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Nathan Burley: Good morning, and welcome to Telstra's results announcement for the half year ending 31st of December 2025. I am Nathan Burley, Head of Investor Relations. I'm joining today from the lands of the Gadigal people. And on behalf of Telstra, I acknowledge and pay my respects to the traditional custodians of country throughout Australia and recognize the continued connection Australia's First Nations people have to land, waters and cultures. We pay our respects to elders, past and present. This morning, we will have presentations from our CEO, Vicki Brady; and our CFO, Michael Ackland. We will then open to questions from analysts, investors, and then the media. I will now hand over to Vicki. Vicki Brady: Thank you, Nathan, and good morning, everyone, and thank you for joining us. I'll make some comments reflecting on Telstra's overall performance and our outlook. Michael will then cover the details of our financials. The first half of FY '26 was a strong period for Telstra. We delivered ongoing growth in earnings, reflecting momentum across our business, strong cost control and disciplined capital management. We also made a positive start to our Connected Future 30 strategy, which will see us double down on connectivity, drive growth and play a critical role in enabling a prosperous digital future for Australia. In first half '26, reported financial performance compared to the prior period included EBITDAaL up 4.9% to $4.2 billion, EBIT up 9.2% to $2 billion, profit for the period or NPAT up 8.1% to $1.2 billion, earnings per share up 11% to $0.099, and return on invested capital up 0.8 percentage points to 8.8%. Our underlying growth more accurately reflects our financial performance compared to the prior period. Underlying financial performance showed underlying EBITDAaL up 5.5% to $4.2 billion, cash EBIT up 14% to $2.5 billion, cash EPS up 20% to $0.14, and underlying return on invested capital up 0.9 percentage points to 8.9%. On the back of cash earnings growth, the Board resolved to pay an interim dividend of $0.105 per share. The interim dividend is 90.5% franked with a franked amount of $0.095 per share and an unfranked amount of $0.01 per share. The interim dividend uplift and the level of franking applied is consistent with our capital management framework and our aim to deliver a sustainable and growing dividend. Our dividend is supported by strong cash earnings this half, and our Connected Future 30 ambition remains to deliver mid-single-digit growth in cash earnings. Today, we are also announcing an increase in our current on-market share buyback from up to $1 billion to up to $1.25 billion. This increase is supported by strong progress in completing $637 million of the buyback in the half, earnings growth and the strength of our balance sheet. The on-market share buyback is expected to support earnings and dividend per share growth, and along with the increased interim dividend reflects the Board and management's confidence in our financial strength and outlook. Now that we've completed our first half, we are tightening our FY '26 underlying EBITDAaL guidance to between $8.2 billion and $8.4 billion. Our guidance on other measures are unchanged. Looking now at our results across the business. We grew underlying EBITDA across our Mobiles, Fixed Consumer and Small Business, InfraCo Fixed and Amplitel businesses. Importantly, our Mobile business has continued to perform well with EBITDA growth of $93 million. Mobile's growth was driven by higher ARPU and more customers continuing to choose our network and the value it provides. Mobile services revenue grew by 5.6%. Our Fixed C&SB EBITDA grew by $37 million, reflecting ARPU growth and disciplined cost management. We introduced our Internet-only plans late in the half, and customers now also have access to our Telstra Smart Modem 4 with next-generation Wi-Fi 7 technology. With these new offerings in place, we are focused on stabilizing customer numbers and driving growth. Our Fixed Enterprise EBITDA declined by $9 million as we continue to reset this business, including through portfolio management and reduced costs. We remain committed to this reset with further changes proposed last week to continue removing complexity. Our international EBITDA declined by $2 million, but grew excluding one-offs. Michael will go through this in detail. Our domestic infrastructure businesses across InfraCo, Fixed, and Amplitel continued to grow, reflecting strong customer demand. Across the business, we achieved 14% cash EBIT growth. This percentage growth rate is higher than the rate we expect at the full year, largely due to lower BAU CapEx in the first half. Our full year cash EBIT guidance is equivalent to around 5% to 10% annual growth. We delivered positive operating leverage of 3.1 percentage points, in line with our Connected Future 30 target. Given the low level of income growth in the period, we achieved operating leverage largely through strong cost discipline and efficiency gains. We reduced underlying operating expenses by $179 million or 2.4%, more than offsetting pressure from rising costs. This required challenging but necessary decisions to reduce some roles and set us up to deliver on our Connected Future 30 ambitions. We're also seeing efficiency gains flow from technology leadership as an important enabler of our strategy. This includes modernizing our software practices, relentless simplification, strong adoption of AI and an API-first architecture. For example, we've consolidated our software partners from 400 down to 2, improved efficiency in our software development by more than 20% and sped up time to market and release cycles by 15% to 20%. And most importantly, we're seeing benefits to customers, which I'll come to shortly. Turning to our strategy. Our ambition is to be the #1 choice for connectivity in Australia. Achieving that in a changing environment means radically innovating in the core of our business. You can see the layers and enablers of this strategy on this slide, which we covered in our last Investor Day. There is a more detailed scorecard in the appendix that shows our progress, so I won't go through that in detail. But I will make some comments on the importance of connectivity and call out some highlights from the half. Connectivity is foundational to supporting national productivity, resilience and security. As reliance on telco networks grows and service expectations rise, continued investment in digital infrastructure is fundamental to better delivering services to consumers and business. Investment needs to be supported and encouraged and the investment required across the sector will be large in the multibillions of dollars. To do this well, we need to have a shared national vision for the digital future we want to create for Australia and a national digital infrastructure plan our sector can align behind with government and regulators. This must include a plan to use spectrum to the greatest possible benefit to consumers and businesses. To do that, we need certainty of spectrum allocation on fair terms at a fair market price. We also need better regulation designed for but agnostic to the technology of today. We need forward-looking guardrails that both protect consumers and encourage innovation to deliver better outcomes for them and the nation. We welcome the Productivity Commission's proposal for a deep dive review of regulation in the telecommunications sector. We want to work with government, regulators and the sector on a shared vision for Australia's digital future, so we can better align policy, regulation and decision-making with the goals we have as a country. On investing in connectivity, we are driving significant momentum in the build of our Aura network and managing this large complex project with discipline. The network will be vast, connecting our capital cities with ultra-fast and reliable fiber and the ability to connect regions too. This week, we reached the halfway mark with 7,000 kilometers of fiber in the ground. Our Sydney to Melbourne coastal via Canberra routes are now live and more routes are expected to be completed in FY '26, including Sydney to Melbourne Central via Canberra and Sydney to Perth. We are on track to achieve a 1 point uplift in our network experience index, which brings together network availability and speed across our mobile and fixed networks to measure the real experience our customers receive. The uplift is a result of our ongoing program of network optimization and early benefits from our additional investment over 4 years in 5G advanced capability. It also reflects improvements in resilience. For example, we have invested to strengthen backup power across our network sites, which we were able to withstand more than 95% of the 165,000 planned and unplanned power interruptions we experienced over FY '25. While there's always more to be done, these investments and others contributed to Telstra receiving the 2025 Best in Test Mobile Network Award from umlaut for the eighth year in a row and with our highest score ever. In June last year, we became one of the first operators in the world to launch satellite messaging. And while it's not a replacement for terrestrial networks, we're seeing it add another layer of resilience when terrestrial networks are disrupted. For example, when fire damage and power disrupted our network during the recent bushfires in Victoria, particularly around Longwood and Harcourt, we saw a threefold increase in people connecting to satellite messaging, even though many people had evacuated this area. On supporting customers, we have migrated more than 99.9% of our 7.7 million consumer customers to our new digital stack. We continue to work with around 4,000 of our customers who are the most complex to migrate, and we are managing that thoughtfully. Our team know these customers as individuals as we work through this with each of them, and we're committed to getting it done. We're seeing significant improvements in customer experience from digitization and AI. 86% of consumer service interactions like billing, order tracking or prepaid recharge are now completed through our digital self-service instead of customers having to call us. In November, we launched an AI-powered assistant, which customers can access on telstra.com to get help with simple things like checking their plan, activating a SIM or how to reset a password. This is our first customer-facing generative AI assistant, and it has meant an almost threefold increase in customers being able to resolve their inquiry using AI. We plan to scale this AI-powered assistant across our My Telstra app over this quarter. It is just one example, but we have many more AI use cases across the business, helping us serve customers better, strengthen network resilience, protect customers from scams and solve issues before they become problems. Overall, our investment in digitization and AI, combined with our ongoing network and capability investment is helping to drive improvements in customer experience. Over the 12 months, we've seen strategic NPS increase by 5 points and episode NPS increase by 2 points. At the same time, we have been laying the foundations of our Connected Future 30 strategy, and there are 3 things that I'll call out here. The first is innovating in core connectivity, capability and how we capture value. In Mobile, our investment in 5G advanced is moving us towards a smarter, more adaptable and programmable network. In Fixed, we launched our Adaptive Network Centre in June last year, a self-service platform that empowers our enterprise customers, partners and Telstra teams to design, order, track, manage and monitor connectivity services, all in one place. These capabilities are both fundamental to enabling our network as a product layer, and we continue to drive momentum. The second is our work under our joint venture with Accenture to transform our business with AI. We have made good progress since launch, including retiring legacy platforms, strengthening responsible AI governance, streamlining data architecture, and opening access to global innovation via our Silicon Valley hub. We recently proposed changes that would see the JV tap into Accenture's existing resources and expertise to deliver on our data and AI road map more quickly. That means some roles would not be required. While decisions like this are never easy, over time, we expect it will deliver benefits to our customers and our business faster. Third is our investment in upskilling our people. We continue to put AI tools into the hands of our people to help them learn and adapt. And over the half, more than 75% of our team with access to those tools use them weekly or more often. We also continue to offer training through our Data & AI Academy. In the first 6 months of FY '26, almost 9,000 of our people completed a course. Looking ahead, we are focused on continuing to deliver value for our customers, communities and shareholders as we build momentum behind our Connected Future 30 strategy. This includes, through our core business cash flows, active portfolio and investment management and disciplined capital management. Our ambition is to be the #1 choice in connectivity in Australia and to continue delivering on our purpose to build a connected future, so that everyone can thrive. I'd like to thank the Telstra team for everything they have delivered in the half and the care they've shown for our customers, particularly responding to the Victorian fires and Queensland floods over the summer. I'll now hand to Michael to take you through the results in detail. Michael Ackland: Thanks, Vicki. And as Vicki said, we've had another strong half with continued growth across all earnings and cash metrics, including our new guidance measures. This is in line with our goal to deliver resilient, predictable and consistent growth under our Connected Future 30 strategy. While total income across the group increased just 0.2% in the half, we've reduced operating expenses by 2.1% with our continued focus on efficiency. EBITDA after lease depreciation or EBITDAaL was up 4.9% on a reported basis and 5.5% on an underlying basis, with the difference due to a $23 million impairment of the London Hosting Center. We've delivered a profit to Telstra shareholders of $1.1 billion, up 9%, and earnings per share of $0.099, up 11%. These results reflect growth in key products, especially Mobile, ongoing strong cost management and reduced shares on issue from buybacks. Cash earnings were higher than reported earnings as depreciation and amortization is higher than business as usual or BAU CapEx. We expect this trend to continue and continued growth in D&A. In addition, cash EPS of $0.14 per share was up 20%, a higher growth rate than reported EPS as BAU CapEx was lower this half. As Vicki said, with stronger cash earnings, the Board increased the interim dividend to $0.105 per share, up 10.5% on a cash basis. This represents 75% of cash EPS. With our tight franking balance and ongoing gap between cash and accounting earnings, partial franking in this period best supports a growing and sustainable dividend. We've also lifted our current buyback from up to $1 billion to up to $1.25 billion. $637 million was bought back in the first half or 1.1% of shares at an average price of $4.90, bringing us to a total of 2.6% of shares retired in the calendar year 2025. Now given this is the first half we are reporting on cash EBIT and cash earnings, let me provide a little more detail. As a reminder, cash EBIT is a view of earnings after key cost buckets, including BAU CapEx, lease and spectrum amortization. Cash earnings is a further view after interest, tax and noncontrolling interest. Cash EBIT growth of 14% to $2.5 billion follows growth in our core operations, coupled with strong cost management and lower BAU CapEx. BAU CapEx of $1.5 billion was down 5%, largely due to timing. We expect a higher spend on digital infrastructure, including in our International business in the second half. Despite a lower average borrowing rate, finance costs increased modestly. Tax was higher in line with higher earnings with an effective tax rate of 28.4%. With that, cash earnings grew 17% to $1.6 billion. Turning to Slide 14 on product profitability. We delivered EBITDA growth across Mobile, Fixed C&SB, InfraCo Fixed, Amplitel and Other. Other EBITDA comprises costs not allocated to product. It improved with favorable foreign exchange movements, adjustments due to bond rate changes and the absence of equity losses following the divestment of our Foxtel stake last year. Health was flat with continued growth in revenue, offset by higher costs supporting new contracts and ongoing transformation. Other EBITDA would generally be around a $70 million loss per half, although this varies based on the nature of the items included. Turning to our key products, starting with Mobile, which continues to demonstrate strong performance. Mobile service revenue grew 5.6% with growth across all product groups, including postpaid, prepaid and wholesale handheld, mobile broadband and IoT. We delivered sustained average revenue per user or ARPU growth across all categories, brands and segments with disciplined commercial execution. Postpaid handheld ARPU grew 4.8%. Prepaid handheld ARPU grew 14.7%, although significantly lower on a unique user basis, and growth is due to the flow-through of October 2024 price changes. And Wholesale ARPU grew 7%. We achieved this ARPU growth while also growing postpaid, prepaid and wholesale customers. Our handheld mobile user base grew by 135,000 in the half. Mobile EBITDA grew 4% to $2.7 billion, with service revenue growth partly offset by higher costs, including higher-than-usual customer remediation and compensation, sales costs largely related to satellite, increased redundancy, and a higher allocation of shared costs as Mobile becomes a bigger part of our business. We expect sequential mobile service revenue growth to be muted given the timing of past price changes and lower IoT revenue following the divestment of MTData. Turning to Fixed Consumer and Small Business, where we continue to grow earnings by focusing on a portfolio of products and technologies and strong cost management. In the half, we grew nbn unit margin through price rises and plan mix, which offset SIO losses, and we continue to grow our 5G fixed wireless product. We continue to invest in our offering in the half. We launched our Internet-only plans and introduced the Telstra Smart Modem 4. However, SIO losses remain a challenge and a focus for our channel and marketing teams. In Fixed Enterprise, we have continued efforts to reset the business and focus on connectivity and strategic growth areas. Starting with Data and Connectivity, or DAC, where income fell 9%. During the half, progress on product refresh and upselling to higher bandwidth was not enough to offset the impact of service rationalization and in-period customer credits. We delivered cost and CapEx reductions. However, DAC EBITDA declined to $25 million as cost reduction was insufficient to offset the revenue decline. Turning to Network Applications and Services or NAS. Revenue declined 4% following deliberate decisions to focus on areas aligned to our strategy and declines in calling products. With strong cost management, EBITDA increased to $62 million in the half. Our focus on portfolio management is ongoing. The sale of Alliance Automation and MTData are completed, and the sale of 75% of Versent Group announced last August is expected to close this half. These businesses contributed $235 million in revenue in the first half of FY '26. Turning now to International on Slide 18. While reported EBITDA fell 0.5%, we achieved modest growth, excluding significant one-offs. Starting with Wholesale & Enterprise, while reported EBITDA of $232 million grew 20%, this included $45 million of one-off benefits, including deferred revenue recognition, other balance sheet releases and an equity accounted associate gain. Excluding these and one-offs in the prior period as well as FX impacts, EBITDA grew around 1%. This growth was delivered through strong cost management following a strategic refocus of the business on DAC. This more than offset DAC margin pressure from higher off-net mix, ongoing declines in legacy voice, a business we expect to complete the sale of this month. Looking forward, Wholesale & Enterprise EBITDA is expected to decrease significantly in the second half sequentially with the one-off items not expected to repeat, declines in NAS and voice, and partially offset by ongoing cost discipline. Over the past few years, we're focused on maximizing utilization in our subsea cable assets. We have been disciplined in our investments in new capacity. However, this has limited opportunities for new sales and growth. We now see promising investment opportunities in the second half of FY '26 within our BAU CapEx guidance. Digicel Pacific reported EBITDA declined 22% to $139 million as the prior year benefited from the release of the remaining earn-out provisions. Excluding this and in constant currency, EBITDA grew 1.7% with ongoing cost reduction offsetting a challenging operating environment. Turning to Infrastructure on Slide 19. InfraCo fixed income was broadly flat at $1.4 billion with growth from nbn, CPI indexation and ground stations. This was offset by lower commercial and recoverable works, reported legacy asset sales and internal revenue based on efficiencies and lower power charges. InfraCo fixed EBITDAaL grew 3.4% to $905 million, including a higher contribution from nbn, copper recovery, commercial works and cost efficiency, partially offset by the reduced internal income. Amplitel continued to benefit from strong demand for towers and cost efficiencies. EBITDAaL grew 6.6% to $162 million despite the MOCN impacts. Regarding strategic investments, including the Aura network, which is our new name for our Intercity Fibre. We continue to expect spend of $1.6 billion above BAU CapEx across the project. Now while we expect the vast majority of this spend to occur by the end of FY '27, we now expect a small amount of spend and some routes to complete in FY '28. We continue to be disciplined in the build of this 30-year asset, including prioritizing routes in line with customer demand and returns. We expect a mid-teens IRR with strong revenue growth, especially from FY '28, in line with demand as routes come online. Strong cost management is a key highlight of this result. Our proactive cost management and the benefits from technology adoption is helping us be more efficient, respond to structural challenges in some products, as well as the impact of inflation, and allow for reinvestment. Lower sales costs were a function of lower Fixed C&SB, International and NAS costs. Fixed costs were $76 million lower. Together with lower BAU CapEx, cash EBIT costs reduced, delivering strong operating leverage of over 3 percentage points. We've maintained our strong capital position with liquidity supported by strong operating cash flows. Net debt remained stable at 1.9x despite our buybacks, as higher debt was offset by EBITDA growth. We've also reduced our average cost of debt to 4.8% and extended our maturity profile. Our balance sheet is strong, and we remain committed to an A band credit rating. This has enabled us to lift our current buyback. We've also improved our return on invested capital. Turning to FY '26 guidance on Slide 22. Today, we are tightening our underlying EBITDAaL guidance to between $8.2 billion and $8.4 billion, with the midpoint unchanged. Our guidance on all other measures is reconfirmed. In terms of EBITDAaL, there are a number of one-offs that have benefited the first half, including in International and Other EBITDA. The second half will also reflect the loss of earnings from businesses we have divested. Offsetting these items in the second half, we expect ongoing productivity, including carry-in from prior years as well as InfraCo asset sales and net product growth. As previously noted, we also expect higher BAU CapEx in the second half. These results demonstrate our value creation under our Connected Future 30 strategy, growth in core business cash flow, 17% growth in cash earnings supported by strong operating leverage, portfolio and investment management, where we continue to execute in line with our strategy to enhance returns, and disciplined capital management, including the lift in dividend and buyback. Finally, I would also like to thank the Telstra team for all of their ongoing efforts in delivering value, especially for our customers, the communities in which we operate, and our shareholders. And I'll now hand to Nathan for Q&A. Thank you. Nathan Burley: Thank you, Michael. We'll now open for questions from analysts and media. On the call today, in addition to Vicki and Michael, we have other members of the Telstra Group Executive, including Brad Whitcomb, Group Executive, Consumer; Steven Worrall, CEO, InfraCo; Oliver Camplin-Warner, Group Executive, Enterprise; Amanda Hutton, Group Executive, Business; and Kim Krogh Andersen, Group Executive, Product & Technology. With that, I'll open to the first question, which comes from Eric Choi from Barrenjoey. Eric Choi: Congrats, everyone, on the result and lifting the dividend. I've got 3 questions, but can I please start my first question specifically on the dividend. And I just wanted to check the broad logic for potential FY '26 and '27 outcomes. So if you look at FY '26, your first half cash payout was 75%, but your policy has been sort of 70% to 90% in the past. And just logicking out the second half, you can work out cash EPS will fall a little bit in the second half versus first half. So I guess we just wanted to check if you're happy to up that cash payout above that 75% to maintain $0.105 into the second half. And then just beyond FY '26, you're clearly focused on cash earnings now. So if we think you guys can grow cash earnings by 5% or more, there's no reason why that EPS can't grow 5% or $0.01 again beyond FY '26. That's the first one. Did you want the rest? Or should I give you a chance to respond? Vicki Brady: Why don't we -- Eric, we might do it a little differently. Given there's quite a bit in that first one, why don't we take it first off? I'll make a couple of comments, and then I know Michael will want to jump in as well. So first off, this is obviously the first half where we've spoken a lot about in terms of dividend that under our capital management framework, where focus is sustainable and growing dividend, our preference is fully franked. But where that's not possible, we would consider unfranked. And so look, as the Board considers the dividend, the capital management framework is obviously the critical thing that they reference. As we spoke to this morning, the first half of this financial year, we've seen particularly strong cash earnings, and that supports the first half dividend. But yes, that sustainable and growing dividend is absolutely a key focus. We don't have any more a cash payout ratio that we're targeting. It's very much -- we focus on the capital management framework and look at it through that lens. But Michael may want to comment on some of the historic numbers, I'm not sure. But look, as we look forward, that's why we keep coming back, Eric. Our ambition under Connected Future 30 is really that mid-single-digit cash earnings. That's really critical, and that's an important reference point. As you know, we work through and the Board makes its final decision on the dividend. But Michael, do you want to jump in with any further? Michael Ackland: Yes. I mean, I think Vicki is absolutely right. We don't have a policy on payout ratio. But if you look over the last few years, I think in FY '25, on the same basis, the cash EPS payout ratio was 85%. It was 90% in FY '24, and it was 83% -- 84% in FY '23. But we're focused on that sustainable dividend and just recommit to our objective to deliver mid-single-digit growth in cash earnings, Eric. Eric Choi: Awesome. I'll try and be quick on 3. But just number two, just in terms of balance sheet headroom for capital management, and I'm going to focus on Moody's here since they're 1 notch higher than S&P. It looks like they've lifted your max gearing headroom to 2.4x now. So can I confirm on their measure, you'd be tracking at 2.1x to 2.2x, and that's before you conducted portfolio optimization. So basically, the question is, do you have plenty of headroom to increase both dividends and buybacks on the credit agency view? Vicki Brady: Excellent. Well, that's quite a detailed one. My overarching comment is, our balance sheet is strong. It's a core part of our capital management framework. You know that. We're absolutely committed to those things that keep us in that A band credit rating. But Michael, do you want to get into any of the specifics there? Michael Ackland: Yes. So we reported 1.9x. I think that's well within our conservatively framed outlook of 1.75x to 2.25x. Moody's have a slightly higher top end to that range. They do use some slightly different methodologies, as you point out. We track both of them. But I think your conclusion is that the balance sheet is strong and that we do have strong capacity within that A band rating based on both Moody's and S&P's, correct. Eric Choi: Can I fit in the last one, sorry. Just a question on whether investors should think of Telstra as an AI loser or winner. And I think you're implying you're an AI winner, because to get to your long-term ROIC of 10%, you basically need to grow EBITDA $1 billion or more from here. And like logically, you can see your mobile service revenues are $8 billion to $9 billion, your fixed cost base is $7 billion. If those 2 kind of grow in line with each other, they kind of offset each other. So you kind of need something else to fill that $1 billion-plus gap. And that's going to have to be through InfraCo and cost efficiencies. And I'm also guessing that's going to have to be driven by AI. So you're essentially saying AI helps you hit your long-term guidance? Vicki Brady: Okay. Well, why don't I start off on that, Eric? There's quite a lot in that one. The first thing I'd say is, obviously, inside Telstra, there's a number of businesses. Obviously, Mobile key driver of value and growth right now. And we're super happy with that business. That's come through years and years of consistent investment and differentiation in what we deliver to customers, and that will obviously remain a focus. If you look at our portfolio, I'll come to InfraCo in a second. But there are other elements of our portfolio we're still working through, Telstra Enterprise. We spoke a little bit about the International component of our business today as well. So there's still work to do in our portfolio in terms of getting those businesses in the right shape and supporting our ambitions. On InfraCo, I mean, there is no doubt the demand cycle we're in at the moment, the sort of investment that is going into AI infrastructure. We couldn't be more pleased that we embarked on Aura, or Intercity Fibre as it was previously known quite a few years ago now, and that build-out is at the halfway mark. All of the demand signals would indicate growing demand there. So the Infrastructure side of our business is obviously important in the long run. We have also set in our ambitions, positive operating leverage. And so yes, we've got to keep getting more efficient. And you see that. I think Michael and I both commented today, we are seeing benefits from, again, years of investment in digitization, in pushing ourselves to be sort of at the front of how we apply AI inside our business. So they are important. The dynamics in the world, it is changing fast. For us to be competitive, for us to keep delivering on rising expectations, rightly, of consumers and businesses, we've got to be able to apply AI. And so I'm really optimistic on what AI can deliver for us, both in terms of the demand signals in InfraCo, but also in how we use that inside our business, yes, to drive efficiency, but also drive better customer outcomes. So they'd be the big things I'd comment on in there. I don't know, Michael, if we want -- I know I might go, because we've got Steven Worrall. Obviously, it's his first set of results with Telstra leading InfraCo. So I thought it might be a good chance, because that winners and losers in AI, particularly from our Infrastructure business. I thought, Steven, if you're happy to make a few comments, it would be great. Steven Worrall: I'll be very happy to do that. Thank you, Vicki. And good morning, everyone. It's great to be here, as Vicki said, my first results announcement with Telstra. And if you'll indulge me for a moment, I thought I might provide a little context that goes to the heart of the question, Eric, that you've posed. But I also can give some direction in terms of where we're headed. I think I'll just start with saying how excited I am to be here at Telstra at this time. It's an incredibly exciting time for our business, but it's also an exciting time in relation to digital infrastructure. We don't have to look too far. Pretty much every other day, there's an announcement of a new investment that's being made in data centers here in Australia. And Australia has emerged as one of the leading destinations for data center investment around the world, as we've all seen. Now of course, that's just one part of the digital infrastructure landscape. And as recently as last month at PTC, which is a conference in Hawaii, where we engaged with hyperscalers, of course, other players in the AI ecosystem, some of our existing clients and many others who are eyeing the opportunities that this build-out of digital infrastructure is providing, we saw a very significant uptick in terms of our pipeline coming out of those discussions. As Vicki mentioned, that's why we think Aura is such an important investment. It will provide the AI inferencing architecture that we think is so essential for our nation as we look to an increasingly digital future. And while I'm excited about all of that and excited to be here, it's also a really important time for us as a nation. And I think Vicki also pointed to this earlier in her comments. Indeed, she made these comments at the press call last year in terms of the moment that we find ourselves confronted by. And that is in relation to how do we think about productivity going forward, how do we think about how we best participate in an increasingly digital world. And we think investments in Aura and the assets that we have give us the permission. And I think the logical role for us to play to help Australia best position itself. Last quick thought. That's a long answer to your question. Of course, our international asset base is incredibly important as well, and Michael touched on this in his remarks. Telstra