we are fortunate of having owning these unique assets, is right in the middle of Madrid, and we know that there are best-in-class tenants looking for space like this one. So we are going to refurbish this asset. We are actually refurbishing this asset, and the expected yield on CapEx will be around 9.6%. So there's another example in Page 11. Again, super prime office building, Liberdade. As you know, this one we bought it on purpose to be converted into what it will soon be probably the best office building in the Lisbon market. And as of today, even if we have not started commercialization, we have fully let to a top luxury group, all the retail, the high street retail space. Then we have Adequa. This is to show you that there's no only demand for pure prime CBD assets. Adequa is one of those examples where a tenant of ours that was willing to expand to grow in a campus, very, very close to Castellana has actually signed an agreement with us, a turnkey project. And so again, the yield on CapEx around this one is around 10%, 10.4%. And we will soon in '28 and '30, we will have these two buildings built up and completing what today is Campus Adequa. And then finally, this is a jewel. This is a very small building, but a true jewel. and it's going to be even more valuable once Renazca project gets executed. As you know, it has been approved. And once it is executed, we know very well that a lot of tenants will be willing to pay very high rent for these unique assets, which for those who have visited Plaza Ruiz Picasso building is just next to it, you can actually monitor the works from that one. Moving to logistics in Slide 15. GRI like-for-like has been positive despite the loss of a tenant in 48,000 square meter warehouse in [indiscernible] that had an impact of 3% in occupancy. The sound 5.8% Release Spread, together with an average CPI of around 2.5%, has helped to increase rents by 2.5 reaching EUR 86 million. Gross yield at 5.7%, slightly higher than the average yield of the portfolio 5.3%, and net initial yield at 5. The leasing activity has been strong with more than 440,000 square meters contracted compared to only 100,000 square meters in '24, while valuation uplift has been moderate being only 1.2% on a like-for-like basis. This has been mainly driven by the increase in CapEx. Certainly more on future development, but a little bit as well on existing assets due to, for example, fire safety measures. In '25, we finished construction and delivered 21,000 square meters fully led to [indiscernible]. And we've also sold 73,000 square meters warehouse that was under refurbishment in Vitoria and have added a couple of projects to the committed pipeline, now amounting to 279,000 square meters. Yield on CapEx for all these projects remain quite appealing at 13.2%. The noncommitted land bank has therefore reduced by 61,000 square meters outstanding at 183,000 square meters located mainly in Madrid and Barcelona. If we move to shopping centers, well, this has been said already by Ismael. it's great performance in every KPI that you can look at, the GRI of EUR 133 million, it's an uplift of 4.7% like-for-like. It's a great combination of a very high Release Spread plus CPI. In terms of valuation, this EUR 2.1 billion portfolio has gone up by 2.9% with an implied gross yield of 6.4 and net initial yield of 5.7. And this portfolio, shopping center portfolio is shifting to adapt to market trends and customer needs, and we are seeing retailers demanding new formats, so fewer, but bigger and certainly better located. The synergies with logistics, they continue to be a reality, and this is value also for the largest storage spaces that they required and experience of our customers keep on being the main and main focus of everything that we do. And in Slide 21, you have a few examples of new retailers leasing space in our assets, mainly focused on health and beauty and leisure/home entertainment. And with no further delay, I pass the floor to Francisco who will explain where the future is coming from, the data centers. Francisco Gonzalez: Many thanks, Ines. Moving into the Data Center section, I would like to start by congratulating, Ismael did, our data center team and the vision for a fantastic 2025 year, which had a very strong workload and proved the excellent execution. Part of this effort, as you have seen, has been crystallized at the beginning of this year, 2026, with the signing of very significant contracts across our assets. Turning now to the presentation on Page 24, we provide as always an overview of the two phases under operation and/or construction with updated figures. On the one hand, we present the results of Phase 1, which we will now refer as Ismael said, as assets in operation, where the 64 meg have been fully contracted. The originally 14.5% gross yield on cost shared with you 12 months ago has now increased to 15.8% with a stabilized GRI of EUR 97 million above the previous EUR 88 million reported 12 months ago. Regarding Phase 2, which we will refer as work in progress WIP, we have been able to redensify the first two buildings in Lisbon moving from 36 meg to now 40 meg increasing the total size of Phase 2 from 246 meg to 254 meg as you have here in the presentation. And this has led as well to an update of both the total investment amount and expected stabilized GRI now at EUR 397 million, delivering a very attractive 14.4% gross yield on cost. And in terms of commercialization, moving now to Page 25, we have successfully completed the letting of the three assets of this Phase I, following the signing of an 18-meg contract with a very well-known new cloud operating [indiscernible] and first time in our portfolio reaching the full occupancy of our assets in operation. And for those of you who are more curious about the technical aspects, 34 meg out of the 64 are air cooled while 30 meg are liquid cool. And by the type of specification we have it means that these 30 meg liquid cool are targeting above 70 KV per rack. On our experience right now, they are more in the 120 KV per rack, which shows that the type of technology they are using is the last of one of [ NVIDIA ]. On Page 26, we show how the rental income will ramp up on a yearly basis with EUR 31 million already received in terms of rents in 2025 and a forecast of EUR 66 million for 2026, resulting in a stabilized GRI as we mentioned before, of EUR 97 million in 2027. From a value creation perspective, Page 27 shows the breakdown of total costs incurred. The valuation already captured, although it's a little bit more limited in [indiscernible] in the signing of this new contract that the appraisal was not aware of and the expected additional value to be accrued if the value assumptions remain unchanged as we are disclosing in the footnote. So this EUR 291 million estimated value, we expect to be captured in the next valuations if those are retained. Moving to Phase 2. On Page 28, we include a brief reminder of the commercialization status of our data center assets that we divided, as you know, in bookings, advanced negotiations and let or prelet. And with this in mind, in Page 29, we summarize the status of the different projects of Phase 2 with now a total capacity of 254 meg IT. Going one by one, in Bilbao 2, what we call ARA II, the construction is progressing on schedule. After 14 months of execution, we have gained sufficient certainty to enter into prelet agreement as the ready-for-service dates that we show in the presentation, December 2026 are very, very certain. This is a highly complex deployment because we will coexist the deployment of the equipment that we have as landlords, but also the client equipment, which are largely based on a liquid cooling solution. The kind is -- was already in our portfolio is very well, no new cloud operator focused on AI and the level of densities that the client is requesting allows us to know that they are using a state-of-the-art technology, as all of you know. The connection to the substation of this building 2 has been already completed with our first building, what we call ARA III and right now, we are just progressing with cabling of that -- of those that were created for our first asset there. Regarding Bilbao ARA I, as we will show in the following slides, the construction has started at the end of last year, beginning with piling works, and we have maintained our estimated ready for service by the end of 2027. Moving now to the center part of the page, in Lisbon Compos. At the end of 2025, we started the construction of the first two buildings following, believe it or not, 1.5 years of piling works. And please consider the Lisbon region is both flood-prone, as unfortunately, we have experienced some few weeks ago, but also is located in a seismic zone and which has required a significant soil preparation, reason why of this 1.5 years of previous works. And as an example, the piling works have reached approximately 35 meters in depth, just to avoid situations as recommended. And thanks to this preparation, none of the works were affected by the heavy rains experienced in the region earlier this month. From a construction point of view, we have once again redensified the buildings, increasing capacity to 40 mg per building IP, benefiting from the insights gained from client discussions that we have held over the last months. In parallel, substation works have also started with a ready for service in all these first two buildings by December 2027. In terms of leasing, we are in very good progress regarding the initiative that we will comment on the following slides, while keeping the buildings ready for the latest computing technologies in case the first option does not ultimately materialize. Moving into the 2 Madrid projects. In [indiscernible] approval, what we call [Foreign Language] in Spain of the land, and we are in the final stage of securing the organization permits to begin on-site works, which will run simultaneously with the building construction. The ready-for-service is currently planned for the first half of 2029. Regarding [indiscernible] located, as you know, on the same street as [indiscernible] we obtained environmental assessment approval at the end of last year and right after demolition works are started and are going and the construction permit has been already requested just to make sure that when we finalize the demolition works, we can immediately start. Given the previous timing experiences, we are still maintaining ready- for-service in the second half of 2029 although knowing that we have already power on site what in our naming we call power ready supplied, we have already entered in negotiations with several clients interested in this site precisely for the reason that power is already there. Regarding CapEx commitment planning for Phase II and now I'm moving into Page 30. 2025 has been a record year for the company in terms of CapEx commitments. And this is significant because you need to know that a significant portion of this CapEx relates to equipment, which typically has shorter execution timelines once we commission it on site. Commitments have reached EUR 987 million versus the previously reported EUR 836 million, but also the next two years looks very strong in terms of CapEx commitments. So in the absence of any capital event, the company expects to tap the debt market, as Ismael was mentioning before, again, mainly during the second half of the year, once the equity that we raised in 2024 is fully deployed and at work. The target stabilized GRI is planned for 2030 as mentioned in the last quarter presentation, at EUR 387 million, delivering a 14.4% stabilized gross yield on cost. All these figures are reflected in Page 31, 32 and 33, which includes images showing construction progress in both Bilbao, Arasur and Lisbon campuses. And for those attending to our Capital Markets Day in the 9th and 10th of March, you will have the opportunity to see these projects at a human scale, which I think I can tell you that is pretty impressive. Finally, on Page 34, we would like to share the status of our EU Gigafactory initiative. As previously mentioned in the last year call, timelines of this initiative have experienced significant delays and based upon our latest information, the work resolution is now expected before year-end 2026. As we have stated several times, our Phase 2 projects were not conditional upon obtaining the EU Gigafactory award. In fact, this initiative was not even under consideration when we launched Phase 2 and we have always maintained discussions with traditional clients, both hyperscalers and new class operators in line with our original business plan. Nevertheless, as we always say, we've tried to be constructive shareholders -- stakeholders and good citizens, and we remain prepared for initiatives that could benefit the regions where we operate, particularly the Iberian Peninsula and we strong believe we continue believing that bringing the EU Gigafactory status to our region will create a lot of value, whether we are -- whether or not we are directly involved. As you may recall, we have set most of our capacity in Arasur, Capacity 1, and the full capacity of [indiscernible] for this initiative in Spain and the first two buildings for our Lisbon campuses of the Portuguese initiative. And we were always betting an Iberian consortium, so both Spain and Portugal, something that looks like were well received because most of the countries are doing exactly the same in other parts of Europe and offering several locations per country to allow synchronized computing and across the campuses. Situation as of today is that the Spanish government has shown a preference for another Spanish project. And thereby, they have released the capacity that we have reserved for that initiative in ARA II and [indiscernible] I, which, as you have seen, are both now fully let as following the -- what we have always commented to have one option and the other. With regards to ARA I, we are in advance negotiation with a particular client, and those negotiations, of course, will be more intensified and documented once the ready-for-service dates are becoming more and more and more closer. Regarding our Lisbon Campos, we remain committed to this EU initiative, which is now why we are moving forward with the first two buildings in connection with the Portuguese proposal. And once again, as we approach ready-for-service dates, the number of clients inquiring about availability continues to grow. For this reason, we will welcome clarity from the EU in terms of the timing because as soon as we are approaching and approaching delivery times, normally more clients are interested and we would want to have to take a decision there. And now Ismael will close this presentation with the closing remarks and outlook before we enter into Q&A. Ismael Orrego: Okay. Francisco, thank you. Well, on Page 36, closing remarks and outlook. Everything which is written here is pretty evident. So I'm not going to torture you with any more bulls***. The only thing that I will say is that the idea is to move in terms of lets and pre-lets from the current 112 to as close as possible to 100 megawatts in data centers. And this could be achieved through one of several combinations of facts. I mean, more normally, it will be through the documentation of the Lisbon lease which could come in the form of formalization of the EU Gigafactory program or otherwise, through an alternative route. I mean we have been lately adapting our -- the design of our campus there to the specific requirements of a certain client. You must have noticed that the total capacity has increased by 8 megawatts. Well, this came at the cost of 12 additional million in construction cost that I believe makes sense. And now the white rooms conform to the specifications of concrete SOQ of a concrete client. But more importantly, are perfectly flexible to adapt to the requirements of either other neo hyperscalers or neo cloud clients. So with that, I believe the 2026 should be the year of Lisbon. We will work -- we will endeavor to achieve that target. And that's it, dividend and FFO, we have already commented on it. And I believe the best thing we can do is move into Q&A so that you can make your questions in the line. And we will do our best to be able to reply to your questions. Operator: [Operator Instructions] The first question comes from the line of Marios from Bernstein. Marios Pastou: I've got a couple of questions from my side. So firstly, on the lease-up and the pre-letting of your data center pipeline. I think you mentioned that Bilbao building 2 was pre-let to existing neo cloud tenant and that Madrid say, was to a new neo cloud operator. So can you comment on the occupier type you're having discussions with across Phase 2 and whether we should anticipate a diversification of your tenant base across that phase? Ismael Orrego: Okay. Look, Marios, basically the leasing of Bilbao 02 has been closed with an existing client of ours. The one in Madrid, however, was a different one. At present, the diversification of our tenant roster is perfectly distributable. You can imagine with only 112 megawatts let, that I will beg you all to wait till we are 1 gigawatt in operation in order to calculate the real diversification of our portfolio, because have you calculated our diversification in logistics in 2014, you will have come to the -- this main conclusion that it was 72% DHL. But now no client -- individual client represents more than 10% of our rent. So we need to continue building if we want to continue leasing. What I can tell you, talking about Phase 2 and preliminary conversations for Phase 3 is that we are talking to every kind of clients you can imagine. You love hyperscalers. We are talking to all the hyperscalers except one, which is a self-builder. But the other three, we are talking to them. And we are talking to no less than 5 Tier 1 neo clouds alike. So sooner or later, we will end up closing an agreement with a big hyperscalers and you all will breathe with tranquility. But I need to remind you that closing deals with hyperscalers is not an easy thing. It comes at a cost, because they are the fastest cowboy in town. And as such, they have a big pistol. And you have to be very, very careful because that pistol can kill you. So it's big organizations, complicated organizations, you can engage in very fruitful and healthy conversations with the infrastructure guys, with the cable guys, with the first-line guys, but when you move into middle office and back office, it can be complicated. And at times, it is as frustrating as reaching contractual status and then stopping conversations because the conditions can turn abusive very quickly. So we will end up closing deals or reaching agreements with hyperscalers, but probably already in Phase 2 and more surely in Phase 3, but you need to bear with us for a second because we also need to defend our financials, which are your financials. So let's not be childish on this, and let's not -- let's be careful about what we wish for because closing an agreement with one of these is very easy. However, the fact that this agreement is good is a very different thing, okay? So we have to continue working in that respect. What I can tell you is that we are now technically qualified with 3 out of the 4 hyperscalers, so at least we know that our facilities conform to their technical specifications. And sooner or later, we will end up closing. Operator: The next question comes from the line of [ Veronique from Kampen ]. Unknown Analyst: Maybe first on just the other business lines. I was hoping could you give some additional color on what you expect in terms of occupancy rate, any big departure planned in '26, especially for offices and logistics? So your view towards '26 for those business lines? Ismael Orrego: Okay. Well, in offices, the idea is to remain relatively flat. So we have finished this year at 94.2%. The idea is to finish this year between 93% and 94%, which is already a significant effort because you have to take into account that in April, we are losing 11,000 square meters from Meta in Barcelona in the middle of '22 at. Yes, in a building, which is a winner, clearly winner in the market, but replacing 11,000 square meters in today's market in Barcelona is not an easy task. So we have to be prudent, taking into account the situation of the market there. In logistics, our idea is to improve a little bit the occupancy or compared to the 96.4% we have. It's quite binary because it depends a lot on whether we are able to lease one big shed in the Henares corridor or not. If we lease it up, then it's going to be very close to 100% again. But let's not plan for that, at least for the moment, we will inform in due time. And then in shopping centers, we are going to remain relatively flat, because it's almost impossible to go higher. I mean, yes, I mean, you can go 20 basis points higher or that it is complicated to go significantly higher. In shopping centers, in fact, what we are trying to do now is to yield manage a little bit our portfolio, because we are the cheapest shopping center owner in Iberia in terms of OCR. And that is always a very interesting position to start from, and we will yield manage a little bit our shopping centers, although the behavior is impeccable for the moment. Unknown Analyst: Okay. That's clear. And then one question around data centers. So your gross yield on costs went up again. And you also mentioned that the margins actually were better than expected, but I see that's a number that you haven't changed in the slides. So could you give some color on the movements on those numbers and why you still report a 70% margin if it was actually better so far? Inés Arellano: Because Veronique, this is Ines. What has been better is the today's margin. While we are on ramp-up, we do not achieve the 70%. So 70% margin is on stabilization. And so we were expecting lower than what we have achieved margin during the ramp-up. 70% remains as the stabilization margin. Ismael Orrego: Okay. And regarding the growth yield on cost, it is simply a reflection of the fact that the market is helping us. I mean, yes, of course, I mean, there are -- the teams are doing a fantastic job, but we are operating in a market which is quite favorable at present. So this is why we are improving -- if you look at our forecast in data centers, both in terms of cost per megawatt and delivery times, we have been absolutely bang on compared to the numbers we gave you. So our construction cost has been exactly the one we forecasted. Even though you might notice that in Phase 2 is higher than in Phase 1, the only reason is that in Phase 2, we had to buy 2 of the 6 plots of our data centers. And also Phase 2 is fully liquid, while in Phase 1, we had some air, okay? So that is the reason why we have a higher cost. Also Lisbon, as commented by Frank, is a slightly more costly construction to make because of the strict seismic regulations similar to Japan or California. We expect -- I mean, the -- we have already raised by 20 basis points the expected yield on cost on Phase 2. let's see how the leases come up. We might be able to bid it or not. I mean, that we better say than sorry. I mean we prefer to underestimate a little bit rather than being absolutely bullish, particularly when there is so much to be done before inaugurating those assets. I mean the RFSs other than Bilbao, Arasur 2 are expected for the end of '27. And between now and the end of '27, there is a lot to see. So let's continue -- let's remain prudent. Unknown Analyst: Okay. Clear. Sorry, one small follow-up on Lisbon. I just wanted to double check. It says now advanced negotiations on the slide for the Lisbon asset. Is that referring to the EU effect? Or is that concerning something a different tenant? Ismael Orrego: That one is concerning the EU Gigafactory. Then with different tenants, it cannot be -- it is not advanced negotiations. It's simply leads, bookings. The Portuguese government is conscious of that. They are honest people, and they are also trying to find a way to firm up part of the commitment rather than leave everything conditional upon obtaining the EU program. They are looking at ways to firm up part of their commitment so that we can close an agreement and we don't need to go through an alternative route. Operator: So the next question comes from the line of Florent Laroche from ODDO. Florent Laroche-Joubert: So actually, I would have just one question on data centers. So we can see that -- so you have made a lot of progress on Phase II. So congratulations, but we can see that you have also a lot of work to do before completing Phase II. Why is it today the right timing to present us the Phase III in 2 or 3 weeks? And why it is the right timing maybe to start to launch this Phase III in terms of risk? Ismael Orrego: Well, the reason is twofold. On one side, we have a number of internal definitions, and we report as we reach the milestones of those specific definitions. But in my mind, I see Phase 2 significantly derisked. Let's leave it that way. Second, power land is a scarce asset in Europe. I mean everyone is dying to get powered land. We are lucky enough to have a lot of power land in our ownership, because we started asking for power in 2021 and '22 when nobody else was asking for that. So I think it is in the best interest of all of our shareholders that we make full use of that powered land. And then the future only God knows, but at least make use of everything we currently have because we continue enjoying very interesting yields on cost. And what is more important, we continue commercializing in clear market. At the beginning, when we explained this new venture of data centers to all of you, our prediction is that we will commercialize maybe Phase 1 in clear market, there will be no competition. But certainly, we were expecting competition for Phase 2. The truth is that the market is full of noise, full of bull****, but in reality, very few people are really building or building to the exact specifications of AI, and therefore, very few can really meet the requirements of AI clients. And to our surprise, we are commercializing Phase 2 almost on a clear market basis. The next reasoning is that if we go fast with Phase 3, we could achieve a very similar result. So basically, I believe it will be extremely unfair to our shareholders not to move. We know it's a lot of complication. We know it's a lot of construction yards. We have recently incorporated one executive just for the control of our works. But I think the best thing we can do if we want to be responsible managers is to move on and continue developing capacity because we are in a situation in the market which is as favorable as you can probably think. Operator: The next question comes from the line of Celine from Barclays. Celine Huynh: I just have two questions, please. The