owns and operates more than 25% of the world's subsea capacity. And when you think about a digital future, you think about connecting Australia to the global digital supply chain, it's that subsea network combined with the domestic and terrestrial assets that we have that we think sets us apart, and we think puts us in an incredibly important position with all of the work ahead of us to ensure that we can capitalize on those commercial opportunities as, of course, we serve the country. Nathan Burley: We'll go to our next question, which is from Entcho Raykovski from Evans Partners. Entcho Raykovski: So my first question is around Mobile costs in the period, and they were a bit higher than the market expected. And Michael, you've provided us with some good color around what's driven that. My question is, to what extent were the higher costs driven by higher satellite costs as opposed to some nonrecurring items like remediation. I'm just trying to get a sense of the extent to which the cost increase is recurring. And I've got a couple of others, but I might hold off after this answer. Vicki Brady: Yes. Thanks, Entcho, for that. I know Michael spoke to sort of 4 major things that were in that cost increase. We don't break it down. We don't get into sort of cutting and dicing it into the pieces. But as you said, the first one mentioned was customer remediation and compensation. We are at the end of a program of work on historical sales practices. So that comes to an end at the end of this financial year. We have in part of business as usual, those costs exist, but they are higher in this half, and we would expect higher for this full year. But we don't break it down into the subcomponents. I don't know, Michael, if there's any other comments you wanted to add. Michael Ackland: No. I mean I think, Entcho, I would -- the satellite costs, we should consider those to be an ongoing change. And I think you rightly pointed out, the others we don't expect to be ongoing in this nature. The other one we referenced there is just the way that shared costs are allocated. And frankly, that's just a little bit that Mobile is increasingly a bigger part of our business, as you can see in our numbers. And so that trend will continue as well. But frankly, it's against our overall costs going down. So I think we should remain reasonably confident about ongoing operating leverage in that business as we've committed to across our entire business as we move forward and look at this, as there has been some more specific impacts this period. Entcho Raykovski: Okay. That's helpful. And my second question is around the potential expected increase in spectrum renewal costs that was announced by ACMA in December. Does that impact your ROIC targets to FY '30 in any way? I mean, I noticed that on Slide 35, you've got a footnote referencing the new payment structure. I guess if that does have an impact on ROIC, do you foresee a need to perhaps divert investment from elsewhere into spectrum purchases? Or how does it impact your decisions around pricing and the need to pass this cost on to consumers? Vicki Brady: Yes. Thanks, Entcho. And obviously, it's an ongoing process at the moment, that process of spectrum renewals. I think on the positive -- I mean on the positive front, starting there, ACMA has decided it is a renewal process. I mean, again, reinforcing the spectrum that will come up for renewal through 2028 to 2032 is about 80% of the spectrum that the mobile networks in the country rely on. So that's a positive. And the process in terms of determining what is fair market price, that is the debate that's underway through that process. ACMA obviously put out some more information just pre-Christmas. We have a different view on what fair market price is. For us, it's about -- at the moment, it would be, we believe, about $1.3 billion more than what we would see fair market price. So look, that will be part of our submission back. Obviously, that process is still ongoing. We'll put our views, our thoughts, our analysis work we've done into that. Obviously, any additional cost that comes into the business, we've got to be incredibly thoughtful about. As extra cost pressure comes, there's constantly a balance of how much we invest into the network and the products and services we're delivering for customers. That might be things like satellite to mobile technology. It's investment in our mobile network we keep making and our broader network. So that will be something we'll have to think about. Obviously, increasing costs, we've then got to think about, what does that look like in terms of what it means for pricing for customers, because ultimately, for us to keep investing and being at the forefront to deliver high-quality connectivity services, we absolutely need to make a return on those investments, so we can keep that investment going. So look, it's part of the process. Our ambition on ROIC remains the same. That ambition under Connected Future 30 to get underlying ROIC to 10%. You did pick up that note. We wondered how quickly that footnote would get picked up. And as you can see, we've just been very transparent using the current ACMA pricing that they've put out as the interim pricing that's reflected in that footnote. Nathan Burley: Our next question is from Bob Chen from JPMorgan. Bob Chen: A few questions for me. Maybe firstly, just on the really strong ARPU result across the Mobile business, especially across the prepaid and wholesale. Like how sustainable do you think this is? And is this just the beginning of moving those customers on to higher prices? Vicki Brady: Bob, did you have more than one question? Can I just check? Bob Chen: Yes, sure. Yes, I've got some others. Do you want me to... Vicki Brady: Yes, why don't we grab them all and then I'll make sure we manage to get to them all. Michael Ackland: Yes. Bob Chen: Yes, sure. Maybe just on the comments earlier around the Aura network. Obviously, we're seeing a lot of demand from new data centers being put into the region, like you guys mentioned. When you think about that sort of mid-teens IRR you're talking to, I mean, given the increased level of demand for data centers and connectivity, could the return profile of Aura be better than what you were initially expecting? Vicki Brady: Okay. And is there a third one? Bob Chen: Yes. And then just on the ACMA spectrum renewal process, I think you spoke to some of the trade-offs you're sort of thinking about in terms of mobile network investment. But how does it impact maybe your capital management settings if you don't see the gap between ACMA's pricing close with your views? Vicki Brady: Great. Thank you. Okay. So quite a few to cover off there. Why don't we -- just on Aura, my comment there would be, we continue to have the same outlook in terms of Aura in terms of that financial profile. So that mid-teens IRR is absolutely what we continue to target. Of course, as you heard Steven talk about earlier, we do see good demand signals. But obviously, we've only just passed the halfway mark of build. So our focus is absolutely completing the build, and as the routes come online, making sure we're converting those demand signals into commitments and switching on revenue on the network. So right now, that financial profile stays as is. And I think we've put a slide in the appendix just as a reminder of what that looks like. Just on the ACMA, look, as I said, that process is ongoing. If it does land with the pricing that's currently proposed, I think this is where you see the benefit of very disciplined capital management, a strong balance sheet. Obviously, as I said, we'll need to consider various trade-offs. But I think given the hard work over many, many years, obviously, the business is in that underlying earnings growth, we're seeing cash earnings growth. And spectrum is ultimately -- it's a critical element to delivering high-quality mobile services. So I think as we stand today, we sit with the capacity, I think, to be able to navigate that period, and we just wanted to be really clear in that footnote and give you a view of how that might look like if the current pricing was to proceed as is in the interim proposal. On ARPU, I think it might be worth getting a few comments on this one. I might get Michael just to make an overall comment, because he can cover off the broader perspective, including wholesale. And then I might ask Brad to comment, because you particularly mentioned prepaid, and we've got good strong performance out of the consumer side of the business. So Michael, why don't I go to you on ARPU more broadly? Michael Ackland: Yes, sure. Sorry, just a quick one on your point around capital management and spectrum. I think it's a really good question. The way that I would think about it is we start with what's our return on invested capital? Are we getting an appropriate return on invested capital, and that's where all those trade-offs that Vicki talked about. And then the second one is capital management, which is our strong balance sheet. So I think -- just reiterating what Vicki said, but I wanted to talk to it. Vicki Brady: Yes. No, thank you. Michael Ackland: Look, I think on Mobiles overall, and I think hearing from Brad is going to be much more insightful than anything I could offer, obviously. But we're really happy with the way that our multi-brand strategy is playing out. We have a broad range of brands and offers and channels to market that are meeting more of the market, and we continue to grow that base. You can see that when you look at the revenue growth, the way that is spread, and also the ARPU growth that we're seeing when you take all of our handheld customers in total. So we're really happy with the way that multi-brand strategy is playing out. Prepaid has been a very specific highlight that you called out. And so maybe with that, we can get Brad to talk a little bit about how that's working and what's happening. Bradley Whitcomb: Yes. Thanks, Michael. Just to broaden that out a little bit, yes, we're really happy with the performance for the first half when we look at the mass market mobile. And as Michael pointed out, we do have a series of brands that we work with, Boost, Belong, main brand, and also our products on prepaid and post, and we work to tile those up, so that we've got offers that are attractive to our customer segments. I'm really pleased that we were able to see growth in terms of subscribers across all of those various aspects of the portfolio. And as you pointed out, also ARPU growth as well. The mechanics of that ARPU growth for prepaid, it was around price rise back in October of 2024. And for postpaid, including Belong, July 2025 price rises there. But when we look to -- in terms of sustainability, I would look first at how happy are our customers. And really pleased that we're sitting -- as Vicki mentioned, we're at an all-time high for our customer NPS at plus 47. That's up significantly PCP. So that's a great trend for us. I'd also look at our overall value proposition and what we're offering our customers. First and foremost, it is built upon having the broadest, deepest, most reliable network in the country and arguably in the world; world-class privacy spend, protection and security for our customers; and then the intangibles around our brand. We see our brand moving from strength to strength. We're now the ninth strongest brand in the nation, which is consistent with one of our Connected Future 30 aspirations to stay in that top 10. We've got brilliant frontline workers that are serving our customers, whether that's through our retail stores or in our contact centers. And you'll feel that when you engage with them that they like the work that they do. In fact, we've got, across the consumer division, which is mostly frontline workers, we've got an employee engagement score of plus 85. And when your employees are engaged, they just provide that much better service to the customer. So hard to predict the future. It is a very, very competitive market, and we have to earn the right to serve our customers every day. But when I think about the sustainability of the value proposition that we have, I like where we're standing right now. Nathan Burley: We'll take our next question, which is from Lucy Huang from UBS. Lucy Huang: I've got 3 questions. I'll just ask them first. So just -- I mean, good results on mobile ARPU. I just wanted to see if you could unpick some trends in churn in postpaid post the price rise that was implemented in July. And particularly on the Enterprise side in Mobile as a result, was that still a drag in the ARPU numbers this half? Or do we think that drag has actually moderated moving forward? And then secondly, just on Intercity Fibre, again, I think you mentioned on the call that we're expecting strong growth coming through in FY '28. What's the conversation with customers on whether or not they want to pre-commit to capacity just to give, I guess, investors a bit more comfort around the demand profile longer term? And then just thirdly, on Fixed C&SB. Early days since unbundling of the modem from the plan, but maybe if you could provide us with some color as to whether that's been driving a better outcome so far in scanning [indiscernible] decline. Vicki Brady: Excellent. Well, thanks, Lucy, for those. I'm actually going to get Brad to come back up and talk a little bit about postpaid churn and also cover off C&SB-Fixed internet-only plans. And then I'll ask Oliver, who's leading Telstra Enterprise. I know you had a question there on the Mobile front. There's been some really great work out of Oliver and the team in Enterprise. So I'll get him to talk a little bit about where that's at and the trends we're seeing. And then, Steven, it might be worth you popping back up and just the discussions. As we've said previously, I think, Lucy, with big builds like this, we find there's lots of good demand signals. Often until you're at RFS of certain routes, it's sometimes not the practice to pre-commit. We obviously had Microsoft where we had a big strategic partnership there. They are an important foundation customer of Intercity Fibre or Aura now. But I might get Steven to give a bit more color to how the dynamics are. So why don't we go to Brad, if you're comfortable to cover off those couple. Bradley Whitcomb: Yes. So if I start with the Mobile churn, as you can imagine, before we make any price changes, we do quite a bit of work around elasticity, conjoint analysis, the customers that we're serving and where they might go should they choose to move off the current plan that they're on. And as a reminder, we have no lock-in contracts, we don't have handset subsidies, and so customers can move very, very quickly if they want. That's all the modeling that we do, and we look at that in terms of a yield, how many customers are going to stay where they were, how many people will down plan? Will we have any customers churning. And I would say that this price change that we made in July, we landed right about where we expected in terms of yield. So we are pleased with that. Of course, that all then comes down to the trading on the floor and how we perform in terms of our peak trading windows, whether that's our flagship handset launches or Black Friday, Christmas and currently our end of summer sale, and I think the team is executing quite well. So we're never fully satisfied with churn. We want to keep customers within the portfolio, but we're right on track with what we had planned for. In terms of Fixed C&SB, one thing I would like to underscore is the team has doubled the profitability of that business over the last 3 years. It's been a massive performance, and we're on track right now to deliver about $0.5 billion in profit when we exclude the legacy copper cost that's in that business. So very pleased about that. As you mentioned, we've rolled out a number of new capabilities within that product suite, including the nbn high-speed tiers. We've got straight-through digital processing to make it really easy for our customers to order digitally. We've got a beautiful new Smart Modem 4, which if you don't have it, you should get it. The Wi-Fi performance in the house is exceptional. And then we've got now our Internet-only. It is early days. We launched Internet-only right on Black Friday. And I will point out as we've been migrating off of Siebel and now on to console. We only got about what, a little less than 4,000 customers left on console. It meant we could move very quickly, and we could meet that critical trading window of Black Friday. Customer response has been good. That said, we remain in a very, very competitive market. We are focused on SIOs, but we're not focused on SIOs at any cost. So that's how I would describe it now. Team very much focused though on the SIO loss. Vicki Brady: Thanks, Brad, for that. That's excellent. And why don't we -- Oli, are you comfortable to speak a little bit to TE and TE Mobile, ARPU trends? Oliver Camplin-Warner: Yes. Thanks, Vicki. Thanks, Lucy, for the question. So yes, let me zoom out and start a little bit on just Enterprise reset and how we're traveling there, and then I'll zoom in on Mobiles. On Enterprise reset, as Vicki reminds me, there's always more work to do, but I'm really pleased with the progress that we've made so far. Without doubt, by the end of reset, we will be a stronger, more customer-focused business, no question. We identified a number of critical initiatives at the start of reset, and those are progressing well. I'm pleased with where they are at. And pleasingly, most importantly for me, customer reaction has been positive as well, where we've seen an increase in NPS. Some of the key points to reset. First off, just that radical simplification of our product portfolio. It was absolutely critical that we're really focused on who we wanted to be moving forward, not trying to be everything to everyone. We've taken a long hard look at our cost base and facing some really tough decisions here, but we've made those calls, and we do have a very different cost base across the business now. Commercial guardrails, we've continued to tighten, which have had a good impact. We have an engaged workforce, like Brad spoke about earlier as well, who are now making a real difference. And then on the portfolio management as well, we've taken a long hard look at the various businesses that we've had. As Michael touched on, we completed the divestments of MTData, Sapio and Alliance in the half. The partnership with Versent -- Versent partnership, that's continuing on track and will close out in the second half. So long story short, there's a lot in there. A couple of weeks ago, we also announced the radical transformation of our service delivery business. We will look to improve the customer experience on the delivery front. So there's a lot there. I'm pleased with where things are at, but there's always more to do. Just on Mobiles. So Mobiles without doubt has been the beneficiary of many of those actions that we have taken through reset, commercial guardrails really celebrating the network that Brad spoke about earlier, all those beautiful attributes. And pleasingly, we saw growth in the half, which I'm really thrilled with. It was great to launch satellite to our customers and especially those organizations who have a remote field workforce, where having that connectivity in the area of need is absolutely critical. So a good response there. You will note in the footnote just around the MTData divestment and how that will impact Mobile in the second half, but pleased with the Mobile performance, but there's always more work to do. Vicki Brady: Yes. Thanks, Oli, for that. And just to add one comment to what Oli said on TE Mobile performance. Lucy, if you go to the very last -- I think it's the very last page in the presentation material in the appendix there, you can see Telstra Enterprise Mobile performance, and you can see growth there. And so real credit to Oli and the team. He spoke about commercial guardrails. The team have been very disciplined, and we have seen, I think Michael mentioned ARPU growth across all products and all segments. So that's been a good outcome of that real focus and discipline. Michael Ackland: Including business? Vicki Brady: Including business, that's right. That's right, every segment across Mobile, which has been great to see. So why don't we come to Steven, a little bit of color, Steven, around those commitments from customers. Are they prepared to pre-commit? Yes. Steven Worrall: Happy to. Thank you, Vicki. And Lucy, thanks for the question. There's sort of 2 thoughts that might be helpful here. As Vicki mentioned, first and foremost, we need to build the network. So we're 7,000 kilometers into a 14,000-kilometer total build, and we have a couple of the routes ready for service and actually in use today, but most are yet to get to that threshold. And so that obviously is the priority as we continue to have all sorts of conversations with players, both domestic and international. The second thought I'd love to share with you is the thought that we are building what I'll describe as AI inferencing architecture for our nation and, of course, connecting that architecture to what is increasingly being built out around our region and around the world. And in that context, what Aura presents to Australia, obviously, critical digital infrastructure for the nation, but it's infrastructure that will support us for a generation. And we're talking about a demand profile that we don't actually see just yet with all of the investments that we're hearing regularly in relation to data centers. Many of those are in the construction process and have yet to come online. And the sort of demand profile that those data centers will drive as one part of the digital supply chain is yet to arrive. And as you might expect, as a result, the commercial conversations with those operators in terms of pre-commits and their precise requirements in terms of connectivity, both domestically and through the region, are conversations that we engage in regularly. We're obviously moving many of them down the pipe very well, and we expect to have more to say on the topic in the future. Thanks very much. Nathan Burley: We'll take our next question from Liam Robertson from Jarden. Liam Robertson: Three questions from me as well. Just firstly, on Mobile, in particular, postpaid subs growth. It looks like Belong was the standout there, adding 21,000 in the half, core base declined modestly. Michael, I think you touched on your multi-brand portfolio already. Clearly, that remains well positioned. But I'm just interested in how you're seeing the market? And should we be thinking of Belong as the key acquisition channel going forward? Or do you actually think you can also grow your core brand? And then just a follow-on from that. I mean, given that dynamic, have you got any concerns around your ability to grow postpaid ARPU moving forward? And then just my next question on the dividend. I might frame it slightly differently, just given you were clear on not having a targeted payout ratio. I don't think it was a coincidence that the $0.095 fully franked and then the $0.01 unfranked on a grossed up basis was similar to the $0.10 fully franked in expectations. I guess moving forward, should we now be thinking about growth of that dividend on a gross basis? And then your split between the franked component and unfranked component will just be dictated by your available franking credits. I guess the inference there is that the unfranked component might actually need to accelerate just given your franking balance and the mismatch between tax paid and then cash earnings? And then my last question, hopefully, just a really quick one on Enterprise. I appreciate all the comments and color, Oli, there around recent divestments, the cost base reset, some of the pockets of growth, looks like Mobile was strong. I guess my question is, when can we consider that portfolio to be fully rebased? Vicki Brady: Well, thanks, Liam. Lots in there, some great questions. I might get Brad back in just a second, because I think how the market is playing out, Belong. My overall comment, as Michael spoke to earlier, our multi-brand approach is critical to how we address the market. There are very different needs in the market in terms of what different segments of customers are looking for. And so it remains a really important piece. And of course, as you'd expect, we're always pushing. We want to make sure we're meeting those needs as best we can. And the Telstra branded proposition is critically important. It is our premium offer to market. I might get Michael to jump in after Brad and just talk a little bit more about dividend. As you call out, this is the first time in a long time it's not a fully franked dividend. So I'm sure there are many questions about how to think about it. Again, I just come to cash earnings is an important piece as we consider, as the Board goes through that process, as they're thinking about the dividend in light of our capital management framework. TE, it's a really great question on reset. Oli and myself and the leadership team, we've been working through that at the moment. I mean, incredible progress. It was May '24 when we announced the reset of our Enterprise business. As you just heard from Oli, some really pleasing progress, but there is still more to be done. And so that's part of our thinking. As we come back for our full year results, we'll be able to share where we're at. But right now, the focus really is on making sure those pieces that are in work still now, and Oli spoke to some of the changes we're driving to try and remove further complexity out of that business to really deliver on those rightly high expectations of our enterprise customers remains absolutely our focus, along with finalizing some of those elements on the portfolio management side. But why don't I -- Brad, are you comfortable to jump in on the market, and then we'll come back to Michael on dividend. Bradley Whitcomb: Yes. So thanks for the call out on Belong. We're super proud of the performance of that business. And it's great to see them growing both in terms of subscribers and also profitability. I think the team there is doing a fantastic job. I will point out, we did have a fairly significant price rise within Belong back in July, the same time that we did the main brand price increases as well. So this isn't necessarily a pricing thing. We do see more growth at the lower end of the market. So from my perspective, it's not surprising that we would see Belong competing very well there and seeing that grow. But our primary focus is around our core main brand and the other brands sit around that to support that main brand. And there's a number of attributes that you can only get with the Telstra main brand. And one that I would point out, we've talked a little bit about today, is the satellite messaging service. And for customers that are aware that we have satellite messaging, we see an NPS which is a full 16 points higher than customers that aren't aware of it. So we're offering real value there, and our aspiration is to continue to grow that business, both in terms of the profitability, but also the number of customers that we can serve. Michael Ackland: Thanks, Brad. And thanks, Liam, for the question on dividends. I think I would -- a little bit like Vicki sort of spoke to, we have an ambition under Connected Future 30 to grow our cash earnings mid-single digit. It is those cash earnings that support the sustainable and growing dividend. And the level of franking within that is going to be determined by the growth in our Australian tax payments, which I apologize is an obvious statement, but it is going to be driven by the growth in our Australian tax payments, and that's going to be fairly closely linked to our growth in accounting earnings and EPS. So as we said, we think that our franking balance is tight, has been tight for some years. The partial franking in this period, we believe was the best way to deliver on our commitment to a sustainable and growing dividend, and we look forward to continuing to achieve our ambition of mid-single-digit cash earnings growth that supports a sustainable and growing dividend in the future. Nathan Burley: We'll go to Roger Samuel from Jefferies. Roger Samuel: I might just stick to 3 questions as well, hopefully, quick ones. Firstly, just on your guidance. If we look at your performance in the first half, the underlying EBITDAaL grew by 5%. And if we assume that you can repeat that 5% performance in the second half, that implies that you can easily get to the top end of the $8.3 billion to $8.4 billion. But is there any issues that we should be aware of in the second half? I mean, I know of your divestments of some businesses, but yes, there could be some cost cut as well that you may do in the second half. Second question is just on Fixed CS&B. Obviously, a very good result on the profit side. But Michael, you mentioned that you'd like to stabilize the nbn subs over time. And yes, if we look at this result, I think your nbn subs still declined by about 25,000. And yes, I'm just wondering what you can do to arrest this decline given that you've introduced Internet-only plans, you have moved your customers to a new technology stack. But if you look at what's been happening in the last 2 weeks, your competitors, especially the challenger brands, they have been doing some consolidation as well. So I'm just wondering what you can do to arrest that decline in nbn subs? And lastly, just a quick one on mobile ARPU. You mentioned about network slicing in the past and how that could add to mobile ARPU, especially in postpaid. How are you going about introducing network slicing to differentiate certain plans and the impact on ARPU, please? Vicki Brady: Thank you. Thanks, Roger, for that. And we're getting the hurry up from Nathan. We're speaking too much. So let us see if we can fire through these 3 quite quickly. I'm going to come back to Michael on guidance. I think he can give a very concise answer on that. On C&SB Fixed, I'd just say, first off, look, the team have done a great job in that business, and Brad spoke to earlier just how much EBITDA profitability in that business has changed in a small number of years. But absolutely, our focus is now on stabilizing customer numbers. The Internet-only proposition only went into market in November. So our focus and Brad's focus with the team is absolutely in our channels, in our marketing, because although we might all know about it, I'm pretty confident that a lot of customers in the market don't know about that proposition yet. So we will focus absolutely continuing to deliver a really high-quality experience for our customers that meets their needs. So that will be the focus there. In terms of Mobile ARPU and slicing, yes, we've got a slicing product in market in our Enterprise business. It is very early days. And Connected Future 30, a big part of that is network as a product. So how we build out, how we make sure we have those network attributes, that we're reinventing the commercial models that go with those attributes. So as we create value for customers, we also share in some of that value creation. So very early days on that, but we remain optimistic. We've got the foundational investments going in, in network, systems capabilities to put us in a position over time to be able to make sure that level of sophistication in our network that can meet the level of sophistication of our customers' needs going forward that we get that to work well together. So that's definitely our focus as we look at the business going forward. Michael, are you happy to cover off guidance, first half, second half? Michael Ackland: No, absolutely. And thanks, Roger. So yes, there is a few things sequentially that are impacting us. So one is we had around $45 million of one-offs in International that we don't expect to repeat. So we will see a significant sequential decline in International, not only that $45 million, but also the divestment of the wholesale voice business in International. So that will be a sequential decline. We mentioned Other EBITDA. In other EBITDA, there was, I think, around $20 million of bond and FX gains that we are not necessarily forecasting to repeat in the second half, which will provide a bit of a headwind. The second one is probably on redundancy. Redundancy is traditionally -- or sorry, not traditionally, has over a number of years, been a tailwind on cost into the second half, because we've done more redundancy in the first half than the second. We announced that we were consulting on some changes last week. If they were to go ahead, we would expect to see redundancy not be that tailwind into the second half. Of course, offsetting that, we have productivity flowing through as we talked to. I think the other one, as we look into the second half, is just based on the historical timings of some of the price rises across particularly in the consumer portfolio, whether that's Fixed or Mobile, we would expect to see some of that revenue growth sequentially to be a bit more muted. And then, of course, as I said, on top of the other divestments that we expect either have completed or we expect to complete in the NAS portfolio. Nathan Burley: Excellent. Our next question is from Nick Basile from CLSA. Nicholas Basile: Just 2 questions. The first one is on AI. I think in your opening remarks, you talked about rationalization of software providers and deployment of AI across the coding team. So I'm just interested to understand or get a little bit more color on how that is benefiting you and how it helps you, I guess, deliver on the 2030 cost ambitions? And also just to what extent at all you've managed some of that vendor concentration risk now from a cost inflation perspective? So that's the first question. So there's a few add-ons. And then the second one is just on incremental returns on Mobile investment. I guess with respect to the commentary around your investment in augmented services using satellite networks. Just wanting to understand what the incremental margins on this capability is relative to selling services leveraging your terrestrial mobile network. Vicki Brady: Yes. No, thank you. Thanks, Nick, for that and a couple of great questions. Well, I'll take the second one first off and then make a couple of comments. But I might get Kim Krogh Andersen, who leads Product & Technology and really has been the driving force between a lot of the pieces you mentioned on the software side. So just on Mobile, obviously, satellite to mobile, I would think about that as we are leveraging the capabilities of a third party. So I think about it like a reseller of a service. So obviously, the incremental margin on that sort of business is very different to where we own and operate the infrastructure ourselves. And obviously, very different CapEx dynamic. We're not the one investing all of the money in launching LEOsat. So we are a reseller of that service. But it is, I think, as Brad spoke to, really important, it is a key element of our proposition, how we bring these services to our customers. And again, as Telstra, we provide a premium experience under our Telstra brand in the market. And so being one of the first few operators globally to be able to bring that to Australian customers, because we could see the service could really serve a purpose here, whether it's when terrestrial networks are disrupted or when people in our very large country are outside mobile coverage. So that's how we sort of broadly think about that. As you said on AI, I made some comments this morning, because I think it is really important to understand there has been investment and work underway for years as we digitize our business, as we're applying AI and particularly in software development. It is so critical in our speed to market and being able to deliver at the level our customers expect. But Kim, I might just get you to make a couple of comments, if you can, on those benefits, how it's been driven and then how you thought about vendor consolidation risk. Kim Andersen: Yes. Thank you so much, and thanks for the question. First of all, we have been modernizing our tech stack for a very long time, and tech leadership is a core part of our Connected Future strategy. Michael mentioned it, and I want to reinforce it. We have actually managed to decrease our cost in tech over the last few years, and that's despite inflation. But as you mentioned as well, there is a lot of partners that really want to hike the price to justify and get return on their AI investment. So we have managed to combat that and ensure that we take the value of this digitization, simplification, AI, et cetera, instead of that become revenue in some of these partners' pockets. So that's important for us because we want that value to go to our customers and to Telstra and to our shareholders. I think Vicki mentioned that we have actually seen a 20% production improvement in our software deployment. And not only that, we are also shipping our software and releases faster 15% to 20%. That comes from a more efficient software flow. So we have seen 12% improvement in EPIC flow. We have seen 29% improvement in our defect rates. So it's great to see when quality, time to market, but also our efficiency come together. It is AI-enabled all of it. Now most of our software engineers, they are using GitHub Copilot to really ensure they produce more code faster. We also use AI for testing. We use AI for quality assurance, for architecture assurance, but also for change management and other things. We use AI for migration. And all these things is a part of us really driving this. But we have consolidated partners, that both applications. So we have done a lot of exits of applications we don't use. We have consolidated our partners. Vicki mentioned, we have consolidated our SIs from more than 400 down to 2. And these 2, Cognizant and Infosys, they're really incentivized to help us to simplify and help us to adopt AI as fast as possible. So all these things is a part of us really creating the right foundation for us to drive this company forward. And it's hard work, and we're not done. We keep pushing hard, but we believe we have a foundation now where our segments, they can compete, where our channels, they have a good experience and our customers have a good experience. These have been very critical for software, but it's even more critical for AI. We believe that if you don't get that foundation right, we will actually see the run cost of AI outperform the benefit of AI. So we are very focused on that foundation to get that in place. We have 380 use cases today. So we are at scale. We are deploying agentic now. So the whole reason for us doing the 2 joint ventures with Quantium and with Accenture was to ensure we have that foundation in place, because we want to ensure, as we have mentioned many times, we are not an AI company, but to be a leading telco, we really need to be a leader in AI and in software. And this is the foundation. And these partners, they keep pushing us forward and really ensure that's in place. So we are pushing hard here, but there is a lot to do. Nathan Burley: Thanks, Kim. We'll go to Brian Han from Morningstar. We will go to the next question, which is from Andrew Gillies from Macquarie. Andrew Gillies: I'll keep it to one just in the interest of time. Not to put too much of a finer point on it, but just on the AI and data strategy, just a little clarification. You mentioned kind of faster delivery on this. Should we be thinking about that as kind of a structural pull forward of the cadence of cost out? I mean, Infosys, it was flagged before. Some of your outsourced partners are flagging really strong efficiency benefits, both internally for themselves, but also for the businesses that they work with. And more broadly, more recently, we've seen software vendors shifting from seat-based models to more of a value share-based model. Can you just clarify that that's all captured in your comments around cost on this call? And can you make a little comment on the cadence? And I presume you're going to reiterate the medium-term EPS CAGR, but that would be great. Vicki Brady: Yes. No, thanks, Andrew, for that. Again, just to reinforce, as we work with our partners, whether it's Accenture under our Data & AI joint venture, whether it's Infosys as a key software partner. And also, obviously, we're planning to also use them more extensively to help us in terms of really simplifying the complexity in our Enterprise service delivery for our customers. Look, I think Kim sort of covered it briefly then. As we enter those arrangements, they are built on very much aligned incentives of delivering real efficiency in terms of our partners have to be able to really be leaning into using AI to drive the efficiency and the experience benefits under those arrangements that we've entered into. So as we look forward, yes, those partnerships are another element of how we make sure we're driving efficiency in our business. Kim spoke to, our goal is, like we did with the Data & AI joint venture with Accenture, we're accelerating a 5-year road map we had into a much shorter time frame, but without driving cost up. And so we are very conscious of making sure that as we move forward, that alignment with our partners where we're both driving to get the efficiencies from the application of AI into our process systems and interactions is absolutely built in. And Michael, in terms of our forward sort of ambitions... Michael Ackland: No, I think it's captured in our forward ambitions. It's covered in that commitment to operating leverage, which I think is really important, growing revenue faster than we grow costs, and that opens up those jaws. The one point I would make, and I think it's really core to our technology strategy and how we're going about it is we are very -- and Kim made the point, there is a risk here that you end up in software licensing, in cloud costs, and in paying the AI providers that you offset your benefits. And that is very much our focus. We've made tremendous progress in the efficiency of our cloud costs. We're getting significant efficiencies around the way that we're focused on how we buy software. And that is embedded in our strategy to ensure that we're using an open architecture, modern software approach, and we're setting up the way that we're executing AI right now, so that we can swap out vendors that we can move between LLMs and that we are really focused on the cost of both cloud and AI. And I think it's been a really important point around those technology costs. So it's a great question, Andrew. Vicki Brady: Yes. Wonderful question. Thank you. Nathan Burley: We'll take 2 more questions from analysts, after which we will move to media. [Operator Instructions] Our second last question comes from Fraser McLeish from Credit Suisse -- I got that wrong, from MST. Fraser Mcleish: Just 2 quick ones from me. Just Vicki, obviously, there's a fair bit of discussion on AI in relation to costs. I'm just wondering, can AI be a competitive advantage for you in the marketplace in terms of being able to invest more and faster than competitors in customer tools and experiences? Or do you expect all players to broadly have the same capabilities? And then second quick one, maybe for Brad, just on fixed broadband. I mean, are you expecting much spin down from these new Internet -- to these new Internet-only plans? And what are you doing to minimize potential for that? Vicki Brady: Thanks, Fraser, for that. Just on AI and where we're at, I think the thing that's front of mind for us is it's moving so fast. And so we are absolutely focused on, we can't be complacent, we've got to be pushing really hard, because we do see, ultimately, for us to be a leading provider of connectivity. We're not an AI company, but we absolutely need to be a leader in how we're applying AI. And that's because, yes, it affects all the obvious parts of our business, how do we make those customer interactions more efficient and better for customers? How do we enable our teams to be able to use AI and work smarter and have greater satisfaction. But it's also right in the heart of our business, the network itself. And if I look at where networks are headed, and we do have Mobile World Congress coming up shortly, so we'll get another injection of where everyone a year on sees things headed. We absolutely believe networks are headed to being much more autonomous. And the complexity of doing that, you absolutely need to have AI deeply embedded and being at the forefront. And so absolutely being at the forefront of delivering world-leading connectivity is absolutely at the core of our differentiation. So moving fast. I think it's not just having it, I think it's moving at the pace and scale needed to make sure we maintain our differentiation. We do provide a premium experience in the market for our customers under the Telstra brand. And so we're very much focused on making sure we're moving fast enough. We are delivering those benefits to customers. We're helping our teams grow their skills and be able to use these tools effectively in the way they work. And ultimately, yes, we see it as an important piece. I mean, long run with any sort of technology, obviously, over time, I would expect it becomes more widely dispersed. But absolutely, we see it as important. The pace we move out here and really enabling our business with it is an important focus for us to deliver for our customers. On fixed broadband, I don't know whether Michael, you want to grab it or we want Brad just to quickly jump up and grab the spin down. Michael Ackland: I'm happy for Brad to... Vicki Brady: Yes, Brad, please. Bradley Whitcomb: Just I can't resist on the AI as well. Vicki mentioned that Telstra virtual agent, which we've deployed. And I think it's the start of a competitive advantage there. We've more than tripled the containment since we've launched that AI agent to customers. So they're able to get their needs met without having to go to a human agent. And another one I'll mention, which is really cool, is using AI, you can change our entire digital experience into over 35 different languages. We've had about 30,000 -- or rather 70,000 customers already do that, and that just makes it much easier for them to engage with us. So that's an example, I think, of where it helps us addressing the customer. In terms of the broadband only, there's a couple of areas that we're focused on there. One is opening up to customers that genuinely -- they have their own modem at home, and they're just looking for the broadband connection and not looking for that full experience. We think also, though, this gives us a softer entry point to have a conversation with the customer when they come in, they see a price point that they're comfortable with, and we talk about the value proposition and what equipment they do have in the home and to then talk about the advantages of things like our smart meter -- or Smart Modem 4.0 rather. So we're not anticipating significant spin down. We think those are 2 different segments of customer, but we will keep an eye on that. Nathan Burley: Excellent. And we will take our last analyst question from Nicole Penny from Rimor. Nicole Penny: Thank you for taking my question and for the detail on the Aura opportunities you're seeing. Just secondly, the CapEx on the Viasat project remains ongoing. Could you provide more color on the expected completion time line and the likely earnings impact during this period as the project moves towards full operation, please? Vicki Brady: Okay. And Nicole, is that the only one? Have you got any others? Nicole Penny: That's it. Vicki Brady: Fantastic. Thanks, Nicole, for that. Look, I'll make a comment and then Michael may want to jump in. Just to be clear, and hopefully, the appendix again helps reinforce it in the material we've issued today. We think about Aura and Viasat inside that $1.6 billion of CapEx spend and those overall returns are linked to that. The profile is a little bit different. Viasat is the smaller component inside that overall program of work where we have been supporting with the build-out of ground stations and other infrastructure. So it's captured inside that broader financial profile that you can see. So it's Intercity Fibre or Aura as it's now called, and Viasat combined. I don't know, Michael, if there's any other color. Michael Ackland: No, I don't think so. I mean the Viasat has been delivered on an ongoing basis, and we've seen the revenue start to appear through both InfraCo but also into our Telstra Enterprise business. And that will continue for the life of that project. They're long-term assets in terms of the ground stations and well on track. Nathan Burley: That concludes our question time from analysts and investors. We'll now show a short video, which I suspect you do not want to miss, because as Brad would say, it is pretty cool. So we'll show that. And after that, we will have time of questions from media. [Presentation] Steve Carey: Thank you, and welcome back. Thank you, Nathan, for that handover. We hope everyone enjoyed the new ad. We will now commence our media Q&A. We are slightly early. So apologies to some media who may be joining at 11. We will obviously drop you into the queue. In this session, we have Vicki Brady, our CEO; and our CFO, Michael Ackland, who will be available to address your questions that you have asked. [Operator Instructions] Our first question today comes from David Swan from Nine Metro Publishing. David Swan: I wanted to ask about spectrum strategy. I've got 3 questions, all related to that. So I'll just fire those away. You've told ACMA, the fair price is $1.4 billion and they've come back at $2.7 billion. Is that number -- I guess what's the number that Telstra would accept without passing costs on to consumers? Is there a sort of landing zone there? Or is it a binary number? I wanted to ask as well, you said the trade-off with spectrum is between network investment and consumer pricing. But is there a third option which might be absorbing the cost through lower returns to shareholders? Is that something that Telstra has or would consider? And third, I wanted to ask about ACMA's renewal process. I mean, you didn't avoid a competitive auction, which could theoretically cost more. Is the $1.3 billion gap that you've complained about still cheaper than the alternative, a competitive auction? Is that something you're keen to -- is a competitive auction, I guess, something you'd be keen to avoid? Vicki Brady: Thanks, David, for that, and some great questions on spectrum. So first thing I'd say is, as you called out, we absolutely agree we've got to pay a fair price for spectrum. It's a core part of delivering high-quality mobile services. And we see spectrum as one of those assets as a country, we absolutely need to be maximizing its benefits to consumers and businesses. We do think as a country, it would be helpful as part of a digital infrastructure plan to have a clear plan for spectrum long run. This process right now is renewal of spectrum. Obviously, there will be spectrum needed for 6G, for future satellite services, for lots of other things as we look forward. So we do think having a really clear plan for how we maximize the use of spectrum to get the maximum benefit for consumers and businesses is super important. Look, obviously, the process is still ongoing on the pricing of the renewal of the spectrum. That's part of the ACMA process right now. We have a different view to ACMA, and that will be part of our submission back in as part of that process. As you call out, there's about a $1.3 billion difference in what we think the fair market value of the spectrum that we will go through renewal on versus what the ACMA currently see as the fair market value for that. Look, in running a telecommunications business like Telstra, you're constantly balancing up various things and various trade-offs. Importantly, Telstra, like all telcos, is a big infrastructure business. We've got to invest a lot of CapEx into our business. And if you look globally, telcos have been challenged on getting reasonable returns, because we need to be profitable to make sure that we can keep investing, and that means investing in our network, in things like the 5G advanced capabilities, or bring in services like satellite to mobile texting, the satellite messaging service we launched last year. And we're seeing customers -- NPS is up, so we've got to keep investing, because expectations also keep rising. We know we've got to keep investing to be able to attract and retain the best talent and invest in their skills. And yes, we also need to deliver returns to shareholders. We've got an underlying return on invested capital at 8.9%. So through a lot of work, we've steadily seen that increase. It is above our cost of capital, but it's probably -- it's not at the level that our investors would ultimately hope for. So we do have an ambition to grow that to 10%. And I don't think that is unreasonable in any way. Remembering our shareholders, we have more than 1 million shareholders. We've got the largest retail shareholder base in the country. And we know through things like superannuation, we estimate about 16 million Australians benefit from the financial outcome. So yes, there is absolutely a balance we need to achieve as we make choices and decisions. Higher spectrum cost just puts again extra costs we need to consider, and we would have to think about the various trade-offs as part of that. But the process is still ongoing at the moment. Steve Carey: Thank you, David, for those questions. Next up, we have Jared Lynch from The Australian. Jared Lynch: Two questions for you. Telstra's first half profit was driven by strong cost control, and it's a strategy that you plan to intensify with the proposed 750 job cuts in the current half. Just wondering, how will you ensure that prioritizing short-term cost savings and efficiencies will not fundamentally undermine the in-house expertise and people-driven innovation necessary to deliver the long-term growth and service quality promised by your Connected Future 30 strategy. And then just on the Connected Future 30 strategy, I'm interested to hear how will your investment in AI and data functions, including the JV with Accenture be deployed to solve one of the nation's most pressing challenges, whether it's climate resilience, health care, accessing regional areas or digital inclusion. And I guess what is the legacy that you want Telstra's new capabilities to create for the country? Vicki Brady: Yes. Thanks, Jared. A couple of good territories there. So let me go firstly to first half. Yes, we've delivered a strong first half performance. And yes, as part of our strategy, given we have very small revenue growth to deliver positive operating leverage, we absolutely need to be driving cost and efficiency. But as we think about our business and we think about the capability we need to be able to deliver long run in this business, absolutely, our internal teams are critical to that. And we keep investing in our teams internally, whether that is in things like their ability to be able to use and apply AI capabilities, because we fundamentally believe, for all of our team, they will be better positioned in the future, the better able they are to apply AI and use it in their jobs. So we're absolutely -- internal capability remains critical. It wasn't that long ago, for example, we bought back our retail stores. And we've heard Brad speak about this morning, just the benefit that has driven in having such a highly engaged team of people out there servicing our customers face-to-face in our stores. We also will partner with key partners. And the couple of things you mentioned from last week, they are 2 examples of where we are partnering. First, in terms of our Enterprise business, we've still got a load of complexity we need to get through in that business. So we did announce and propose some changes where we are partnering with Infosys to really be able to access their capability to help us simplify the complexity in that business in the way we serve and deliver for our Enterprise customers. We also proposed changes in the Telstra, Accenture Data & AI joint venture. Again, that is about accessing Accenture's global capabilities to help us really accelerate our road map on data and AI to be able to deliver benefits to our customers and into our business more quickly. So absolutely, it will be a combination. Our internal teams are critical, and we keep investing in them. But we also -- to remain competitive and at the forefront, we've also got to leverage partnerships. And I can assure you, any decision that impacts a role inside Telstra, they are never taken lightly, and we support and work with our teams very, very closely as we work through anyone who has a role impacted as part of any of those choices and decisions. Just in terms of Connected Future 30 and that ambition as we look forward, I think fundamentally, we see connectivity, it is a foundational piece for the country. You look to the future of inclusion of productivity, of prosperity. Technology is going to play a key role, and having a really solid foundation of leading edge connectivity that is there to deliver to all of those future needs is absolutely fundamental. You spoke about things like health care. I think about education. I see the way we work and connect regional communities, it's absolutely core to who we are as Telstra and the focus and delivery of our Connected Future 30 strategy. So absolutely, that core foundation of leading connectivity, we think, helps enable the country in terms of those future ambitions of inclusion and of prosperity. Steve Carey: Thank you, Vicki. Thank you, Jared. We do have a couple of people on the call that haven't registered for questions. So I'll just quickly reiterate that. [Operator Instructions]. We will move to our next question in the queue, and we will go to Grahame Lynch from CommsDay, please. Grahame Lynch: I wanted to ask about spectrum renewals. I've been following the debate around this quite closely now for a few months. And it seems to be missing the reality that over the next 15 years or so, which is the period we're talking about, 5G and then 6G is going to require a lot of new spectrum in addition to the renewing spectrum. But also Australia's population is probably going to grow by quite a few million over that same period, which means that telcos such as Telstra are going to have to install a lot of new capacity in cities to deal with all that extra population. Is this -- are these 2 realities perhaps a bit missing from the discussion around spectrum? And are they informing Telstra's posture on renewal prices? And perhaps could Telstra be better articulating that these are the issues that we'll be facing in coming years? Vicki Brady: Yes. Thanks, Grahame. And I know -- I've been reading some of your articles that you've been writing and your opinion pieces. You're incredibly well informed and understand our sector and how important spectrum is. So look, I think... Grahame Lynch: Thank you. Vicki Brady: Yes. No, I really appreciate it, because it's a really important question where you've gone. Absolutely, renewal is important. As you well understand, better than anyone, it is 80% of the spectrum that our current mobile networks run on today that will go through this renewal 2028 through 2032. So the certainty of renewal is absolutely a positive. Obviously, we are debating with the ACMA what each of us think the fair market price of that spectrum is, because absolutely, we accept, understand we need to pay a fair market price on fair terms. So that's important. But I think where you're gone is critical. And that's why we have been advocating that as a country, we do need a really clear vision for the digital future that has a very clear digital infrastructure plan that includes spectrum. Because where you've gone, as you look forward over 15 years, it's not just the renewal of spectrum, it is all of those new services, all of those new capabilities like 6G, like some of the satellite capability that is currently sort of forecast to be able to be delivered over that time horizon. I think as a country, we absolutely need to be thinking about how do we maximize the use of our spectrum so we get the best possible outcomes for consumers and businesses. And I think that's an important piece that needs to be brought into the thinking. And again, that's not easy, and we are very happy to be part of that as Telstra and I think as a sector, alongside government and regulators, as we think about how do we absolutely set up the country to maximize the use of spectrum to get the maximum benefits for consumers and businesses. So I think it is an important element right now. A lot of focus on renewal, because that process is obviously well underway, but I think your broader point is incredibly important. Steve Carey: Thank you, Vicki. Thank you, Grahame, for that question. Next up, we have Jenny Wiggins from the AFR on the line. Jenny Wiggins: Vicki, 3 questions from me as well. Just with regards to AI, can you give us any more examples of how exactly you're accelerating Telstra's investment in AI other than what you're doing with Accenture? I mean, for example, is Telstra spending more money on AI investments in the current financial year? Secondly, just more generally, do you have any views on how the federal government can improve productivity and economic growth in Australia? And thirdly, with regard to the ongoing problems with the 4G VoLTE networks, that's an issue for all network operators and device manufacturers, do you think Telstra will ever be able to guarantee that in the future, all mobile phone devices that are sold in Australia will be able to connect to Triple Zero without any problems. I mean, do you think your testing and talks with device manufacturers will ensure that after the current state of problems we've had? Vicki Brady: Thanks, Jenny. Well, lots in those 3 questions. So let me take them one by one. In terms of AI, when I talk about accelerating our Data & AI road map, that's absolutely about accelerating the use cases and the benefits and scaling those across the business. In terms of where we're seeing some of that acceleration, we're absolutely -- through our Data & AI joint venture with Accenture, that's really helped us accelerate some of the fundamental pieces like really streamlining the number of data platforms that we rely on. So we're absolutely seeing acceleration there. We're not talking about accelerating spend. So one of the things we're really clear on is, as we make choices on partnering or going into joint ventures, how do we align our ambitions and incentives, so that it is about being at the leading edge of being able to apply these capabilities into our business, but do it in a way where we do manage our costs, because we're very conscious of that. It's an easy area to spend a lot of money and that to grow fast. So we're very conscious of those and thoughtful in how we set up those partnerships and how we architect the technology inside our business to make sure we have choice, so that we can both get the benefits, accelerate those benefits, but also not see our costs grow beyond where we are comfortable with that being. Just on the productivity agenda for the country, I think it's such an important discussion. One of the things we've been strong on is we do think, as you look forward for our country, whether it's productivity and prosperity of the nation, there's no doubt technology is going to play a big part in that. And we think something that isn't always at the top of the list is that technology, whether it's AI or data centers, it does need to be connected. And so having a really clear digital infrastructure plan for the country, so that as a sector we can align behind that with government, with regulators, so right policy decisions are made, the right investment decisions are made. The regulatory environment is set up to, yes, protect customers, but also encourage innovation. So we think that's a really big piece as we look forward, and we're really optimistic about what technology and the important role that connectivity can play in helping to enable that for the country. On the third one, where you are talking about Triple Zero. And yes, obviously, there's been a lot of focus on Triple Zero. The first thing I'd say, it is a very complex ecosystem to ensure Triple Zero works from the devices themselves through to the networks and the different softwares and protocols that are running over networks through to getting the calls through to emergency services who operate across around the country, state by state, territory by territory. Look, our focus -- this is a complex ecosystem, and I think everyone in that ecosystem is working to try and make sure it works absolutely as well as it can. And I would say, obviously, any call that doesn't get through is too many. But the large majority of that ecosystem does work well. There are some complexities in devices. You're spot on. And obviously, devices come into the country, device manufacturers have to accredit those. We do testing on our network. But it is a dynamic area where devices are changing, software is getting updated, networks are changing. And so we work really hard to make sure we meet our obligations to be monitoring devices. And obviously, as part of some of those obligations, it does mean blocking devices if we find they cannot make Triple Zero calls. And so I think it requires work right across that ecosystem to make sure Australians continue to trust and they should trust our Triple Zero system to be able to get help in an emergency. Steve Carey: Thank you, Vicki, and thank you, Jenny. Our next question comes from Rhayna Bosch from SBS. We might be having some issues there. So we might go to David Taylor from ABC. David Taylor: It's quite extraordinary what Telstra is doing. The ABC has spoken to both current employees of Telstra, but also previous employees of Telstra and those who have been contracted by companies to be also employed by Telstra, and there's a real sense of fear around how your AI investment and AI rollout is affecting jobs. So can you give me an idea of -- so it's a two-pronged question, I suppose. Over the past 12 months, what proportion of jobs that have been lost within Telstra are related to your AI rollout? And how many -- what proportion of jobs are going to be lost at Telstra up to 2030 based on AI? Vicki Brady: Okay. And thanks, David, for that. So first off, I mean, the pace of change in AI is quite extraordinary. And when I'm engaging with our teams internally, yes, one of the questions is what does it mean for my job going forward? And I think the thing we're focused on is absolutely none of us can predict that future. It is changing so fast. I look back over the last couple of years, just how fast it's changed. None of us, I think, predicted that. So the thing we're focused on with our teams, in an environment where it is uncertain how AI will be used, I think the most important thing is skilling our teams. And so we invest heavily in the tools available to our team members. We invest heavily in also the training and skills of our teams through our Data & AI academy, because irrespective of what the future is and how it plays out, we firmly believe that our people who have better capability in being able to use and apply AI will be better positioned for future jobs. So we're very much focused on that. And I do understand it is a question top of mind for our teams. And as I engage across the country and travel internationally, it feels like a very common theme. The world is moving fast. So our focus is on how do we skill, enable our teams, give them access to the tools. And we are seeing our team members who have access to our AI tools, which is the large, large majority, are using those tools on a weekly -- 75% of them are using them at least weekly and often a lot more often as it becomes part of the way they work and operate. So as we look at impacts on our business, and yes, any decision to impact a role is a difficult one. We have had to face into those decisions. They are necessary decisions to put us in a position to be competitive, to be able to deliver at the level we need to for our customers. Those benefits -- today, there's not a role I could say, has directly been taken by AI. But of course, our investment in digitizing our business, our investment in applying AI is generating a more efficient business for us. And that's why, as I said, our focus is absolutely on working with our teams, that investment in the tools, and that investment in their skills. Steve Carey: Thank you, Vicki. Our next caller is Brandon How from Capital Brief. Brandon How: Just wanted to touch on an earlier comment that was made during the analyst call. I think it was flagged that because of Telstra's disciplined capital management, it would be able to navigate the upcoming spectrum renewal fees if they were to go through as they're currently proposed. I was just curious if that means that there's unlikely to be significant disruptions to existing investment plans at least out to 2032. And just wanted to touch on a separate point as well. It was revealed -- Telstra revealed earlier in the year to the Triple Zero service outage inquiry that suffered about more than 5,200 mobile tower outages last year. I was just wondering what commitments are you making to ensure that this is brought down? Vicki Brady: Yes. Thank you. Thanks, Brandon, for those couple of questions. Look, this morning on the call with analysts, the question was around