first one is on the beat on the FFO this year. It was driven by better gross to net margin in DCs. Can you explain how you achieved that and whether we could expect the same in 2026? And secondly, it's about retail. Your name popped up in the news regarding a large Spanish shopping center portfolio. Can you provide any comments if you can? And if you can't comment, we've seen the expansion into DCs, but there wasn't much mention about retail. So can you clarify your appetite for shopping centers going forward? Ismael Orrego: Okay. Well, starting by the easiest, which is the FFO gross to net. Well, as commented by Ines, we have basically improved compared to our projections, because we had a better margin. And talking about margin, the margin we expected for this year, that was not the stabilized margin, okay? It was not 70%. It was well below 70%. That was the margin we expected for this year that we have beaten that margin a little bit because we have been able to operate more efficiently our data centers. And then we have, as commented before, we have also benefited from a number of little tweaks and things that we have been doing on behalf of our clients. Many of our clients do not have a super big established presence in Europe. And as such, they rely on our own engineers in order to install equipment or make offices fit-outs, do improvements to their equipment once installed. I mean we are helping them to do that, and they are paying us for that service. And as a consequence, we have improved a little bit the gross to net margin in our data centers, but not to a point in which we are in a position to reforecast the 70% stabilized, which we are -- we will very soon reach. But we cannot reforecast that because, first, 70% is already a very good gross to net margin, particularly compared to what our peers in the U.S. are getting. And second, because we still do not have all the information in order to be able to reforecast that. And then retail... Inés Arellano: Celine, just to be clear, can you please repeat the question that you made? Celine Huynh: There was just a news that you were about to bid on a Spanish portfolio, retail portfolio. So could you comment on that? Ismael Orrego: Well, basically, we are very happy with the performance of our retail. We have in a number of occasions commented with you that being a listed company, sometimes you cannot be too contrarian to the market because if we had, we would have loved to bid for 1 or 2 assets in the past 3, 4 years, but we have been being -- we would have been slaughtered in a public place, I mean had we done it. So now there is a retail portfolio available in the market that we have analyzed in depth in a number of occasions already. It was very difficult to reach an agreement with the sellers because it was a relatively convoluted situation. But now it's out there. What I can tell you is that the assets are high quality. They will make a perfect fit with ours. But I can also tell you that this will be a capital recycling exercise. So if you are afraid about us using one penny out of our data center spending capacity, this is not the case. I mean if we are to bid for this portfolio, which we will only do if we can achieve a positive capital recycling figure, I mean if the capital recycling disappears, we will not bid. And we are not going to participate in an investment banking auction. So we will do our best. We have a number of pros and cons. Our main con is that, of course, we don't control the French connection. Our main pro is that the Spanish staff, we know them very well. They are colleagues in the market and they will be probably very happy to join the family. So we will see what comes out of that process. But if one day, we end up bidding for that and we are successful, what I can assure you is that we will rotate internal capital, try to sharpen the pencil a little bit in terms of ROA, I mean, try to obtain a positive print, positive arbitrage in ROA and make sure that the data center effort is not even disturbed by this acquisition. Remember, there is a big hype in the market about resi transformation, et cetera. We have a number of levers that we could action in order to make sure that we can rotate capital in an efficient way, okay? Celine Huynh: Okay. Ismael, just to be sure, we're talking about a portfolio that is worth more than EUR 1 billion, right? So you would have to sell more than EUR 1 billion. Is that correct? Ismael Orrego: Yes. That is... Celine Huynh: Okay, that is a big amount. Ismael Orrego: Yes. Operator: The next question comes from the line of Fernando Abril from Alantra. Fernando Abril-Martorell: I have 3, please. First on the recent [indiscernible] rent. So it was clearly above your expectations. I think correct me if I'm wrong, but it was around EUR 140,000 more or less per megawatt month. So I know it is Madrid, but how should we interpret your embedded 130 assumption for the entire Phase 2 because it seems a bit prudent probably to me. Also on the contract terms of the Bilbao 2 and Hefata, I don't know if there were any material changes to duration or escalator structures compared to previous agreements. And then last, you know that the Spanish grid operator, and also several Spanish utilities have recently announced increased CapEx plans for the power network. So I would like to know your view on this and whether you believe or not that these investment plans will meaningfully alleviate grid congestion and improve the power availability in Spain or not? Ismael Orrego: Thank you, Fernando. Well, first, on the price of Hefata 2, we are not going to be very specific because it's our client, and of course, the terms of engagement of our contracts have to remain secret. But it is true that in the global underwriting of Phase 2, we were relatively conservative at 118.5% on average, and we are beating those figures. But it's always good to remain prudent because there could be deviations in course. There could be many things, equipment that could vary. So we have to be -- we have to remain prudent, but it's true that in that particular contract, it's been better than expected. And then in terms of contract, basically the same that we have been doing up to now in the region of 10 years and with fixed escalators, which are now slightly higher because the 10-year inflation swap is also higher. So we are happy with the contract to all terms. Remember that one of the reasons among many that why we moved into data centers is because they were able to improve our WAULT once we sold the 3 portfolio. That, of course, was a secret weapon. I mean it was clearly improving our average WAULT across the portfolio. One of the reasons why we moved into data centers was because the WAULT were pretty attractive. They remain so. And in fact, not only that remain, so the clients are now wanting longer terms if they can, in exchange for rent because they are trying to lock up IT capacity in a market which is starved of IT capacity. There is very few, very few places where you can land 20, 30 megawatts of AI capable equipment. It's -- there are not so many places in the world. Colocation is a different thing. But AI is very special, and there are not so many places in the world where you can do it. And one thing also that the clients like a lot and why they are ready to compromise for longer terms is expansion capacity. I think it was a good vision in our side to bet from the very beginning on super large plots with a lot of energy in which we could grow with the client doing one building, another building, a third building and a fourth building. That has been probably a very good decision and clients like it because once they send their experts, their engineers to a certain location, they achieve significant synergies if they can operate a more significant capacity than simply just one data center and move to another place within the country. So this is the situation. And regarding [indiscernible] and the increased CapEx, it's a much welcome piece of news. Of course, our stance with the regulator has always been that they need to improve the grid. The Spanish grid is, believe it or not, because all of you are affected by the 28th of April blackout last year, but that was a different thing and happened for different reasons. That the Spanish grid is super high quality. It is very well designed, very well duplicated and wet and is very robust. Of course, it will need investment in order to adapt to the new demand because at present, we are coming from a world in which the consumption was going down year after year because many households were incorporating self-generation. And as such, the consumption was going down and down and down. But we are in front of an era in which consumption contrary to some of the official estimates that were made a long time ago and probably wrong with the new circumstances, consumption will go up and will go up very significantly, if only because of the effect of the data center industry. As a consequence, the country has to make an effort in terms of bringing together generation and consumption. So that means investing in distribution and transport. And any news in that respect are very much welcome. The alternative is to allow and probably could be a very interesting complement, the alternative will be to allow private grids. But that is always complicated in Europe. As you know, it's the world -- the word private is not very much allowed in Europe. And private grids are only a reality for very small distances. I mean when you are bringing a certain generation mainly from renewable sources into a certain point that bigger grids are not that common in Europe. So very happy to see that they are starting to move. The only problem is the speed of movement, which, as you know, is a problem always with the public sector. For the moment, the only entry door we have found to the grid is through agreements with renewable producers. And this is what we are doing. I mean we are engaged in a number of negotiations with a number of renewable generators and you will be keeping abreast of our evolution over the coming months/years because it is the only practical way to access the grid as of today. I mean one day, there will be a bigger grid and electricity eventually will be widely available. But if you want to continue honoring your demand request from your clients, the only way is through agreements with renewable generators. Operator: The next question comes from the line of Stephanie Dossmann from Jefferies. Stephanie Dossmann: I would have two questions. The first one regarding data centers and the appraisal values. I understand that appraisers recognize the value creation closer to the time of the lease signing. But could you say how much of Phase 2 is currently factored into the appraisal values? Francisco Gonzalez: So what the appraisers are doing is they're just incorporating into their valuation the assets that are under construction. So once we start construction, then those assets come into the perimeter. You have seen June 2025 that we have incorporated several assets, mainly ARA II and Lisbon 1 because they have already started construction. And then in December 2025, we have incorporated -- we started construction as disclosed before in ARA I and Lisbon 2, which means that the appraisal takes that into the appraisal. The rest of the power land that we have is not being -- so it's hold at cost. And only when we start construction, then is when we -- when the appraisal enters into that valuation. From a valuation point of view, then you need to differentiate between the assets which are under operation and the assets that are considered as WIP. In the cases of assets in operation is exactly what like an office building or shopping center or logistics that we have. So they do normally a DSF of 10 years. And that's the reason why they arrive at this value. And regarding WIP, as you may remember in logistics, appraisers tend to wait until the very last moment when the asset is completed and you have a tenant to reappraise the asset and then we're holding at cost the different development. But also, you need to be aware that those type of exercises normally were carried out over a period of between 9 months and 15 months only because the construction of logistics is much, much quicker. In the case of a data center, it's different. First one is, first, the land that you hold at cost already just because you are starting a construction there. It means that this power land all of a sudden becomes more -- becomes a reality first. And second, you are incurring a lot of cost and approaching pre-lets over the period of the 2 years that normally 2.5 years that takes us to build this type of assets. So I would say that the value is little by little absorbed until delivery times. Of course, the fact that we have pre-lets or not pre-lets of course, give more certainty to the projects, but this is how they are normally approaching it. Inés Arellano: Stephanie, just to add to what Francisco commented, it is very important for you to know that the 4 land plots that are -- that have been included in the scope of work for the appraisers, they were on land that belong to us. So just by putting the market value, which is powered land and not raw land, they were sitting in our balance sheet at almost nothing, just by consider them as powered land that it's a significant uplift on a relative basis, of course, right? So Phase 2, as Frank said, the first thing to know is or the first thing to bear in mind is how that land -- the market value of that land stands. In our case for what we had before, is certainly an uplift, not -- it is not the same for the land that we buy, of course, because that's the market value. And then as the different milestones of CapEx keep on going and as you approach the cash flow, you will get more value crystallized. But for this 4 particular projects, there's obviously been an uplift because they're sitting in our balance sheet for long at almost 0. Stephanie Dossmann: All right. And my second question relates to more traditional business. The office market in Barcelona. You said it is softer, of course. I was wondering what you expect on the midterm. I mean I understand you expect no oversupply shortly, but will the demand be strong enough to see higher Release Spread going forward? And what's your view generally speaking on the Barcelona office market? Ismael Orrego: Okay. Look, the Barcelona office market is in a digestion crisis. 320,000 square meters without client joined the market at the end of '24 and that hit is still being felt across the market. So this is taking a hit on the tension, the demand tension in the 22 ARA, more noticeable in occupancy than for the movement in rents but clearly noticeable. Our expectation in a normal world is that we had positive Release Spread overall in Barcelona this year, not brilliant, 1.7%, but still positive. So rents are holding for the moment. The market has corrected itself, as you can expect. So no new construction starts have happened since 2024. And in normal circumstances, unless the Afghanistan, Pakistan war expands to Iran, Israel and U.S., Russia, normally, within 18 to 24 months, Barcelona should be able to absorb the excess offer and come back to a certain normality. That would be what we would normally expect. Could be a little bit more, could be a little bit less, but Barcelona remains a strong small city, I mean, very specialized in certain submarkets within offices. A little bit of pharma, a little bit of gaming and tech. And as a consequence, we expect the city to continue performing robustly once they have been able to absorb this little blip caused by a situation of oversupply and touristification of the office development. Operator: And the final question comes from the line of [indiscernible]. Unknown Analyst: I have a couple of questions, if I may. One is in relation to your guidance for 2026. I'm trying to understand what assumptions are going in there in terms of additional debt funding. I think you said that in the second half, you're going to raise some more debt. In terms of share count, if you assume any change in that? And also in terms of the logistics, whether you assume that, that big asset that has been vacated by the client is going to be lifted up at any point during the year. So that's my first question. Ismael Orrego: Okay, Daniela. Look, regarding the guidance, the guidance stems out of our modeling of the year. We believe that the top line, the income could go up by around EUR 40 million easily, but it's going to be eaten by bigger financial expenses mainly. Why is that? Because there will be two events during the year. Money is fungible, so EUR 800 million will disappear when we have to repay our bond. And second, the speed at which we are spending or investing money in CapEx because of our Phase 2 deployment is significant. Already in 2025, we exceeded our original budget. I say ever, I believe the original budget was like EUR 830 million and we ended up spending like EUR 980 million. So we have spent more money in CapEx commitments, okay, in the year than -- commitment, meaning when we commission a certain equipment, we pay between 20% and 40% upfront, and then we pay the rest upon the reception of the equipment. However, that money for us becomes untouchable because we need to phase that payment if and when the equipment is received. So in our models, this is what we are seeing. Whether that could be achieved, I mean if we are quick in leasing up some logistic gaps, we should be able to improve it. They wouldn't move that much the needle because if you take into account that logistics account for around EUR 84 million of our rents and the rents expected for this year are going to be in the region of EUR 600 million, it's not going to move the needle that much. What share count considered for the guidance, same share count. And that is, of course, a very tricky question, I know, because you are already assuming that there is going to be capital issuance at some point. But this is -- I mean, we are talking apples-to-apples. The 58 is with the same share count we have at present. Unknown Analyst: Second question, if I may. And that's on Phase 3. I wonder whether there's been any investment, even minimal infrastructure preparation in Lisbon. If I'm correct, Lisbon is Part 1 of your Phase 3. And given what you mentioned about the earthquake risk and all that kind of stuff. I wonder whether there's already been a little bit of investment in infrastructure into that and related to also Phase 3, what would be the earliest date that you would like to start ordering equipment or start properly deploying into Phase 3? Ismael Orrego: Okay. Regarding the commissioning of equipment for Phase 3, et cetera, we will inform in detail about Phase 3 on the Capital Markets Day. But you will see what is basically the cash flow schedule in -- for Phase 3, and you will see it significantly overlaps with Phase 2. Regarding whether we have already advanced infra investments for Phase 3, yes. I mean, in Lisbon, we have been preparing the ground for plots 3, 4, 5, and we might start precharging land for plots 6 and 7. But we are talking about relatively humble investments. I mean we are not talking about significant things. Likewise, we have spent money in the licensing of a number of projects, including, for example, the one in [indiscernible] where we are already requested construction license, and we have already applied for specific planning status by the autonomous region. We are building up electric capacity in anticipation of Phase 3. For example, the whole purpose of the Solaria agreement in November was that, was to illuminate plots 5 -- 4 and 5 of Arasur and some of the other agreements that we might be reaching in or have reached in as we speak, are also related one way or another to Phase 3 or pipeline. But we will inform about all that in the Capital Markets Day. The only thing that is important for you to keep in mind is that Phase 3 will be defined with everything that is being licensed and has power. So it will not include any pie in the sky or talking about things in which we could get the electricity, et cetera. We will be very specific about that on the Capital Markets Day. Operator: Thank you very much. There are no further questions. Just a quick reminder, many of you already know, but we'll be hosting our Capital Markets Day in Bilbao the following 9th and 10th of March. It won't be broadcasted. It will be recorded and then uploaded into our website. But all of our material will be published on our website that morning, the 10th of March. So hopefully, all of you can make it so you get to enjoy a nice wine. And you know where we are in case you have any other questions and have an excellent weekend.
Operator: Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the HEI Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mateo Garcia, Director of Investor Relations. Mateo, please go ahead. Mateo Garcia: Thank you. Welcome, everyone, to HEI's Fourth Quarter and Full Year 2025 Earnings Call. Joining me today are Scott Seu, HEI President and CEO; Scott DeGhetto, HEI Executive Vice President and CFO; and Shelee Kimura, Hawaiian Electric President and CEO; and other members of senior management. Our earnings release and our presentation for this call are available in the Investor Relations section of our website. As a reminder, forward-looking statements will be made on today's call. Factors that could cause actual results to differ materially from expectations can be found in our presentation, our SEC filings and in the Investor Relations section of our website. Today's presentation also includes references to non-GAAP financial measures, including those referred to as core items. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non-GAAP measures to the closest GAAP financial measure. We will take questions from institutional investors at the end of this call. Individual investors and others can reach out to Investor Relations. Now Scott Seu will begin with his remarks. Scott W. Seu: Aloha kakou! Welcome, everyone. For today's call, I'll start with an overview of the important accomplishments we've made over the past year and touched on our priorities going forward. Scott DeGhetto will walk through our financial results and then open it up for questions. Over the past year, we continue to execute on the priorities we've communicated since the Maui wildfires in 2023, and I'm proud of the progress we've made. We've advanced key initiatives, including progressing the Maui wildfire tort settlement, pursuing legislative measures that support our communities as we deal with the risk of wildfires, implementing wildfire safety improvements that have reduced the risk of ignition from utility equipment and laying the groundwork for a successful second multiyear rate period under our performance-based regulation, or PBR framework. Our actions to date help ensure our ability to serve and invest in our communities for the long term. Last quarter, we discussed the process to obtain final court approval of the Maui wildfire towards settlement. We continue to make good progress in resolving the remaining contingencies to payment. In late December, the Maui Circuit Court granted our motion for summary judgment on the subrogation insurers direct claims. In January, the court granted final approval of the class settlement agreement and provided a good faith settlement determination. We also received another favorable decision from the Hawaii Supreme Court. As previously disclosed, the subrogation insurers moved to intervene in the class settlement process, and the Maui Circuit Court denied this attempt last June. The insurers appealed, and the appeal was sent to the Hawaii Supreme Court. On February 10, the court affirmed the lower court's denial of the subrogation insurers motion to intervene in the class settlement. In doing so, it made clear that a class settlement transforms an insurer's subrogation rights into lean rights the same way an individual settlement does, which is what the court rule on a year ago. This decision ends the insurer's efforts to derail the class settlement. And because they lack party status in the class action, the insurers should not be able to file a successful appeal to the final approval of the class agreement previously granted by the Maui Circuit Court. This positive result moves us one step closer toward final court approval of the settlement agreements. In sum, we've continued to work through the administrative steps required to see the settlement through to completion and trigger our first payment. We're also pleased that we've been able to finalize settlements resolving both the shareholder class action and shareholder derivative lawsuits filed in connection with the Maui wildfires. As disclosed last quarter, in early November, we signed binding term sheets to settle the litigation. In late December and early January, the settlements were finalized and executed. The agreements provide for complete resolution of both sets of litigation with the company's obligations fully funded by insurance proceeds. Turning to legislation. As we've discussed over the past few quarters, Hawaii's historic wildfire legislation signed into law last July acknowledges the need for legislative measures to protect our communities and support the financial stability of electric utilities in the face of increasingly severe weather events. The PUC's wildfire fund study was completed at the end of December, and this was a crucial first step in implementing our state's milestone legislation. Work continues to establish a liability cap with the PUC rule-making process expected to take 18 to 24 months. Details around the wildfire fund will be established sometime thereafter. The PUC also approved the utility's 3-year wildfire safety strategy in late December, concluding that the strategy can be expected to reduce wildfire risk and emphasizing the importance of continuous improvement. The utility has achieved many of the operational objectives laid out in the strategy ahead of schedule, and we'll continue rapidly advancing the strategy as we progress through 2026. We'll be submitting our next update to the PUC in April. We've also continued to make our company stronger and more resilient through carefully managing our balance sheet. Our successful $500 million utility debt issuance last year as well as our revolver upsize to $600 million support our financial flexibility and liquidity as we look toward the elevated capital cycle ahead. We also continue to advance our state clean energy goals with the utility reaching a 37% renewable portfolio standard or RPS in 2025. We remain on track to meet the 40% by 2030 statutory RPS requirement. Affordability has been essential focus as we've advanced our strategic and operational priorities. Customer bills remained stable