our capacity to be able to -- if those spectrum renewal costs come in as is currently proposed, how would we be able to navigate that? One of the things about Telstra, we're very focused on is ensuring the business is in the right position to be able to continue to sustain investing in the business. And we've worked over many years now to steadily improve our overall returns in the business. They're still not super high. They are above our cost of capital, however. And obviously, if that cost does land higher than what we think the fair market value is and that process is still ongoing, then that will be a consideration we need to consider as we think about various trade-offs, where we're investing our money, how we're positioning and pricing in market. So there are a whole lot of factors we would need to consider. The point this morning is, are we set up to be able to navigate that as a company. And I look at where we're at financially, our ability to keep investing in the CapEx needed to support the business, our balance sheet capacity as a business. So it was a broader comment about being able to navigate through that. Just in terms of Triple Zero, obviously, there's been a huge amount of Triple Zero focus, particularly through the latter part of last year. Telstra takes its obligations incredibly seriously. We do have 2 sets of obligations. We run the emergency answer point for the country. When someone calls Triple Zero under a contract with the federal government, it is a Telstra person that answers that call and passes it then on to the relevant emergency services. And we have our obligations as a telecommunications company, including as a mobile operator. We invest huge amounts of our CapEx into the resilience of our network. These are large complex networks. And they will have issues over time, particularly, I spoke this morning about the investment in power backup systems. The single biggest thing that impacts the resilience of our network is power outages. So we do invest in power backup. However, there are situations where power is out for extended time. It could be that equipment fails. They're not infallible. And so we absolutely invest heavily in resilience of our networks. We also invest in things like new technology, bringing satellite messaging to customers just as another form. If there is an issue on the terrestrial network, there's another layer. We also encourage our customers, who are heavily reliant on being connected, to think about multiple technologies rather than relying on just one. So there are many things we do. These are large complex networks, and they're not infallible, and we invest huge amounts in their resilience. Steve Carey: Thank you, Vicki, for that. Our final caller for the day is Andrew Colley from iTnews. Andrew Colley: Can we have an update on Telstra's lease of OneWeb's LEOsat constellations and the issues you're having with complaints about the performance of small cell base stations themselves. Has [ Telesat ] provided an update on when it might be able to fill coverage gaps in its constellation over Australia to eliminate the voice service dropouts when using those LEOsat for backhaul on those installations? Vicki Brady: Yes. Thank you, Andrew. And so yes, as you well understand, you understand this technology well, we have rolled out using OneWeb's LEO satellite constellation backhaul over their satellites to some of our remote sites. And their rollout of their satellite constellation hasn't gone as planned on their side. So it does mean today there are some issues, particularly impacting voice. However, in terms of data performance, we have seen significant improvements by being able to access that LEO satellite service. We are working through that, working closely with communities and our customers to figure out -- we have rolled it out to a relatively small number of sites to date. That rollout is not going further right now as we work out what is the right balance to find here. It does provide real benefits, much more capacity, much better performance in terms of data over those sites. However, as you call out, there have been some issues around voice dropouts given where that constellation is at. So that's something we continue to work through with OneWeb. And our teams, as I said, closely engage with customers and communities that rely on those small cell services. Andrew Colley: Okay, I have one more question I'll be able to ask. You've sought some delays to the Universal Outdoor Mobile Obligation to push it back a year. Has the federal government given Telstra any indications it's open to doing that or to holding back the legislation for further consultation? Vicki Brady: So just in terms of the Universal Outdoor Mobile Obligation legislation. So first thing I'd say is, we're absolutely at the forefront of rolling out those services in the country. We've already got satellite messaging that we launched in June last year in market. So commercially, we absolutely see the benefits of these services. Under that legislation, it looks at then future services, voice, data. Some of that is dependent on brand-new constellations, brand-new capability that is not commercially available today. So as we've thought about that and we've given input, that's just an important element. Some of this technology is very early, some of it not in market yet. So obviously, that's going to be an important factor, but we're absolutely at the forefront of bringing those services to Australians, because we see them as important services and extra layer of resilience in the event a terrestrial network has an issue and also that ability in a country as large as Australia when people are outside of mobile network coverage, that ability to stay in touch. Steve Carey: Thank you, Andrew, and thank you, Vicki. We do have one final question. Jared Lynch just had a follow-up question. So Jared, just over to you for your follow-up, please. Jared Lynch: Thanks, Steve. Vicki, today, other business leaders warn that without productivity gains that this is as good as it gets after real wages fell for the first time in more than 2 years. I'm just interested about capacity constraints at Telstra and whether you're changing investment as a result of inflation or capacity constraints and are any being delayed? Vicki Brady: Okay. I must admit, Jared, I did see some headlines this morning. I haven't read the transcripts and understood the full context of some of those comments. But in terms of where we're at, we're having to navigate. Obviously, there are inflationary pressures on some of our costs. That's why us being at the forefront of how we really drive efficiency and better outcomes for our customers is at the forefront. We're navigating that. We are very focused on what we call positive operating leverage. So we're in an environment where we're not seeing top line growth at any large level. So we've got to continue being efficient, to be competitive, to be able to deliver at the level we need to for our customers. So right now, we are navigating that. You will have seen, in terms of our overall result, we did reduce overall costs. So we're able to offset that inflationary pressure that, yes, we feel like consumers and businesses across the country feel. We've been able to offset through some of the hard work, the discipline and the gains that we found, particularly through technology investment. Steve Carey: Thank you, Vicki. Thank you, Jared, and thank you to all the media and analysts that have joined our call and Q&As today. Thank you for your time and investment in today's call. We will now wrap up the half year results update. Thank you very much, and have a lovely day.
Nathan Burley: Good morning, and welcome to Telstra's results announcement for the half year ending 31st of December 2025. I am Nathan Burley, Head of Investor Relations. I'm joining today from the lands of the Gadigal people. And on behalf of Telstra, I acknowledge and pay my respects to the traditional custodians of country throughout Australia and recognize the continued connection Australia's First Nations people have to land, waters and cultures. We pay our respects to elders, past and present. This morning, we will have presentations from our CEO, Vicki Brady; and our CFO, Michael Ackland. We will then open to questions from analysts, investors, and then the media. I will now hand over to Vicki. Vicki Brady: Thank you, Nathan, and good morning, everyone, and thank you for joining us. I'll make some comments reflecting on Telstra's overall performance and our outlook. Michael will then cover the details of our financials. The first half of FY '26 was a strong period for Telstra. We delivered ongoing growth in earnings, reflecting momentum across our business, strong cost control and disciplined capital management. We also made a positive start to our Connected Future 30 strategy, which will see us double down on connectivity, drive growth and play a critical role in enabling a prosperous digital future for Australia. In first half '26, reported financial performance compared to the prior period included EBITDAaL up 4.9% to $4.2 billion, EBIT up 9.2% to $2 billion, profit for the period or NPAT up 8.1% to $1.2 billion, earnings per share up 11% to $0.099, and return on invested capital up 0.8 percentage points to 8.8%. Our underlying growth more accurately reflects our financial performance compared to the prior period. Underlying financial performance showed underlying EBITDAaL up 5.5% to $4.2 billion, cash EBIT up 14% to $2.5 billion, cash EPS up 20% to $0.14, and underlying return on invested capital up 0.9 percentage points to 8.9%. On the back of cash earnings growth, the Board resolved to pay an interim dividend of $0.105 per share. The interim dividend is 90.5% franked with a franked amount of $0.095 per share and an unfranked amount of $0.01 per share. The interim dividend uplift and the level of franking applied is consistent with our capital management framework and our aim to deliver a sustainable and growing dividend. Our dividend is supported by strong cash earnings this half, and our Connected Future 30 ambition remains to deliver mid-single-digit growth in cash earnings. Today, we are also announcing an increase in our current on-market share buyback from up to $1 billion to up to $1.25 billion. This increase is supported by strong progress in completing $637 million of the buyback in the half, earnings growth and the strength of our balance sheet. The on-market share buyback is expected to support earnings and dividend per share growth, and along with the increased interim dividend reflects the Board and management's confidence in our financial strength and outlook. Now that we've completed our first half, we are tightening our FY '26 underlying EBITDAaL guidance to between $8.2 billion and $8.4 billion. Our guidance on other measures are unchanged. Looking now at our results across the business. We grew underlying EBITDA across our Mobiles, Fixed Consumer and Small Business, InfraCo Fixed and Amplitel businesses. Importantly, our Mobile business has continued to perform well with EBITDA growth of $93 million. Mobile's growth was driven by higher ARPU and more customers continuing to choose our network and the value it provides. Mobile services revenue grew by 5.6%. Our Fixed C&SB EBITDA grew by $37 million, reflecting ARPU growth and disciplined cost management. We introduced our Internet-only plans late in the half, and customers now also have access to our Telstra Smart Modem 4 with next-generation Wi-Fi 7 technology. With these new offerings in place, we are focused on stabilizing customer numbers and driving growth. Our Fixed Enterprise EBITDA declined by $9 million as we continue to reset this business, including through portfolio management and reduced costs. We remain committed to this reset with further changes proposed last week to continue removing complexity. Our international EBITDA declined by $2 million, but grew excluding one-offs. Michael will go through this in detail. Our domestic infrastructure businesses across InfraCo, Fixed, and Amplitel continued to grow, reflecting strong customer demand. Across the business, we achieved 14% cash EBIT growth. This percentage growth rate is higher than the rate we expect at the full year, largely due to lower BAU CapEx in the first half. Our full year cash EBIT guidance is equivalent to around 5% to 10% annual growth. We delivered positive operating leverage of 3.1 percentage points, in line with our Connected Future 30 target. Given the low level of income growth in the period, we achieved operating leverage largely through strong cost discipline and efficiency gains. We reduced underlying operating expenses by $179 million or 2.4%, more than offsetting pressure from rising costs. This required challenging but necessary decisions to reduce some roles and set us up to deliver on our Connected Future 30 ambitions. We're also seeing efficiency gains flow from technology leadership as an important enabler of our strategy. This includes modernizing our software practices, relentless simplification, strong adoption of AI and an API-first architecture. For example, we've consolidated our software partners from 400 down to 2, improved efficiency in our software development by more than 20% and sped up time to market and release cycles by 15% to 20%. And most importantly, we're seeing benefits to customers, which I'll come to shortly. Turning to our strategy. Our ambition is to be the #1 choice for connectivity in Australia. Achieving that in a changing environment means radically innovating in the core of our business. You can see the layers and enablers of this strategy on this slide, which we covered in our last Investor Day. There is a more detailed scorecard in the appendix that shows our progress, so I won't go through that in detail. But I will make some comments on the importance of connectivity and call out some highlights from the half. Connectivity is foundational to supporting national productivity, resilience and security. As reliance on telco networks grows and service expectations rise, continued investment in digital infrastructure is fundamental to better delivering services to consumers and business. Investment needs to be supported and encouraged and the investment required across the sector will be large in the multibillions of dollars. To do this well, we need to have a shared national vision for the digital future we want to create for Australia and a national digital infrastructure plan our sector can align behind with government and regulators. This must include a plan to use spectrum to the greatest possible benefit to consumers and businesses. To do that, we need certainty of spectrum allocation on fair terms at a fair market price. We also need better regulation designed for but agnostic to the technology of today. We need forward-looking guardrails that both protect consumers and encourage innovation to deliver better outcomes for them and the nation. We welcome the Productivity Commission's proposal for a deep dive review of regulation in the telecommunications sector. We want to work with government, regulators and the sector on a shared vision for Australia's digital future, so we can better align policy, regulation and decision-making with the goals we have as a country. On investing in connectivity, we are driving significant momentum in the build of our Aura network and managing this large complex project with discipline. The network will be vast, connecting our capital cities with ultra-fast and reliable fiber and the ability to connect regions too. This week, we reached the halfway mark with 7,000 kilometers of fiber in the ground. Our Sydney to Melbourne coastal via Canberra routes are now live and more routes are expected to be completed in FY '26, including Sydney to Melbourne Central via Canberra and Sydney to Perth. We are on track to achieve a 1 point uplift in our network experience index, which brings together network availability and speed across our mobile and fixed networks to measure the real experience our customers receive. The uplift is a result of our ongoing program of network optimization and early benefits from our additional investment over 4 years in 5G advanced capability. It also reflects improvements in resilience. For example, we have invested to strengthen backup power across our network sites, which we were able to withstand more than 95% of the 165,000 planned and unplanned power interruptions we experienced over FY '25. While there's always more to be done, these investments and others contributed to Telstra receiving the 2025 Best in Test Mobile Network Award from umlaut for the eighth year in a row and with our highest score ever. In June last year, we became one of the first operators in the world to launch satellite messaging. And while it's not a replacement for terrestrial networks, we're seeing it add another layer of resilience when terrestrial networks are disrupted. For example, when fire damage and power disrupted our network during the recent bushfires in Victoria, particularly around Longwood and Harcourt, we saw a threefold increase in people connecting to satellite messaging, even though many people had evacuated this area. On supporting customers, we have migrated more than 99.9% of our 7.7 million consumer customers to our new digital stack. We continue to work with around 4,000 of our customers who are the most complex to migrate, and we are managing that thoughtfully. Our team know these customers as individuals as we work through this with each of them, and we're committed to getting it done. We're seeing significant improvements in customer experience from digitization and AI. 86% of consumer service interactions like billing, order tracking or prepaid recharge are now completed through our digital self-service instead of customers having to call us. In November, we launched an AI-powered assistant, which customers can access on telstra.com to get help with simple things like checking their plan, activating a SIM or how to reset a password. This is our first customer-facing generative AI assistant, and it has meant an almost threefold increase in customers being able to resolve their inquiry using AI. We plan to scale this AI-powered assistant across our My Telstra app over this quarter. It is just one example, but we have many more AI use cases across the business, helping us serve customers better, strengthen network resilience, protect customers from scams and solve issues before they become problems. Overall, our investment in digitization and AI, combined with our ongoing network and capability investment is helping to drive improvements in customer experience. Over the 12 months, we've seen strategic NPS increase by 5 points and episode NPS increase by 2 points. At the same time, we have been laying the foundations of our Connected Future 30 strategy, and there are 3 things that I'll call out here. The first is innovating in core connectivity, capability and how we capture value. In Mobile, our investment in 5G advanced is moving us towards a smarter, more adaptable and programmable network. In Fixed, we launched our Adaptive Network Centre in June last year, a self-service platform that empowers our enterprise customers, partners and Telstra teams to design, order, track, manage and monitor connectivity services, all in one place. These capabilities are both fundamental to enabling our network as a product layer, and we continue to drive momentum. The second is our work under our joint venture with Accenture to transform our business with AI. We have made good progress since launch, including retiring legacy platforms, strengthening responsible AI governance, streamlining data architecture, and opening access to global innovation via our Silicon Valley hub. We recently proposed changes that would see the JV tap into Accenture's existing resources and expertise to deliver on our data and AI road map more quickly. That means some roles would not be required. While decisions like this are never easy, over time, we expect it will deliver benefits to our customers and our business faster. Third is our investment in upskilling our people. We continue to put AI tools into the hands of our people to help them learn and adapt. And over the half, more than 75% of our team with access to those tools use them weekly or more often. We also continue to offer training through our Data & AI Academy. In the first 6 months of FY '26, almost 9,000 of our people completed a course. Looking ahead, we are focused on continuing to deliver value for our customers, communities and shareholders as we build momentum behind our Connected Future 30 strategy. This includes, through our core business cash flows, active portfolio and investment management and disciplined capital management. Our ambition is to be the #1 choice in connectivity in Australia and to continue delivering on our purpose to build a connected future, so that everyone can thrive. I'd like to thank the Telstra team for everything they have delivered in the half and the care they've shown for our customers, particularly responding to the Victorian fires and Queensland floods over the summer. I'll now hand to Michael to take you through the results in detail. Michael Ackland: Thanks, Vicki. And as Vicki said, we've had another strong half with continued growth across all earnings and cash metrics, including our new guidance measures. This is in line with our goal to deliver resilient, predictable and consistent growth under our Connected Future 30 strategy. While total income across the group increased just 0.2% in the half, we've reduced operating expenses by 2.1% with our continued focus on efficiency. EBITDA after lease depreciation or EBITDAaL was up 4.9% on a reported basis and 5.5% on an underlying basis, with the difference due to a $23 million impairment of the London Hosting Center. We've delivered a profit to Telstra shareholders of $1.1 billion, up 9%, and earnings per share of $0.099, up 11%. These results reflect growth in key products, especially Mobile, ongoing strong cost management and reduced shares on issue from buybacks. Cash earnings were higher than reported earnings as depreciation and amortization is higher than business as usual or BAU CapEx. We expect this trend to continue and continued growth in D&A. In addition, cash EPS of $0.14 per share was up 20%, a higher growth rate than reported EPS as BAU CapEx was lower this half. As Vicki said, with stronger cash earnings, the Board increased the interim dividend to $0.105 per share, up 10.5% on a cash basis. This represents 75% of cash EPS. With our tight franking balance and ongoing gap between cash and accounting earnings, partial franking in this period best supports a growing and sustainable dividend. We've also lifted our current buyback from up to $1 billion to up to $1.25 billion. $637 million was bought back in the first half or 1.1% of shares at an average price of $4.90, bringing us to a total of 2.6% of shares retired in the calendar year 2025. Now given this is the first half we are reporting on cash EBIT and cash earnings, let me provide a little more detail. As a reminder, cash EBIT is a view of earnings after key cost buckets, including BAU CapEx, lease and spectrum amortization. Cash earnings is a further view after interest, tax and noncontrolling interest. Cash EBIT growth of 14% to $2.5 billion follows growth in our core operations, coupled with strong cost management and lower BAU CapEx. BAU CapEx of $1.5 billion was down 5%, largely due to timing. We expect a higher spend on digital infrastructure, including in our International business in the second half. Despite a lower average borrowing rate, finance costs increased modestly. Tax was higher in line with higher earnings with an effective tax rate of 28.4%. With that, cash earnings grew 17% to $1.6 billion. Turning to Slide 14 on product profitability. We delivered EBITDA growth across Mobile, Fixed C&SB, InfraCo Fixed, Amplitel and Other. Other EBITDA comprises costs not allocated to product. It improved with favorable foreign exchange movements, adjustments due to bond rate changes and the absence of equity losses following the divestment of our Foxtel stake last year. Health was flat with continued growth in revenue, offset by higher costs supporting new contracts and ongoing transformation. Other EBITDA would generally be around a $70 million loss per half, although this varies based on the nature of the items included. Turning to our key products, starting with Mobile, which continues to demonstrate strong performance. Mobile service revenue grew 5.6% with growth across all product groups, including postpaid, prepaid and wholesale handheld, mobile broadband and IoT. We delivered sustained average revenue per user or ARPU growth across all categories, brands and segments with disciplined commercial execution. Postpaid handheld ARPU grew 4.8%. Prepaid handheld ARPU grew 14.7%, although significantly lower on a unique user basis, and growth is due to the flow-through of October 2024 price changes. And Wholesale ARPU grew 7%. We achieved this ARPU growth while also growing postpaid, prepaid and wholesale customers. Our handheld mobile user base grew by 135,000 in the half. Mobile EBITDA grew 4% to $2.7 billion, with service revenue growth partly offset by higher costs, including higher-than-usual customer remediation and compensation, sales costs largely related to satellite, increased redundancy, and a higher allocation of shared costs as Mobile becomes a bigger part of our business. We expect sequential mobile service revenue growth to be muted given the timing of past price changes and lower IoT revenue following the divestment of MTData. Turning to Fixed Consumer and Small Business, where we continue to grow earnings by focusing on a portfolio of products and technologies and strong cost management. In the half, we grew nbn unit margin through price rises and plan mix, which offset SIO losses, and we continue to grow our 5G fixed wireless product. We continue to invest in our offering in the half. We launched our Internet-only plans and introduced the Telstra Smart Modem 4. However, SIO losses remain a challenge and a focus for our channel and marketing teams. In Fixed Enterprise, we have continued efforts to reset the business and focus on connectivity and strategic growth areas. Starting with Data and Connectivity, or DAC, where income fell 9%. During the half, progress on product refresh and upselling to higher bandwidth was not enough to offset the impact of service rationalization and in-period customer credits. We delivered cost and CapEx reductions. However, DAC EBITDA declined to $25 million as cost reduction was insufficient to offset the revenue decline. Turning to Network Applications and Services or NAS. Revenue declined 4% following deliberate decisions to focus on areas aligned to our strategy and declines in calling products. With strong cost management, EBITDA increased to $62 million in the half. Our focus on portfolio management is ongoing. The sale of Alliance Automation and MTData are completed, and the sale of 75% of Versent Group announced last August is expected to close this half. These businesses contributed $235 million in revenue in the first half of FY '26. Turning now to International on Slide 18. While reported EBITDA fell 0.5%, we achieved modest growth, excluding significant one-offs. Starting with Wholesale & Enterprise, while reported EBITDA of $232 million grew 20%, this included $45 million of one-off benefits, including deferred revenue recognition, other balance sheet releases and an equity accounted associate gain. Excluding these and one-offs in the prior period as well as FX impacts, EBITDA grew around 1%. This growth was delivered through strong cost management following a strategic refocus of the business on DAC. This more than offset DAC margin pressure from higher off-net mix, ongoing declines in legacy voice, a business we expect to complete the sale of this month. Looking forward, Wholesale & Enterprise EBITDA is expected to decrease significantly in the second half sequentially with the one-off items not expected to repeat, declines in NAS and voice, and partially offset by ongoing cost discipline. Over the past few years, we're focused on maximizing utilization in our subsea cable assets. We have been disciplined in our investments in new capacity. However, this has limited opportunities for new sales and growth. We now see promising investment opportunities in the second half of FY '26 within our BAU CapEx guidance. Digicel Pacific reported EBITDA declined 22% to $139 million as the prior year benefited from the release of the remaining earn-out provisions. Excluding this and in constant currency, EBITDA grew 1.7% with ongoing cost reduction offsetting a challenging operating environment. Turning to Infrastructure on Slide 19. InfraCo fixed income was broadly flat at $1.4 billion with growth from nbn, CPI indexation and ground stations. This was offset by lower commercial and recoverable works, reported legacy asset sales and internal revenue based on efficiencies and lower power charges. InfraCo fixed EBITDAaL grew 3.4% to $905 million, including a higher contribution from nbn, copper recovery, commercial works and cost efficiency, partially offset by the reduced internal income. Amplitel continued to benefit from strong demand for towers and cost efficiencies. EBITDAaL grew 6.6% to $162 million despite the MOCN impacts. Regarding strategic investments, including the Aura network, which is our new name for our Intercity Fibre. We continue to expect spend of $1.6 billion above BAU CapEx across the project. Now while we expect the vast majority of this spend to occur by the end of FY '27, we now expect a small amount of spend and some routes to complete in FY '28. We continue to be disciplined in the build of this 30-year asset, including prioritizing routes in line with customer demand and returns. We expect a mid-teens IRR with strong revenue growth, especially from FY '28, in line with demand as routes come online. Strong cost management is a key highlight of this result. Our proactive cost management and the benefits from technology adoption is helping us be more efficient, respond to structural challenges in some products, as well as the impact of inflation, and allow for reinvestment. Lower sales costs were a function of lower Fixed C&SB, International and NAS costs. Fixed costs were $76 million lower. Together with lower BAU CapEx, cash EBIT costs reduced, delivering strong operating leverage of over 3 percentage points. We've maintained our strong capital position with liquidity supported by strong operating cash flows. Net debt remained stable at 1.9x despite our buybacks, as higher debt was offset by EBITDA growth. We've also reduced our average cost of debt to 4.8% and extended our maturity profile. Our balance sheet is strong, and we remain committed to an A band credit rating. This has enabled us to lift our current buyback. We've also improved our return on invested capital. Turning to FY '26 guidance on Slide 22. Today, we are tightening our underlying EBITDAaL guidance to between $8.2 billion and $8.4 billion, with the midpoint unchanged. Our guidance on all other measures is reconfirmed. In terms of EBITDAaL, there are a number of one-offs that have benefited the first half, including in International and Other EBITDA. The second half will also reflect the loss of earnings from businesses we have divested. Offsetting these items in the second half, we expect ongoing productivity, including carry-in from prior years as well as InfraCo asset sales and net product growth. As previously noted, we also expect higher BAU CapEx in the second half. These results demonstrate our value creation under our Connected Future 30 strategy, growth in core business cash flow, 17% growth in cash earnings supported by strong operating leverage, portfolio and investment management, where we continue to execute in line with our strategy to enhance returns, and disciplined capital management, including the lift in dividend and buyback. Finally, I would also like to thank the Telstra team for all of their ongoing efforts in delivering value, especially for our customers, the communities in which we operate, and our shareholders. And I'll now hand to Nathan for Q&A. Thank you. Nathan Burley: Thank you, Michael. We'll now open for questions from analysts and media. On the call today, in addition to Vicki and Michael, we have other members of the Telstra Group Executive, including Brad Whitcomb, Group Executive, Consumer; Steven Worrall, CEO, InfraCo; Oliver Camplin-Warner, Group Executive, Enterprise; Amanda Hutton, Group Executive, Business; and Kim Krogh Andersen, Group Executive, Product & Technology. With that, I'll open to the first question, which comes from Eric Choi from Barrenjoey. Eric Choi: Congrats, everyone, on the result and lifting the dividend. I've got 3 questions, but can I please start my first question specifically on the dividend. And I just wanted to check the broad logic for potential FY '26 and '27 outcomes. So if you look at FY '26, your first half cash payout was 75%, but your policy has been sort of 70% to 90% in the past. And just logicking out the second half, you can work out cash EPS will fall a little bit in the second half versus first half. So I guess we just wanted to check if you're happy to up that cash payout above that 75% to maintain $0.105 into the second half. And then just beyond FY '26, you're clearly focused on cash earnings now. So if we think you guys can grow cash earnings by 5% or more, there's no reason why that EPS can't grow 5% or $0.01 again beyond FY '26. That's the first one. Did you want the rest? Or should I give you a chance to respond? Vicki Brady: Why don't we -- Eric, we might do it a little differently. Given there's quite a bit in that first one, why don't we take it first off? I'll make a couple of comments, and then I know Michael will want to jump in as well. So first off, this is obviously the first half where we've spoken a lot about in terms of dividend that under our capital management framework, where focus is sustainable and growing dividend, our preference is fully franked. But where that's not possible, we would consider unfranked. And so look, as the Board considers the dividend, the capital management framework is obviously the critical thing that they reference. As we spoke to this morning, the first half of this financial year, we've seen particularly strong cash earnings, and that supports the first half dividend. But yes, that sustainable and growing dividend is absolutely a key focus. We don't have any more a cash payout ratio that we're targeting. It's very much -- we focus on the capital management framework and look at it through that lens. But Michael may want to comment on some of the historic numbers, I'm not sure. But