in 2025 despite the significant investments we've made in wildfire safety and resilience. The utility continues to offer financial assistance to working families including providing over $1 million in payment assistance. Turning to the next slide. As we look ahead to our objectives for 2026, we'll continue working to resolve the conditions to payment in the tort litigation settlement agreements. We believe we're in the home stretch of this process as the only remaining steps are resolving all outstanding appeals. This includes resolving the appeal the insurers have taken from the judgment entered in our favor in their direct subrogation actions. Turning to our ongoing rate rebasing. As discussed on our last earnings call, we are pursuing an alternative process that could allow for resetting rates without the time costs and resources typically required for a full rate case proceeding. We see this as an opportunity to develop a rate rebasing proposal in a nontraditional manner. Consistent with fundamental PBR tenants set forth by the commission and state legislature, encouraging innovation and honoring a stakeholder-driven process. We plan to submit a joint rebasing proposal with UluPono initiative, a PBR Working Group stakeholder party by March 6. We'd also like to address some of the elements that could be improved under our PBR regulatory framework, including our annual inflationary adjustment and performance incentive mechanisms, or PIMS. This will happen in the process that the PUC has designated as PBR Phase 6. We expect further guidance from the TUC on a schedule for Phase 6 after the rebasing proposal is submitted. Affordability remains a central focus as we look ahead toward the commencement of the second multiyear rate period under PBR, especially given the elevated capital investment cycle projected over the next few years. We are pursuing low-cost financing options that would reduce impacts to customers from critical investments required for safety and results. In the coming months, we'll be submitting a request to finance wildfire safety strategy CapEx and other infrastructure resilience costs via securitization, which is typically the lowest cost of capital available for these types of investments. In summary, in 2026, we'll continue to execute on our key objectives of advancing the tort settlement and our rate rebasing process while implementing the wildfire risk reduction measures outlined in our wildfire safety strategy. Although much remains to be done, I'm optimistic about the path ahead and proud of what our team has accomplished to date. Finally, we'll be seeing an executive transition at HEI at the end of the quarter. As previously determined by our Board of Directors in 2024, Scott DeGhetto's term as HEI's CFO expires on April 1. And as a result, Scott will resign effective April 2. Paul Ito, the current Treasurer and CFO of Hawaiian Electric will resume his prior role as HEI's CFO, effective April 2, 2026. Scott joined us as our CFO shortly after the Maui wildfires in 2023, and he's played a crucial role in helping lead our company through the most challenging period we've ever been through. His leadership and expertise have been critical for our success, and I'd like to thank Scott for all that he's done. And even though he'll hand the CFO reins over to Paul come April, Scott won't be too far as we'll have him support us as our consultant. Again, I thank Scott and I welcome Paul back to his previous role. Scott DeGhetto, I'll now turn the call over to you. Scott Deghetto: Thank you, Scott. And it's been a pleasure working alongside you in serving this company. I'll start with our financial results on Slide 6. For the full year 2025, we generated net income of $123.1 million or $0.71 per share compared to a net loss of approximately $1.4 billion in 2024. The results include $16.5 million of pretax Maui wildfire-related expenses net of insurance recoveries and deferrals. Approximately $12.6 million of that amount was recorded at the utility. Results for the year also include $12.4 million of losses related to the strategic review of Pacific Current. Excluding these items, which we refer to as non-core, consolidated core net income was $149.3 million or $0.86 per share. This compares to core income from continuing operations of $124.3 million or $0.98 per share in 2024. Utility core net income for the year was $177.5 million compared to $180.7 million in 2024. The decrease was driven by higher O&M expenses, primarily due to previously deferred consulting and legal fees, higher interest expense, higher depreciation and the recognition of tax credit benefits in the previous year. Holding company core net loss was $28.2 million compared to $56.4 million in 2024. The lower core net loss was driven by lower interest expense due to the lower debt balance following the retirement of holding company debt in April and higher interest income from cash being held on the balance sheet to make the first settlement payment. Turning to the next slide. As of the end of the fourth quarter, the holding company and the utility had approximately $16 million and $486 million of unrestricted cash on hand, respectively. In addition, the holding company has approximately $530 million in combined liquidity available under its ATM program and credit facility capacity. The utility also has approximately $540 million of liquidity available under its accounts receivable facility and credit facility capacity. Consistent with last quarter, Hawaiian Electric's Board of Directors approved a $10 million quarterly dividend to HEI for the fourth quarter of 2025. There have been no changes to our settlement financing plans since what we communicated last quarter. We still expect to fund the second settlement payment with debt and/or convertible debt and expect that payments thereafter will be funded with a mix of debt and equity depending on market conditions. As Scott Seu mentioned, outstanding appeals must be resolved before we can make our first $479 million settlement payment, which we now expect to make in the second half of 2026. Turning to the next slide. We still expect 2026 CapEx of $550 million to $700 million in 2027 and 2028 CapEx to increase further to $600 million to $800 million and $600 million to $850 million, respectively. This level of spend is consistent with our expectations communicated last quarter and is subject to additional PUC approvals and further resource adequacy initiatives and analysis. At that, let's open up the call to questions. Operator: [Operator Instructions] Your first question comes from the line of Michael Lonegan with Barclays. Michael Lonegan: Just wondering if you could talk about the latest appeal by the insurers. What do you see as the chances the Hawaii Supreme Court takes up the case? Or do you think it's possible that they deny to hear the appeal based on some of the language from the prior appeals or prior cases with the Supreme Court? Scott W. Seu: Mike, this is Scott. Thanks for the question. Yes. So the only remaining item here is that appeal, the subros appeal of the earlier summary judgment, which dismissed their claims, their direct claims against the defendants. There's been no briefing scheduled yet on this appeal that was just filed in January. I do think that ultimately, of course, I don't want to get ahead of our Hawaii Supreme Court. But essentially, this is the last step. And all decisions by the Circuit Court and the State Supreme Court have been very supportive of the settlements. Again, I won't speculate we'll speak for the Supreme Court. But I'm -- maybe I'll stop my comments there. Michael Lonegan: Okay. And then on financing the second settlement payment, what are your latest thoughts on a preference between debt or convertible debt or a combination thereof? And do you think you'll wait until after the settlement is approved to do this financing? Or is it something we could see like with the first settlement capital raise where you did that already with equity? Scott Deghetto: Mike, Scott DeGhetto. So no change in plans from what we've been saying over the past several quarters. It will be a relevering at HEI either through debt or convertible debt. Right now, based upon market conditions, I would say we're leaning more towards convertible debt and doing it all as convertible debt, but that certainly can change. as we go forward. And then in terms of the timing of that payment, we don't anticipate doing anything until after the settlements approved. As you know, that first payment was raised a while ago. It's being held in escrow. And then once the settlement is approved, we have 30 days to make that payment. And so then we would look -- once that payment is made, we'll continue to look at the markets and determine at the appropriate time when we would raise that money. I don't think it will be a year in advance like we did the last one. But you just never know. It depends on where the market is at that particular time. Michael Lonegan: Great. And then you talked about financing your capital program with the prior debt issuance and then also retained earnings, a good portion of it. With the remaining amount, do you expect to use your $250 million ATM program, how much of that -- and what could be the cadence of issuances of that if you were to use that? Scott Deghetto: So in terms -- let me hit the ATM program first, and then I'll kick it to Paul Ito to talk a little bit a bit more about financing down at the utility and his thoughts on that. But in terms of the ATM, the ATMs out there, we have the ability to use it again, we'll be opportunistic in use of that. We may use it. We may not. It just again, depends on market conditions, but that's always an option for us. Michael Lonegan: And then lastly from me, American Savings Bank, you talked about selling the remaining roughly 10% stake of that. Is that assumed in your financing plan? Or how should we think about the timing of that potential sale? Scott Deghetto: So we still intend to divest that remaining 9.9% in calendar year 2026. Again, just depends on market conditions, how the bank is doing, et cetera. So we continue to look at that regularly. And again, we do have plans to divest that this year. Operator: Your next question comes from the line of James Ward with Jefferies. Jamieson Ward: Congratulations, Paul. And Scott wishing you all the best. In terms of the PBR rebasing, what should we think about in terms of what's actually in that upcoming March 6 joint proposal. You've spoken to it at a high level, but the 2 to 3 most material elements may be target revenue methodology, PIM redesign of a follow-up on that, et cetera? How should we be thinking about what's in there? Scott W. Seu: Yes, James, I think we've described the high-level elements of what we're trying to work through. including the inflationary adjustment factor, having a true-up mechanism as opposed to the current structure. Looking at the PIMS and making sure the PIMS are nice and tight in terms of our ability to actually influence outcomes as well as also the potential return from those PIMs if we show that we have truly performed well there. We've also mentioned in the past looking at expanding the scope of EPRM, the exceptional project recovery mechanism. So those are the key elements I'd say. Jamieson Ward: Okay. Got you. I have a follow-up on the pen but just first, in terms of like rebasing outcome, for risk just described this as the final extension. And what are the specific triggers that we should think about in terms of what would cause you to pivot back to a traditional 2027 test year rate case a second half '26. Like how are you managing the risk of that Jan 2027 new rate states slipping? Scott W. Seu: James, let me hand it over to Joe Viola at the utility. He's our Senior Vice President, overseeing our regulatory affairs. Joe Viola: The March 6 day is when we'll be submitting the rebasing proposal with one of the PBR stakeholders, Ulupono, as Scott had mentioned. The commission after that will just take a look. We figure in about 30 days. They'll make sure that everything as a formal matter administratively is in there that they expect and then give us an order to proceed with the rest of the process. We'll make -- the only thing that would cause us to pivot to a 2027 test year rate case is if that rate basing falls over denied. Jamieson Ward: Got it. Okay. That's very helpful. On the per design, we actually hosted a call recently, we posted a number of the past year, Hawaii-focused former regulators, other people attached to the political process and so on. And they were as clear for me, which I'm sure you guys already would be aligned with and happy to hear, but reiterating 150 to 200 basis points of incremental earnings power above your authorized ROE with the original intention for the PIMS and that's coming from on high. With that in mind, and given how the initial ones were often designed with things that were outside of your control, unfortunately. And also the imbalances in terms of asymmetry in terms of downside and upside. What -- on the PIM redesign, what does a more meaningful package look like to you guys in practice? Like what would the top 2 or 3 PIM changes be that you're pursuing? And how should we think about that symmetry in terms of upside versus downside? Joe Viola: This is Joe again. I think in terms of the ultimate reward opportunity, we think -- we believe that the commission should eventually support what they said in the past at 150 to 200 basis points, and we'll support that. We think there's other support for that as well. In terms of what we want to see going forward, we've learned a lot, living under the first 5 years of PBR. So when we say more meaningful package, we want to make sure that the targets are reasonably set and the means to achieve them are reasonably within our control. That's the important part. We're going to look going forward, as Scott mentioned, we'll be discussing with the specific topics and specific priorities would be for those incentives. But it's -- to us, it's the design to make sure that we can achieve them. And that's our main goal. . Scott W. Seu: Yes. The only other thing I'd add, James, is we're also interested to see if we can actually reduce the total number of PIMS because that has been a bit of a challenge over the last few years managing a long list of PIMS. Jamieson Ward: Got it. That's very helpful. Last question I have is the wildfire platform here, legislation passed. So you're now guiding the 8 to 24 months for the liability cap process. wildfire fund thereafter. We obviously saw the PUC report at the end of the year to the legislature. So bringing it back right to the 24 months back to 2026, what are the 2026 milestones we should be watching for liability cap, wildfire fund, securitization. It sounds like wildfire fund might not be on there. I'll leave it open, but I think that's what the other part people would like to on. Scott W. Seu: Yes, James. So as you noted, right, at the end of last year, the PUC filed their report on the fund, the potential for a fund. And in that, they indicated that it should actually be taken up after the PUC rule-making process for a limitation of liability happens, which the PUC has indicated that, that would be the 18- to 24-month period beginning -- roughly the beginning of this year. So as far as critical milestones, I mean a state agency rule-making process, 18 to 24 months, it will involve a lot of information gathering, data gathering. And eventually, they would file a proposed set of rules for comments and review and then they would go back and take those into account and issue the final. Once the final rule making is proposed, there is a certain period of time for the governor to actually be able to weigh in with his own comments. And at that point, once that is resolved, then the rule becomes final. So those are the high-level steps in the rule-making process. As far as other critical milestones this year, it's really all on that PUC rule-making process. And I think I would also say there's nothing that would be teed up for example, in front of the legislature this year. Jamieson Ward: Got it. Okay. I appreciate it, and see you next week at the conference. Operator: That concludes our question-and-answer session. I will now turn the call back over to Scott Seu for closing remarks. . Scott W. Seu: I just want to close by saying again to all of our investors and interested stakeholders. Thank you for your support. 2025, like I said, was a year where we felt we really -- we're able to make a lot of progress in terms of advancing our key initiatives. I also want to one more time, just thank Scott DeGhetto for his service as HEI's CFO, coming to us shortly after the Maui wildfires in 2023. And Paul Ito, I welcome you back to our team at HEI. So with that, thank you very much. Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the doValue Preliminary Full Year 2025 Financial Results Presentation. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Daniele Della Seta, Investor Relations. Please go ahead, sir. Daniele Seta: Good morning, everyone. I'm Daniele Della Seta, Head of Investor Relations at doValue. I'm joined by Manuela Franchi, our Group CEO; and Davide Soffietti, our Group CFO, as we present our preliminary full year 2025 results. Manuela will begin with an overview of our performance, including key insights into market and business trends. Next, Davide will provide a detailed analysis of our financial results for the period. We'll conclude with a Q&A session to address any questions you may have. Thank you for joining us today. I will now hand over to Manuela. Manuela Franchi: Good morning, everyone. Let me start clearly and concisely - we delivered. We met our 2025 business plan targets for both cash flow and EBITDA, our seventh consecutive year of delivery on the 3-year business plan, and we reached several milestones even earlier than planned. And we achieved this in a particularly challenging phase of our industry while also executing 2 major M&A transactions that will shape the future of our company. Before walking you through the results, which together presented solid and consistent picture, I want to thank all the people at doValue. Their commitment and hard work have enabled us to accomplish what many in the market doubted would be possible. Commercial momentum remains strong with new business intake closing at roughly EUR 15 billion, 1.8x the annual business plan target and a pipeline that continues to support the visibility into 2026. Profitability strengthened with EBITDA ex NRI reaching a record EUR 217 million and margin at 37%, up 3 percentage points year-on-year. The near completion of the Gardant integration is now contributing to improved efficiencies across the platform, setting the strong foundation for the next year. Cash generation was also very strong with free cash flow at EUR 76 million, well above guidance. These results supported both deleveraging and the return to dividend payment in accordance with dividend policy. On a recurring basis, free cash flow was EUR 93 million, bridging the gap towards the 2026 EUR 90 million target. Net leverage stood at 2x at year-end, fully in line with guidance, even after accounting for extraordinary payouts linked to the M&A activities, such as EUR 6 million cash out for Alba Leasing, which was not contemplated when the guidance was announced. As for coeo, I know that just like us, you are eager to see the performance reflected in our numbers. The transaction is expected to close shortly with no execution issues. Coeo delivered another year of strong double-digit organic growth with files intake up 23% in '25 and well ahead of our buyer case but also seller case. Altogether, we entered '26 with a stronger business, a clearer trajectory and the foundation to deliver our next set of targets, including coeo. If you follow me on Page 3, let me start from the bigger picture. DoValue today plays a system-level role in Europe's financial stability. We operate at a scale that very few players in Europe can match, managing over 4.3 million position across individuals and businesses, all of this before coeo, which will more than double the number of data points with a broader scope. This gives us one of the largest behavioral and credit database in the market, an asset that allow us to anticipate patterns, tailor strategies and support the functioning of the financial system with evidence-based decision-making. This is the context in which our portfolio proves sustainable across cycles. It is diversified by design and managed by specialized professionals operating in areas where AI alone is not enough. First, diversification. Our portfolio is no longer a single asset NPL story. Alongside NPLs, we manage a large UTP perimeter, about 1 million positions, where we act as a structuring partner to protect value early. And we are developing a growing reperforming base currently of 400,000 positions that extracts value from proactive debt management. Second, runway and capacity. Look at '25 impact indicators at the bottom, 58,000 positions recovered from individuals, 21,000 from businesses, 12,000 positions restructured and 3,000 [ reperforming ] positions collected. All these figures show a substantial annual throughput. But when you said that against the overall stock of 4.3 million outstanding positions, it's clear there is ample embedded opportunity in the existing book, a lot still to convert, which underpins visibility for the coming years. Third, AI resilience. 88% of our portfolio is made up by loans above EUR 50,000, typically complex, bespoke and legal intensive. Here, AI augments our execution capabilities, but outcomes are driven by highly specialized asset managers who cannot be replaced by AI-only models, also due to the proprietary nature of our data set, which encompass decades of data and is not available to third-party models. In short, our scale, our dataset and the complexity we manage make doValue one of the few players that truly matter for Europe's financial stability, and they give us a long predictable and AI resilient path of value creation. With that foundation, let me turn to the '25 new business inflow on Page 4. In '25 GBV from new business reached almost EUR 15 billion, 1.8x our initial business plan targets, confirming the strength of our commercial engine. New Mandates continued to grow in the fourth quarter by nearly EUR 1 billion, including around EUR 600 million from [ Banco ] Project in Italy and EUR 200 million from the new contribution fund launched in December by doValue through its asset management platform focused on state guaranteed loans. Spain also added EUR 200 million in the quarter with mandates from a major banking institution. We also saw sustained forward flow from existing customers, which totaled EUR 4.3 billion for the year, covering around 80% of collections. This performance was mainly driven by solid contribution across countries with continued acceleration in flows from Santander in Spain, up 60% year-on-year, which has been recently renewed for an additional year without any front payment. If we take a step back, the scale of what we have achieved over the past 2 years becomes even clearer. While bank boost NPE ratios and cost of risk at historical lows, we secured EUR 24 billion of cumulative new business, nearly EUR 11 billion of which from banks. This is not just commercial success. It's a tangible demonstration of the systemic role of our industry in Europe's financial ecosystem. Banks, funds and institutions rely on our and our competitor platform through the cycle, and this is precisely what underpins the long-term sustainability of our business. Let's now turn to Page 5. Here, we outlined our pipeline, already reflecting the broader scope and diversification of the group after the coeo acquisition. What you see on this page is not just the net flows of inflows -- the net wave of inflows, but the shape of a business that is becoming structurally wider, more diversified and more balanced across products and geographies. The NPE pipeline is large and diversified. This pipeline amounts to EUR 50 billion, well distributed across countries and asset classes with almost 1/4 being UTP. I would like to take a moment to clarify the tax credit opportunity in Italy. As part of the '26 budget law, the government has introduced a new framework to recover unpaid tax and property revenues from local authorities with AMCO pointed to orchestrate the collection efforts. A decree expected in March will define the operational parameters, including the potential outsourcing to license operator, a key enabling step for volumes to flow. We are currently working on obtaining a license in order to be among the selected subservicers. For now, the initial stock identified as recovered amounts to roughly EUR 20 billion, and we are prudently including EUR 4 billion of what in our pipeline as the share realistically attainable by the value. But it's important to be clear, these figures represent only the first phase of the opportunity, specifically the local authority receivables that were already assigned to the [ Agencias delle Entrate ]. If the model proves effective and scalable, the pipeline would expand materially, potentially including local authority receivables currently handled by smaller local operators, central government receivables today managed exclusively by [ Agencias delle Entrate ]. Parallelly, on the coeo side, the pipeline is extremely strong with potential for additional annual revenue of over EUR 250 million. This means that with the current dip in the market, coeo could effectively more than double its annual revenue and largely diversified customer base. Indeed, 2/3 of the pipeline comes from sector beyond e-commerce, including telcos, insurance and mobility. All this comes from opportunities in markets where coeo is currently present. Once we look at expanding coeo into doValue, this opportunity further expands. We included a deep dive for Italy and Spain, and you can see there are plenty of sectors with small ticket receivables that coeo could tap with its highly automated digital recovery processes. Let's now turn to Page 6. Here, we have shown the market backdrop. Insolvency have been rising across the EU with bankruptcy declaration up 18% year-on-year in '24 and the '25 run rate reaching the highest level since '19. In Q4 '25, seasonally adjusted declaration were once again up quarter-on-quarter, underscoring that the trends remain live. By country, the picture is fully designed with what to be observed on the ground. Greece recorded an average plus 20% quarterly increase through 2025. Italy is expected to exceed the pre-pandemic insolvency levels. Germany started its upswing later, but is expected to continue. And Spain showed insolvency levels contained but higher versus 10 years ago across most markets. Now an important