look, as we look forward, that's why we keep coming back, Eric. Our ambition under Connected Future 30 is really that mid-single-digit cash earnings. That's really critical, and that's an important reference point. As you know, we work through and the Board makes its final decision on the dividend. But Michael, do you want to jump in with any further? Michael Ackland: Yes. I mean, I think Vicki is absolutely right. We don't have a policy on payout ratio. But if you look over the last few years, I think in FY '25, on the same basis, the cash EPS payout ratio was 85%. It was 90% in FY '24, and it was 83% -- 84% in FY '23. But we're focused on that sustainable dividend and just recommit to our objective to deliver mid-single-digit growth in cash earnings, Eric. Eric Choi: Awesome. I'll try and be quick on 3. But just number two, just in terms of balance sheet headroom for capital management, and I'm going to focus on Moody's here since they're 1 notch higher than S&P. It looks like they've lifted your max gearing headroom to 2.4x now. So can I confirm on their measure, you'd be tracking at 2.1x to 2.2x, and that's before you conducted portfolio optimization. So basically, the question is, do you have plenty of headroom to increase both dividends and buybacks on the credit agency view? Vicki Brady: Excellent. Well, that's quite a detailed one. My overarching comment is, our balance sheet is strong. It's a core part of our capital management framework. You know that. We're absolutely committed to those things that keep us in that A band credit rating. But Michael, do you want to get into any of the specifics there? Michael Ackland: Yes. So we reported 1.9x. I think that's well within our conservatively framed outlook of 1.75x to 2.25x. Moody's have a slightly higher top end to that range. They do use some slightly different methodologies, as you point out. We track both of them. But I think your conclusion is that the balance sheet is strong and that we do have strong capacity within that A band rating based on both Moody's and S&P's, correct. Eric Choi: Can I fit in the last one, sorry. Just a question on whether investors should think of Telstra as an AI loser or winner. And I think you're implying you're an AI winner, because to get to your long-term ROIC of 10%, you basically need to grow EBITDA $1 billion or more from here. And like logically, you can see your mobile service revenues are $8 billion to $9 billion, your fixed cost base is $7 billion. If those 2 kind of grow in line with each other, they kind of offset each other. So you kind of need something else to fill that $1 billion-plus gap. And that's going to have to be through InfraCo and cost efficiencies. And I'm also guessing that's going to have to be driven by AI. So you're essentially saying AI helps you hit your long-term guidance? Vicki Brady: Okay. Well, why don't I start off on that, Eric? There's quite a lot in that one. The first thing I'd say is, obviously, inside Telstra, there's a number of businesses. Obviously, Mobile key driver of value and growth right now. And we're super happy with that business. That's come through years and years of consistent investment and differentiation in what we deliver to customers, and that will obviously remain a focus. If you look at our portfolio, I'll come to InfraCo in a second. But there are other elements of our portfolio we're still working through, Telstra Enterprise. We spoke a little bit about the International component of our business today as well. So there's still work to do in our portfolio in terms of getting those businesses in the right shape and supporting our ambitions. On InfraCo, I mean, there is no doubt the demand cycle we're in at the moment, the sort of investment that is going into AI infrastructure. We couldn't be more pleased that we embarked on Aura, or Intercity Fibre as it was previously known quite a few years ago now, and that build-out is at the halfway mark. All of the demand signals would indicate growing demand there. So the Infrastructure side of our business is obviously important in the long run. We have also set in our ambitions, positive operating leverage. And so yes, we've got to keep getting more efficient. And you see that. I think Michael and I both commented today, we are seeing benefits from, again, years of investment in digitization, in pushing ourselves to be sort of at the front of how we apply AI inside our business. So they are important. The dynamics in the world, it is changing fast. For us to be competitive, for us to keep delivering on rising expectations, rightly, of consumers and businesses, we've got to be able to apply AI. And so I'm really optimistic on what AI can deliver for us, both in terms of the demand signals in InfraCo, but also in how we use that inside our business, yes, to drive efficiency, but also drive better customer outcomes. So they'd be the big things I'd comment on in there. I don't know, Michael, if we want -- I know I might go, because we've got Steven Worrall. Obviously, it's his first set of results with Telstra leading InfraCo. So I thought it might be a good chance, because that winners and losers in AI, particularly from our Infrastructure business. I thought, Steven, if you're happy to make a few comments, it would be great. Steven Worrall: I'll be very happy to do that. Thank you, Vicki. And good morning, everyone. It's great to be here, as Vicki said, my first results announcement with Telstra. And if you'll indulge me for a moment, I thought I might provide a little context that goes to the heart of the question, Eric, that you've posed. But I also can give some direction in terms of where we're headed. I think I'll just start with saying how excited I am to be here at Telstra at this time. It's an incredibly exciting time for our business, but it's also an exciting time in relation to digital infrastructure. We don't have to look too far. Pretty much every other day, there's an announcement of a new investment that's being made in data centers here in Australia. And Australia has emerged as one of the leading destinations for data center investment around the world, as we've all seen. Now of course, that's just one part of the digital infrastructure landscape. And as recently as last month at PTC, which is a conference in Hawaii, where we engaged with hyperscalers, of course, other players in the AI ecosystem, some of our existing clients and many others who are eyeing the opportunities that this build-out of digital infrastructure is providing, we saw a very significant uptick in terms of our pipeline coming out of those discussions. As Vicki mentioned, that's why we think Aura is such an important investment. It will provide the AI inferencing architecture that we think is so essential for our nation as we look to an increasingly digital future. And while I'm excited about all of that and excited to be here, it's also a really important time for us as a nation. And I think Vicki also pointed to this earlier in her comments. Indeed, she made these comments at the press call last year in terms of the moment that we find ourselves confronted by. And that is in relation to how do we think about productivity going forward, how do we think about how we best participate in an increasingly digital world. And we think investments in Aura and the assets that we have give us the permission. And I think the logical role for us to play to help Australia best position itself. Last quick thought. That's a long answer to your question. Of course, our international asset base is incredibly important as well, and Michael touched on this in his remarks. Telstra owns and operates more than 25% of the world's subsea capacity. And when you think about a digital future, you think about connecting Australia to the global digital supply chain, it's that subsea network combined with the domestic and terrestrial assets that we have that we think sets us apart, and we think puts us in an incredibly important position with all of the work ahead of us to ensure that we can capitalize on those commercial opportunities as, of course, we serve the country. Nathan Burley: We'll go to our next question, which is from Entcho Raykovski from Evans Partners. Entcho Raykovski: So my first question is around Mobile costs in the period, and they were a bit higher than the market expected. And Michael, you've provided us with some good color around what's driven that. My question is, to what extent were the higher costs driven by higher satellite costs as opposed to some nonrecurring items like remediation. I'm just trying to get a sense of the extent to which the cost increase is recurring. And I've got a couple of others, but I might hold off after this answer. Vicki Brady: Yes. Thanks, Entcho, for that. I know Michael spoke to sort of 4 major things that were in that cost increase. We don't break it down. We don't get into sort of cutting and dicing it into the pieces. But as you said, the first one mentioned was customer remediation and compensation. We are at the end of a program of work on historical sales practices. So that comes to an end at the end of this financial year. We have in part of business as usual, those costs exist, but they are higher in this half, and we would expect higher for this full year. But we don't break it down into the subcomponents. I don't know, Michael, if there's any other comments you wanted to add. Michael Ackland: No. I mean I think, Entcho, I would -- the satellite costs, we should consider those to be an ongoing change. And I think you rightly pointed out, the others we don't expect to be ongoing in this nature. The other one we referenced there is just the way that shared costs are allocated. And frankly, that's just a little bit that Mobile is increasingly a bigger part of our business, as you can see in our numbers. And so that trend will continue as well. But frankly, it's against our overall costs going down. So I think we should remain reasonably confident about ongoing operating leverage in that business as we've committed to across our entire business as we move forward and look at this, as there has been some more specific impacts this period. Entcho Raykovski: Okay. That's helpful. And my second question is around the potential expected increase in spectrum renewal costs that was announced by ACMA in December. Does that impact your ROIC targets to FY '30 in any way? I mean, I noticed that on Slide 35, you've got a footnote referencing the new payment structure. I guess if that does have an impact on ROIC, do you foresee a need to perhaps divert investment from elsewhere into spectrum purchases? Or how does it impact your decisions around pricing and the need to pass this cost on to consumers? Vicki Brady: Yes. Thanks, Entcho. And obviously, it's an ongoing process at the moment, that process of spectrum renewals. I think on the positive -- I mean on the positive front, starting there, ACMA has decided it is a renewal process. I mean, again, reinforcing the spectrum that will come up for renewal through 2028 to 2032 is about 80% of the spectrum that the mobile networks in the country rely on. So that's a positive. And the process in terms of determining what is fair market price, that is the debate that's underway through that process. ACMA obviously put out some more information just pre-Christmas. We have a different view on what fair market price is. For us, it's about -- at the moment, it would be, we believe, about $1.3 billion more than what we would see fair market price. So look, that will be part of our submission back. Obviously, that process is still ongoing. We'll put our views, our thoughts, our analysis work we've done into that. Obviously, any additional cost that comes into the business, we've got to be incredibly thoughtful about. As extra cost pressure comes, there's constantly a balance of how much we invest into the network and the products and services we're delivering for customers. That might be things like satellite to mobile technology. It's investment in our mobile network we keep making and our broader network. So that will be something we'll have to think about. Obviously, increasing costs, we've then got to think about, what does that look like in terms of what it means for pricing for customers, because ultimately, for us to keep investing and being at the forefront to deliver high-quality connectivity services, we absolutely need to make a return on those investments, so we can keep that investment going. So look, it's part of the process. Our ambition on ROIC remains the same. That ambition under Connected Future 30 to get underlying ROIC to 10%. You did pick up that note. We wondered how quickly that footnote would get picked up. And as you can see, we've just been very transparent using the current ACMA pricing that they've put out as the interim pricing that's reflected in that footnote. Nathan Burley: Our next question is from Bob Chen from JPMorgan. Bob Chen: A few questions for me. Maybe firstly, just on the really strong ARPU result across the Mobile business, especially across the prepaid and wholesale. Like how sustainable do you think this is? And is this just the beginning of moving those customers on to higher prices? Vicki Brady: Bob, did you have more than one question? Can I just check? Bob Chen: Yes, sure. Yes, I've got some others. Do you want me to... Vicki Brady: Yes, why don't we grab them all and then I'll make sure we manage to get to them all. Michael Ackland: Yes. Bob Chen: Yes, sure. Maybe just on the comments earlier around the Aura network. Obviously, we're seeing a lot of demand from new data centers being put into the region, like you guys mentioned. When you think about that sort of mid-teens IRR you're talking to, I mean, given the increased level of demand for data centers and connectivity, could the return profile of Aura be better than what you were initially expecting? Vicki Brady: Okay. And is there a third one? Bob Chen: Yes. And then just on the ACMA spectrum renewal process, I think you spoke to some of the trade-offs you're sort of thinking about in terms of mobile network investment. But how does it impact maybe your capital management settings if you don't see the gap between ACMA's pricing close with your views? Vicki Brady: Great. Thank you. Okay. So quite a few to cover off there. Why don't we -- just on Aura, my comment there would be, we continue to have the same outlook in terms of Aura in terms of that financial profile. So that mid-teens IRR is absolutely what we continue to target. Of course, as you heard Steven talk about earlier, we do see good demand signals. But obviously, we've only just passed the halfway mark of build. So our focus is absolutely completing the build, and as the routes come online, making sure we're converting those demand signals into commitments and switching on revenue on the network. So right now, that financial profile stays as is. And I think we've put a slide in the appendix just as a reminder of what that looks like. Just on the ACMA, look, as I said, that process is ongoing. If it does land with the pricing that's currently proposed, I think this is where you see the benefit of very disciplined capital management, a strong balance sheet. Obviously, as I said, we'll need to consider various trade-offs. But I think given the hard work over many, many years, obviously, the business is in that underlying earnings growth, we're seeing cash earnings growth. And spectrum is ultimately -- it's a critical element to delivering high-quality mobile services. So I think as we stand today, we sit with the capacity, I think, to be able to navigate that period, and we just wanted to be really clear in that footnote and give you a view of how that might look like if the current pricing was to proceed as is in the interim proposal. On ARPU, I think it might be worth getting a few comments on this one. I might get Michael just to make an overall comment, because he can cover off the broader perspective, including wholesale. And then I might ask Brad to comment, because you particularly mentioned prepaid, and we've got good strong performance out of the consumer side of the business. So Michael, why don't I go to you on ARPU more broadly? Michael Ackland: Yes, sure. Sorry, just a quick one on your point around capital management and spectrum. I think it's a really good question. The way that I would think about it is we start with what's our return on invested capital? Are we getting an appropriate return on invested capital, and that's where all those trade-offs that Vicki talked about. And then the second one is capital management, which is our strong balance sheet. So I think -- just reiterating what Vicki said, but I wanted to talk to it. Vicki Brady: Yes. No, thank you. Michael Ackland: Look, I think on Mobiles overall, and I think hearing from Brad is going to be much more insightful than anything I could offer, obviously. But we're really happy with the way that our multi-brand strategy is playing out. We have a broad range of brands and offers and channels to market that are meeting more of the market, and we continue to grow that base. You can see that when you look at the revenue growth, the way that is spread, and also the ARPU growth that we're seeing when you take all of our handheld customers in total. So we're really happy with the way that multi-brand strategy is playing out. Prepaid has been a very specific highlight that you called out. And so maybe with that, we can get Brad to talk a little bit about how that's working and what's happening. Bradley Whitcomb: Yes. Thanks, Michael. Just to broaden that out a little bit, yes, we're really happy with the performance for the first half when we look at the mass market mobile. And as Michael pointed out, we do have a series of brands that we work with, Boost, Belong, main brand, and also our products on prepaid and post, and we work to tile those up, so that we've got offers that are attractive to our customer segments. I'm really pleased that we were able to see growth in terms of subscribers across all of those various aspects of the portfolio. And as you pointed out, also ARPU growth as well. The mechanics of that ARPU growth for prepaid, it was around price rise back in October of 2024. And for postpaid, including Belong, July 2025 price rises there. But when we look to -- in terms of sustainability, I would look first at how happy are our customers. And really pleased that we're sitting -- as Vicki mentioned, we're at an all-time high for our customer NPS at plus 47. That's up significantly PCP. So that's a great trend for us. I'd also look at our overall value proposition and what we're offering our customers. First and foremost, it is built upon having the broadest, deepest, most reliable network in the country and arguably in the world; world-class privacy spend, protection and security for our customers; and then the intangibles around our brand. We see our brand moving from strength to strength. We're now the ninth strongest brand in the nation, which is consistent with one of our Connected Future 30 aspirations to stay in that top 10. We've got brilliant frontline workers that are serving our customers, whether that's through our retail stores or in our contact centers. And you'll feel that when you engage with them that they like the work that they do. In fact, we've got, across the consumer division, which is mostly frontline workers, we've got an employee engagement score of plus 85. And when your employees are engaged, they just provide that much better service to the customer. So hard to predict the future. It is a very, very competitive market, and we have to earn the right to serve our customers every day. But when I think about the sustainability of the value proposition that we have, I like where we're standing right now. Nathan Burley: We'll take our next question, which is from Lucy Huang from UBS. Lucy Huang: I've got 3 questions. I'll just ask them first. So just -- I mean, good results on mobile ARPU. I just wanted to see if you could unpick some trends in churn in postpaid post the price rise that was implemented in July. And particularly on the Enterprise side in Mobile as a result, was that still a drag in the ARPU numbers this half? Or do we think that drag has actually moderated moving forward? And then secondly, just on Intercity Fibre, again, I think you mentioned on the call that we're expecting strong growth coming through in FY '28. What's the conversation with customers on whether or not they want to pre-commit to capacity just to give, I guess, investors a bit more comfort around the demand profile longer term? And then just thirdly, on Fixed C&SB. Early days since unbundling of the modem from the plan, but maybe if you could provide us with some color as to whether that's been driving a better outcome so far in scanning [indiscernible] decline. Vicki Brady: Excellent. Well, thanks, Lucy, for those. I'm actually going to get Brad to come back up and talk a little bit about postpaid churn and also cover off C&SB-Fixed internet-only plans. And then I'll ask Oliver, who's leading Telstra Enterprise. I know you had a question there on the Mobile front. There's been some really great work out of Oliver and the team in Enterprise. So I'll get him to talk a little bit about where that's at and the trends we're seeing. And then, Steven, it might be worth you popping back up and just the discussions. As we've said previously, I think, Lucy, with big builds like this, we find there's lots of good demand signals. Often until you're at RFS of certain routes, it's sometimes not the practice to pre-commit. We obviously had Microsoft where we had a big strategic partnership there. They are an important foundation customer of Intercity Fibre or Aura now. But I might get Steven to give a bit more color to how the dynamics are. So why don't we go to Brad, if you're comfortable to cover off those couple. Bradley Whitcomb: Yes. So if I start with the Mobile churn, as you can imagine, before we make any price changes, we do quite a bit of work around elasticity, conjoint analysis, the customers that we're serving and where they might go should they choose to move off the current plan that they're on. And as a reminder, we have no lock-in contracts, we don't have handset subsidies, and so customers can move very, very quickly if they want. That's all the modeling that we do, and we look at that in terms of a yield, how many customers are going to stay where they were, how many people will down plan? Will we have any customers churning. And I would say that this price change that we made in July, we landed right about where we expected in terms of yield. So we are pleased with that. Of course, that all then comes down to the trading on the floor and how we perform in terms of our peak trading windows, whether that's our flagship handset launches or Black Friday, Christmas and currently our end of summer sale, and I think the team is executing quite well. So we're never fully satisfied with churn. We want to keep customers within the portfolio, but we're right on track with what we had planned for. In terms of Fixed C&SB, one thing I would like to underscore is the team has doubled the profitability of that business over the last 3 years. It's been a massive performance, and we're on track right now to deliver about $0.5 billion in profit when we exclude the legacy copper cost that's in that business. So very pleased about that. As you mentioned, we've rolled out a number of new capabilities within that product suite, including the nbn high-speed tiers. We've got straight-through digital processing to make it really easy for our customers to order digitally. We've got a beautiful new Smart Modem 4, which if you don't have it, you should get it. The Wi-Fi performance in the house is exceptional. And then we've got now our Internet-only. It is early days. We launched Internet-only right on Black Friday. And I will point out as we've been migrating off of Siebel and now on to console. We only got about what, a little less than 4,000 customers left on console. It meant we could move very quickly, and we could meet that critical trading window of Black Friday. Customer response has been good. That said, we remain in a very, very competitive market. We are focused on SIOs, but we're not focused on SIOs at any cost. So that's how I would describe it now. Team very much focused though on the SIO loss. Vicki Brady: Thanks, Brad, for that. That's excellent. And why don't we -- Oli, are you comfortable to speak a little bit to TE and TE Mobile, ARPU trends? Oliver Camplin-Warner: Yes. Thanks, Vicki. Thanks, Lucy, for the question. So yes, let me zoom out and start a little bit on just Enterprise reset and how we're traveling there, and then I'll zoom in on Mobiles. On Enterprise reset, as Vicki reminds me, there's always more work to do, but I'm really pleased with the progress that we've made so far. Without doubt, by the end of reset, we will be a stronger, more customer-focused business, no question. We identified a number of critical initiatives at the start of reset, and those are progressing well. I'm pleased with where they are at. And pleasingly, most importantly for me, customer reaction has been positive as well, where we've seen an increase in NPS. Some of the key points to reset. First off, just that radical simplification of our product portfolio. It was absolutely critical that we're really focused on who we wanted to be moving forward, not trying to be everything to everyone. We've taken a long hard look at our cost base and facing some really tough decisions here, but we've made those calls, and we do have a very different cost base across the business now. Commercial guardrails, we've continued to tighten, which have had a good impact. We have an engaged workforce, like Brad spoke about earlier as well, who are now making a real difference. And then on the portfolio management as well, we've taken a long hard look at the various businesses that we've had. As Michael touched on, we completed the divestments of MTData, Sapio and Alliance in the half. The partnership with Versent -- Versent partnership, that's continuing on track and will close out in the second half. So long story short, there's a lot in there. A couple of weeks ago, we also announced the radical transformation of our service delivery business. We will look to improve the customer experience on the delivery front. So there's a lot there. I'm pleased with where things are at, but there's always more to do. Just on Mobiles. So Mobiles without doubt has been the beneficiary of many of those actions that we have taken through reset, commercial guardrails really celebrating the network that Brad spoke about earlier, all those beautiful attributes. And pleasingly, we saw growth in the half, which I'm really thrilled with. It was great to launch satellite to our customers and especially those organizations who have a remote field workforce, where having that connectivity in the area of need is absolutely critical. So a good response there. You will note in the footnote just around the MTData divestment and how that will impact Mobile in the second half, but pleased with the Mobile performance, but there's always more work to do. Vicki Brady: Yes. Thanks, Oli, for that. And just to add one comment to what Oli said on TE Mobile performance. Lucy, if you go to the very last -- I think it's the very last page in the presentation material in the appendix there, you can see Telstra Enterprise Mobile performance, and you can see growth there. And so real credit to Oli and the team. He spoke about commercial guardrails. The team have been very disciplined, and we have seen, I think Michael mentioned ARPU growth across all products and all segments. So that's been a good outcome of that real focus and discipline. Michael Ackland: Including business? Vicki Brady: Including business, that's right. That's right, every segment across Mobile, which has been great to see. So why don't we come to Steven, a little bit of color, Steven, around those commitments from customers. Are they prepared to pre-commit? Yes. Steven Worrall: Happy to. Thank you, Vicki. And Lucy, thanks for the question. There's sort of 2 thoughts that might be helpful here. As Vicki mentioned, first and foremost, we need to build the network. So we're 7,000 kilometers into a 14,000-kilometer total build, and we have a couple of the routes ready for service and actually in use today, but most are yet to get to that threshold. And so that obviously is the priority as we continue to have all sorts of conversations with players, both domestic and international. The second thought I'd love to share with you is the thought that we are building what I'll describe as AI inferencing architecture for our nation and, of course, connecting that architecture to what is increasingly being built out around our region and around the world. And in that context, what Aura presents to Australia, obviously, critical digital infrastructure for the nation, but it's infrastructure that will support us for a generation. And we're talking about a demand profile that we don't actually see just yet with all of the investments that we're hearing regularly in relation to data centers. Many of those are in the construction process and have yet to come online. And the sort of demand profile that those data centers will drive as one part of the digital supply chain is yet to arrive. And as you might expect, as a result, the commercial conversations with those operators in terms of pre-commits and their precise requirements in terms of connectivity, both domestically and through the region, are conversations that we engage in regularly. We're obviously moving many of them down the pipe very well, and we expect to have more to say on the topic in the future. Thanks very much. Nathan Burley: We'll take our next question from Liam Robertson from Jarden. Liam Robertson: Three questions from me as well. Just firstly, on Mobile, in particular, postpaid subs growth. It looks like Belong was the standout there, adding 21,000 in the half, core base declined modestly. Michael, I think you touched on your multi-brand portfolio already. Clearly, that remains well positioned. But I'm just interested in how you're seeing the market? And should we be thinking of Belong as the key acquisition channel going forward? Or do you actually think you can also grow your core brand? And then just a follow-on from that. I mean, given that dynamic, have you got any concerns around your ability to grow postpaid ARPU moving forward? And then just my next question on the dividend. I might frame it slightly differently, just given you were clear on not having a targeted payout ratio. I don't think it was a coincidence that the $0.095 fully franked and then the $0.01 unfranked on a grossed up basis was similar to the $0.10 fully franked in expectations. I guess moving forward, should we now be thinking about growth of that dividend on a gross basis? And then your split between the franked component and unfranked component will just be dictated by your available franking credits. I guess the inference there is that the unfranked component might actually need to accelerate just given your franking balance and the mismatch between tax paid and then cash earnings? And then my last question, hopefully, just a really quick one on Enterprise. I appreciate all the comments and color, Oli, there around recent divestments, the cost base reset, some of the pockets of growth, looks like Mobile was strong. I guess my question is, when can we consider that portfolio to be fully rebased? Vicki Brady: Well, thanks, Liam. Lots in there, some great questions. I might get Brad back in just a second, because I think how the market is playing out, Belong. My overall comment, as Michael spoke to earlier, our multi-brand approach is critical to how we address the market. There are very different needs in the market in terms of what different segments of customers are looking for. And so it remains a really important piece. And of course, as you'd expect, we're always pushing. We want to make sure we're meeting those needs as best we can. And the Telstra branded proposition is critically important. It is our premium offer to market. I might get Michael to jump in after Brad and just talk a little bit more about dividend. As you call out, this is the first time in a long time it's not a fully franked dividend. So I'm sure there are many questions about how to think about it. Again, I just come to cash earnings is an important piece as we consider, as the Board goes through that process, as they're thinking about the dividend in light of our capital management framework. TE, it's a really great question on reset. Oli and myself and the leadership team, we've been working through that at the moment. I mean, incredible progress. It was May '24 when we announced the reset of our Enterprise business. As you just heard from Oli, some really pleasing progress, but there is still more to be done. And so that's part of our thinking. As we come back for our full year results, we'll be able to share where we're at. But right now, the focus really is on making sure those pieces that are in work still now, and Oli spoke to some of the changes we're driving to try and remove further complexity out of that business to really deliver on those rightly high expectations of our enterprise customers remains absolutely our focus, along with finalizing some of those elements on the portfolio management side. But why don't I -- Brad, are you comfortable to jump in on the market, and then we'll come back to Michael on dividend. Bradley Whitcomb: Yes. So thanks for the call out on Belong. We're super proud of the performance of that business. And it's great to see them growing both in terms of subscribers and also profitability. I think the team there is doing a fantastic job. I will point out, we did have a fairly significant price rise within Belong back in July, the same time that we did the main brand price increases as well. So this isn't necessarily a pricing thing. We do see more growth at the lower end of the market. So from my perspective, it's not surprising that we would see Belong competing very well there and seeing that grow. But our primary focus is around our core main brand and the other brands sit around that to support that main brand. And there's a number of attributes that you can only get with the Telstra main brand. And one that I would point out, we've talked a little bit about today, is the satellite messaging service. And for customers that are aware that we have satellite messaging, we see an NPS which is a full 16 points higher than customers that aren't aware of it. So we're offering real value there, and our aspiration is to continue to grow that business, both in terms of the profitability, but also the number of customers that we can serve. Michael Ackland: Thanks, Brad. And thanks, Liam, for the question on dividends. I think I would -- a little bit like Vicki sort of spoke to, we have an ambition under Connected Future 30 to grow our cash earnings mid-single digit. It is those cash earnings that support the sustainable and growing dividend. And the level of franking within that is going to be determined by the growth in our Australian tax payments, which I apologize is an obvious statement, but it is going to be driven by the growth in our Australian tax payments, and that's going to be fairly closely linked to our growth in accounting earnings and EPS. So as we said, we think that our franking balance is tight, has been tight for some years. The partial franking in this period, we believe was the best way to deliver on our commitment to a sustainable and growing dividend, and we look forward to continuing to achieve our ambition of mid-single-digit cash earnings growth that supports a sustainable and growing dividend in the future. Nathan Burley: We'll go to Roger Samuel from Jefferies. Roger Samuel: I might just stick to 3 questions as well, hopefully, quick ones. Firstly, just on your guidance. If we look at your performance in the first half, the underlying EBITDAaL grew by 5%. And if we assume that you can repeat that 5% performance in the second half, that implies that you can easily get to the top end of the $8.3 billion to $8.4 billion. But is there any issues that we should be aware of in the second half? I mean, I know of your divestments of some businesses, but yes, there could be some cost cut as well that you may do in the second half. Second question is just on Fixed CS&B. Obviously, a very good result on the profit side. But Michael, you mentioned that you'd like to stabilize the nbn subs over time. And yes, if we look at this result, I think your nbn subs still declined by about 25,000. And yes, I'm just wondering what you can do to arrest this decline given that you've introduced Internet-only plans, you have moved your customers to a new technology stack. But if you look at what's been happening in the last 2 weeks, your competitors, especially the challenger brands, they have been doing some consolidation as well. So I'm just wondering what you can do to arrest that decline in nbn subs? And lastly, just a quick one on mobile ARPU. You mentioned about network slicing in the past and how that could add to mobile ARPU, especially in postpaid. How are you going about introducing network slicing to differentiate certain plans and the impact on ARPU, please? Vicki Brady: Thank you. Thanks, Roger, for that. And we're getting the hurry up from Nathan. We're speaking too much. So let us see if we can fire through these 3 quite quickly. I'm going to come back to Michael on guidance. I think he can give a very concise answer on that. On C&SB Fixed, I'd just say, first off, look, the team have done a great job in that business, and Brad spoke to earlier just how much EBITDA profitability in that business has changed in a small number of years. But absolutely, our focus is now on stabilizing customer numbers. The Internet-only proposition only went into market in November. So our focus and Brad's focus with the team is absolutely in our channels, in our marketing, because although we might all know about it, I'm pretty confident that a lot of customers in the market don't know about that proposition yet. So we will focus absolutely continuing to deliver a really high-quality experience for our customers that meets their needs. So that will be the focus there. In terms of Mobile ARPU and slicing, yes, we've got a slicing product in market in our Enterprise business. It is very early days. And Connected Future 30, a big part of that is network as a product. So how we build out, how we make sure we have those network attributes, that we're reinventing the commercial models that go with those attributes. So as we create value for customers, we also share in some of that value creation. So very early days on that, but we remain optimistic. We've got the foundational investments going in, in network, systems capabilities to put us in a position over time to be able to make sure that level of sophistication in our network that can meet the level of sophistication of our customers' needs going forward that we get that to work well together. So that's definitely our focus as we look at the business going forward. Michael, are you happy to cover off guidance, first half, second half? Michael Ackland: No, absolutely. And thanks, Roger. So yes, there is a few things sequentially that are impacting us. So one is we had around $45 million of one-offs in International that we don't expect to repeat. So we will see a significant sequential decline in International, not only that $45 million, but also the divestment of the wholesale voice business in International. So that will be a sequential decline. We mentioned Other EBITDA. In other EBITDA, there was, I think, around $20 million of bond and FX gains that we are not necessarily forecasting to repeat in the second half, which will provide a bit of a headwind. The second one is probably on redundancy. Redundancy is traditionally -- or sorry, not traditionally, has over a number of years, been a tailwind on cost into the second half, because we've done more redundancy in the first half than the second. We announced that we were consulting on some changes last week. If they were to go ahead, we would expect to see redundancy not be that tailwind into the second half. Of course, offsetting that, we have productivity flowing through as we talked to. I think the other one, as we look into the second half, is just based on the historical timings of some of the price rises across particularly in the consumer portfolio, whether that's Fixed or Mobile, we would expect to see some of that revenue growth sequentially to be a bit more muted. And then, of course, as I said, on top of the other divestments that we expect either have completed or we expect to complete in the NAS portfolio. Nathan Burley: Excellent. Our next question is from Nick Basile from CLSA. Nicholas Basile: Just 2 questions. The first one is on AI. I think in your opening remarks, you talked about rationalization of software providers and deployment of AI across the coding team. So I'm just interested to understand or get a little bit more color on how that is benefiting you and how it helps you, I guess, deliver on the 2030 cost ambitions? And also just to what extent at all you've managed some of that vendor concentration risk now from a cost inflation perspective? So that's the first question. So there's a few add-ons. And then the second one is just on incremental returns on Mobile investment. I guess with respect to the commentary around your investment in augmented services using satellite networks. Just wanting to understand what the incremental margins on this capability is relative to selling services leveraging your terrestrial mobile network. Vicki Brady: Yes. No, thank you. Thanks, Nick, for that and a couple of great questions. Well, I'll take the second one first off and then make a couple of comments. But I might get Kim Krogh Andersen, who leads Product & Technology and really has been the driving force between a lot of the pieces you mentioned on the software side. So just on Mobile, obviously, satellite to mobile, I would think about that as we are leveraging the capabilities of a third party. So I think about it like a reseller of a service. So obviously, the incremental margin on that sort of business is very different to where we own and operate the infrastructure ourselves. And obviously, very different CapEx dynamic. We're not the one investing all of the money in launching LEOsat. So we are a reseller of that service. But it is, I think, as Brad spoke to, really important, it is a key element of our proposition, how we bring these services to our customers. And again, as Telstra, we provide a premium experience under our Telstra brand in the market. And so being one of the first few operators globally to be able to bring that to Australian customers, because we could see the service could really serve a purpose here, whether it's when terrestrial networks are disrupted or when people in our very large country are outside mobile coverage. So that's how we sort of broadly think about that. As you said on AI, I made some comments this morning, because I think it is really important to understand there has been investment and work underway for years as we digitize our business, as we're applying AI and particularly in software development. It is so critical in our speed to market and being able to deliver at the level our customers expect. But Kim, I might just get you to make a couple of comments, if you can, on those benefits, how it's been driven and then how you thought about vendor consolidation risk. Kim Andersen: Yes. Thank you so much, and thanks for the question. First of all, we have been modernizing our tech stack for a very long time, and tech leadership is a core part of our Connected Future strategy. Michael mentioned it, and I want to reinforce it. We have actually managed to decrease our cost in tech over the last few years, and that's despite inflation. But as you mentioned as well, there is a lot of partners that really want to hike the price to justify and get return on their AI investment. So we have managed to combat that and ensure that we take the value of this digitization, simplification, AI, et cetera, instead of that become revenue in some of these partners' pockets. So that's important for us because we want that value to go to our customers and to Telstra and to our shareholders. I think Vicki mentioned that we have actually seen a 20% production improvement in our software deployment. And not only that, we are also shipping our software and releases faster 15% to 20%. That comes from a more efficient software flow. So we have seen 12% improvement in EPIC flow. We have seen 29% improvement in our defect rates. So it's great to see when quality, time to market, but also our efficiency come together. It is AI-enabled all of it. Now most of our software engineers, they are using GitHub Copilot to really ensure they produce more code faster. We also use AI for testing. We use AI for quality assurance, for architecture assurance, but also for change management and other things. We use AI for migration. And all these things is a part of us really driving this. But we have consolidated partners, that both applications. So we have done a lot of exits of applications we don't use. We have consolidated our partners. Vicki mentioned, we have consolidated our SIs from more than 400 down to 2. And these 2, Cognizant and Infosys, they're really incentivized to help us to simplify and help us to adopt AI as fast as possible. So all these things is a part of us really creating the right foundation for us to drive this company forward. And it's hard work, and we're not done. We keep pushing hard, but we believe we have a foundation now where our segments, they can compete, where our channels, they have a good experience and our customers have a good experience. These have been very critical for software, but it's even more critical for AI. We believe that if you don't get that foundation right, we will actually see the run cost of AI outperform the benefit of AI. So we are very focused on that foundation to get that in place. We have 380 use cases today. So we are at scale. We are deploying agentic now. So the whole reason for us doing the 2 joint ventures with Quantium and with Accenture was to ensure we have that foundation in place, because we want to ensure, as we have mentioned many times, we are not an AI company, but to be a leading telco, we really need to be a leader in AI and in software. And this is the foundation. And these partners, they keep pushing us forward and really ensure that's in place. So we are pushing hard here, but there is a lot to do. Nathan Burley: Thanks, Kim. We'll go to Brian Han from Morningstar. We will go to the next question, which is from Andrew Gillies from Macquarie. Andrew Gillies: I'll keep it to one just in the interest of time. Not to put too much of a finer point on it, but just on the AI and data strategy, just a little clarification. You mentioned kind of faster delivery on this. Should we be thinking about that as kind of a structural pull forward of the cadence of cost out? I mean, Infosys, it was flagged before. Some of your outsourced partners are flagging really strong efficiency benefits, both internally for themselves, but also for the businesses that they work with. And more broadly, more recently, we've seen software vendors shifting from seat-based models to more of a value share-based model. Can you just clarify that that's all captured in your comments around cost on this call? And can you make a little comment on the cadence? And I presume you're going to reiterate the medium-term EPS CAGR, but that would be great. Vicki Brady: Yes. No, thanks, Andrew, for that. Again, just to reinforce, as we work with our partners, whether it's Accenture under our Data & AI joint venture, whether it's Infosys as a key software partner. And also, obviously, we're planning to also use them more extensively to help us in terms of really simplifying the complexity in our Enterprise service delivery for our customers. Look, I think Kim sort of covered it briefly then. As we enter those arrangements, they are built on very much aligned incentives of delivering real efficiency in terms of our partners have to be able to really be leaning into using AI to drive the efficiency and the experience benefits under those arrangements that we've entered into. So as we look forward, yes, those partnerships are another element of how we make sure we're driving efficiency in our business. Kim spoke to, our goal is, like we did with the Data & AI joint venture with Accenture, we're accelerating a 5-year road map we had into a much shorter time frame, but without driving cost up. And so we are very conscious of making sure that as we move forward, that alignment with our partners where we're both driving to get the efficiencies from the application of AI into our process systems and interactions is absolutely built in. And Michael, in terms of our forward sort of ambitions... Michael Ackland: No, I think it's captured in our forward ambitions. It's covered in that commitment to operating leverage, which I think is really important, growing revenue faster than we grow costs, and that opens up those jaws. The one point I would make, and I think it's really core to our technology strategy and how we're going about it is we are very -- and Kim made the point, there is a risk here that you end up in software licensing, in cloud costs, and in paying the AI providers that you offset your benefits. And that is very much our focus. We've made tremendous progress in the efficiency of our cloud costs. We're getting significant efficiencies around the way that we're focused on how we buy software. And that is embedded in our strategy to ensure that we're using an open architecture, modern software approach, and we're setting up the way that we're executing AI right now, so that we can swap out vendors that we can move between LLMs and that we are really focused on the cost of both cloud and AI. And I think it's been a really important point around those technology costs. So it's a great question, Andrew. Vicki Brady: Yes. Wonderful question. Thank you. Nathan Burley: We'll take 2 more questions from analysts, after which we will move to media. [Operator Instructions] Our second last question comes from Fraser McLeish from Credit Suisse -- I got that wrong, from MST. Fraser Mcleish: Just 2 quick ones from me. Just Vicki, obviously, there's a fair bit of discussion on AI in relation to costs. I'm just wondering, can AI be a competitive advantage for you in the marketplace in terms of being able to invest more and faster than competitors in customer tools and experiences? Or do you expect all players to broadly have the same capabilities? And then second quick one, maybe for Brad, just on fixed broadband. I mean, are you expecting much spin down from these new Internet -- to these new Internet-only plans? And what are you doing to minimize potential for that? Vicki Brady: Thanks, Fraser, for that. Just on AI and where we're at, I think the thing that's front of mind for us is it's moving so fast. And so we are absolutely focused on, we can't be complacent, we've got to be pushing really hard, because we do see, ultimately, for us to be a leading provider of connectivity. We're not an AI company, but we absolutely need to be a leader in how we're applying AI. And that's because, yes, it affects all the obvious parts of our business, how do we make those customer interactions more efficient and better for customers? How do we enable our teams to be able to use AI and work smarter and have greater satisfaction. But it's also right in the heart of our business, the network itself. And if I look at where networks are headed, and we do have Mobile World Congress coming up shortly, so we'll get another injection of where everyone a year on sees things headed. We absolutely believe networks are headed to being much more autonomous. And the complexity of doing that, you absolutely need to have AI deeply embedded and being at the forefront. And so absolutely being at the forefront of delivering world-leading connectivity is absolutely at the core of our differentiation. So moving fast. I think it's not just having it, I think it's moving at the pace and scale needed to make sure we maintain our differentiation. We do provide a premium experience in the market for our customers under the Telstra brand. And so we're very much focused on making sure we're moving fast enough. We are delivering those benefits to customers. We're helping our teams grow their skills and be able to use these tools effectively in the way they work. And ultimately, yes, we see it as an important piece. I mean, long run with any sort of technology, obviously, over time, I would expect it becomes more widely dispersed. But absolutely, we see it as important. The pace we move out here and really enabling our business with it is an important focus for us to deliver for our customers. On fixed broadband, I don't know whether Michael, you want to grab it or we want Brad just to quickly jump up and grab the spin down. Michael Ackland: I'm happy for Brad to... Vicki Brady: Yes, Brad, please. Bradley Whitcomb: Just I can't resist on the AI as well. Vicki mentioned that Telstra virtual agent, which we've deployed. And I think it's the start of a competitive advantage there. We've more than tripled the containment since we've launched that AI agent to customers. So they're able to get their needs met without having to go to a human agent. And another one I'll mention, which is really cool, is using AI, you can change our entire digital experience into over 35 different languages. We've had about 30,000 -- or rather 70,000 customers already do that, and that just makes it much easier for them to engage with us. So that's an example, I think, of where it helps us addressing the customer. In terms of the broadband only, there's a couple of areas that we're focused on there. One is opening up to customers that genuinely -- they have their own modem at home, and they're just looking for the broadband connection and not looking for that full experience. We think also, though, this gives us a softer entry point to have a conversation with the customer when they come in, they see a price point that they're comfortable with, and we talk about the value proposition and what equipment they do have in the home and to then talk about the advantages of things like our smart meter -- or Smart Modem 4.0 rather. So we're not anticipating significant spin down. We think those are 2 different segments of customer, but we will keep an eye on that. Nathan Burley: Excellent. And we will take our last analyst question from Nicole Penny from Rimor. Nicole Penny: Thank you for taking my question and for the detail on the Aura opportunities you're seeing. Just secondly, the CapEx on the Viasat project remains ongoing. Could you provide more color on the expected completion time line and the likely earnings impact during this period as the project moves towards full operation, please? Vicki Brady: Okay. And Nicole, is that the only one? Have you got any others? Nicole Penny: That's it. Vicki Brady: Fantastic. Thanks, Nicole, for that. Look, I'll make a comment and then Michael may want to jump in. Just to be clear, and hopefully, the appendix again helps reinforce it in the material we've issued today. We think about Aura and Viasat inside that $1.6 billion of CapEx spend and those overall returns are linked to that. The profile is a little bit different. Viasat is the smaller component inside that overall program of work where we have been supporting with the build-out of ground stations and other infrastructure. So it's captured inside that broader financial profile that you can see. So it's Intercity Fibre or Aura as it's now called, and Viasat combined. I don't know, Michael, if there's any other color. Michael Ackland: No, I don't think so. I mean the Viasat has been delivered on an ongoing basis, and we've seen the revenue start to appear through both InfraCo but also into our Telstra Enterprise business. And that will continue for the life of that project. They're long-term assets in terms of the ground stations and well on track. Nathan Burley: That concludes our question time from analysts and investors. We'll now show a short video, which I suspect you do not want to miss, because as Brad would say, it is pretty cool. So we'll show that. And after that, we will have time of questions from media. [Presentation] Steve Carey: Thank you, and welcome back. Thank you, Nathan, for that handover. We hope everyone enjoyed the new ad. We will now commence our media Q&A. We are slightly early. So apologies to some media who may be joining at 11. We will obviously drop you into the queue. In this session, we have Vicki Brady, our CEO; and our CFO, Michael Ackland, who will be available to address your questions that you have asked. [Operator Instructions] Our first question today comes from David Swan from Nine Metro Publishing. David Swan: I wanted to ask about spectrum strategy. I've got 3 questions, all related to that. So I'll just fire those away. You've told ACMA, the fair price is $1.4 billion and they've come back at $2.7 billion. Is that number -- I guess what's the number that Telstra would accept without passing costs on to consumers? Is there a sort of landing zone there? Or is it a binary number? I wanted to ask as well, you said the trade-off with spectrum is between network investment and consumer pricing. But is there a third option which might be absorbing the cost through lower returns to shareholders? Is that something that Telstra has or would consider? And third, I wanted to ask about ACMA's renewal process. I mean, you didn't avoid a competitive auction, which could theoretically cost more. Is the $1.3 billion gap that you've complained about still cheaper than the alternative, a competitive auction? Is that something you're keen to -- is a competitive auction, I guess, something you'd be keen to avoid? Vicki Brady: Thanks, David, for that, and some great questions on spectrum. So first thing I'd say is, as you called out, we absolutely agree we've got to pay a fair price for spectrum. It's a core part of delivering high-quality mobile services. And we see spectrum as one of those assets as a country, we absolutely need to be maximizing its benefits to consumers and businesses. We do think as a country, it would be helpful as part of a digital infrastructure plan to have a clear plan for spectrum long run. This process right now is renewal of spectrum. Obviously, there will be spectrum needed for 6G, for future satellite services, for lots of other things as we look forward. So we do think having a really clear plan for how we maximize the use of spectrum to get the maximum benefit for consumers and businesses is super important. Look, obviously, the process is still ongoing on the pricing of the renewal of the spectrum. That's part of the ACMA process right now. We have a different view to ACMA, and that will be part of our submission back in as part of that process. As you call out, there's about a $1.3 billion difference in what we think the fair market value of the spectrum that we will go through renewal on versus what the ACMA currently see as the fair market value for that. Look, in running a telecommunications business like Telstra, you're constantly balancing up various things and various trade-offs. Importantly, Telstra, like all telcos, is a big infrastructure business. We've got to invest a lot of CapEx into our business. And if you look globally, telcos have been challenged on getting reasonable returns, because we need to be profitable to make sure that we can keep investing, and that means investing in our network, in things like the 5G advanced capabilities, or bring in services like satellite to mobile texting, the satellite messaging service we launched last year. And we're seeing customers -- NPS is up, so we've got to keep investing, because expectations also keep rising. We know we've got to keep investing to be able to attract and retain the best talent and invest in their skills. And yes, we also need to deliver returns to shareholders. We've got an underlying return on invested capital at 8.9%. So through a lot of work, we've steadily seen that increase. It is above our cost of capital, but it's probably -- it's not at the level that our investors would ultimately hope for. So we do have an ambition to grow that to 10%. And I don't think that is unreasonable in any way. Remembering our shareholders, we have more than 1 million shareholders. We've got the largest retail shareholder base in the country. And we know through things like superannuation, we estimate about 16 million Australians benefit from the financial outcome. So yes, there is absolutely a balance we need to achieve as we make choices and decisions. Higher spectrum cost just puts again extra costs we need to consider, and we would have to think about the various trade-offs as part of that. But the process is still ongoing at the moment. Steve Carey: Thank you, David, for those questions. Next up, we have Jared Lynch from The Australian. Jared Lynch: Two questions for you. Telstra's first half profit was driven by strong cost control, and it's a strategy that you plan to intensify with the proposed 750 job cuts in the current half. Just wondering, how will you ensure that prioritizing short-term cost savings and efficiencies will not fundamentally undermine the in-house expertise and people-driven innovation necessary to deliver the long-term growth and service quality promised by your Connected Future 30 strategy. And then just on the Connected Future 30 strategy, I'm interested to hear how will your investment in AI and data functions, including the JV with Accenture be deployed to solve one of the nation's most pressing challenges, whether it's climate resilience, health care, accessing regional areas or digital inclusion. And I guess what is the legacy that you want Telstra's new capabilities to create for the country? Vicki Brady: Yes. Thanks, Jared. A couple of good territories there. So let me go firstly to first half. Yes, we've delivered a strong first half performance. And yes, as part of our strategy, given we have very small revenue growth to deliver positive operating leverage, we absolutely need to be driving cost and efficiency. But as we think about our business and we think about the capability we need to be able to deliver long run in this business, absolutely, our internal teams are critical to that. And we keep investing in our teams internally, whether that is in things like their ability to be able to use and apply AI capabilities, because we fundamentally believe, for all of our team, they will be better positioned in the future, the better able they are to apply AI and use it in their jobs. So we're absolutely -- internal capability remains critical. It wasn't that long ago, for example, we bought back our retail stores. And we've heard Brad speak about this morning, just the benefit that has driven in having such a highly engaged team of people out there servicing our customers face-to-face in our stores. We also will partner with key partners. And the couple of things you mentioned from last week, they are 2 examples of where we are partnering. First, in terms of our Enterprise business, we've still got a load of complexity we need to get through in that business. So we did announce and propose some changes where we are partnering with Infosys to really be able to access their capability to help us simplify the complexity in that business in the way we serve and deliver for our Enterprise customers. We also proposed changes in the Telstra, Accenture Data & AI joint venture. Again, that is about accessing Accenture's global capabilities to help us really accelerate our road map on data and AI to be able to deliver benefits to our customers and into our business more quickly. So absolutely, it will be a combination. Our internal teams are critical, and we keep investing in them. But we also -- to remain competitive and at the forefront, we've also got to leverage partnerships. And I can assure you, any decision that impacts a role inside Telstra, they are never taken lightly, and we support and work with our teams very, very closely as we work through anyone who has a role impacted as part of any of those choices and decisions. Just in terms of Connected Future 30 and that ambition as we look forward, I think fundamentally, we see connectivity, it is a foundational piece for the country. You look to the future of inclusion of productivity, of prosperity. Technology is going to play a key role, and having a really solid foundation of leading edge connectivity that is there to deliver to all of those future needs is absolutely fundamental. You spoke about things like health care. I think about education. I see the way we work and connect regional communities, it's absolutely core to who we are as Telstra and the focus and delivery of our Connected Future 30 strategy. So absolutely, that core foundation of leading connectivity, we think, helps enable the country in terms of those future ambitions of inclusion and of prosperity. Steve Carey: Thank you, Vicki. Thank you, Jared. We do have a couple of people on the call that haven't registered for questions. So I'll just quickly reiterate that. [Operator Instructions]. We will move to our next question in the queue, and we will go to Grahame Lynch from CommsDay, please. Grahame Lynch: I wanted to ask about spectrum renewals. I've been following the debate around this quite closely now for a few months. And it seems to be missing the reality that over the next 15 years or so, which is the period we're talking about, 5G and then 6G is going to require a lot of new spectrum in addition to the renewing spectrum. But also Australia's population is probably going to grow by quite a few million over that same period, which means that telcos such as Telstra are going to have to install a lot of new capacity in cities to deal with all that extra population. Is this -- are these 2 realities perhaps a bit missing from the discussion around spectrum? And are they informing Telstra's posture on renewal prices? And perhaps could Telstra be better articulating that these are the issues that we'll be facing in coming years? Vicki Brady: Yes. Thanks, Grahame. And I know -- I've been reading some of your articles that you've been writing and your opinion pieces. You're incredibly well informed and understand our sector and how important spectrum is. So look, I think... Grahame Lynch: Thank you. Vicki Brady: Yes. No, I really appreciate it, because it's a really important question where you've gone. Absolutely, renewal is important. As you well understand, better than anyone, it is 80% of the spectrum that our current mobile networks run on today that will go through this renewal 2028 through 2032. So the certainty of renewal is absolutely a positive. Obviously, we are debating with the ACMA what each of us think the fair market price of that spectrum is, because absolutely, we accept, understand we need to pay a fair market price on fair terms. So that's important. But I think where you're gone is critical. And that's why we have been advocating that as a country, we do need a really clear vision for the digital future that has a very clear digital infrastructure plan that includes spectrum. Because where you've gone, as you look forward over 15 years, it's not just the renewal of spectrum, it is all of those new services, all of those new capabilities like 6G, like some of the satellite capability that is currently sort of forecast to be able to be delivered over that time horizon. I think as a country, we absolutely need to be thinking about how do we maximize the use of our spectrum so we get the best possible outcomes for consumers and businesses. And I think that's an important piece that needs to be brought into the thinking. And again, that's not easy, and we are very happy to be part of that as Telstra and I think as a sector, alongside government and regulators, as we think about how do we absolutely set up the country to maximize the use of spectrum to get the maximum benefits for consumers and businesses. So I think it is an important element right now. A lot of focus on renewal, because that process is obviously well underway, but I think your broader point is incredibly important. Steve Carey: Thank you, Vicki. Thank you, Grahame, for that question. Next up, we have Jenny Wiggins from the AFR on the line. Jenny Wiggins: Vicki, 3 questions from me as well. Just with regards to AI, can you give us any more examples of how exactly you're accelerating Telstra's investment in AI other than what you're doing with Accenture? I mean, for example, is Telstra spending more money on AI investments in the current financial year? Secondly, just more generally, do you have any views on how the federal government can improve productivity and economic growth in Australia? And thirdly, with regard to the ongoing problems with the 4G VoLTE networks, that's an issue for all network operators and device manufacturers, do you think Telstra will ever be able to guarantee that in the future, all mobile phone devices that are sold in Australia will be able to connect to Triple Zero without any problems. I mean, do you think your testing and talks with device manufacturers will ensure that after the current state of problems we've had? Vicki Brady: Thanks, Jenny. Well, lots in those 3 questions. So let me take them one by