point of context. Our business plan '24-'26 was built without assuming any macroeconomic shock or deterioration. Despite that, we have delivered new business significantly above expectation in both '24 and '25, even while banks were reporting historically low new NPE ratios and cost of risk. What this means is that in an already benign credit environment, doValue still capture strong inflows and commercial traction. And if the current insolvency trend persists or broadens, it represents potential upside versus the intake assumed in our plan with the usual time lag between filing and onboarding and with the same discipline on mix and pricing, guiding what we choose to service. Now on to a more cheerful note, let's move to Page 7 for an update on coeo. '25 has been another really strong year for them despite management being largely involved with a long and complex sales process to doValue. Coeo grew New Files by 23% to 9.6 million files, reflecting both in-market client growth, notably in telco across Germany, Sweden and the U.K. and client-driven expansion into 3 new markets: Switzerland, Norway, Finland without M&A. On the digital engagement and service quality, coeo is running AI-enabled interaction across Germany, the U.K., the Netherlands, Austria, Sweden and Norway, delivering over 1 million customer interaction completely digital whilst maintaining excellent customer satisfaction metrics. On the financial side, coeo delivered around EUR 60 million EBITDA in 2025, excluding EBITDA coming from the hybrid model with a 35% increase in portfolio investments, which fuel future collection revenue growth. It's important to note that this 35% increase in portfolio investment was entirely funded through the strong cash generation of the business, evidence of the sustainability of the hybrid model. Moving to Page 8. We have initially hoped to close the coeo transaction by January. The closing is still pending without any issues. I'd like to give you some color on the process. The transaction is clearance by 4 major authorities in several countries where coeo operates. We are awaiting clearance from just one last authority in Germany. The time line was extended due to the document collection and examination requirements across multiple jurisdictions and counterparts and administrative multiparty review that simply taken longer than anticipated. Importantly, there has been no change to the perimeter on terms agreed, and we remain fully engaged with the authority on the remaining steps. From an execution readiness standpoint, we are prepared to move quickly once clearance arrives. We have already agreed the integration plan structured along 7 work streams; governance, finance, HR, IT, procurement, AI and business expansion with clear owners detailed checklist and no disruption expected for clients. The AI work stream is set to make coeo, the group AI app for small tickets, digital first growth while presenting our high-touch approach on complex exposures. We will close promptly upon receipt of the final clearance and are operationally ready to integrate from day 1. First, we operate in 2 very different arenas. Now you can see it on Page 9. Here, we want to comment upon the recent noise about what the AI winners and loser will be, and we want to be very concrete about how AI touches our business. On the one hand, we manage mid-large secured loans. Our [ core ] book with an average ticket of around EUR 70,000, where AI mainly improves cost efficiency and workflow orchestration, but outcomes still require experienced asset managers. Here, AI is an enabler with limited impact on economics, not a substitute for human expertise. On small and secured tickets, AI matters more because full automation is needed to make unit economic work. That is exactly why we choose to enter this segment through coeo, a digital AI-driven platform built for scale. In practice, we are already using AI where it moves the needle. Digital debtor portals and channels are live in Greece, about 30% of 0 to 90 days collection are handled digitally. We are also using modeling and advanced analytics for segmentation and propensity to pay, virtual agents to support our teams on [indiscernible] responses and call wrap-ups and document analytics to extract facts from judicial and notarial files. The impact is visible. With the initial adoption of the digital platform in Greece, small ticket EBITDA margin increased from roughly 53% to 89%, a step change that illustrates how automation can lower the cost to collect without compromising governance. It's equally important to explain why we are structurally protected as AI adoption accelerates in 3 ways. First, regulation. Our activities require licenses and human oversight. AI cannot hold a servicing license or assume legal responsibility under certain regulation. So human-in-the-loop is mandatory in our markets. Second, data. AI needs domain-specific training data. DoValue owns one of the Southern most -- Europe's most expensive proprietary credit recovery databases, which is private and not available to third-party models. Third, complexity. Corporate and secured recoveries are bespoke and legal intensive. Local courts filing, multiparty negotiations are at the heart of our business. Automation can manage low-value, high-volume cases. Experts drive outcomes on complex scales. Our strategy is clear: automate at scale where automation wins small ticket by coeo and augment human expertise where value is created. Secured and complex claims add to value, all under a road map with a clear roadway. Regulation, data and complexity will continue to be durable moves as AI promises. Let's now turn to Page 10 with an overview on the German market, which will become very important for us. Germany is now the #2 NPL market in Europe by stock held on bank's balance sheet at EUR 46 billion, up 24% versus 2019 and 21% larger than the current Italian size. Importantly, this EUR 46 billion figure covers banks only. It excludes position held by investors, fintechs and debt purchasers and receivable from nonfinancial entities served by coeo. So the true addressable market is materially larger than on balance sheet number. Yes, the servicing market is underdeveloped. It's highly fragmented with servicers typically specialized by client segments and not meaningfully consolidation to date, leading limited scale platform and clear scope for a consolidator to bring multi-client, multiproduct capabilities. On execution, the regulatory bar is also a differentiator. Since '24, Germany requires a CSI license to operate in credit servicing. We have secured the license, established doValue Germany, onboarded project staff and identified key hirings, completed the first market analysis, upgraded system to run NPL workflows and onboarded an initial client, aiming to make profits already in '27. All these are concrete tangible steps and not simple intention. Strategically, this expansion is the first synergy of the coeo acquisition. Germany is coeo largest market. Sweden ahead of closing. We are not standstill. We are leveraging coeo footprint and digital stack to accelerate entry, demonstrating that we are proactive and already putting the model in motion to scale quickly once consolidation is completed. To sum up, a large and growing German NPL pool plus the fragmented servicing landscape creates room for a sizable opportunity. We are in markets licenses and building capacity using the coeo's first synergy of the deal to ensure that once consolidation is completed, we can scale delivery from day 1. Before I hand over to Davide to walk you through the financials, let's turn to Page 11 and look at the progress made so far on the business plan horizon. This is our second consecutive year of delivering this guidance, and we are ahead on the 2024-'26 business plan. Cumulatively, we have already reached the full 3-year new business target in just 2 years, more than EUR 24 billion of GBV from new business in '24 and '25 only. Engine 2 of growth is delivering. The digital platform is live in all countries. Our alternative asset management company is above EUR 1 million of fee-generating AUM with 2 new funds launched in recent months. FinThesis has already intermediated 2,000 mortgage applications and our advisory unit continues to expand. With the consolidation of coeo, Engine 2 will become the group main business and represent the majority of group revenue from day 1, not over time, shifting the group revenue mix as outlined at the Capital Markets Day. On capital structure, we delivered as well. We refinanced the '25-'26 bonds by summer '25. And in October '25, issued the 350 2031 notes at a coupon 160 bps lower than the February issuance despite the longer maturity. Our bonds trade at a yield to maturity around -- below 5%, sorry; the lowest in the industry, and we still see room to optimize interest costs through further refinancing. Finally, financial performance is in line with guidance. GBV of EUR 136 billion, EBITDA of EUR 217 million ex-NRI, free cash flow of EUR 76 million, net leverage of 2x. So overall, we are delivering what we said. We are ahead on the transformation, and we are doing it with a capital structure and the financial profile that supports the next phase. Actually, we didn't just deliver on the numbers, we overdelivered on our strategic position. We expanded our geographical footprint, strengthened our AI capabilities and broadened our product scope with an acquisition that will open a new chapter for doValue at the next Capital Markets Day. And we did all this while keeping leverage in check and delivering on every stand-alone target. I will now hand over to Davide, who will take you through the financial results in more detail. Davide Soffietti: Thank you, Manuela, and good morning, everyone. Let me start by saying that 2025 was a year of tangible progress and strong financial execution as is clear from the summary of our preliminary full year results on Page 13. 2025 stands out as a year where we delivered strong results and materially enhanced profitability with double-digit increases in both revenues and EBITDA. Gross revenue in 2025 was EUR 580 million, showing a solid double-digit growth of 21.1% versus the prior year. Despite temporary timing effects related to the ramp-up of the collection process on the new Greek portfolios, the underlying momentum remained strong with growth sustained by non-NPL revenue, which continue to expand their contribution to the group's mix as indicated in our plan. Net revenue rose to EUR 524 million, mirroring the gross revenue growth in the presence of a stable impact of outsourcing costs year-over-year. EBITDA ex-NRI reached EUR 217 million, up 31.8% versus 2024. Synergies expected for the Gardant acquisition are playing out exactly as expected in Italy with integration now largely completed. Cost discipline across the other regions continue to support high margin, up by 3 percentage points from the 2024 level. Net income ex NRI increased to EUR 25 million, more than tripling from EUR 7 million in 2024 despite higher financial costs and higher D&A following the consolidation of the Gardant perimeter. This is fully consistent with our M&A philosophy. Every transaction must be EPS accretive, and the performance we are showing confirms exactly that. The coeo acquisition will show in our figures in 2026, and it will be a synergy. Moving now to Page 14, we can find breakdown of gross revenue per region. At group level, gross revenue grew by 21.1% year-on-year, driven by continued growth in non-NPL revenues, both UTP and recurring with [indiscernible]. Non-NPL revenue represents now 36% of gross revenues, up 1 percentage point from 2024, in line with the group strategy shift towards higher growth, lower volatility segments. This will expand further following the completion of the coeo acquisition. In the Hellenic region, as mentioned, revenues in Q4 accelerated due to timing effect in the ramp-up of new portfolios, which we expect to contribute fully to revenue in 2026. Other than that, the regions continue to show sustainable activity across all of the business segments with healthy collections underpinned by different markets. In Italy, gross revenue grew 61% year-on-year, supported by the combined contribution of Gardant and the strong growth in non-NPL revenue, which will continue to expand even excluding Gardant. It is important to highlight that even on a stand-alone basis, both doValue and Gardant recorded low single-digit growth, confirming that the stabilization of GBV and the increasing weight of non-NPL revenues are already shaping a new positive growing dynamic even in a mature markets such as Italy. In Spain, revenue declined EUR 41 million as weakness in REO was mitigated by circa 60% growth in UTP servicing. Revenue in the future will be driven by new business intake in a still fragmented market. On Page 15, you can see the result of the continuous cost discipline efforts at the group level and of the successful integration of Gardant, delivering all the synergies promised 1 year ago. In 2025, operating costs increased only by 14.6% year-on-year, 6.3 percentage points less than revenues despite the inclusion of the cost base of Gardant. More in detail, HR costs grew 17.3%, leading to an incidence on revenues lower by more than 130 basis points, mainly thanks to effective release of synergies in Italy as well as cost savings across all geographies. As for IT, Real Estate, SG&A expenses, we recorded an increase of only EUR 42 million with the incidence on revenues falling 170 basis points as the group listed savings in all markets. On Page 16, we find by country details of EBITDA ex-NRI, which reached EUR 217 million at group level, up by 31.8% year-over-year and landing at upper end of our guidance for 2025. In Hellenic region, EBITDA ex NRI reached EUR 121.4 million with a reduction versus 2024 that mirrors the revenue dynamics, although partially mitigated by cost discipline measures. The region continued to be a key profitability driver for the group, contributing 56% of total EBITDA ex NRI with a solid 51% margin. In Italy, EBITDA increased 50% to the contribution of Gardant as well as the effective release of synergies. Indeed, the Gardant integration has been progressing really well, and the synergies are evident. In Italy, the EBITDA margin increased by 13 percentage points year-on-year with more value extracted from the acquisition than originally expected. This remarkable results demonstrate the high value-creating nature of our M&A activities. In Spain, we achieved a positive EBITDA as cost savings contributed to offset negative trends observed in REO. Nonrecurring items were limited to negative EUR 8 million, originating mainly from consultancy costs related to the coeo acquisition and cost to release Gardant synergies. Moving to Page 17. We show very positive dynamics in net income evolution, which, excluding nonrecurring items, more than tripled to EUR 25 million and increased by EUR 19 million compared to 2024. Analyzing the most impactful items between EBITDA and net income, depreciation and amortization and net impairment on PPE & intangible increased EUR 36 million year-over-year. The increase versus last year is mainly related to incremental D&A from Gardant and its PPA. Net financial interest and commission were higher, reflecting the normal impact of the larger gross debt following recent M&A activities. This includes the term loan paid in 2024 to fund the Gardant acquisition, currently circa EUR 300 million outstanding and amortizing EUR 53 million per annum, EUR 300 million bond due 2030 issued in February and EUR 350 million bond due 2031 issued in November and currently held in escrow until closing of the coeo transaction. Income tax decreased on a recurring basis by 17% year-on-year, while reported tax increased due to adverse comparison effect related to an extraordinary EUR 20 million positive effect in 2024 from a tax claim won in Spain. Net income attributable to noncontrolling interest increased EUR 6 million in 2025 to EUR 18.1 1million due to Gardant minorities. Nonrecurring items for the period amounted to EUR 34 million, up by EUR 29 million, mainly due to the aforementioned EUR 20 million positive effect from the tax claim in Spain related to 2024 and the nonrecurring financial costs related to the 2 recent bond issuance and early redemption of the '26 bonds. As a result, net income, excluding nonrecurring income items, reached EUR 25.3 million, up by EUR 19 million paving the way for dividend payout in line with our dividend policy. Moving to Page 18. Let's have a look at the cash flow dynamics, which, as anticipated in our plan, improved significantly. We are pleased to see the group being back to its previous high cash generation levels with cash flow from operations up EUR 99 million to EUR 181 million in the full year, thanks to positive EBITDA contribution and working capital dynamics and tighter control over the change in other asset and liabilities. Capital expenditure increased by EUR 11 million versus last year, higher than previously guided due to AI and automation initiatives to unlock efficiencies, investment in data strategy, investment to strengthening the group's cybersecurity perimeter as well as investments linked to the Gardant integration, namely the unification of system across the company. Net working capital released EUR 32 million, mainly linked to the recovery of past invoices in Greece and some nonrecurring expenses related to the coeo, which will be paid on closing. Lease payments under IFRS 16 amounted to EUR 17 million, including Gardant perimeter, in line with previous messaging. Payment for redundancy were EUR 11 million, slightly down versus 2024 as the group successfully limited redundancy by relocating personnel across the wider doValue Gardant perimeter, limiting the use of external asset managers. Other change in other asset and liabilities reflect the expected reversal of the MBO effect and include a positive effect related to the coeo transaction which will be reversed in 2026. Minorities were unchanged versus 9 months results as expected. Investments in equity and financial assets accounted for EUR 18 million, mainly from nonrecurring payments for the earnout in Greece and investment in Alba Leasing. Taking all this into account, free cash flow before debt repayment or dividend landed at EUR 76 million, above our EUR 60 million to EUR 70 million guidance range. On a recurring basis, excluding M&A-related effects such as earn-out for doValue Greece, Alba Leasing investment free cash flow for debt repayment would have been EUR 93 million, bringing the gap towards the 2026 free cash flow guidance. Based on the results achieved, doValue currently trades at a free cash flow yield of around 18% or 21% on a recurring basis. To conclude, let's now move on Page 19 and take a look at our financial structure. Net financial leverage at the end of December stood at 2x, down from the 2.4x level at December 2024, reaching the target for the 2025 despite an additional extraordinary M&A related to Alba Leasing. Even after the EUR 53 million term loan repayment, the group maintained a solid liquidity buffer of EUR 277 million, made up of EUR 145 million cash on balance sheet and EUR 152 million undrawn revolving credit facility, including a EUR 20 million new facility agreed in January '26, which remains completely undrawn. Overall, we closed the year with a solid capital structure, BB credit rating, strong performance in the bond market with our bonds trading at the lowest yield in the industry, below 5% and no refinancing needs until 2030, given the recent November issuance to finance the acquisition currently held in escrow. As we continue on our delevering path, we also see further opportunities to optimize our cost of debt by refinancing instruments issued at higher coupon. Importantly, this structure gives us significant flexibility in future capital allocation and shareholder remuneration; topics that will be addressed in detail as part of the next Capital Market Day. This is all our side for today. Thank you all for your attention. We will now take your questions. Operator: [Operator Instructions] The first question is from Tommaso Nieddu of Kepler Cheuvreux. Tommaso Nieddu: I have a few. The first one on free cash flow, which was clearly the main positive surprise. On working capital, the EUR 32 million release in 2025 was, I believe, materially ahead of your prior guidance and our expectation. Can you help us understand with more details what structurally changed there and also beyond the EUR 5 million temporary benefit from coeo? And given the 2025 net working capital release, as we think about 2026, should we assume a broadly neutral working capital? Or do you see scope for further structural release? The second question is on dividends. While you reiterated that the proposal will be in line with policy, could you give us more clarity on how you think about positioning within the 50% to 70% payout range? And for now, the last one on Gardant. You originally guided for EUR 5 million of synergies in 2025 and EUR 15 million at a full run rate. My question is, could you quantify how much has been realized to date and whether there is any incremental upside beyond the EUR 15 million target? Davide Soffietti: Tommaso, I will take your first question. Free cash flow, EUR 32 billion were coming as anticipated mainly from Greece as we guided EUR 15 million to EUR 20 million, the higher level of our guidance. Then we have also a contribution, as I was saying, from coeo, we have roughly EUR 3 million that has been included in the reported EBITDA that will be paid in 2026 at closing. And then we have also positive impact from Italy, both on working capital and also because we were able to use our tax credit that has been transformed in tax credit has been used to pay related to the working capital. For '26, we still expect a positive contribution from working capital, we still need to recover advanced payment we made in Greece. So we would expect still a double-digit contribution of working capital in 2026. Manuela Franchi: On the dividend front, we will propose to be on the high end of our guidance in terms of percentage, probably rounding the numbers up. On the Gardant integration, about 2025, we closed between actual synergies of around EUR 9 million to EUR 10 million. We confirm still the run rate of EUR 15 million, hoping to do better. All the actions have been put in place. The technical aspects to be executed will complete by June. So by June, everything is really closed. And the team is running ahead of guidance on the cost efficiency side. Operator: The next question is from Antonio Gianfrancesco of Intermonte. Antonio Gianfrancesco: Congratulations for these set of results. I have 2 questions. The first one is on new business because new business intake reached EUR 14.5 billion in 2025, exceeding already the cumulative business plan target, a very good figure. But I would be -- it would be useful to better understand your expectation for inflows in 2026, both in terms of volume and product mix and how confident you are in maintaining this commercial momentum in a market where NPE inflows remaining for sure, structurally low, but insolvency trends appear to be rising? The second question is on coeo, because I understand that BaFin approval is the final step before closing. And you have confirmed your guidance for 2026, which includes coeo's contribution. So considering that the actual closing will now take place at least 2 months later than planned or something like that, it will be useful to understand whether you expect this delay to have any potential impact on execution in 2026? And the third one is on the German expansion. You highlighted Germany as a fragmented and consolidated market with CSI licensing obtained and operations starting, if I don't understand worse in January 2026. So some additional color on the medium-term ambition in that geography, let's say, in terms of scale, investment intensity and potential margin profile would be very, very helpful. Manuela Franchi: Thank you for your question. On the business volumes, clearly, there were major transaction this year that we had embedded as probability in our pipeline. But obviously, they all realize in a positive manner that probability will become 100%, and this has brought to doubling the level. Clearly, the level of primary transaction across the core markets, the Southern European one, we see them less in the traditional NPL business, while they will be mostly focused on the UTP and Early Arrears part. And also the pipeline regarding nonfinancial claims from there is quite big given that it's a market we don't touch today or at a very limited extent in Spain and that for us is an open opportunity. So we confirm -- we reiterate still what we had in the business plan of EUR 8 billion. Clearly, this EUR 8 billion is composed by forward flows and the new contracts. On a positive note, the forward flow this year only contributed more than EUR 4 billion. Clearly, this includes UniCredit that has finished in terms of forward flow last October and that is replaced by Sondrio that obviously it's smaller that will start after April. And the renewal of Santander, which this year has done more than EUR 1 billion over our budget. So this brings us to positive expectation also on the forward flow contribution of 2026. If you remember, our original mix in the EUR 8 billion was EUR 2 billion from forward flow and EUR 6 billion from the rest and also this component is much higher. This is without coeo. Obviously, coeo has an end market which is different. And in that sense, is a growing market. And this is all assuming in our core business still not substantial increase in the default rates, which is instead happening. So we prefer still to be conservative on this front. Also because you might remember that the time between winning the contract onboarding and the actual pickup of the activities takes a bit of time. And so it has a more dilutive effect over time. Now on the coeo side, the -- in terms of execution of the integration, we don't see impact on the execution. Why? We have already defined the integration plan, and we are already moving ahead with the business opportunity without waiting the closing. So coeo team has built a division to manage NPL and has already deployed a system which allows them under our guidance to manage our traditional NPL. And they already got new clients from January for which they are managing NPL bank. So we are talking to banks. I was actually in terms of for a conference with banks just 2 days ago because the regulator is telling them to prepare themselves for this increasing weight because they have not used those internally to manage more NPL. And to do it more efficiently based on other models and Italy was portrayed as a reference model for the servicing industry. So that activity is developing. On the other side, we are deploying in Italy and in Spain, the coeo models and system. And we can say that already from April, we will start managing 2 of the major clients in our jurisdiction. So this is major results. Then if you look from a pure accounting standpoint, clearly, the figures we have given are pro forma, and it depends on the timing of close, we will consolidate from that point in time. But in terms of free cash flow generation and the targets, we feel confident given that the contribution of coeo in '26 was pretty much somehow offset most extent from the transaction costs, while the full effect on the free cash flow side is from the year after. So because we already achieved this year, clean for the extraordinary elements, the EUR 90 million guidance, the target for the EUR 2.2 billion, it's pretty much sustainable despite this delay. Now going back to your last question on the German expansion. Clearly, our history in Germany is different now from Southern Europe, where we bought a legacy platform that we will go to make more efficient, more modern. In Germany, we start with a model which is extremely light doesn't have legacy, and we would like to grow our market share, keeping that approach. So we will look to M&A in a very thoughtful and selective manner, but we prefer the organic growth strategy in that specific sector, given that it has proven very successful and the AI-driven collection model in the German market has taken a lot of market share from traditional players in the small ticket business, and we hope to do the same also for the NPL. Obviously, adding the more human-intensive piece that we have explained is critical for when you manage larger tickets. But on that front, as I said, the team has already hired a few people, has already [indiscernible]. So -- and all of this is -- all these costs are included already in the guidance we have given. Operator: The next question is from Davide Rimini, Intesa Sanpaolo. Davide Rimini: Just a few. One is on cash flow. I was just wondering, you mentioned already your guidance in terms of working capital contribution for this year. I just wonder whether you might mention a few other building blocks to get to a rough guidance for this year versus the EUR 76 million reported today? The second question would be just a clarification on the pro forma confirmed guidance for this year. I just wonder whether you might add on coeo business, whether there is any seasonality in the business that we should be aware of within the year? And that might affect sort of this message? And the third question, still on coeo. I noticed that you put sort of a slide on the potential pipeline in the 18 months forward on EUR 250 million. And at the same time, you highlighted the opportunities in extended the business in countries like Italy and Spain. I just wondered whether the EUR 250 million is including these opportunities or is excluding those? Davide Soffietti: Davide, I will take your first question. '26, as we mentioned already in 2025 shows that we are able to -- excluding nonrecurring items to be at EUR 90 million. So in 2026, we still have CapEx that will be quite in line with this year, probably around EUR 30 million. We will have a positive contribution from working capital between EUR 20 million and EUR 25 million. We'll have change in other asset liabilities that are always the IFRS EUR 70 million plus redundancy that expected around EUR 60 million. We have tax income to pay around EUR 30 million. Financial charge expected roughly EUR 36 million, EUR 38 million. And we still have the earnout to the grid that is the last one we need to pay this year is EUR 12 million. The next one will be in 2030 of EUR 60 million and minority that is quite in line with this year, so roughly EUR 8 million. On coeo, as Manuela was mentioned, we get free cash flow that will be mainly compensated by the transaction cost and by higher financial charge. But from 2026, we will benefit from the cash flow. This is why we are confirming EUR 90 million. Then we will have the benefit of the proceeds for the portfolio sales that this is in line with our guidance. So we reduced the gross debt. Manuela Franchi: On the guidance for '26, if I understood the question correctly, -- this year, we closed for the doValue Group at EUR 217 million. In terms of EBITDA, we indicated in the guidance last year that the EUR 300 million included the bottom end guidance we had given before of EUR 240 million to EUR 250 million. And in coeo, there is no seasonality effect. There are some mild effects related to [ an uptick ] of e-commerce transaction around Christmas and the like, but nothing as typical as the [ core ] activity in the traditional business. In relation to your last question, if you're looking to Page 5, the pipeline of the EUR 250 million does not include the expansion to Southern Europe. Davide Rimini: And if I may just have a follow-up sort of on the CapEx that you mentioned, the EUR 30 million is -- could you give us sort of a sense why sort of it should be off versus the EUR 35 million sort of spend this year? Davide Soffietti: Sorry, can you say it again? Davide Rimini: I just wonder, if I picked up correctly, sort of you are pointing to EUR 30 million CapEx this year off versus the EUR 35 million reported today. I was wondering whether there's any reason for... Davide Soffietti: The main [delta ] this year we included all the costs mainly related to the Gardant synergies that was a one-off to integrate platform to have the positive effect of the synergies. So from next year, we will save this money. So we continue to spend our Gardant CapEx plus investment in technology... Manuela Franchi: Yes. Just to be clear, we don't expect a lot of cost from the integration of coeo because it's a different platform. So we will have some integration of unification of back-end platform, but it's more deployment and it's much more contained than in the Gardant case, which included a significant, obviously, FTE reduction effort and related integration of in-market platforms that in this case, we are not going to have. Clearly, you have some costs related to the development of the -- of their platform in our countries and of our platform in their country. The second one has already been expanded in their P&L in 2025, given that we moved ahead just after signing. So this impact of integration is much less. Another important point is differently from -- with an increasing trend vis-a-vis the past, the component of development, new technologies, AI projects as part of the CapEx has materially increased. Last year it was probably around 30%. This year will be more than 50%. This is obviously a function of bringing better processes, better technologies in our core system rather than integrating what we had. Operator: The next question is from Davide Giuliano of Equita. Davide Giuliano: I have 4. The first one on gross revenues. Revenues were a touch below your guidance, but more than offset by remarkable efforts on costs. Can you give us some color on the like-for-like trend in revenues? And are you seeing a more pronounced slowdown in recent quarters compared to your guidance? Where do the difference come from? The second one on Greece. In the release, you reported that there are still slowdowns in the onboarding of portfolios, I guess, still related to the Alphabet tranches. In addition, we have also seen a market drop -- a marked drop, sorry, in the collection rate compared to last year. Why are you experiencing these difficulties in onboarding? And in general, what trajectory do you expect for the Greek business going forward? The third one on tax credits. Has there been any relevant developments for state tax credits? And can you give us your expectation on profitability of local tax credit servicing, which will be assigned to AMCO? And the very last one is just a quick comment on coeo results were very good in 2025. And I was wondering in light of Klarna's recent results, if your long-term assessment of the coeo business model or concentration risk with Klarna has changed? Davide Soffietti: Davide, I'll take your first question on revenues. As we anticipated in Greece, the reduction is not a -- tax reduction is mainly correlated to the -- as you mentioned, we have onboarded a huge amount of portfolios in 2025, very big, more than EUR 5 billion. So all the portfolio are onboarded, and we are managing those portfolio. The only difference is when you onboard this big portfolio, you need to work on those portfolio to have up and running revenue. So the expectation was to anticipate revenue during 2025, but because they are very, very big portfolio, we need to work on those portfolios, start the judicial action to also reach an autologous agreements with the borrower. So this created a temporary delay of those revenues from 2025 to 2026. And this is also impacting the collection rate you were mentioned because for sure, we [ existing ] portfolios that are still not having a run rate collection rate. So the first year will be lower, then we will pick up and go back to the previous collection rate. So we will consider this only really temporary effect that will not be any more in 2026. And then we have also, as I mentioned, in Spain, the reduction of revenue arrears, but that one has been also a choice for us because that part is not high margin. So we prefer to reduce these revenues, increasing other type of credit to manage that have lower revenues, but higher profitability. Manuela Franchi: On the tax credit, we are waiting or waiting the operating metrics and that the laws to be published by March will indicate on how to execute what was in the budget law. So based on that, they are defining the operating model on which the services they will use will work on. And we assume that after June, that type of business will be moved to them and they will allocate to subservicers. We have, as you know, a good relationship with them, given that we even increased last year or we even doubled the amount of portfolios that we were managing for them after they reassessed the number of services they work with. So we are keeping ourselves for -- to manage that business, which is not included in our budget estimates. And the margin we are hoping for is driven not by the type of receivable, but the operating model that we want to create on the back end on our side, we should be a digital model. So to confirm the margin we have on the rest of the business in Italy. Now on the coeo results, maybe Daniele can comment. Daniele Seta: Klarna results, you mean? Manuela Franchi: Yes. Daniele Seta: We watch very closely the quarterly results of Klarna, of course, because it is a key customer of coeo. First, let me begin by saying that as you have seen from the pipeline, coeo is diversifying much from Klarna. Nevertheless, it is still an important customer. What we watch for in the quarterly results of Klarna is the growth in the transacted volume. And this is growing very healthy across all of the regions where coeo operates. Specifically, the most important are Germany, U.K. and Sweden. In those regions, Klarna is already very profitable with its flagship product which is Pay in 3 installments. But a good news is that they launched recently the Klarna card. It's a debit card that sits in your phone and allow you to purchase in normal brick-and-mortar shops, with buy now pay later installment. And this is already producing an increase in purchase frequency by 8x in Germany. And this is driving a solid growth of transacted volume in U.K. by 40% and in Germany by 20%. So we are happy about Klarna growth. Of course, their profits are suffering from expansion in other products such as consumer financing in the U.S. We think that there's a clear rationale in expanding in those products. And we hope that at a certain point, coeo will be able to expand its product offering towards the more profitable products. Operator: The next question is from Simonetta Chiriotti of Mediobanca. Simonetta Chiriotti: Looking at the guidance for 2026, excluding coeo, you projected growth from EUR 217 million to EUR 240 million. Could you elaborate a bit more on the trends in the various markets? So should we expect growth in the Hellenic region, for example, and a further growth in Italy? And my second question is on tax receivables. In the past, I think that you have mentioned that there is an opportunity also in Greece on this segment. Could you just give us an update on this? Manuela Franchi: On the Hellenic front, we see 3 type of growth. One, the full action on the EUR 7 billion new portfolio onboarded in 2025 will have a collection effect on certain younger vintages that we didn't have before. And this was what Davide was explaining that you need to put activities in place before you see the actual results. On the other side, don't forget that Greece is probably the country where we are diversifying more the product offer. We have the real estate company, the mortgage broking company, the advisory company. We are offering a data proposition out of the advisory company from this year. We have created another company which they manage small ticket unsecured starting from next year, which is called doServe and will open the market for nonfinancial receivables and also the tax receivable opportunities you were mentioning where the process shall start next month. But this is as an upside is included in a very small amount in our budget given that it's a public tender process, and it might take a bit longer. On the Italian front, the extra value perimeter, but also the Gardant one have been growing this year, mildly vis-a-vis last year. And we are now deploying at full speed also the revenue synergies that we had in the Gardant perimeter. Then in Italy, we have the asset management company. So that falls under that perimeter where we have developed now 2 new funds recently actually 3, and we have a pipeline for next year, too. And last, on the data side, we think we will increase significantly the product offer to noncaptive clients. We have already developed the products. And remember, we also are launching in Italy the Stage 2 product, which has now might be -- we might be closing with 2 banks contract. So this is in our assumption. So it's exploring as much as possible the stocks we have and the inflows from BPM, doValue and Sondrio, but also to grow these other revenue lines. While in Spain, apart from the fact that we have developed digital collection now in all the countries with the marginality increase, which is very strong. We mentioned -- I think Davide mentioned that on the 0 to 90 days past due, the margin on the digital channel is more than 80% versus less than 40% before. There, we are deploying a JV, but we will discuss in more details in the next call on the legal servicing side because the structure of the legal services in the Spanish market allow us to develop this type of proposition. So it's really professional services type of revenues, which -- where we are going to use the capacity we have inside with strong lawyers with expertise in this sector for other sectors, which are not NPL related. Operator: Mr. Della Seta, there are no more questions registered at this time. Daniele Seta: Thank you all. We wish you a good day. Operator: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.
Operator: [ Welcome to the bioMerieux 2025 Third ] Quarter Sales Conference Call. The call will be structured in 2 parts. First, a presentation by bioMerieux Group management team. Afterwards, there will be a Q&A session. [Operator Instructions] I will now hand over to Aymeric Fichet, VP, Investor Relations. Please go ahead. Aymeric Fichet: Thanks. Hello, everyone. Good afternoon, good morning, and thank you for joining this call. I'm with Pierre Boulud, CEO; together with Guillaume Bouhours, CFO. Please note that this conference call will include forward-looking statements that may change or be modified due to uncertainties and risks related to the company's environment. Accordingly, we cannot give any assurance as to whether we will achieve these objectives. I also remind you that today's call is being recorded and that the replay will be available on our website, www.biomerieux-finance.com. I will now hand the call over to Pierre, and then we will open the call to questions. Pierre? Pierre Boulud: Hello, everyone. Good morning, good afternoon. So I'll start with giving you the highlights for the year 2025. So I'll start with the sales numbers. We've reached a very important milestone, EUR 4 billion company now, bioMerieux growing 6.2% organically, significantly outpacing a market that we're seeing way around 1% when we look at the diagnostics results from most of the competitors. This growth would have been 7.8% excluding China. What is very positive we see in our performance for 2025 is we've made a very profitable growth, reaching 17.9% of our sales contributed EBIT and growing 16% organically. And finally, on the numbers side, very strong cash flow generation, reaching EUR 460 million, growing 40% versus 2024. So now if we go into the commercial dynamics and the 4 growth drivers that we selected in the context of GO.28. So if you put them together, they've actually been growing 9.4%. So let me start with non-respiratory BIOFIRE. What I'd like to highlight here is an increase of the net unit installations. As you know, this is an indicator that we follow very closely. We've managed to install an additional 1,800 units of BIOFIRE in 2025, to be compared with 1,350 in 2024. So we have successfully grown installed base by 7% in 2025 only, which is very consistent with the growth perspective that we project for the years to come. And we've done that. We'll come back to that with very limited price erosion. The second growth driver, as you know, is SPOTFIRE, point-of-care system. So what I'd like to highlight here is a very significant improvement of the installed base, 110%. We've installed 6,400 instruments in 2025 with the successful launch of the nasal swab in the U.S. in the summer. The third growth driver is Microbiology, where we have a very strong leadership position. As you know, we've been impacted by the decline in China. Excluding China, we've managed to grow 6.3% We are very satisfied actually with the instruments growth in the region of 14% in 2025, growing 14% in 2025 versus 2024. So demonstrating very strong momentum for our Microbiology solutions moving forward. And an additional 2 percentage point price increase in Microbiology, which is also a very positive factor. Finally, Industrial Applications. What I'd like to highlight is a very strong performance on the Pharma segment, where our launches are demonstrating a very strong impact in the market and the pharma sales growing at mid-teens again, very strong level of [indiscernible] for the future, together with 2 percentage point of price increase. Now the 2 additional areas of sales that are not a growth driver, but we still obviously monitor very carefully. Respiratory panels, we've actually managed to grow 1%, building on very strong performance already in 2024. The epidemiology was broadly in line, distributed differently between quarters but broadly in line for the full year between 2025 and 2024. What is making us very positive on this one is, again, very limited price erosion, below 2%. And of course, the installed base increase that I was mentioning will also benefit the respiratory panels for the future. In immunoassays, we've been struggling with immunoassays franchise, as you know, in the last couple of years, minus 6% in 2025. A positive factor that I wanted to highlight here is the VIDAS KUBE, a new system for VIDAS that we have launched now a couple of years ago, is growing very nicely. There are replacements obviously there, but mid-teens sales growth in instruments in 2025, demonstrating that we are actively managing the replacement of the old VIDAS in the market. So what are the comments on the top line? If we look at the bottom line, 16%, as I was commented -- commenting an improvement of CEBIT. Together with the 6% of sales, so definitely a significant operating leverage. We are deploying our GO.28 initiatives. We are progressing on the automation with regards to manufacturing costs, reaching 40% of the pouches fully manufactured now on the automated lines, which is good news, bad news. I mean, good news is we keep improving. And we still have an opportunity to grow this in the next few years and further improve our costs with regards to BIOFIRE and SPOTFIRE pouches. We are also progressing in R&D following the decision to close the San Jose site, we are moving forward with adding 1 unified team for Microbiology. And we are progressing also with the transformation of our global customer service that will translate into a better service to our clients and efficiency improvement. Overall, we've increased our headcount around 2% in 2025. So to be compared with a 6% sales growth that we are posting. Finally, on 2025, I wanted to give you an update on very significant progress on our CSR agenda. We are actually, for nearly all KPIs, either at or above target. I'd like to highlight especially the CO2 greenhouse gas emission that has been reducing close to 30% since 2019, while our sales have been growing 50% since 2019. So a very significant improvement, and we're talking absolute emissions, which, by the way, I'll come back to that, will lead us to review and upgrade our CSR ambition for the years to come. So before handing over to Guillaume, who will give more granularity on the information on the financial performance. It's been 2 years now that we've communicated GO.28 plans. So we have -- it's a good opportunity to step back after 2 years. So if we look at the different dimensions of the GO.28 ambition, after 2 years, we've been growing sales 8% on average in the last 2 years. So significantly very much in line with the plan. We've grown the EBIT by 20% in 2024, 16% in 2025. So overall, an improvement of 260 basis points versus 2023, very much in line. In terms of team engagement, we wanted to be in the top quartile of the industry. At the end of 2025, our engagement ratios within the top 5% of the industry. And as I said, I will come back to that, 29% reduction of greenhouse gas emissions versus 2019, very much in line with the ambition to reduce by 50% by 2030. So with this, I hand over to Guillaume, who will share with you more insights on 2025. Guillaume Bouhours: Thank you, Pierre, everyone. So let's look at our financial performance. Pierre already explained very well the commercial dynamics of our different ranges. So you see actually a wrap up on this page. The only thing I can highlight is that BIOFIRE overall without SPOTFIRE, which represents 37% of our total sales as our first product range. And we take everything together, grew 5% in 2025. And of course, our second range is Microbiology, which represents 33% of group sales. Now looking at maybe some kind of by geography on the next page. So North America grew an organic plus 8%. Of course, it's our first region for SPOTFIRE, so fueled by SPOTFIRE super high growth. Also a very good performance of industrial applications in North America as well as non-respiratory panels. Latin America, as you can see, is super dynamic, quite a stunning plus 18% organic, and it's actually very solid on all product lines in this region. EMEA delivered a 5% organic growth in 2025. We can see notably double-digit growth of BIOFIRE non-respiratory. And I remember, we always have questions on the internalization, meaning outside of the U.S., the push outside of the U.S. for BIOFIRE. So I think this is also pretty visible here in the figures. In EMEA, we should mention a solid performance of Industry Applications as well as Microbiology being mid-single digit. Asia Pacific, maybe let's stand there, had a contrasted overall 1.5% organic. Really contrasted because, of course, we discussed China all over the year. Just to remind everyone, China declined, so for us, minus 40% is a market downturn with a lot of pressure from authorities to decrease the spend of hospitals, which actually translated in our field, which is mainly Microbiology in China in a volume decline in 2025, so down 14% in China. But very dynamic actually in Asia Pacific outside of China, plus 11% overall. We can mention India with plus -- which is 12%, so above double digit. And of course, Japan, which has now delivered about 30% -- above 30% organic growth in 2025 with a great success of BIOFIRE and SPOTFIRE. Noting that there was the exceptional instrument sales of SPOTFIRE in Q1, but yet a great dynamic in this country. With that, let's turn to the P&L. So with 6% organic on the top line, we have delivered a solid improvement in gross margin. You can see 8% like-for-like growth of gross margin, which is actually a 90 bps improvement in the margin itself on a like-for-like basis. How do we explain that? We have a product mix effect. As you saw, we had a higher share of BIOFIRE, SPOTFIRE, which I remind everyone is a slightly higher margins than the rest of the group. And we also have in gross margin, a number of GO.28 efficiency that Pierre illustrated earlier that improved our cost of goods sold. We had notably, really nice procurement savings in 2025 and supply chain, international transport savings. And this is all despite the impact of tariffs which we had in H2, of course, in this gross margin part. Below, we have the SG&A in, let's say, contained increase, I should say, at plus 4%. That also includes some of our GO.28 efficiency initiative, and then you had examples earlier from Pierre. R&D is up 3% on a like-for-like basis. So we continue to invest strongly in R&D at 12.5% of total sales and we deliver innovation. And yet, we have Innovation Powerhouse initiatives to make R&D more efficient overall. So CEBIT, our main indicator is, so contributive EBIT is up 16% like-for-like, as Pierre said. CEBIT margin, as you can see, improved to 17.9% on a reported basis, which you can break down as 160 basis point improvement on the like-for-like FX and scope compare constant, which -- plus impact of foreign exchange, which was actually a negative EUR 33 million due to the strength of the euro currency against many other currencies. And we can -- we'll come back to FX later on this presentation. And also a second effect, which is the effect of acquisitions, maybe mainly the impact of SpinChip, in which we invest a lot of about EUR 20 million. So altogether, we publish 100 basis points of margin improvement on a reported basis. With that, turning to the rest of the P&L. So the operating income, the reported one was impacted by VITEK REVEAL impairment that we had already reported and explained in first half this year. Just to remind, it's a lower-than-expected commercial start of this fast AST product. Yet, we still believe in this product. We believe there are high unmet medical needs on this product, and we continue to invest. But we also decided in H2 to close the site of San Jose of SPECIFIC REVEAL and to combine the teams under our Microbiology franchise in St. Louis in the U.S. We took the associated charges, let's say, impairment and restructuring charges that you see in the nonrecurring line for EUR 40 million. Our net financial results improved from minus EUR 9 million to plus EUR 4 million. This was -- it's mainly linked to the positive impact of euro increase on our internal cash flow, so more technical topics. Income tax is at 24.5% effective tax rate, down from 26% last year, but very stable when you look at the recurring part of effective income tax rate. And so overall, our net income group share reported is down 8% due to the REVEAL impairment and associated charges. We have decided with the Board to publish for the first time, an adjusted net income and therefore, an adjusted EPS. We decided that to align with market practice. And actually, some of the -- our investors were asking for that. So basically, the adjusted net income excludes the amortization of acquired intangibles and nonrecurring, but we are very tight on nonrecurring. So with that, adjusted net income and adjusted EPS is up 9% in 2025. By the way, the decision of the Board is to propose a dividend to be voted at the AGM of 0.98% -- sorry, EUR 0.98 per share, which is exactly a 9% increase, in line with the increase of the adjusted EPS. Turning to free cash flow. And Pierre said it earlier, we had a really strong free cash flow generation in 2025, up 40% at EUR 462 million, driven first by an increase in EBITDA, pretty close to EUR 1 billion of EBITDA for bioMerieux now, EUR 960 million, up 5%. Working capital was a negative consumption of EUR 66 million, linked to mainly activity, actually, a small increase of inventory. Almost EUR 30 million increase of receivables. So we collected better when we look at days or overdue, we collect it better from our customers. But of course, we had the higher activity at the very end of the year, so ended up the year with this higher receivables. And in other working capital, we had more payments of social debt, means mainly variable compensation in 2025. Tax. So I commented on the P&L tax with no major change on the tax rate. On the cash tax, there is a major positive impact of the changes of U.S. tax regulation. It's a bit technical, but basically a more acceleration of R&D expense deduction, which drives a significantly lower tax payment in the U.S. in '25 and probably more of the same in '26, and then it will come back to more normal in 2027. In terms of CapEx, we will zoom on it in the next page, but EUR 328 million and 8% of sales. So overall, EUR 462 million, again, free cash flow that you saw. You see we invested about EUR 155 million in business development and financing activities. So business development was SpinChip, Neoprospecta and Day Zero Diagnostics acquisition. And overall, bioMerieux turned now officially into a net cash positive situation on the balance sheet at EUR 108 million net cash. With that, we wanted to give you a zoom on CapEx. So this EUR 328 million is split, just to remind everyone between about 2/3 in what is the usual manufacturing CapEx, as you can see, which supports capacity increase for future growth. Automation, that Pierre mentioned, for especially the manufacturing automation in Salt Lake City, and also internalization. You see here, I have a photo of our ongoing work of a new building in Marcy-l’Etoile, for enzyme manufacturing that were previously built outside. 