one. In terms of AI, when I talk about accelerating our Data & AI road map, that's absolutely about accelerating the use cases and the benefits and scaling those across the business. In terms of where we're seeing some of that acceleration, we're absolutely -- through our Data & AI joint venture with Accenture, that's really helped us accelerate some of the fundamental pieces like really streamlining the number of data platforms that we rely on. So we're absolutely seeing acceleration there. We're not talking about accelerating spend. So one of the things we're really clear on is, as we make choices on partnering or going into joint ventures, how do we align our ambitions and incentives, so that it is about being at the leading edge of being able to apply these capabilities into our business, but do it in a way where we do manage our costs, because we're very conscious of that. It's an easy area to spend a lot of money and that to grow fast. So we're very conscious of those and thoughtful in how we set up those partnerships and how we architect the technology inside our business to make sure we have choice, so that we can both get the benefits, accelerate those benefits, but also not see our costs grow beyond where we are comfortable with that being. Just on the productivity agenda for the country, I think it's such an important discussion. One of the things we've been strong on is we do think, as you look forward for our country, whether it's productivity and prosperity of the nation, there's no doubt technology is going to play a big part in that. And we think something that isn't always at the top of the list is that technology, whether it's AI or data centers, it does need to be connected. And so having a really clear digital infrastructure plan for the country, so that as a sector we can align behind that with government, with regulators, so right policy decisions are made, the right investment decisions are made. The regulatory environment is set up to, yes, protect customers, but also encourage innovation. So we think that's a really big piece as we look forward, and we're really optimistic about what technology and the important role that connectivity can play in helping to enable that for the country. On the third one, where you are talking about Triple Zero. And yes, obviously, there's been a lot of focus on Triple Zero. The first thing I'd say, it is a very complex ecosystem to ensure Triple Zero works from the devices themselves through to the networks and the different softwares and protocols that are running over networks through to getting the calls through to emergency services who operate across around the country, state by state, territory by territory. Look, our focus -- this is a complex ecosystem, and I think everyone in that ecosystem is working to try and make sure it works absolutely as well as it can. And I would say, obviously, any call that doesn't get through is too many. But the large majority of that ecosystem does work well. There are some complexities in devices. You're spot on. And obviously, devices come into the country, device manufacturers have to accredit those. We do testing on our network. But it is a dynamic area where devices are changing, software is getting updated, networks are changing. And so we work really hard to make sure we meet our obligations to be monitoring devices. And obviously, as part of some of those obligations, it does mean blocking devices if we find they cannot make Triple Zero calls. And so I think it requires work right across that ecosystem to make sure Australians continue to trust and they should trust our Triple Zero system to be able to get help in an emergency. Steve Carey: Thank you, Vicki, and thank you, Jenny. Our next question comes from Rhayna Bosch from SBS. We might be having some issues there. So we might go to David Taylor from ABC. David Taylor: It's quite extraordinary what Telstra is doing. The ABC has spoken to both current employees of Telstra, but also previous employees of Telstra and those who have been contracted by companies to be also employed by Telstra, and there's a real sense of fear around how your AI investment and AI rollout is affecting jobs. So can you give me an idea of -- so it's a two-pronged question, I suppose. Over the past 12 months, what proportion of jobs that have been lost within Telstra are related to your AI rollout? And how many -- what proportion of jobs are going to be lost at Telstra up to 2030 based on AI? Vicki Brady: Okay. And thanks, David, for that. So first off, I mean, the pace of change in AI is quite extraordinary. And when I'm engaging with our teams internally, yes, one of the questions is what does it mean for my job going forward? And I think the thing we're focused on is absolutely none of us can predict that future. It is changing so fast. I look back over the last couple of years, just how fast it's changed. None of us, I think, predicted that. So the thing we're focused on with our teams, in an environment where it is uncertain how AI will be used, I think the most important thing is skilling our teams. And so we invest heavily in the tools available to our team members. We invest heavily in also the training and skills of our teams through our Data & AI academy, because irrespective of what the future is and how it plays out, we firmly believe that our people who have better capability in being able to use and apply AI will be better positioned for future jobs. So we're very much focused on that. And I do understand it is a question top of mind for our teams. And as I engage across the country and travel internationally, it feels like a very common theme. The world is moving fast. So our focus is on how do we skill, enable our teams, give them access to the tools. And we are seeing our team members who have access to our AI tools, which is the large, large majority, are using those tools on a weekly -- 75% of them are using them at least weekly and often a lot more often as it becomes part of the way they work and operate. So as we look at impacts on our business, and yes, any decision to impact a role is a difficult one. We have had to face into those decisions. They are necessary decisions to put us in a position to be competitive, to be able to deliver at the level we need to for our customers. Those benefits -- today, there's not a role I could say, has directly been taken by AI. But of course, our investment in digitizing our business, our investment in applying AI is generating a more efficient business for us. And that's why, as I said, our focus is absolutely on working with our teams, that investment in the tools, and that investment in their skills. Steve Carey: Thank you, Vicki. Our next caller is Brandon How from Capital Brief. Brandon How: Just wanted to touch on an earlier comment that was made during the analyst call. I think it was flagged that because of Telstra's disciplined capital management, it would be able to navigate the upcoming spectrum renewal fees if they were to go through as they're currently proposed. I was just curious if that means that there's unlikely to be significant disruptions to existing investment plans at least out to 2032. And just wanted to touch on a separate point as well. It was revealed -- Telstra revealed earlier in the year to the Triple Zero service outage inquiry that suffered about more than 5,200 mobile tower outages last year. I was just wondering what commitments are you making to ensure that this is brought down? Vicki Brady: Yes. Thank you. Thanks, Brandon, for those couple of questions. Look, this morning on the call with analysts, the question was around our capacity to be able to -- if those spectrum renewal costs come in as is currently proposed, how would we be able to navigate that? One of the things about Telstra, we're very focused on is ensuring the business is in the right position to be able to continue to sustain investing in the business. And we've worked over many years now to steadily improve our overall returns in the business. They're still not super high. They are above our cost of capital, however. And obviously, if that cost does land higher than what we think the fair market value is and that process is still ongoing, then that will be a consideration we need to consider as we think about various trade-offs, where we're investing our money, how we're positioning and pricing in market. So there are a whole lot of factors we would need to consider. The point this morning is, are we set up to be able to navigate that as a company. And I look at where we're at financially, our ability to keep investing in the CapEx needed to support the business, our balance sheet capacity as a business. So it was a broader comment about being able to navigate through that. Just in terms of Triple Zero, obviously, there's been a huge amount of Triple Zero focus, particularly through the latter part of last year. Telstra takes its obligations incredibly seriously. We do have 2 sets of obligations. We run the emergency answer point for the country. When someone calls Triple Zero under a contract with the federal government, it is a Telstra person that answers that call and passes it then on to the relevant emergency services. And we have our obligations as a telecommunications company, including as a mobile operator. We invest huge amounts of our CapEx into the resilience of our network. These are large complex networks. And they will have issues over time, particularly, I spoke this morning about the investment in power backup systems. The single biggest thing that impacts the resilience of our network is power outages. So we do invest in power backup. However, there are situations where power is out for extended time. It could be that equipment fails. They're not infallible. And so we absolutely invest heavily in resilience of our networks. We also invest in things like new technology, bringing satellite messaging to customers just as another form. If there is an issue on the terrestrial network, there's another layer. We also encourage our customers, who are heavily reliant on being connected, to think about multiple technologies rather than relying on just one. So there are many things we do. These are large complex networks, and they're not infallible, and we invest huge amounts in their resilience. Steve Carey: Thank you, Vicki, for that. Our final caller for the day is Andrew Colley from iTnews. Andrew Colley: Can we have an update on Telstra's lease of OneWeb's LEOsat constellations and the issues you're having with complaints about the performance of small cell base stations themselves. Has [ Telesat ] provided an update on when it might be able to fill coverage gaps in its constellation over Australia to eliminate the voice service dropouts when using those LEOsat for backhaul on those installations? Vicki Brady: Yes. Thank you, Andrew. And so yes, as you well understand, you understand this technology well, we have rolled out using OneWeb's LEO satellite constellation backhaul over their satellites to some of our remote sites. And their rollout of their satellite constellation hasn't gone as planned on their side. So it does mean today there are some issues, particularly impacting voice. However, in terms of data performance, we have seen significant improvements by being able to access that LEO satellite service. We are working through that, working closely with communities and our customers to figure out -- we have rolled it out to a relatively small number of sites to date. That rollout is not going further right now as we work out what is the right balance to find here. It does provide real benefits, much more capacity, much better performance in terms of data over those sites. However, as you call out, there have been some issues around voice dropouts given where that constellation is at. So that's something we continue to work through with OneWeb. And our teams, as I said, closely engage with customers and communities that rely on those small cell services. Andrew Colley: Okay, I have one more question I'll be able to ask. You've sought some delays to the Universal Outdoor Mobile Obligation to push it back a year. Has the federal government given Telstra any indications it's open to doing that or to holding back the legislation for further consultation? Vicki Brady: So just in terms of the Universal Outdoor Mobile Obligation legislation. So first thing I'd say is, we're absolutely at the forefront of rolling out those services in the country. We've already got satellite messaging that we launched in June last year in market. So commercially, we absolutely see the benefits of these services. Under that legislation, it looks at then future services, voice, data. Some of that is dependent on brand-new constellations, brand-new capability that is not commercially available today. So as we've thought about that and we've given input, that's just an important element. Some of this technology is very early, some of it not in market yet. So obviously, that's going to be an important factor, but we're absolutely at the forefront of bringing those services to Australians, because we see them as important services and extra layer of resilience in the event a terrestrial network has an issue and also that ability in a country as large as Australia when people are outside of mobile network coverage, that ability to stay in touch. Steve Carey: Thank you, Andrew, and thank you, Vicki. We do have one final question. Jared Lynch just had a follow-up question. So Jared, just over to you for your follow-up, please. Jared Lynch: Thanks, Steve. Vicki, today, other business leaders warn that without productivity gains that this is as good as it gets after real wages fell for the first time in more than 2 years. I'm just interested about capacity constraints at Telstra and whether you're changing investment as a result of inflation or capacity constraints and are any being delayed? Vicki Brady: Okay. I must admit, Jared, I did see some headlines this morning. I haven't read the transcripts and understood the full context of some of those comments. But in terms of where we're at, we're having to navigate. Obviously, there are inflationary pressures on some of our costs. That's why us being at the forefront of how we really drive efficiency and better outcomes for our customers is at the forefront. We're navigating that. We are very focused on what we call positive operating leverage. So we're in an environment where we're not seeing top line growth at any large level. So we've got to continue being efficient, to be competitive, to be able to deliver at the level we need to for our customers. So right now, we are navigating that. You will have seen, in terms of our overall result, we did reduce overall costs. So we're able to offset that inflationary pressure that, yes, we feel like consumers and businesses across the country feel. We've been able to offset through some of the hard work, the discipline and the gains that we found, particularly through technology investment. Steve Carey: Thank you, Vicki. Thank you, Jared, and thank you to all the media and analysts that have joined our call and Q&As today. Thank you for your time and investment in today's call. We will now wrap up the half year results update. Thank you very much, and have a lovely day.
Operator: Hello, everyone. Thank you for joining us and welcome to the Extra Space Storage Inc. Q4 2025 and Year-end Earnings Call. [Operator Instructions] I will now hand the call over to Jared Conley, VP of Investor Relations. Please go ahead. Jared Conley: Thank you, Miriam. Welcome to Extra Space Storage's Fourth Quarter 2025 Earnings Call. In addition to our press release, we have furnished unaudited supplemental financial information on our website. Please remember that management's prepared remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act. Actual results could differ materially from those stated or [ implied by our forward-looking ] statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the cautionary statements contained in the company's latest filings with the SEC, which we encourage our listeners to review. Forward-looking statements represent management's estimates as of today, February 20, 2026. The company assumes no obligation to revise or update any forward-looking statements because of changing market conditions or other circumstances after the date of this conference call. I would now like to turn the call over to Joe Margolis, Chief Executive Officer. Joseph Margolis: Thank you, Jared, and thank you, everyone, for joining today's call. We delivered positive core FFO in the fourth quarter of 2.5% and full year core FFO growth of 1.1% despite challenging but improving operating and supply environments. Operationally, we continued to experience the trend of increasing new customer move-in rates, while maintaining strong occupancy levels. In fact, in the fourth quarter, 16 of our top 20 markets experienced positive year-over-year move-in rates to new customers and sequential improvement in revenue growth, contributing to same-store revenue growth returning to positive 0.4% in the quarter. Only 2 of our top 20 markets reached this metric in the fourth quarter of 2024. In the quarter, we also deployed capital strategically in a number of our investment and external growth channels. First, we took advantage of an opportunity to repurchase approximately $141 million of our common shares at an average price of around $129. Second, we closed on 27 operating stores for $305 million, bringing our full year total to 69 stores for $826 million. Third, we executed several high-value JV-related transactions, acquiring 7 stores for $107 million gross while selling our interest in 9 JV properties and unlocking a $37 million promote. Fourth, we originated $80 million in bridge loans, growing the portfolio to approximately $1.5 billion at year-end. And finally, we added 78 third-party managed stores with net growth of 45 stores in the quarter. For the full year, we added 379 stores and 281 net new stores to the program, bringing our total managed portfolio to 1,856 stores. Our diversified external growth platform continues to provide us with opportunities across various channels, which we believe gives us an external growth advantage over all other industry participants. Overall, it was another solid year for Extra Space Storage. We generated positive same-store revenue and FFO growth, and our external growth platform is firing on all cylinders. While only incremental, we are pleased to see progress in most of our markets as they absorb the new supply that was delivered in the last few years. We feel better with regard to our positioning going into 2026 than we did heading into 2025, and in our ability to gradually accelerate performance as fundamentals continue to improve through 2026. I will now turn the time over to Jeff Norman. Jeff Norman: Thanks, Joe, and hello, everyone. As Joe mentioned, we are pleased with the sequential improvement we've experienced in new customer rate growth as well as seeing acceleration in our same-store revenue growth. We were also pleased to see improvement in our same-store operating expenses, which increased only 1.1%, with several notable drivers. Property taxes declined 3.4% due to the expected normalization of prior year increases, and property operating expenses, including utilities, were down over 5%. These savings were partially offset by higher health care costs and elevated marketing expense. Our decision to invest more in marketing has been instrumental in driving our stronger move-in rates and positions us for revenue growth as we move through 2026. The net result was same-store NOI growth of 0.1% for the quarter. Our low leverage balance sheet remains strong with 93% of our total debt at fixed rates, net of loan receivables and a weighted average interest rate of 4.3%. Our commercial paper program launched in December of 2024 saved us over $3 million in incremental interest expense during 2025 and has been another useful tool to optimize our cash management and reduce our cost of capital. We have only one material debt maturity in 2026 and a balanced maturity schedule over the next decade. Our flexible and conservative balance sheet provides us access to many types of capital and we have plenty of dry powder to efficiently execute on our growth strategy. In last night's earnings release, we provided our 2026 outlook. Our guidance reflects our current visibility and represents a slow and steady recovery in storage fundamentals. We have not assumed any specific catalysts that could materially accelerate storage demand or any material positive or negative changes in the economy. Specifically, we have not assumed a meaningful improvement in the housing market, nor a change to current pricing restrictions in Los Angeles County. With these factors in mind, our 2026 same-store revenue guidance is negative 0.5% to positive 1.5%. Our expense growth range is 2% to 3.5%, reflecting disciplined cost management while maintaining strategic investments in our people, our properties and our platform that drive long-term revenue growth. This results in same-store NOI of negative 2.25% to positive 1.25%. Our core FFO range for 2026 is $8.05 to $8.35 per share, approximately flat on a year-over-year basis at the midpoint. Our guidance assumes that average bridge loan balances remain generally flat as compared to 2025. It also assumes that most of our 2026 acquisitions will be completed in joint venture structures. In summary, we are encouraged by our positive momentum in new customer move-in rates and same-store revenue. While it takes time for rate improvements to flow through our rent roll, our stable occupancy and strong customer acquisition platform position us well to capitalize on demand as market fundamentals continue to improve in 2026. The combination of our operational strength, talented team and diversified growth platform gives us confidence that we can continue to deliver long-term value for our shareholders through 2026 and beyond. With that, Miriam, let's open it up for questions. Operator: [Operator Instructions] Your first question comes from the line of Michael Goldsmith of UBS. Michael Goldsmith: First question is just on the same-store revenue guidance. You did 0.4% same-store revenue growth in the fourth quarter, the midpoint of the guidance calls for things to remain the same in 2026 at 0.5%. So recognizing that you've now had the benefit of street rates being positive and that's starting to flow through, I guess I would have expected it to be a little bit higher. So can you kind of walk through kind of like what's the read on how we should interpret the midpoint of the guidance kind of expecting trends to remain kind of flat with where they currently are and if there's any sort of seasonal cadence associated with that, that'd be helpful? Jeff Norman: Sure, Michael. Thanks for the question. You're right that at the midpoint it really implies generally flat same-store revenue growth as compared to our exit in the fourth quarter of 2025. As always, we provide a range recognizing the number of factors that could have evolved throughout the year, and to your point, at the higher end of our range, that would imply continued acceleration in 2026. And at the low end, some deceleration, generally flat at the midpoint, as I mentioned. And based on the trends we're seeing today with steady occupancy improving and steady new customer rate growth and a gradual year-over-year compression of the roll down between move-out and move-in customers, it's setting itself up to provide a better fundamental outlook than we saw last year. All that said, the range does capture a number of potential outcomes, which include both acceleration or deceleration, depending where you are in that range. Michael Goldsmith: And maybe sticking with the trends you're seeing today, can you kind of give us an update with how street rate has trended through January and into February and just to see if anything has changed in terms of demand environment or the existing customer into the new year? That'd be helpful. Joseph Margolis: Sure. So for the first 45 days of the year, we continue to see the trends we saw in the fourth quarter. Mid-February occupancy is 92.5%. It's about 40 bps down year-over-year, and rates to new customers are sort of up slightly over 6%. So all the positive signals continue. Operator: Your next question comes from the line of Samir Khanal of BofA Securities. Samir Khanal: Jeff, maybe sticking to guidance here. On the expense side, it's that 2% to 3.5%. You go back last year and even the prior years, it's been higher. So I guess what gives you the confidence to kind of come out with that sort of lower range this time of the year. Jeff Norman: Yes. Thanks, Samir. The biggest needle mover as we compare to 2025 is property tax. As you know, for the first half of '25, we had outsized property tax increases that impacted our full year number, with that being the biggest driver of the expenses. We saw that normalize in Q3 and improve further in Q4, and we expect that to be at a more inflationary type rate in 2026. That's the biggest factor. Insurance, which is running a little hot in Q3 and Q4, we have a midyear renewal. All indications are that the market's favorable, and we would expect that to improve materially in the second half of the year. And then most of the other line items, we've done a good job of containing and finding additional efficiencies and think those will be low single digits, if not better. So without getting to specific guidance line item by line item, gives you some of the big building blocks. Samir Khanal: Got it. And the other line item that sort of stuck out was the acquisition volume guidance. I know you talked about dry powder, you talked about external growth, but that level is lower than what you were guided to last year. Maybe provide more color on that and kind of broadly what you're seeing kind of on the transaction side. Joseph Margolis: Sure. So we expect in 2026 that most of our acquisitions will be done in a joint venture format where we put in a minority of the capital. So 200 million of our capital may represent a much larger number of gross acquisitions. And that's because given where returns are in the market for deals, we would likely not be interested in many of them wholly owned on balance sheet where if we do them in a joint venture structure, we can enhance the returns so they become accretive to our shareholders. I'd also say it's a guidance number and we have plenty of capital, sources of capital, that if there are other opportunities, we will execute them and increase our guidance like we have for the last 2 years. Operator: Your next question comes from the line of Brendan Lynch of Barclays. Brendan Lynch: Joe, you started by saying that street rates are turning positive in 16 of 20 markets. That's certainly attractive progress there. But on the same-store NOI front, it looks like a lot of -- about half your markets are still in negative territory. How should we think about the transition of those kind of street rates improving and that finally flowing through down to same-store NOI and more markets converting to positive in the next couple of quarters? Joseph Margolis: Yes, I think it's a good question and you kind of hinted at the answer. It does take time for new rates to flow into the rent roll. We only churn 5%, maybe 5% to 6% of our customers a month. So it's really a forward indicator and not something that has immediate impact on our results. Jeff Norman: And Brendan, from an NOI standpoint, property taxes in a lot of those markets that you're seeing in the 2025 numbers were a pretty significant factor. And with that being more muted and we expect it to be more muted in '26, that's another positive driver as we think of how that flows through the NOI where we don't anticipate the same headwind in some of those markets with outsized property tax growth. Brendan Lynch: Great. That's helpful. And maybe another follow-up on the expense front. Jeff, you called out health care costs being a factor in the fourth quarter. We've heard a lot of your peers suggest the same. What is your expectation for that line item going forward in 2026? Jeff Norman: Yes, there still will be pressure on the health care side. That is the headwind that I think all companies are facing. On the other hand, we continue to find efficiencies in general payroll and staffing, which mutes it to some extent. So I won't provide specific numbers in terms of our budget. But overall, the total payroll line item is within our general expectation for expenses as a whole, driven by savings on the payroll side. Operator: Your next question comes from Salil Mehta of Green Street Advisors. Salil Mehta: Just a quick one here to start off. Regarding California's, I think it was, Senate Bill 709 that went into effect earlier this year. Have you guys been able to see any, I guess, tangible changes in customer behavior or patterns as a result, I guess, the forced extra disclosure that was mandated. Joseph Margolis: So our disclosure pre legislation was as robust as what they're requiring. Now they want it in a different spot in the lease, in a specific font and color. None of that made any difference. We had very robust disclosure before the bill, and now everybody has the similar disclosure, kind of more of a level playing field, and we haven't seen any effect on our leasing activity in California. Salil Mehta: Awesome. That's great to hear. And I guess a slight pivot here as a follow-up. You guys mentioned that the guidance is not factoring in any housing market recovery or any improvements in the macroeconomic environment. But I guess more broadly speaking, what are like the top, I guess, macroeconomic drivers outside of home sales that you guys view could help provide a catalyst for the storage industry? Are you guys tracking anything specific, both on a market and national level? Any color here will be super helpful. Joseph Margolis: So a couple factors that we think are very important. One is job growth. Job growth is highly correlated to self-storage performance, and it's one of the reasons that even though in 2025 our exposure to Sunbelt markets was a headwind, that we believe our kind of proportional overexposure compared to our peers to the Sunbelt is going to be a benefit to us, because in the future we do believe that's where there'll be outsized job growth. And then the other most important factor is, of course, supply. And we see not that supply is going to 0. I don't think it will ever go to 0, new supply, but we do see a continued incremental reduction in new stores getting delivered. Operator: Your next question comes from Michael Griffin of Evercore. Michael Griffin: Maybe to start, Joe, just on the interplay between rate and occupancy. I realize you guys are solving for revenue maximization, but just given that you've run at, call it, a higher elevated occupancy compared to the industry group, and it seems to be some pretty constructive commentary on the new customer rate growth side. Does now feel like the right time to lean more into pricing? Or how should we think about the push and pull between rate and occupancy to drive revenue this year? Joseph Margolis: So I don't think you can think about it as we're leaning into occupancy or we're leaning into rate. Our algorithms price every unit type in every building every night. And we'll make those decisions as to whether, to use your words, they want to lean a little bit into rate more or whether they want to pull back to encourage more rentals on a unit type by unit type basis in every single building. So I can't tell you that Jeff and I sit around the table and say, let's lean into rate, lean into occupancy. It's just not the way it works. Michael Griffin: Certainly, that's some helpful context. And then maybe just next, I know there was an earlier question just on the regulatory landscape, but there was some news out a couple weeks ago just related to stuff going on in New York. I realize there's probably only so much you can say, but maybe from a broader perspective, is kind of the regulatory onus more of a focus, a potential headwind as it relates to jurisdictions and municipalities, whether it's on capping rate increases or what have you this year? And how do you think Extra Space is positioned to sort of maybe address some of the concerns out there as it relates to potential regulatory environment? Joseph Margolis: Sure. Good question. So with respect to New York, we were served with the complaint filed by the New York City Department of Consumer and Worker Protection. We disagree with the allegations in the complaint. To give you context, the complaint cites 117 consumer complaints over a 3-year period having to do with our 60 properties in New York City. So we have well over 100,000 customers in that time frame, so 0.1% of our customers issued a complaint to the city. We will defend ourselves vigorously, and because it's active litigation, I really can't say anymore. With respect to the broader question about regulatory patterns, we certainly have seen post-COVID an increase in regulation and proposed or attempted regulation of the self-storage industry. There's been a few jurisdictions that have proposed price caps, as you suggest, but none of those have been implemented, and I think that's a difficult piece of legislation to get passed. I think what's more common is disclosure legislation. That's been successful in many states. And as I said earlier, in many ways, we welcome that because we believe our disclosure is very robust, best-in-class. And to the extent certain disclosure has to be codified that everyone has to do it, that could be a good thing for us. Operator: Your next question comes from Eric Wolfe of Citi. Eric Wolfe: As far as your same-store revenue guidance, I know you just try to maximize your same-store revenue and you're not going to guide the specifics on occupancy versus rate because it's the combination of the 2. But as part of your guidance, you seem to at least be assuming that this current trend of 6% move-in rate growth comes down materially. I think that sort of has to be the case to get to your guidance. First, is that the right conclusion that you're assuming that, that move-in rate growth comes down? And then second, what would cause that? Is it the comps getting more difficult, demand indicators just sort of flattish? Like, what would actually cause that? Jeff Norman: Yes, Eric. Thanks for the question. As you acknowledge in your question, we don't assume that all factors remain equal. So as you talk through it, of course, increases and decreases in occupancy, increases and decreases rates are all factors. But in your scenario referring to rates specifically, if we were to try to isolate that, certainly lapping comps does become more difficult as you move particularly in the back half of the year. So