1/3 of our CapEx is actually instrument placement. So it means it's our investment to put instruments, let's say, for free, more or less, at our customers. Of course, with a slightly higher reagents price, that was total EUR 110 million in 2025. M&A. So we have announced earlier, and its opportunity to discuss a bit more, the acquisition in January of Accellix, a company which strengthens our offering in the Pharma Quality Control segment for the cell and gene therapy market. And we believe it will address new applications and unmet needs in this market. It's basically a point of need. So it's not like clinical. Where we say point-of-care here, we say point of need instruments, which delivers an automated results in less than 30 minutes with lab like quality. It will be used in cell and gene therapy, both upstream when the -- to send the patient blood into production and downstream to verify the success of the operation and thus release the batches. It's a company that we knew. We've been working with them since 2021. We had a minority investment and a targeted distribution of their product. We believe this product range will serve as an accelerator for the Pharma Quality Control franchise inside our GO.28 plan and even beyond. You see the price that we paid, about EUR 45 million for 100% value of the company. And it should be basically around 2029, around EUR 20 million sales and breakeven by that year. And with that, I hand over back to Pierre. Pierre Boulud: Thank you, Guillaume. So it's now a moment to talk a little bit about 2026 outlook. And of course, key product launches to start with. So beyond Accellix, that we are excited to launch the pharma customers, we are finalizing following the acquisition of SpinChip, the CE filing to be CE marked. We expect by the end of the year that we can do a commercial launch end of the year, Q4 '26, maybe Q1 '27. We also wanted to update you on the fact that we have initiated already the clinical study in the U.S. so that we are -- the objective, as we said at the time of the acquisition of SpinChip, to be ready for a commercial launch in 2028 for hs-cTnI with SpinChip in the U.S. The second big launch that we expect in 2026 relates to SPOTFIRE. It's a bit of a strategic launch for us because it will be the first time we go into women's health with vaginitis. It will also be an opportunity to expand the use of the SPOTFIRE platform beyond respiratory and sore throat. The plan is to file during the summer, so that we -- again, depending on the length of the regulatory review, we can launch at the end of 2026, early 2027. Last piece of launch, we had SPOTFIRE available in Europe with what we call the high-plex panel for respiratory and sore throat. We are expecting to have in H1 2026, the CE marking for the low-plex panel, 5 targets, nasal swab, that will allow for European customers to address new opportunities and to use this point-of-care solution with a lower plex panel. And for instance, in France, we had in February, a new decree that allows to do point-of-care testing under certain conditions for certain diseases and the financing still needs to be refined, but it's now regulatory approved to have those panels used outside of the hospital and the labs. So guidance for 2026. We plan to grow between 5% and 7%, so around 6% with an improvement of the EBIT of at least 10%. And if we go to the details of the performance, we expect non-RP to grow around 10%, building on the cross-selling and out of U.S. expansion, knowing that we are, at the end of 2025, we've been growing the non-RP panels 13%. So very much since 2023, so very much in line with the guidance. For SPOTFIRE, we expect to grow our sales by between 40% and 60%, which is very much in line with the trajectory that we have to reach EUR 450 million by 2028. Microbiology, we expect to grow between 3% and 5% with China still declining, but softer than what we experienced in 2025. We are expecting mid-single-digit China decline. That will also come together with a high comparison basis in terms of new instruments, as I said, in Microbiology, we grew instrument sales by 14% in 2025. Industrial Applications, very much in line with the plan between 7% and 9% sales growth. Moving on to respiratory panels. We are actually expecting between minus 3% and 2% and plus 3% evolution, knowing that we had a very strong Q1 2025. So we have a very high comp basis. We were -- just to remind you, we were growing 21% respiratory sales in Q1 2025. So to be -- to keep in mind, for those of you who look at quarterly evolutions, Q1 '26 is expected to be very much impacted by this. In immunoassays, minus 5% to 0% and still a little bit of the same story of PCT in China decline. And finally, last but not least, we expect currency effects to have an impact on the CEBIT. Our estimate at this stage, and we update on a regular basis during the quarter earnings calls, is EUR 50 million to EUR 60 million negative impact. So I leave Guillaume to give you a bit more color on this one. Guillaume Bouhours: Thank you, Pierre. So we tried to update you on our FX exposure. And we know it's a complex topic. So as you all have in mind, we have a very high exposure to U.S. dollar on revenues. But much smaller net of cost on the CEBIT because we have a high cost base in the U.S. We try to give -- and again, its estimates, of course, the impact of a 5% variation versus the euro on the CEBIT. And it's, for example, on U.S. dollar, you can see that if you compare U.S. to India exposure, it's 12x more U.S. than India on the revenues, but it's only 3x more on the CEBIT. So keep in mind that we are much more sensitive to the rest of the world than the U.S. And now beyond this, let's say, theoretical variation, we try to give you a bit of a view on the right on where the current rates and some -- depending on the currency, these are the current rates for the spot ones or the forward rates for the more volatile currencies versus the '25 average. So you see the changes, and therefore, how it translates into a forecasted FX impact. Again, bear with me, they are estimates. So the total today is actually pretty negative, very negative, due to the really, really high euro currency strength against most of the world. And so a guidance which we estimate today between minus EUR 50 million and minus EUR 60 million. And as Pierre said, we will do our best to update regularly these figures during the year. Pierre Boulud: Thank you, Guillaume. And as we have -- we have now, as I was sharing earlier, we have 2 years into the plan. We felt good opportunity to give you an update on our GO.28 ambition. So first of all, I mentioned the CSR new conditions and milestones. We are very much in line, in some cases, above the plans that we articulated before. So we decided, especially on 2 pillars of our CSR ambitions to review towards the ambition. So on the planet side, what we want to do is to expand beyond Scope 1 and 2, which is, as you know, very much the control zone of the companies wanted to add a target with regards to Scope 3, which is the CO2 emissions of our suppliers and our clients. So we'll work on helping them to reach minus 35% by 2034. And we've added, it was approved by the Board, a CO2 net zero objective by 2050, including Scopes 1, 2 and 3. On the health side, we wanted to strengthen the dimension of accessibility in our CSR ambition. So we wanted to make sure that for antimicrobial resistance impacts, we're capable to improve for low-end middle-income countries the results that we provide. As you know, in those countries, there are significant challenges with antibiotics resistance. We want to make sure that bioMerieux solutions are well available there. As well as we've increased the coverage of antibiotics from 80% to 90% because it's very relevant, again, in the spirit of making sure that antibiotic resistance is well managed everywhere in the world. So that's for the CSR ambition. With regards to the more financial ambition, by building on the performance '24-'25 and the guidance that we gave for '26, we are very comfortable to confirm the ambition in terms of sales growth, 7% on average between 2023 and 2028. For the EBIT improvement, we said we would grow at least 10% every year. So for the years to come, we -- based on what we've already initiated in the context of the efficiency program that we have, we are also very comfortable to confirm at least 10% every year. Now with regards to the margin improvement, as you can see, when you put together 2024, 2025 and 2026, we are almost after 3 years, at the level of 340 basis points improvement versus 2023. So we have upgraded it to around 500 basis points to be reached by 2028. I'll remind you, at constant exchange rates at constant scope. And this is pretty much what I wanted to share with you before we go into the Q&A session. Operator: [Operator Instructions] The next question comes from Kavya Deshpande from UBS. Kavya Deshpande: I've just got 2, please. So first, just looking at your group organic revenue growth guidance and comparing it to the flu headwind you've estimated in a very weak respiratory scenario. Is it fair to say that the bottom end of your 5% to 7% range is driven mostly by the flu? And in that case, you would expect no sort of underlying slowdown in the rest of the business? And then just also on your EBIT guidance, so you're guiding in line with your GO.28 plan for at least 10% organic EBIT growth even though the floor of the top line guidance is a bit lower at 5%. So would you be able to share the levers that you have that give you confidence you can sustain that level of profitability, especially if we do end up at sort of the lower end of the revenue guide because of weaker flu and lower contribution from high-margin RP sales? Guillaume Bouhours: Yes. So on the top line, definitely respiratory season that, let's say, decreased, and it's visible in the stats in January. And again, as Pierre said, we are comparing to Q1 2025, which was a high comp basis for respiratory. So yes, when we look at our guidance and the range between 5% and 7%, the main element that could change between the lower or higher performance in this range is definitely the strength of the respiratory season, which we have to remember is actually throughout the year, yes. We see January and February, let's say, lower than last year, but I mean it varies quite a lot. 2 years ago, we were surprised by strength in Q2, Q3. Last year, October, November were pretty low and then December super, super high. So yes, let's see throughout the year overall, and that's what we, let's say, try to take in our assumptions, as you could see on RP between minus 3% and plus 3% depending on the full year. On EBIT guidance, thank you for the question. Yes, definitely, we commit to -- we want to confirm we commit to the at least 10% organic CEBIT growth with sales that can be between plus 5% and plus 7%. So even with plus 5%, it's more difficult. But even with plus 5%, we would commit to plus 10%. Why do we feel confident? Because of our GO.28 plans. As said and as illustrated by Pierre, we have quite a lot of initiatives ongoing, efficiency improvements that we believe we can push, and that will continue to deliver in our third year of GO.28 in 2026. Operator: The next question comes from Aisyah Noor from Morgan Stanley. Aisyah Noor: My first one is on BIOFIRE, specifically the 1,800 placements you made in 2025. This number was strongly ahead of your 2024 number of 1,350. We know that your European competitor also launched a multiplex system in the U.S. in mid-2024. So could there be a dynamic here where you lost some customers to this competitor last year, and they've now come back because those 1-year contracts have run out? I'm just trying to understand if the 450 run rate per quarter for BIOFIRE is sustainable for 2026 or if there were any one-off dynamics here? My second question is on the flu season. So your U.S. competitor has called out a 20% decline in respiratory sales for the first quarter. Does that sound realistic to you? I understand you don't guide on quarters, but given the flu volatility, it would be great to get your insights here. And then my third question is on China. You are guiding to a mid-single-digit decline in 2026. How does this compare between the Immunology and Microbiology business? And what gives you confidence that the decline is due to a weak market and not market share loss to local competitors? I asked this because some of your Chinese -- or some of the Chinese IVD companies are forecasting positive growth in 2026? Pierre Boulud: Thank you. So I can start with the first 2 ones, and maybe we can together with Guillaume and so on the third one. So the 1,800 installation that we've seen, and I remind you, it's a net on, so it's between the tenders we lose and the tenders we win. Very strong performance, but we are not seeing what you are suggesting, i.e., customers would have left in 2024 and come back in 2025. What we're seeing is it's either new customers or customers who increase capacity in terms of testing units in their labs. So it's primarily a signal of competitiveness, I would say, of our solutions in the context of competition that you're describing. So for us, now we don't project, you know, It also depends on the market dynamics. We don't give estimate, as you know, in terms of installations from 1 year to another. But it's definitely a positive. As I shared earlier positive signal on our capacity to grow sales on BIOFIRE in general in the next few years. Flu season, yes, it's complicated to comment the impact of the flu season in the middle of the flu season. But for sure, as Guillaume was alluding to, we are seeing, especially in the U.S., a level of flu season which is below what we've seen in 2025, and I think we should account for that. And by the way, very similar when you look at the data from the CDC website, very similar to the '23, '24 respiratory season, probably mimics this one. So this is what we're looking at. But of course, when we publish the results for Q1, we'll be in a position to share more perspective on what the flu season looks like for Q1. And finally, on China. What we -- maybe 2 words. As you know, it's mostly Microbiology, I would say, in China. We are not seeing a significant shift in market share, to be honest. It's really a market decline. By the way, we've also seen, if you look at the Q4 results, China declining around 5%, mid-single digits. So very much in line with the projections for 2026. So we're seeing the stabilization of the market. So -- but unfortunately, still declining mid single digits. So as we speak, this is what we plan for 2026. I don't know, Guillaume, if... Guillaume Bouhours: Just on the majority of sales, as Pierre mentioned, it's actually 90%, 9-0, Microbiology. So it's really a vast majority, Microbiology versus Immunoassay in China. Operator: The next question comes from [ Rashid Anwar from Infi ]. Pierre Boulud: Let's move to the next. Operator: The next question comes from Hugo Solvet from BNP Paribas. Hugo Solvet: Just on pricing, please, to get a bit more details, what does the FY '26 guide imply for respiratory and non-respiratory, and Microbiology pricing? Have you seen also reagent pricing getting worse, probably sequentially in Q4, Q1, given replacement cycle competitions, and competitors launching products? And second on immunoassays, when do you think would be a realistic timeline for the business to go back to growth again? Guillaume Bouhours: Thank you, Hugo. So the first question is easier than the second one. The first question, pricing erosion. Basically, for respiratory panel, which is the most competitive panel, we have a price erosion, which is below 2% in 2025. For non-respiratory, it's below 1%. It's been -- I mean, as you follow us, it's been very stable actually in the last couple of years, so we don't expect a significant degradation on these front. And beyond BIOFIRE on Microbiology or Industry Applications, we are working on pricing improvement in the same order of magnitude as what we've seen in 2025. So that's for the pricing questions. With regards to immunoassays coming back to flat, but actually Q4 was better. It's only 1 quarter. It's also -- we are still suffering the -- even though it's, we are still suffering the PCT decline, even though it's 17% of immunoassay sales, it's still impacting us significantly less than in the past, but it's still there. And it's still impacting us in China. So we have those 2 headwinds. So as I said, the guidance is minus 5% to 0%. So there is still -- we are still seeing a realistic option to stabilize sales for immunoassays in 2026. But a midpoint, if you wish, for immunoassays is minus 2.5%. Operator: The next question comes from Jan Koch from Deutsche Bank. Jan Koch: I would like to try my luck with the flu season again. Could you help us with the phasing of your sales guidance in 2026? So is it fair to assume that sales growth in H1 and especially in Q1 is below the lower end of your sales guidance, given the tough comps? And then secondly, on the planned launch of the vaginitis panel and the point-of-care market, could you speak a bit about the size and the dynamics of this market? And how does your test compete with existing solutions? And if I remember correctly, your midterm targets for SPOTFIRE only include RP sales. So should we assume that sales from vaginitis come on top of your targeted number? And then lastly, on syndromic testing, one of your competitors has recently received FDA clearance for a GI panel, which detects 11 different pathogens. Since your panel is able to do test for 22 targets, I'm wondering how important are these additional 11 targets you have which your competitors does not have? Pierre Boulud: On the flu season, you want to give a try? Guillaume Bouhours: Yes. On the phasing of sales guidance, so definitely not balanced. It was not in -- because it was not on the -- the comparative basis is not balanced. We had a very strong Q1 last year, so a very high comp basis in Q1. So obviously, yes, Q1 should be lower than the full year guidance, of course. And then Q2, Q3, Q4 should -- we will see in these quarters, but should be higher than the average overall. That's very clear. Point-of-care, maybe the prospects, Pierre? Pierre Boulud: Yes, vaginitis and, high-sensitivity troponin. So what we have said is when we get very close to the launch, at the time of the launch, we'll probably update the market on the expectations in terms of sales, in terms of market share, and giving a sense of how our products compare with the competition. Obviously, it's also depending upon the label that we get from the regulatory authorities. So as soon as we are ready to launch, we'll share with the market perspective. We don't expect a significant impact of vaginitis in our sales forecast for SPOTFIRE. GI panel, I was not sure I was fully getting the question because there are a number of GI panels in the market actually. What we've done last year, actually, what we did in 2025 was we launched a midplex, so 11 targets panel on GI, and we had a 22 panel for higher plex, when we need to have -- when the doctors want to have a more comprehensive review of the potential pathogens. So we believe we have the portfolio for GI that allows to compete and to address the competition. Yes, that's basically what I can share on the GI panel. Operator: The next question comes from the Natalia Webster from RBC. Natalia Webster: The first one on microbiology. You reported double-digit growth in blood culture, reagent sales and mid-teens sales growth in instruments. How much of these are coming from competitive wins? And are you able to provide more detail on the wider market environment for blood culture? And if there's been a change to the lower utilization that you reported previously? And then the second question, just on that 3% to 5% Microbiology guidance. Do you see this as conservative given the 8% growth that we saw in Q4? And sort of how much of that range is dependent on China performance specifically? And then finally, on SPOTFIRE, on your 900 placements in Q4. Have these predominantly been driven by McKesson versus those in hospital settings? And are you able to provide an update in terms of what you're seeing in the uptake of 5 versus 15 plex panels? Pierre Boulud: Let me start with the Microbiology questions. So yes, we're very pleased with the good dynamics in terms of instruments, which we believe confirm the leadership that we have taken in Microbiology. There is within those numbers, competitive wins, but to be transparent, especially since we have a leadership position, a number of those installations are also replacement of all the instruments. So we don't communicate or share exactly what's the split, but it's definitely good dynamics in terms of future reagent growth. The 3% to 5% guidance, you're right, we did actually a very strong performance in Q4 with 8% growth. But there was a little bit of a rebalance with China, which was declining less. And also, as I said, very strong instrument sales that we don't expect to happen again. So we are very comfortable with the 3% to 5% guidance for Microbiology. That's what we believe should -- we should see in 2026. Finally, SPOTFIRE placements, 900 installations, Guillaume? Guillaume Bouhours: So overall in the U.S., for the U.S. part, yes, the majority, about 2/3 were actually driven by McKesson. You've seen we put on the slides that in terms of installation, we put on the slide that in terms of sales, the indirect channel is now 60%. It grew very nicely. It's a successful partnership. It grew very nicely, this part in 2025. And I think the second part of your question, if I heard correctly, was about the mix effect inside SPOTFIRE. We have now a balanced sales, 50-50 between the 15-plex -- with therefore a growth of the share of 5 plex in '25. Pierre Boulud: Okay. Yes, please. Natalia Webster: Sorry, just to follow up on the Microbiology blood culture as well, whether you're seeing an improvement in utilization there? Pierre Boulud: Sorry, your question is, do we see a degradation? Improvement? Yes, it's too early to say. As you know, I think you probably referred to the Waters closing the acquisition of BD. You know, we are obviously, we're watching it, and it's a bit early because it just closed. We'll see what's the impact in terms from a commercial perspective with regards to new deals. But as we speak, what we're seeing is very much the continuity of very strong performance. Just to highlight, our 8% growth in Microbiology, I mean, I don't think we have the details for BD, but I think they've communicated a decline of diagnostics business by 10% in Q4. So we see the performance, even though we are disappointed with the overall performance in 2025 in Microbiology, which as you know, it's below initial guidance. We're seeing it as actually a very positive competitive evolution in the market. Okay, moving to some online questions. So we have 4 questions from Christophe Ganet of ODDO. Inflation of personnel cost, what should be the most likely pace of evolution for 2026 and 2027? What is the installed base of BIOFIRE FILMARRAY full year? What is the level of price effect on FILMARRAY in Q4 and full year? And the last one, can we have an update on savings efficiency plans in terms of million euros? And what is the rest of the journey up to 2028? Guillaume Bouhours: So I can take some of those. Thank you, Christophe Raphael. So inflation of personnel cost. So basically, with our global footprint and of course, more weight of U.S. and France, we see kind of average, we call it merit increase or I think inflation of personnel cost around 3.5%, to give you an idea. To come back to the other question, the level of price effect on FILMARRAY. So as we said earlier and just to repeat on the respiratory panels, we see a price erosion below 2%, and that's been -- there's no significant acceleration on the quarter. It's a regular and consistent trend. And on non-respiratory, the price erosion is actually very minimal. It's below 1%. Savings and efficiency plans due linked to GO.28. So actually, we have never reported in million euros. As we said from the start, we measure it through our CEBIT margin increase. You saw that, as Pierre said, after 2 years and when we had our target of '26, we will have likely, let's say, delivered the 340 basis point of organic margin improvement that we were targeting in 3 years instead of 5. So as Pierre stated, we have actually logically increased the 5-year target to 500 basis points organic improvement versus 340. So we still have -- it's also to be very clear. It's not the end of the journey after very well delivering in '24, '25 and likely, '26. It's not the end of the journey. We still have a lot of topics ongoing. Some of our initiatives have delivered earlier than expected. I'd like to mention in '25, the procurement savings. We gave the numbers, it's quite a number of millions delivered in 2025. Some of those were ahead of our plans. There are other topics that are more, let's say, going to produce their effects in '26, even some in '27, and we have plans even, I can tell you, for initiatives that are in the making that have preparation steps in '26 that will actually deliver full year '28. So with that, I would say, rest assured that we still have a number of positive effects from GO.28 plants that are to come in this 500 basis points improvement. Pierre Boulud: And the installed base of BIOFIRE is 28,500, right? End of '25. Guillaume Bouhours: One question from Arnaud Cadart, CIC. What about the recent decree authorizing the point-of-care testing in France? What are the business opportunities for bioMerieux and what could be the update? Pierre Boulud: Yes. So it's a very recent development, very French, but very recent development where we are seeing that's good news, good news for the patients, good news for the business. That is now in France a decree that allows to do point-of-care testing. So it's organized, and it depends on the disease. It also depends on the settings. It's not -- yes, it's a very regulated and organized way, but still allows to do testing outside of the lab. There are 2. Obviously, SPOTFIRE is impacted, but also SpinChip for myocardial infection could be authorized, but also the respiratory test, especially for elderly patients in the -- we call them EHPAD, in the houses for elderly patients. So there are -- those opportunities are opening. The decree was published actually 2 weeks ago. So we still need to work together with our clients on what it means. And as it sometimes happens in France, it's authorized, but it's not funded. So there is a funding mechanism to also organize and refine. So we are working on it, but it's very positive news that the market is opening outside of the U.S. and Japan to point-of-care testing. So we see how it goes. Guillaume Bouhours: Another question from Arnaud. What loss to expect in 2026 at the CEBIT level from the recently acquired company? It was around minus EUR 20 million in 2025. Pierre Boulud: So basically, the company is acquired in '25 and especially SpinChip, which is a major one, was in January 2025. So it's now embedded as an organic contribution in 2026. So it's fully embedded in our figure and in the target of plus 10% organic in 2026. The one that will be on the scope change is actually Accellix, which will be a loss for the first year, probably a few million euros of losses contribution in 2026. I remind you, we have said that we will target a breakeven in 2029 for this group.. Guillaume Bouhours: Okay. One question -- 2 questions from Charles Pitman-King from Barclays. The first 1 is on the BIOFIRE non-respiratory panels. With the increase in competition in the U.S., will the recent launches of the GI Mid and WATCHFIRE panels be sufficient to maintain double-digit growth as the installed base matures? So this is the first question. The second one is on tariffs and pricing. So we are projecting for 2026, a negative currency impact of minus EUR 50 million to minus EUR 60 million on CEBIT. We assume the 15% U.S. tariff rate, and we mentioned the procurement savings in full year 2025. So the question is, could you elaborate on the mitigating actions being explored to protect margins? And to what extent price increase could be further leveraged in a more cautious hospital spending environment? Pierre Boulud: I'll take the first one, Guillaume, you take the second one. For non-respiratory panels. So basically, the -- you're right to say that the recent launches of GI Mid and WATCHFIRE are not going to be sufficient to maintain high -- to maintain double-digit growth. And I mentioned, we've actually grown the installed base by 7% in '25 only. So the main driver for growth, actually not market share, it's market growth. We expect the market on non-respiratory panels to keep growing, be it meningitis, be it blood-culture infections, be it GI, pneumonia. So all those markets are growing actually faster than regulatory panel. We are the only ones with such a broad menu of panels. Best competitors have 3 to 4 panels. We have 7. So we keep working on cost savings, expanding the market and the growth of the installed base, which is, again, 7% in 2026 versus 2025. Guillaume Bouhours: So that's tariffs pricing. Actually, there are a lot of sub-questions in this question. So I think FX impact, we give visibility. Tariffs, we have not discussed. So thank you. It's a good opportunity. The impact in 2025 was approximately EUR 10 million, EUR 11 million exactly in our P&L of additional U.S. tariffs that we had to pay, mainly in H2. What we see for 2026 and that we have embedded in our guidance is about a bit more than double that, EUR 20 million, EUR 24 million. This impact is after the negotiation with our suppliers who take, let's say, their own share and we take out. But it's before, let's say, the effects of price increases, which are not specific to tariffs, of course. On price increases, just to mention that we have, as Pierre said earlier, you know that where we can push on price is in Microbiology and Industry Applications. It's not easy, but we are disciplined to do that. Around 2% in Microbiology and Industry Applications in '25, and we should be ballpark in the same target in 2026. And then there are many other, let's say, actions on the margin improvement, we call them efficiency improvements, as part of our GO.Simple pillar of GO.28. And as I mentioned earlier also, they are part of the margin improvement that we have that we have in our guidance, and that we have even improved for the 2028 target to 500 basis points over the 5 years. Okay. Moving to the live question. That should be a question. Operator: The next question comes from Philip Omnou from JPMorgan. Philip Omnou: Can I just ask, given your net cash position, can you share an update on your capital allocation priorities? And then how are you thinking about opportunities for larger scale M&A? And then my second question, maybe going back to your comments on the margin. But if we just think about the bridge for '26, how should we think about that balance of margin improvement coming from operating leverage or mix and cost efficiencies? Pierre Boulud: So I can start with the capital allocation and M&A. Basically, our strategy is very much to continue what we've been doing, i.e., we call them bolt-on acquisitions. We have strong balance sheet. So we are looking at companies that bring differentiated solutions that support our core business. And that's very much the continuity of it. We are very much in that spirit. And Guillaume mentioned it, we are going to increase our dividends by 9%, which is also a way to give cash back to the shareholders. So it's the other element I would mention on capital allocation. With regards to 2026 margins improvement? Guillaume Bouhours: So it's actually mainly a cost efficiency initiative on top of, of course, of volume growth and, let's say, the scale effect that comes with it. We'll see on the mix. But when you look at it overall, especially with the RP, that could be, again, around neutral. It's not the mix effect that drives the margin improvement. It's mainly our own initiatives. And let's say, yes, proper cost management and cost control. Okay. One question from Maja Pataki. On the vaginitis panel, can you share how it compares to what is in the market now? And how should we see about the pace of uptake? What's the biggest difficulty with the rollout? Pierre Boulud: So it's too early to share the details of the vaginitis panel, and we'll -- when we get closer to first of all, the filing and then the approval, we'll share more details. But what I can share is we're excited actually with the vaginitis panel because it will be an opportunity to leverage the very unique features of SPOTFIRE outside of respiratory and sore throat. So we expect time to results to be very competitive, and we expect the plexing capacity of SPOTFIRE to bring an additional differentiation to what exists in the market. So time to result, point-of-care, plexing capacity, as you know, we like to launch products at bioMerieux that are differentiated. So we'll come back to that, but we expect to launch a differentiated solution in the field of vaginitis. Guillaume Bouhours: Okay. And with that, we can close the call. So we'll be on the [ road ] next week, so we will have the opportunity to meet with some of you. And our next call will be on April 23 to comment on Q1 sales performance. Pierre Boulud: Thank you, everyone. Guillaume Bouhours: Thank you. Bye-bye.
Operator: Hello, everyone. Thank you for joining us, and welcome to the Chartwell Q4 and Year-end 2025 Results Conference Call. [Operator Instructions] I will now hand the call over to Vlad Volodarski, Chief Executive Officer of Chartwell. Vlad, please go ahead. Vlad Volodarski: Thank you, Hillary. Good morning, and thank you for joining us today. There is a slide presentation to accompany this conference call available on our website at chartwell.com under the Investor Relations tab. Joining me are Karen Sullivan, President and Chief Operating Officer; Jeffrey Brown, Chief Financial Officer; Jonathan Boulakia, Chief Investment Officer and Chief Legal Officer; and Gordon Chiu, Chief Technology Officer. Before we begin, I direct you to the cautionary statements on Slide 2 because during this call, we will make statements containing forward-looking information and non-GAAP and other financial measures. Our MD&A and other securities filings contain information about the assumptions, risks and uncertainties inherent in such forward-looking statements and details of such non-GAAP and other financial measures. More specifically, I direct you to the disclosures in our 2025 MD&A under the heading Risks and Uncertainties and Forward-Looking Information for a discussion of risks and uncertainties. These documents can be found on our website or on the SEDAR+ website. Turning to Slide 3. 2025 marked the successful completion of our 5-year strategy. Our teams achieved all strategic goals in resident satisfaction, employee engagement and occupancy. Same-property occupancy reached 95.2% in December, reflecting both strong demand and outstanding execution by our teams across the country. As shown on Slide 4, 2025 was also another exceptional year operationally and financially. Same-property average occupancy increased 480 basis points. Same-property adjusted NOI increased 18.4% and FFO increased 40.8%. These results were broad-based and consistent across our operating platforms. These results are a powerful reflection of the dedication, care and professionalism of our people. Across all aspects of our business, our teams introduced new programs, tested ideas, shared learnings and scaled what worked. At the same time, we continue to invest in technology and management processes to simplify work, improve insight and support better decision-making at the residence level. What stands out is the culture behind the performance, teams staying focused on customer experience, taking accountability for outcomes, remaining curious and innovative and working together across functions. We are tremendously grateful to our teams for their excellent work that produced these outstanding results. With that, I'll pass the mic to my partners. Karen will walk you through the operational initiatives. Jeff will cover our financial performance, and Jonathan will provide you an update on our growth and portfolio optimization initiatives. Karen? Karen Sullivan: Thanks, Vlad. Moving on to Slide 5. We had another strong quarter of leasing activity with a positive net permanent move-in to permanent move-out of 276 units and continued growth in occupancy in all four provinces. Our closing ratios in Q4 were significantly higher at 22% initial contacts to permanent move-ins compared to our typical closing ratio of 15% as prospects took advantage of 2025 rates before market increases came into effect in January. Although the outbreak season started relatively early, it peaked in late December and has been trending down ever since. Our winter dip is quite similar to 2025 and in line with our expectations. We held our first open house event in select properties in January prior to the very cold spell in order to add to our pipeline of qualified prospects. In addition to this event, we continue to implement property-specific marketing strategies as well as numerous corporate initiatives. This includes the recent introduction of an AI-powered chatbot on our website, representing the first-of-its-kind application in Canadian seniors housing at the individual property level. The chatbot provides prospects with a new always-on channel to engage, receive property-specific information and convert into booked tours. In Q4, we held training sessions across the country for over 200 of our sales personnel. The focus was on building proactive sales behaviors, strengthening [ personal ] brand and digital presence, increasing confidence with care-related conversations and understanding how AI influences the prospect journey. We also launched a new more competitive sales commission program, which came into effect in January as well as an automated commission payment process. In terms of expense control, we reduced our same-property staffing agency costs by 57% in 2025 compared to 2024 through our continued focus on recruitment and retention activities. Turning to Slide 6. Chartwell's Wish of a Lifetime continued to contribute positively to earned media through -- sorry, this quarter through human interest storytelling that highlighted residents' experiences and acts of kindness. One notable example is the story of Angie Carnegie from Aurora, who wished to see her original play staged and brought to life for the first time. The story was covered in local media and included attendance from local dignitaries, including the Mayor. Finally, in Q4, the operations teams integrated three new properties, two in Quebec, Chartwell Azalis and Chartwell Panorama, both of which are large 30- and 31-story residences in beautiful locations in the Greater Montreal area as well as The Edward in Calgary, our first boutique living property. We also opened Edgewater by Chartwell in December, a 155-unit independent living property in Nanaimo, BC and have already welcomed the first 30 residents with an additional 7 due to move in shortly. I'll now turn it over to Jeff to take you through our financial results. Jeffrey Brown: Great. Thank you, Karen. As shown on Slide 7, in Q4 2025, net income was $7.2 million compared to net income of $3.5 million in Q4 2024. FFO grew to $81.2 million in Q4 2025, an increase of 40.9% compared to Q4 2024. Our reported FFO does not include $2.5 million or $0.08 per unit of income guarantees related to recently acquired properties. Q4 2025 FFO growth benefited from higher adjusted NOI of $28.8 million, higher adjusted interest income of $1.5 million and higher other lease revenue of $1.2 million, partially offset by higher adjusted finance costs of $3.3 million, higher G&A expenses of $2.4 million and lower management fees of $2.2 million. In Q4 2025, our same-property occupancy increased 430 basis points to 94.7% and our same-property adjusted NOI increased $11 million or 16.9%. We also had an 11.6% increase in our NOI per occupied suite. In 2025, net income was $29.5 million compared to $22.4 million in 2024. FFO grew to $278 million, an increase of 40.8% compared to 2024. Our reported FFO does not include $8.2 million or $0.028 per unit of income guarantees related to recently acquired properties. 2025 FFO growth benefited from higher adjusted NOI of $109.8 million, higher adjusted interest income of $3.7 million, higher other lease revenue of $2.2 million and lower depreciation of PP&E and amortization of intangible assets used for administrative purposes of $0.5 million, partially offset by higher adjusted finance costs of $20 million, lower management fees of $7.6 million, higher G&A expenses of $7.1 million and lower other income of $0.9 million. For 2025, our same-property occupancy increased 480 basis points to 92.8% and our same-property adjusted NOI increased $45.7 million or 18.4%. Our same-property NOI for occupied suite increased by 12.2% during the year. Slide 8 summarizes our same-property operating results for each platform. All of our platforms posted occupancy gains in Q4 2025 compared to Q4 2024, and all are operating above 90% occupancy, which has positively impacted our results. Our Western Canada platform same-property adjusted NOI increased $3 million or 14.4%. Our Ontario platform same-property adjusted NOI increased $6.2 million or 17.1% and our Quebec platform same-property NOI -- adjusted NOI increased $1.8 million or 22.8%. Turning to Slide 9. At February 26, 2026, liquidity amounted to $483.8 million, which included $88.9 million of cash and cash equivalents and $394.9 million of borrowing capacity on our credit facilities. During the year ended December 31, 2025, we raised total gross proceeds of $720.5 million of equity through our ATM programs at an average price of $18.52, which helped support our transaction activity. And we continue to improve our leverage metrics with interest coverage ratio growing to 3.5x and our net debt-to-adjusted EBITDA ratio declining to 6.9x. We also continue to improve our financing flexibility and have grown our unencumbered asset base to $2.1 billion. For the remainder of 2026, our debt maturities include $209.6 million of mortgages with a weighted average interest rate of 2.99%. As of February 26, 2026, we estimate the 10-year CMHC-insured mortgage rate to be approximately 3.85% and the 5-year unsecured debenture rate to be approximately 3.88%. Yesterday, our Board approved a 2% increase in our monthly distributions from $0.051 per unit to $0.052 per unit. The increase will be effective for the March 31, 2026 distribution, which is payable on April 15, 2026. I will now turn the call to Jonathan to discuss our recent acquisitions and portfolio optimization activities. Jonathan Boulakia: Thanks, Jeff. We continue to execute on our portfolio strategy of enhancing our asset base to generate increased quality NOI. I'll highlight some of the deals that we completed in Q4 2025 as pictured on Slide 10. On October 1, 2025, we acquired a 449-suite retirement residence, Les Tours Angrignon in Montreal, Quebec for $88.5 million. On November 3 (sic) [ November 1, ] we acquired Residence L'Aubier in Quebec, which was developed by our development partner in Quebec, Batimo for $128.2 million. Also on November 3, we acquired Residence Panorama, a 238-suite waterfront residence in Laval, Quebec for $76 million. At 31 stories, Chartwell Panorama is the tallest residence in our portfolio. On December 1, we acquired Residence Azalis, a 334-suite, 30-story waterfront residence in Repentigny, Quebec, for a purchase price of $111 million. On December 2, we acquired the Edgewater Retirement Residence in Nanaimo, BC for a purchase price of $102.7 million. This waterfront new property was purchased pursuant to a forward purchase agreement. On December 15, 2025, we acquired a 90-suite boutique residence, The Edward, in Calgary, Alberta for a purchase price of $53 million. And finally, on December 18, we acquired the remaining 15% ownership interest in Residence Legende in Greenfield Park, Quebec from Batimo for $17.9 million. As you can see, in 2025, we continued to grow our portfolio with over $1.7 billion of completed and announced acquisitions. We continue to evaluate several interesting opportunities to grow and enhance the quality of our real estate portfolio. We remain disciplined in how we approach underwriting, diligence and integration of our new acquisitions to deliver enhanced services to the residents, mitigate disruption to operations and achieve our required investment returns. We are also engaged in discussions with local and national developers across the country to restart our development program and create a meaningful pipeline of state-of-the-art assets to bring in our portfolio. We will purchase such developments in a prudent manner with a preference for off-balance sheet development similar to our arrangement in Quebec. Further to this initiative, we announced the development of the 111 suite Chartwell Kingsview Retirement Residence in Calgary with an advance of $4.5 million of the total committed $6.5 million mezzanine financing to local developers. Chartwell will be the operations manager of the project and will have a call option to acquire the residence on stabilization. The project is in an affluent residential area of Calgary in proximity to various neighborhood amenities and will feature self-contained IL apartments and an attractive amenity package. As I've noted, we have invested significant financial and management capital pursuing acquisitions in line with this strategy and have initiated new development projects to support a strong pipeline of future property growth. We have also identified properties within our portfolio that no longer fit this core strategic focus due to their location, size, age and/or service offering. We entered into a definitive agreement to sell one of these noncore properties in Ottawa for $49 million. We intend to pursue dispositions of some or all of these properties as market conditions allow with proceeds expected to be used to support future development and acquisition activity that is in line with Chartwell's current strategy. I'll turn it back to Vlad to wrap up. Vlad Volodarski: Thank you, Jonathan. Turning to Slide 11. We are entering the next phase of Chartwell evolution with clarity and confidence. Our 2026-2028 strategy is focused on generating robust FFO per unit growth through exceptional resident experiences, empowered teams, a well-established agile management platform and the prominent Chartwell brand, driving market-leading occupancies across a growing and renewing portfolio of community-tailored residences. From a performance perspective, our targets are clear. We're focused on maintaining weighted average occupancy above 95%, growing revenue per occupied suite by more than 4%, controlling costs, maintaining strong balance sheet capacity and executing approximately $2 billion of acquisitions and developments, funded in part by approximately $1 billion of dispositions through 2028. Underpinning all of this is our leading management platform, strong company culture and most importantly, our people. Our success depends on teams who put residents first, take ownership of outcomes, stay curious and innovative, simplify and improve how we work and collaborate across the organization. These guiding principles are not aspirational. They're embedded in how we do business every day. With a proven strategy, strong industry fundamentals and exceptional teams, I'm confident in Chartwell's ability to continue delivering strong operating performance and long-term value for all of our stakeholders. Chartwell culture manifests itself in our results, and it leaves in our stories. I will now close our prepared remarks with a story from one of our residences as pictured on Slide 12. Shortly after Kathy and her husband, Mike, moved into Chartwell Thunder Bay, their plans to settle into their new community were disrupted by an unexpected and serious health crisis. Kathy was hospitalized with a condition that required intensive treatment and an extended period of care away from the residence. Throughout this difficult time, our team stayed closely connected to Kathy and Mike, checking in regularly, offering reassurance and supporting them through a period filled with uncertainty. When Kathy's conditions stabilized enough for her to leave the hospital briefly, the team looked for a way to help her reconnect with life beyond treatment. Knowing how meaningful music was to Kathy, they worked with the local community to arrange for her to attend the Christmas concert by Juno award-winning Canadian singer/songwriter, Johnny Reid. It was Kathy's first outing since being hospitalized. The evening included not only the performance, but a personal moment with the artist and a dedication made especially for her. This may sound like a small gesture, but it reflects something fundamental for Chartwell, always a resident-first approach delivered by people who truly know those they serve and who are empowered to act with compassion and purpose. These are the moments that build trust, reinforce why our work matters and quietly brings our responsibility to life. Thank you for your attention this morning. We would now be pleased to answer your questions. Operator: [Operator Instructions] Your first question comes from Lorne Kalmar from Desjardins. Lorne Kalmar: Congrats on a great finish to a great year. Just on the development side, it looks like you guys reintroduced a disclosure we haven't seen since the early innings of COVID. Obviously, a lot of talk about, developments ramping up here in the next little bit with you guys and more broadly. I was just wondering, over maybe the next 2 years, what do you expect, if you can give us a range in terms of annual development spend? I know obviously, there's a preference for off-balance sheet, but just trying to get an idea of where your heads are at in this regard. Vlad Volodarski: Thanks, Lorne. We have a couple of projects that are ongoing already, and those are on our balance sheet. So we have two developments in Montreal area. Those are additions to the existing residences. And as I said, those are on balance sheet. We look to really invest in development mostly off balance sheet with options to purchase the properties when they get to stabilized occupancy. There may be a few additions that we will execute on our balance sheet, but the majority of the development that we expect to conduct over the next couple of years will be off balance sheet. Lorne Kalmar: Okay. That's really good color. And then maybe just sticking on the development side with the ramp-up, is that a reflection of just a great opportunity to develop? Or is it also a reflection of a declining acquisition opportunity set? Vlad Volodarski: Well, for us, it's strategic to grow the portfolio with high-quality newer assets. We continue to see very interesting, as Jonathan pointed out, acquisition opportunities, and we're working through a few right now. With those, we never know whether we're going to be the ultimate purchaser of the properties or not. There is some competition always for high-quality properties. And also, Canadian market is not very large. And especially when people focus on properties types that we're focusing on, newer, larger, more efficient and larger urban markets, it becomes even smaller. And so our development strategy is really the one that is more in our control, where we're trying to build our own pipeline of future acquisitions that will not be dependent of the availability of somebody else's product in the market. Lorne Kalmar: Okay. And then maybe just one last one. I know it's still early days in terms of seeing this next development cycle kick off. But are there any markets where you're concerned at this point that we might see an oversupply or an overbuild in terms of just projects that are sitting at the early stages of development or permits? Vlad Volodarski: At this point, no, it's hard to tell. As you know, it takes at least 2 years to build a building from the time you put the shovel in the ground. So it's too early to speak about that because we have not really seen any meaningful construction starts yet. I think everybody expects that we will see some in 2026. But I also want to remind everybody that demand has been growing by 4%, 4.5% per year for the last 4 years and will continue at that pace for the next 20 years. It's hard to imagine that the industry will be able to build that much product to really catch up and exceed that demand that continues to grow. Some markets probably could be disrupted for a short period of time. But at this point, it's hard to tell which ones they're going to be. Operator: Your next question comes from Jonathan Kelcher from TD Cowen. Jonathan Kelcher: First question, just on the outlook for 2026, same-property occupancy to maintain an average of 95%. Is there any new supply hitting some of your markets that might impact some of that same-property occupancy? Jeffrey Brown: Nothing -- there are some LTC openings that could have some impact, but we're not seeing a lot of new retirement residence competition opening up. Jonathan Kelcher: Okay. So it's -- you guys are just being a little conservative on that... Vlad Volodarski: Well, Jonathan, we are in this uncharted territory, right, where it is really hard to predict the potential for occupancy growth because we've never been at these -- not just Chartwell, the industry-wide never been at these high levels of occupancy. So it's not like we can point to 5 years ago, everybody was at 98%, so that's achievable. So for us, we continue to focus on great resident experience, great sales processes, marketing processes, and we hope that we can exceed the 95% occupancy, but we will see by how much. Jeffrey Brown: And we still want to obviously have our move-ins exceed our move-outs with -- just given the higher turnover in the senior sector compared to other housing sectors. Jonathan Kelcher: Yes. Fair enough. I was just trying to get is there anything out there that you're seeing that might stop just the sort of general increase for the industry. And secondly, just on the rent growth for -- 4%, how would that break down on what you're seeing on when units turn over versus what you're pushing through on renewals? Jeffrey Brown: So our renewal pricing strategy has and continues to be inflation plus 1% or 2%, sort of matching the cost increases in the properties with the rate increase. And then on turnover, we're seeing mid- to high single digits and in some markets, even low single-digit rate increases. Vlad Volodarski: Low double digit. Jeffrey Brown: Low double-digit rate increases, sorry. Jonathan Kelcher: Okay. So shouldn't that work out to higher than 4% then overall? If you're getting 1/3 at 8% or 9% and the other 2/3 at 3% to 4%? Vlad Volodarski: It might. We continue seeing the impact of the incentives that's been granted throughout 2025. So you'll see our occupancies increase significantly in 2025, and there have been some incentives that were put in place to achieve that occupancy growth, the full year impact of those incentives will be felt in 2026. And so that will suppress a little bit the overall blended rate growth. Jonathan Kelcher: Okay. Fair enough. And then just lastly, like Ballycliffe, haven't talked about that one in a while. It's up running complete. Would you -- would that be something you'd expect to sell this year? Jeffrey Brown: Yes. Vlad Volodarski: Yes. Jonathan Kelcher: And the ballpark pricing? Vlad Volodarski: We're not yet ready to announce. It's still in progress. So as soon as we can talk about it, we will. Operator: Your next question comes from Tom Callaghan from BMO. Tom Callaghan: Maybe just to start on the acquisition side and building off some of Lorne's questions there. Can you just talk about what you're seeing in terms of pricing and competition, maybe relative to 12 months ago? I think over the course of '25, we've obviously seen some cap rate compression. Just given the outlook and underlying supply-demand fundamentals, like would you expect to continue to see tightening on pricing over the balance of '26? Or do you think it's kind of more stabilized? Jonathan Boulakia: We have seen some -- a little cap rate compression. I think it's probably stabilizing now. We're still seeing a lot of opportunities in the market, both one-offs and portfolio level. And in terms of the market, it is somewhat competitive, but we think we have a competitive advantage being -- our reputation in the market as a credible buyer. We do a lot of underwriting work really early on in the process. We give credible offers early on in the process that we stick by. So vendors -- the feedback we're getting is that vendors like working with us because of our experience, our experience underwriting, our credibility, our speed of execution and our ability to integrate properties into our platform effectively with as little disruption to residents and staff as possible. And so that kind of gives us, we feel, a competitive advantage, but it is a competitive process. Tom Callaghan: Got it. That's helpful, Jonathan. And maybe I think you referenced some interesting opportunities in prepared remarks. Would some of those encompass kind of more of the portfolio-type deals? Or is it mostly one-off buildings? Jonathan Boulakia: We're seeing both. One-off... Tom Callaghan: Maybe the last one -- sorry. Jonathan Boulakia: No, go ahead. Tom Callaghan: And maybe last one for me is just you did note in your '26 outlook there the expectation for margins to expand year-on-year. Can you just maybe talk about some goalposts in terms of the quantum of that expansion? Jeffrey Brown: Yes. We do think that we should have margin expansion again in 2026, and it -- still be in the low 40% range, where we think there's an opportunity to move that up into the low to mid-40% range as we continue to grow rate above operating expenses. Operator: Our next question comes from the line of Himanshu Gupta from Scotiabank. Himanshu Gupta: On expected rent growth of 4%, do you think there was a view that once we get to that 95% occupancy, cross the bridge to get there, that blended rent growth could become like 5%? And maybe now like the affordability angle is coming up. So it's not just about full capacity, but there's an affordability as well. So that's why 4% is the right number, and not the 5% you can achieve. Fair to say that? Vlad Volodarski: Well, the strategy statement that we put out and the metrics around it says above 4% growth. So 4% marks in our minds, at least the bottom of what is possible for the next 3 years. And as Jeff pointed out, we are continuing to be measured in the rent increases that we put through for our existing residents. They will be tied more to the overall inflation in our cost, labor, food and others. And then market rents, we do think can grow by high single digits in the next 3 years given the supply-demand dynamics. Himanshu Gupta: Okay. And then talking about incentives, you did mention that incentive coming down. Can you elaborate what is it now and where it can go? Jeffrey Brown: Yes. Himanshu, it's approximately 5% of revenue right now. And they come down. There's a number of recurring incentives that were used over the 2024 and 2025, and those roll off or burn off with turnover. So it's hard to predict exact resident turnover, but we expect them to grow this year as we have the full year impact of the 2025 incentives and then start really burning off in 2027, 2028. Himanshu Gupta: Okay. Okay. That's helpful. And then turning attention towards the acquisition activity, The Edward, Calgary acquisition. What kind of cap rate are you expecting there? I don't remember you guys doing anything in Alberta in the last couple of years. So is that like a focus market now? Jonathan Boulakia: Sorry, is Calgary a focus market? Himanshu Gupta: I mean, do you expect to be more active in Alberta, Jonathan? I mean, obviously, you were active in the other three provinces quite a bit in the last couple of years. And is Alberta [indiscernible] very well now? Jonathan Boulakia: For sure. We consider Alberta and Calgary specifically in Alberta to be core markets and areas of focus for future growth, both on the acquisition side and on the development side. And the cap rate would be consistent with published guideline cap rates that we see in publications. So we don't normally disclose the actual cap rates that we pay, but it would be in the high 5%, low 6s cap rate. Himanshu Gupta: Okay. And would you say -- is there like a spread between Alberta versus Ontario? Or is it quite comparable? Jonathan Boulakia: Alberta and Ontario, I think, would be relatively similar in terms of cap rates. Himanshu Gupta: Okay. Okay. And maybe just last question since I have you, Jonathan here. You did mention about some cap rate compression you have seen. For this development cycle to continue, do you need to see more cap rate compression from here? Or whatever you have achieved is enough to bring on more supply? Jonathan Boulakia: Well, we're seeing some developments pencil out now with the current cap rates and current expectations on rate. But as Vlad mentioned, most of our development is what we call off balance sheet. So we're going to be buying these at prevailing cap rates and fair market value when they're stabilized or on construction completion. So if and when that happens, we'll be paying whatever the appropriate price is. Himanshu Gupta: Okay. Okay. Fair enough. And just one last one. That Ontario -- that portfolio acquisition, when are you expecting it to close? Is it the CMHC approval which is taking forever? Jonathan Boulakia: Well, we are still waiting for third-party approvals, yes, and we would expect to close in Q2. Operator: Your next question comes from Sairam Srinivas from ATB Cormark Capital Markets. Sairam Srinivas: Just looking to the quarter, and I might have missed this, but did you guys guide for the acquisition and disposition number for '26? Jonathan Boulakia: I'm sorry, can you repeat that? Sairam Srinivas: Just looking at your commentary on acquisitions and dispositions. I'm not sure if I missed this, but do you have a number for '26 in terms of your... Jonathan Boulakia: No. We provided a strategic plan for the next 3 years of a target of $2 billion of acquisitions and $1 billion of dispositions of noncore properties. But we don't set an annual goal or plan. It's as market conditions allow. And so we will sell and buy as we see opportunities to do so. Sairam Srinivas: Okay. And Jonathan, maybe going back to your comments on the competition you're seeing in the acquisition market. Can you give us a color in terms of the kind of firms you're seeing competing over there? Is it more like more funds competing or more operators as well? Jonathan Boulakia: We're seeing the typical competition for assets. We're seeing competition from domestic owners and operators like us, and we're also seeing U.S. capital coming into Canada as it has been doing so for the last decade. So we just see more of that, but nothing particularly new. Sairam Srinivas: That's good color. And maybe just on the developments, Vlad, I know you mentioned thinking about on balance sheet versus the option and developments. When you historically look at acquiring a new project or newly developed facility versus something that you have probably developed on balance sheet or through your partnerships, are there advantages you've seen operationally that work better for your design builds versus those that you probably acquired through the market? Jonathan Boulakia: Definitely. So when we're doing the off-balance sheet or on-balance sheet development for that matter, we are involved from the get-go from the site selection point to the preliminary design, the feasibility, the programming and all the way to the finishes. And we play an oversight role on the construction quality. So we know exactly what we're getting and what we're getting at the end is exactly what we want. So there is certainly a difference. Now we've been very fortunate in our last 2 years of acquisitions where we have been buying new properties and they are great state-of-the-art properties. By and large, they're almost all newly developed properties. So we've been fortunate. But as Vlad said, we want to plant the seeds for the future where we don't know if those conditions will continue to exist. And so we're preparing ourselves for that potential turn in the market where we don't have those great opportunities. And so we will create them for ourselves. And yes, when we create them for ourselves, we have, I guess, more of a say in what we're ultimately going to buy. Operator: Your next question comes from Giuliano Thornhill from National Bank. Giuliano Thornhill: I just kind of wanted to start on the margins. So the low 40s, 95% occupancy looks pretty achievable. And just given that occupancy last year for the same property pool was up by 480 bps, the margins were up in that 300 bps. Going forward, do you see that margin increase accelerating as we get into these higher occupancy levels? Jeffrey Brown: I would say they would accelerate. We're already operating at the high occupancy levels, but we do expect them to increase with the increase in occupancy. Giuliano Thornhill: Right. Okay. And then moving to the growth portfolio. I know that's higher quality, recently built. Where does something of that quality stable out to at those levels? Jeffrey Brown: And that -- just to be clear, that portfolio includes properties where we've had a change in ownership. So there's a number of properties that we are part of, the Welltower joint venture, that are included in there as well just for clarity. But we do think that portfolio as well can get into that low to mid-40% range. Giuliano Thornhill: Okay. And just going back to the transaction volumes that you guys commented on earlier, how much of that is Chartwell actually interested in? Like what's the, I guess, dollar volume? And what would Chartwell be interested in and what's out there? Jonathan Boulakia: Sorry, are you asking what's the dollar value of potential acquisitions that we see? Giuliano Thornhill: Yes, yes, exactly. Jonathan Boulakia: Yes. We don't typically comment on things that are in the market that we're still kind of kicking the tires on. But we would expect 2026 to be a very active year in the seniors' real estate market. Giuliano Thornhill: And is it still going to be focusing on that kind of care-lite product type that you've been acquiring? Jonathan Boulakia: Yes. By and large, yes, but we do like continuum of care type properties. So we are focused -- we are looking at all -- the whole spectrum of care on the privately funded -- on the private side. But yes, our [indiscernible] thought would be the more independent side with preferably some care component in the building. Giuliano Thornhill: Yes. And I guess the follow-up I'd ask is just kind of do you think with the LTC waitlist growing and obviously higher acuity patients coming in, do you think that could impact the demand later on given like 3, 5 years out, just as more and more people come in with other issues? Vlad Volodarski: We think that the demand is going to grow on all sides of the continuum of care spectrum. We think there's going to be continuing strong demand for more independent senior apartment type of developments. And there's definitely always going to be demand for care. And so our team has been putting in place programs, Care Assist Program in particular, that is Chartwell's proprietary program on care. We have technology that helps people to deliver care -- assess clients, deliver care and bill for it. And you'll see our care revenue has been growing at a pretty robust pace for the last couple of years, and we expect that, that will continue and our properties will be set in such a way that we can accommodate people and their care needs and help them to stay with us as long as they choose to. Operator: Your next question comes from Pammi Bir from RBC Capital Markets. Pammi Bir: Just coming back to maybe the Investor Day and the outlook that you presented there. As you kind of look now at 2026, and we've now had a few months passed, has your view changed at all either perhaps better or maybe even moderating a bit in terms of how you think about 2026? I mean the commentary seems optimistic, but also at the same time, seems perhaps conservative. So just trying to get a pulse on how you're thinking about the year relative to a few months ago. Vlad Volodarski: I don't think anything has changed from a couple of months ago. We're very optimistic about our ability to continue to deliver great services to our residents and continue to grow profitability through occupancy and rental rate growth. We'll continue to focus on controlling the costs and looking to put a lot more new innovative ideas out there in the market and test them and see what works. So I don't think anything has changed from that perspective. Pammi Bir: Okay. And then just on the total occupancy, I think you're sitting at about 93%. Maybe just expanding on one of the earlier questions, is that portfolio something you think you can get to in terms of like the 95% threshold this year? Or will that take a little bit longer? Vlad Volodarski: Well, we'll see. We might. There are some homes in that growth bucket that just -- Karen gave an example of Edgewater in Nanaimo that just opened in December. So it has 30 -- maybe plus 7, 37 people, 130 units. So for that home, it may be way too aggressive to assume, although I'm looking at Karen, she's not nodding her head. Yes, too aggressive to assume that, that will hit 95% this year. So we have a few homes like that. The rest of that portfolio should be at 95% or higher. Pammi Bir: Okay. And then maybe just coming back to the same property portfolio. Again, lots of good detail in terms of what you're thinking from an occupancy and margin standpoint. I mean, should we ultimately expect that in terms of organic growth, you'll be tracking close to, call it, the high single digits, low double-digit range based on all the sort of goalposts that you've provided? Vlad Volodarski: I think it is reasonable. So the rental rate growth over 4%, expenses 4% or lower. And then we still have some occupancy to get to 95% average that we expect to achieve this year or higher. So if you do that math, then it looks like your estimates will be about right. Pammi Bir: Okay. And then just lastly, on the dispositions, you've done one deal so far this year. What does the sort of near-term pipeline look like? I'm not sure if you have stuff on the market currently. And I'm just curious if there's portfolios in there at all and what sort of NOI impact that may have if you do move forward on some additional deals? Vlad Volodarski: Yes. At this point, Pammi, we can't really talk about. These are all very preliminary transactions that are in progress. There are a few of them that we're working on, but you never know whether they're going to be completed or not. So as soon as we can talk about it, we will. But the target remains for the next 3 years to dispose of the noncore portfolio. We value it at over $1 billion today. Operator: Your last and final question comes from Tal Woolley from CIBC Capital Markets. Tal Woolley: Obviously, a big year, unannounced acquisitions. I think it was $1.7 billion of stuff that you've closed and is yet to be closed. Can you just talk a little bit about any signs of integration strain either at the corporate level or on the ground? Vlad Volodarski: Well, we -- frankly, I was surprised of how well our teams were able to integrate these acquisitions, pleasantly surprised because it's not an easy task to take on properties and transition it from one operator to another, especially because we were transitioning many properties from different types of operators. There are some that were managed by smaller companies, some that were managed by larger companies. And it's really been a great experience, hard work, but a great experience for residents and employees of these homes and the feedback that we've been receiving, we were just recently together with the general managers from all of our homes. And those who joined us more recently couldn't have been more complimentary about the process that they and their teams and the residents went through to join the Chartwell family. So it's been a great experience, and we have not experienced any strain. We are very cognizant about the impact that the large volume of these acquisitions has on the support teams in the corporate office and the operations teams in the field, and we're making sure that there's good processes, enough resources dedicated to these transitions. And there's definitely risk associated with it, and we're trying to manage this risk to the best of our ability. The good news is all acquisitions or the vast majority of the acquisitions that we've done over the course of the last 2 years have exceeded our expectations in terms of the financial performance. Tal Woolley: Okay. And then when you take on like that kind of volume in a year, I'm just wondering like can you start to go back and like leverage your buying power more effectively, whether it's like for food or medical supplies, that kind of stuff? Like is there -- like can you get better operating synergies out of this? And is that part of the reason why we're sort of seeing your direct operating expenses per suite start to fall? Jeffrey Brown: Tal, we do that regardless of the level of acquisition activity. So just given the scale of the company, we're very focused on buying power and leveraging the number of properties we have across the country. So we think that does help in our underwriting of acquisitions and should help to some effect on the overall buy, but wouldn't materially drive our operating expenses. Tal Woolley: Okay. And so when I'm looking at that direct operating expense per occupied suite figure, if it's down year-over-year, is it down mostly because the occupancy is up so high? Or are you actually seeing some operating expenses... Jeffrey Brown: They grew on an absolute basis, but because occupancy grew faster than the operating expenses, you're seeing the decline in the operating expense per occupied suite. Tal Woolley: Got it. And then as demand continues to pick up here, how do you feel -- like are you finding you've got the right suite mix for now? Or are you finding it like you need more supportive-living suites or assisted-living suites? How are you matching demand at this point in time? Vlad Volodarski: Tal, most of our properties are in the independent supportive living category, which basically means that we can provide a significant amount of support and care to the residents in their suites, and that's the Care Assist Program that we have with the technology that was recently implemented across the country. And so those properties can accommodate people from fully independent to people who require quite a bit of care. And so that's where the majority of our portfolio is, and we're very happy with that breakdown. We have some neighborhoods or wings of the properties where -- that we designate as memory living or assisted living. Those are specifically designed areas where packages are more all-encompassing, and we have higher staffing levels to accommodate people with higher needs or specific needs like in memory care. But generally, we're pretty happy with the breakdown that we have. And as I said, the -- my expectation is that demand will continue to grow on both sides of the spectrum where people will look for more independent type of accommodation for socialization purposes and will continue to grow a part of our business where we provide services for people with more care needs. Tal Woolley: Okay. And then just lastly, I think the last big deal you've got to close, I think, is the Sifton portfolio. Will you -- like for this year, would you look at completing the balance of that with your credit facilities? Or do you expect it to be through some dispositions by then or perhaps using the ATM? Jeffrey Brown: Yes. So we have a combination of some dispositions and also approximately $170 million of CMHC financings underway. So between those and cash on hand, we'll be able to fund that portfolio acquisition. Operator: There are no further questions at this time. I will now turn the call back to Vlad Volodarski, Chief Executive Officer of Chartwell, for closing remarks. Vlad Volodarski: Thank you again, everybody, for joining us. If you have any further questions, please do not hesitate to give any one of us a call. Goodbye. Operator: This concludes today's call. Thank you for attending, and you may now disconnect.
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