I mean that would be a reasonable assumption. But as Joe led with, we are okay if we're driving revenue growth through any of those levers. So we do provide the range partially to recognize each of those factors and that some could be stronger or weaker. We're also mindful of the fact that you have a headwind of approximately 40 basis points from pricing restrictions in Los Angeles County. So those are all things that we're thinking through as we come up with our range. Eric Wolfe: Got it. And that 40 basis points on L.A., is that like a dilution, like what it would be doing versus what it will actually do? And maybe you could just share what your actual forecast is for L.A. in terms of sort of actual same-store revenue. So when you're forecasting it for 2026, like what's the number that you expect it to end up at for the year? Jeff Norman: No. Thanks for the question. We don't guide at the market level or disclose that at the market level, but you're right that, that is dilution versus what we would have expected growth to be in those markets, absent those restrictions. Operator: Your next question comes from the line of Ravi Vaidya of Mizuho. Ravi Vaidya: Can you offer color on your discounting strategy in the broader promotional environment in 4Q? And what do you have embedded in the guide from a discounting and promotional standpoint? Joseph Margolis: So our discounting strategy is channel-based, based on testing and research we've done for a number of years. So online, we seldom offer discounts, discounts being 1 month free or $1 for the first month, because all of our data is very clear that customers -- long-term customers seeking storage on the web do not respond well to that. We do selectively offer discounts in the stores depending on unit type occupancy and other factors, and we'll continue to do so. I do not envision any change in our discounting strategy until the data tells us there's a reason [ to know ]. Ravi Vaidya: Got it. That's really helpful. Just one more here. Can you describe how your team is using AI or any agentic technologies and maybe how that's an opportunity to lower marketing expense or any other operating expenses? Joseph Margolis: Sure. So we kind of think about AI in 2 big buckets: external use of AI and internal use of AI. And externally, AI's influence on traditional search is real and rapidly changing. We're staying very close to it. So far, the factors, the metrics that make us and other large companies successful in the SEO landscape are the same -- seem to be the same factors and metrics that make a company successful in the Google AIO or ChatGPT landscape. So this is something that we and the other large companies, frankly, have the expertise, technology, focus, resources to stay close to. And I think it's going to be a factor that continues to provide advantages to large companies and differentiates us from most of the industry and allows us to continue to consolidate the industry. On the internal side, I mean we've had machine learning in our pricing models, as I referenced earlier, for years and years and years, also being used in -- to help with marketing spend, software development, certain areas of the call center. We can see it in the future helping us at the help desk, contact management operations. So lots and lots of use cases. We formed an internal platform team to help us make sure that we step into this in a prudent manner and also kind of vet and triage the dozens and dozens of potential opportunities that are coming up. So we think it's going to be a big part of our operations, our technology stack in the future, and we think it will [indiscernible]. Operator: Your next question comes from Todd Thomas of KeyBanc Capital Markets. Todd Thomas: I just wanted to first follow-up on the revenue growth forecast and some of the comments made earlier. Is the base case for guidance at the midpoint, is that currently sort of assuming a stronger first half and a moderating growth rate in the second half of the year as the comps get a little bit more difficult? Is that sort of the right way to think about it based on your comments? Jeff Norman: Good question, Todd. As you can tell by the full range, the growth is still pretty flat, right, high end of 1.5%. Seasonality may impact that 10 to 20 basis points either direction as you move throughout the range -- or throughout the year, excuse me. But that might be as much of a factor as the previous year's comp as anything. So I wouldn't read into that too much. I would look at it more as gradual, slow and steady growth. But to your point, recognizing that you lap more challenging comps the deeper you get into the year. Todd Thomas: Okay. And then, Joe, you mentioned job growth as an important factor for demand. You talked about Sunbelt job growth being a favorable long-term factor. New York, Southern California, Miami, San Francisco, they've been some of the higher performer markets. I realize some of that's Sunbelt, but they've been sort of some of the higher performer markets. It seems with sequential revenue growth really leading the way. Do you expect to see those markets continue to perform or outperform in 2026? Or do you think that you'll see some of the other Sunbelt markets really take the lead next year? Or is it just more of a gradual recovery process for some of the other markets? Joseph Margolis: I think it's more of a gradual recovery process. I think the correlation between market performance in 2025, in particular, has to do with supply, right? The thing that muted Sunbelt market performance -- many Sunbelt market performance was oversupply, and many of the markets that you mentioned did not have that factor. So one thing we know, looking back at kind of long-term trends market by market, is market performance is cyclical. It's really difficult to find correlations between markets, therefore our strategy of having a broadly diversified portfolio with exposure to as many growth markets as we can. And one factor is, how's the market done the last 2 years, right? Atlanta's been a difficult market because we had several years of double-digit revenue growth. So now it's on the other side of that -- so markets will cycle between overperformance and underperformance and having a broadly diversified portfolio can somewhat smooth out that return series. Operator: Your next question comes from the line of Viktor Fediv of Scotiabank. Viktor Fediv: I have a question regarding your ECRI strategy. So you previously mentioned that your ability to drive increases is somewhat limited until street rates start to increase. So what is the average magnitude of increases sent to customers today versus this time last year? And what is your kind of base case assumption for ECRI contribution to same-store revenue growth in 2026? And how does it compare to 2025? Jeff Norman: So Viktor, we don't disclose specifics around the program. We view that as a competitive advantage and part of our overall revenue strategy, but we don't see it changing materially on a year-over-year basis. So at the portfolio level, contributions should be generally similar with the one caveat being Los Angeles County. Viktor Fediv: Got it. And then can you provide some additional details on the 26 properties that you sold during the quarter? So probably some details on pricing and the bidding process overall. And are you largely done with your kind of overall portfolio optimization, or you may consider to sell something as well in 2026 and '27? Joseph Margolis: I think we'll sell a small number of properties every year as we seek to optimize the portfolio and get -- improve our market exposure dynamics. We had a greater number of sales in 2025, largely because of the 22 former Life Storage assets that we sold. And that was part of the original plan when we merged with Life Storage. We wanted with certain select assets to improve the NOI, improve the asset, get beyond the 2-year period and sell them because we didn't think they had the growth characteristics that were attractive to us. They required capital that we didn't think we could get a return on or for market positioning reasoning. So we put that portfolio on the market. We got bids. We executed the sale at a market cap rate for the quality of assets that they were. And they weren't the best assets in our portfolio. And we successfully reinvested the capital, right? We bought stock. We made bridge loans and we did over $300 million worth of portfolio acquisitions in the fourth quarter. I can't give particular cap rate or pricing because of our arrangement with the seller, but it was a market transaction. Operator: Your next question comes from the line of Caitlin Burrows of Goldman Sachs. Caitlin Burrows: You mentioned that you expect continued incremental reduction in new stores getting built. So wondering if you can give more details on your supply expectations, which markets are more versus less exposed, and also which data or source informs that view? Joseph Margolis: So we start with Yardi, which is a national database and might have a little different opinion. We take that data and we apply it only to the markets that we're active in, right? So we don't care what's getting built in North Dakota, for example. And then we use other data that we have through our people on the ground, our investments team, our management team. And when we look at that -- stores that we expect to be delivered in 2026 in our same-store markets, it's an incremental step down, very modest step down, but a step down. I'd also say that when you look -- Yardi does a great job. We think they're the best data source in the industry. I'm not criticizing Yardi, but I think it's hard for them when projects get canceled for them to take it off of their list. They're sometimes behind on taking stores off their list that are -- that don't go forward. And we've seen historically the amount of stores being delivered is always somewhat less than what was predicted. So we think that the situation will get incrementally better. And the markets are the same markets, right? It's the Sunbelt markets that have a lot of this built northern New Jersey, Las Vegas, Phoenix and Atlanta, I guess that's a Sunbelt market. So they're not going to automatically get, where there's no supply, but it will be incrementally better over time. Caitlin Burrows: Got it. Okay. And then also on your comments that you feel better going into '26 than '25, I'm guessing that incremental improvement to supply is part of it. But I guess, is there anything else you can comment on what's driving that? And is there a certain line item in your guidance that reflects that confidence? Because it looks like the full year '25 same-store revenue and same-store NOI results are within the '26 guidance range. So just wondering if that improved feeling is reflected in guidance or not necessarily. Joseph Margolis: So I think the biggest difference between going into '25 and going into '26 is going into '25, we were still experiencing every month negative new rates to customers. And now we've turned that corner for a number of months and that pattern has certainly established itself. So that and the supply situation has certainly helped us feel better going into 2026. With respect to our guidance, we've gotten a lot of questions about that. It's really hard prior to the leasing season to be fully optimistic and fully bake these trends into your guidance, right? We've had 2 years where we did not have the leasing season that we expected, and until we get to that point where we know what the leasing season is going to be like, we're going to remain somewhat cautious. Operator: [Operator Instructions] Your next question comes from the line of Ronald Kamdem of Morgan Stanley. Ronald Kamdem: Just 2 quick ones. One is on the -- just on the operating platform. I think you guys have taken the philosophy that having people at the stores and sort of managing assets, sort of managing sales, I should say, is going to sort of bear fruit. So I guess, one, I just want to hear a little bit more about how you guys think about the potential to replace people in the long-term role in the platform. And, two, any other sort of big changes that you're thinking through about on the platform to be able to reaccelerate growth? Joseph Margolis: So our philosophy is that we want to let the customer choose how to do business with us, and the customer can't choose how to do business with us if we close certain channels to them. So right now, we allow the customer to interact with us online, at the call center or at the store. And 31% of our leases are from customers who walk into the store and have not interacted with us online or on the phone. So if we take those people out of the store, those customers all have a cell phone, they all have a computer, they all could choose to interact with us that way, but they want to go to the store for a reason. And if they get to the store and there's no one there, maybe they'll scan the QR code, maybe they'll go online or maybe they'll go across the street to the competitor. And you don't need to lose too many rentals in a high-margin business where your expense savings is overshadowed by the loss of revenue. So as long as the customers are telling us they want to talk to a store manager, right, 31% of our tenants walk into the store. 5% of our tenants start online, reserve a unit, but will not sign a lease until they go to the store, see the unit and talk to the store manager. 8% call the call center, make a reservation, but will not sign a lease until they go to a store and sign -- talk to a store manager. So the store manager is a very, very important part of our process. In addition, the store manager helps keep the store clean, helps prevent break-ins, helps prevent people from living there, helps prevent the mattress from being left in the drive aisle. The asset is taken care of better when there's a human being there. And one reason our management business is growing much faster than competitors who don't use store managers is because people want -- they want store managers in their valuable assets. So we believe this very strongly. It's why we have a higher occupancy rate, I believe, at higher rents than our competitors. That being said, there are ways to find efficiencies. And we are looking and testing for different ways to reduce the number of hours, but I don't -- until the customers tell us they only want to interact digitally, I don't foresee a future where we have no store managers. Ronald Kamdem: Super helpful. I want to come back to the operating expense question because it was sort of lower than we anticipated as well. I think you hit on the insurance and maybe you sort of talked about property taxes as well, but maybe can you talk through sort of marketing spend and some of the other line items that's getting you to that guidance? Jeff Norman: Thanks, Ron. I think you hit 2 of the biggest ones in terms of primary drivers of growth in 2026, at least as we anticipate in our guidance. And then marketing is the, I would say, the variable expense. And as we've talked about before, we really view that as a revenue driver. So it's a line item that we're happy to pull back on if we're not getting the returns we want and still see healthy transaction volume. On the other hand, it's one that we're also happy to lean into and spend more because it's pretty direct return that we can calculate. So I would say that, that's probably your risk factor, Ron, to the positive and to the negative, is marketing expense. And then on the margins, property taxes, just because of the magnitude of the total expense load that they contribute. The rest, Ron, I would say would be definitely inflationary. Sorry about that. Operator: Your final question comes from Michael Mueller of JPMorgan. Unknown Analyst: It's [ Daniela ] here. On the bridge loans, it looks like you guys have gone through the majority of your backlog of bridge loans. Considering the balance is expected to be generally flat in '26, should we expect the balance to decline beyond '26? Or do you have meaningful activity there to keep it consistent? Jeff Norman: Yes, thank you for the question. We are intentionally guiding to maintaining relatively flat balances. That's not necessarily because there's a lack of volume to keep originating loans, but we have a really flexible structure where we can choose how much of the loan to retain. So if we see higher volume, we can sell more of our mortgage notes and just retain the higher-yielding mezzanine piece, or we can retain both. So we're confident we can retain those balances at this level based on the origination activity we've seen. We've also seen that a lot of these loans -- or borrowers exercise extensions. We see that oftentimes at or before maturity, we are buying these assets, so it serves as an acquisition pipeline for us. So we're happy to participate in the industry in any way we can to partner with other storage participants. And this is just another good tool that helps bring in management, it sources future acquisitions and provides a solid return along the way. Operator: There are no further questions at this time. I will now turn the call over to Joe Margolis, Chief Executive Officer, for closing remarks. Joseph Margolis: Thank you all for the questions. Good conversation. We appreciate your interest in Extra Space and look forward to reporting to you throughout the year how we do on our guidance. Thank you and have a great day. Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Lundin Mining Fourth Quarter 2025 and Year-End Financial Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Jack Lundin, President and CEO. Please go ahead. Jack O. Lundin: Welcome to Lundin Mining's Full Year and Q4 2025 Earnings Call. Our operating and financial results were released last night, and the news release, presentation and webcast replay are available on our website. All amounts are in U.S. dollars unless stated otherwise. You may have noticed a new look in our materials for this call. Today, we are pleased to introduce to you Lundin Mining's new brand, which is aligned with our copper-focused strategy and long-term growth ambitions. Over the past 2 years, we have completed transformative transactions that have streamlined our portfolio and sharpened our focus on copper. Our new brand identity brings together our corporate and sites under one unified recognizable look and feel while strengthening our visibility in the regions where we operate. You'll see the updated brand across our investor materials, website and operations, starting with the financial results we are discussing today. About the logo and colors, the stylized L in our new logo symbolizes momentum and growth, while our new color palette is inspired by copper and the landscapes where we operate. Before we start, we will play a quick video capturing our new look. Please enjoy. [Presentation] Jack O. Lundin: As a reminder, yesterday's results and some remarks made on today's call will include forward-looking statements. Please refer to the cautionary statements on Slide 3 for reference. With me on the call today is Juan Andres Morel, our Chief Operating Officer; and Teitur Poulsen, our Chief Financial Officer, to present operating and financial results for the company. 2025 was another milestone year for Lundin Mining on nearly all fronts of the business, and we have positioned ourselves on a clear path to becoming a top-tier copper producer, completing 3 transformative transactions during the year, which rationalized our portfolio and sharpened our focus on our existing assets in South America. In January, we finalized the merger of our Eagle mine with Talon Metals to create a new pure-play American nickel company. This transaction unlocks meaningful synergies, including the opportunity to leverage the Humboldt Mill as a shared centralized processing facility. At the same time, Lundin Mining has retained a 20% ownership in the combined company, and me and Juan Andres have joined the Board, along with former Managing Director of Eagle, Darby Stacey, as the new CEO of Talon. With this streamlined asset base, we continued to advance our growth initiatives. This includes refining growth plans for our 3 operations and maturing the large-scale growth plans for the Vicu�a project. We recently announced our updated mineral reserve and resource statement and on an attributable basis, the company now has contained metal of over 35 million tonnes of copper, over 60 million ounces of gold and over 960 million ounces of silver, effectively doubling our copper resource base and adding a significant amount of gold and silver to our mineral resource inventory. We delivered our best financial performance in the history of the company and generated record revenue of more than $4.1 billion and adjusted EBITDA of $1.9 billion for the year from continuing operations, not including the Eagle Mine. We declared our 39th regular quarterly dividend, paid out $106 million in dividends during the year and purchased 15.1 million shares for a total return of $256 million to shareholders, demonstrating our commitment to shareholder returns as part of our capital allocation strategy. We are pleased to reinforce today several recent announcements that have been published by the company. The highlight from earlier this week was the announced -- was that we announced the results of the integrated technical report on the Vicu�a project, highlighting an incredible project capable of producing over 500,000 tonnes of copper, 800,000 ounces of gold and over 20 million ounces of silver during its peak production years, which would position it as a top 5 in terms of scale on all of these metal categories. We also announced commitments to upsizing our revolving credit facility to $4.5 billion to enable us to fund the next phase of growth for our company. Operationally, our assets performed exceptionally during the year, and we were able to increase copper guidance in the third quarter while also reducing our consolidated cash cost guidance range. We met revised guidance on all consolidated metals in 2025. Safety remains our top priority. And during the quarter, we continued to strengthen our safety culture through visible leadership and targeted training programs across all operations. We continue to improve our total recordable injury frequency rate, which resulted in achieving the lowest rate in the company's history. Including Eagle, consolidated copper production was 331,000 tonnes of copper for the year, led by strong performance from Caserones and consistency from Candelaria and Chapada. Gold production was 142,000 ounces for the year. Caserones annual production for copper was at the top end of the most recent production guidance range and the fourth quarter copper production was the highest since the mine was acquired by the company in 2023. From continuing operations, we generated adjusted EBITDA of $1.9 billion and adjusted operating cash flow from operations of $1.6 billion during the year, both annual records for the company. For the third year in a row, we met copper guidance, reflecting the accuracy of our planning cycle and our disciplined focus on operational consistency. I will now hand it over to Juan Andres to go through the operational results in more detail. Juan Morel: Thank you, Jack, and good morning, everyone. We shared our production results earlier this year. I will now briefly highlight some of the key points from the year-end release. The company exceeded original guidance -- copper guidance and met revised guidance across all metals. The company produced 331,000 tonnes of copper this year and 87,000 tonnes in the fourth quarter, inclusive of the Eagle mine. Gold production for the fourth quarter totaled approximately 34,000 ounces and for the full year, 142,000 ounces, which was in line with guidance. Throughout the year, Candelaria maintained steady operations with 95% mill availability and processed approximately 7.8 million to 8.1 million tonnes of ore each quarter and 32 million tonnes in the year. Candelaria produced a total of 145,000 tonnes of copper, in line with annual guidance. In the fourth quarter, the mine produced 34,000 tonnes of copper, which was slightly less than previous quarters due to planned lower head grades. Caserones performed very well and annual production for copper beat original guidance and was at the top end of the most recent production guidance range. Fourth quarter copper production was the highest since the mine was acquired by the company, as Jack mentioned earlier. Caserones produced 133,000 tonnes of copper during the year and 40,000 tonnes in the quarter. Higher production was driven by higher head grades and strong cathode production. Additional oxide material placed on the dump leach together with improved leaching practices increased copper cathode production to 25,800 tonnes in 2025. As mentioned at our Capital Markets Day, these optimization efforts have led our annual copper cathode production forecast to increase to approximately 26,000 to 28,000 tonnes in 2026 through 2028, an improvement of 6,000 to 8,000 tons from prior levels. Chapada was slightly second half weighted this year. During the fourth quarter, throughput was 6 million tons, which produced 11,200 tonnes of copper and 44,000 tonnes of copper in 2025, which was at the upper end of guidance for the year. And finally, Eagle produced 2,200 tonnes of nickel in the quarter and for the year was in the midpoint of guidance at 10,000 tonnes. Our assets demonstrated positive progress in 2025. Moving forward, our focus will remain on operational enhancement to optimize margins and further improve the cost profile of our holdings. I will now turn the call over to Teitur to provide financial summary. Teitur Poulsen: Thank you, Andres, and good morning, everyone. So before going into the numbers, as a reminder that with the completion of the sale of our Eagle mine, this operation is presented as discontinued operations in our income statement and the assets and liabilities on the balance sheet have been classified as held for sale as of December 31, 2025. As Jack mentioned earlier, robust copper and gold production, combined with unwinding concentrate inventory, along with high commodity prices led to an outstanding financial performance for the period. We reached record revenue and adjusted EBITDA for 2025. We generated close to $1.4 billion in revenue during the fourth quarter, including $52 million from discontinued operations. Revenue for the full year amounted to a record $4.5 billion, including $409 million from discontinued operations. Our sales mix remains predominantly leveraged to copper and has increased from last year where 75% was generated from copper compared to the fourth quarter this year, where the copper component accounts for 87% for the quarter. Moving to the next slide. In the third quarter, we incurred a shipment delay of approximately 20,000 tonnes of copper concentrate at Caserones due to weather-related impacts. And this resulted in the company carrying higher-than-normal inventory levels at the end of Q3. This elevated level of inventory has been unwound during the fourth quarter, leading Caserones to sell 45,000 tonnes in the quarter. Pricing adjustments on prior period sales of concentrate had a positive impact on revenue by $83 million in the fourth quarter, helping drive financial performance. In the fourth quarter, we realized a copper price of $5.89 per pound, which was higher than the LME quarterly average of $5.03 per pound. For the full year, our average realized price was $4.91 per pound for copper, which is materially higher than the annual LME average of $4.51 per pound copper. This higher realized price is driven by the fact that the disproportionate share of our annual sales occurred during the fourth quarter when the market prices were higher than the annual average price. At the end of the fourth quarter, approximately 80,000 tonnes of copper were provisionally priced at $5.64 per pound and remained open for final pricing adjustments. Moving to Slide 13. Consolidated production costs for the fourth quarter amounted to $585 million, including discontinued operations, which is higher than previous quarters due to the elevated sales volumes and certain one-off costs expensed in the fourth quarter. At Candelaria, the company finalized ahead of schedule labor renewal agreements with Candelaria's 5 unions during the fourth quarter, which led to a onetime increase in costs due to signing payments. Cash costs for the fourth quarter were higher than previous quarters and were similarly impacted by the one-off union signing bonus payment. The higher sales volume at Caserones for the fourth quarter drove a high absolute production cost for the quarter. Cash costs for the fourth quarter were in line with the previous quarter and Caserones full year cash cost of $2.17 per pound is towards the bottom end of guidance. Chapada's full year cash cost of $0.75 per pound outperformed the revised range -- guidance range of $0.90 to $1 per pound. Cash costs were positively impacted by the favorable gold pricing compared to forecast, resulting in improved byproduct credits for both the full year and the fourth quarter. Cost control across all sites remain very robust, and this has resulted in the company's cash cost for the full year of $1.87 per pound coming in below the bottom end of our original guidance and towards the bottom end of the revised guidance. This better-than-expected outcome was achieved despite the unbudgeted union agreement payment at Candelaria being accelerated from 2026 into 2025. Slide 14 shows our total capital expenditure for the full year, which amounted to sustaining CapEx of $499 million, inclusive of Eagle compared to revised guidance of $510 million. The lower sustaining capital investment was primarily the result of reduced stripping and a delay in capital projects at Caserones. Capital expenditure at Vicu�a was $167 million compared to guidance of $215 million, with this underspend mostly relating to timing. Our full year and fourth quarter key financial metrics are presented on the next couple of slides. As previously stated, total revenue for the year, including discontinued operations, reached close to $4.5 billion with almost $1.5 billion generated in the fourth quarter. We generated adjusted EBITDA of $1.9 billion for the year from continuing operations, including $686 million in the fourth quarter. Adjusted operating cash flow from continuing operations exceeded $1.6 billion for the year, including over $665 million in the fourth quarter. Moving to the next slide. Free cash flow from continuing operations was $774 million for the year and $388 million for the quarter. Operating cash flow benefited from higher commodity prices and was offset by a significant negative working capital build of $414 million for the full year and a working capital build of $132 million for the fourth quarter. Full year adjusted earnings from continuing operations amounted to $688 million and $364 million for the quarter. Earnings from continuing operations for the quarter amounted to over $900 million and were positively impacted by a noncash deferred tax recovery at Caserones of $517 million, with the company now having recognized a larger portion of the $3.9 billion tax loss at Caserones. Slide 17 presents in greater detail the sources and uses of cash in 2025. In 2025, our continuing operations generated just over $1.6 billion in cash flow before working capital. This cash generation includes close to $400 million paid in cash taxes during the year. After netting capital expenditure and noncash working capital movement, the free cash flow from continuing operations amounted to $539 million. As per the company's shareholder distribution policy, the company executed on its share buyback program totaling $150 million. And combined with the dividends for the fourth quarter 2024 and the first 3 quarters 2025 has paid an additional $106 million in dividends. Dividends to noncontrolling interest in Candelaria and Caserones amounted to $138 million for the year. The company had a cash outflow of about $150 million on lease payments, interest and hedges and ending the year with net -- with a net cash position of $77 million, excluding capital leases. The company has significantly strengthened its balance sheet during 2025 with the sale of the European assets being pivotal to this strengthening. With last week's announcement to upsize our revolving credit facility from $1.75 billion to $4.5 billion, combined with the strong cash generation from our producing assets, the company is now financially primed to embark on the capital investment required to unlock the exciting Virunyia project in Argentina. And with that, I'll now turn the call back to Jack. Jack O. Lundin: Thank you, Teitur. In January, we announced updated 3-year guidance for production, operating cash costs and capital expenditures for 2026. Copper production is forecast to be 310,000 to 335,000 tonnes on a consolidated basis in 2026. Compared to last year's 3-year outlook, mine sequencing optimizations are expected to increase copper production by 20,000 tonnes in 2027, while the midpoint of 2026 has been adjusted by 5,000 tonnes, resulting in a net increase of approximately 15,000 tonnes over the 2-year period. Revisions to Candelaria's 2026 copper and gold production guidance incorporates lower underground mining rates in the first half of the year as the company in-sources the underground mine operations contractor. The production profile is forecast to be modestly weighted towards the second half of the year due to higher expected grades from Phase 12. We expect the in-sourcing strategy to lead to cost savings and improved productivity for our underground operations, which represents a significant value driver for the future of our Candelaria operation. At Caserones, 2026 estimates remain unchanged, while copper guidance in 2027 increased by 10,000 tonnes to range between 115,000 to 125,000 tonnes, resulting from higher cathode production and increased mill throughput. Chapada copper production guidance has been revised upward by approximately 5,000 tonnes for 2026, resulting in an anticipated range of 45,000 to 50,000 tonnes. Gold production guidance also increased by 10,000 ounces for 2027 compared to previous guidance. The updated mine plan reduces the dependence on lower-grade stockpile material from around 25% down to about 10%, enhancing copper and gold recovery rates over the 3-year period. Consolidated gold production is forecast to be 134,000 to 149,000 ounces in 2026 for the company. Consolidated cash cost for 2026 is projected to range from $1.90 to $2.10 a pound of copper after accounting for by-product credits. Total sustaining capital expenditures are forecast to be $550 million, consistent with prior year's guidance. Candelaria and Caserones account for approximately 80% of the sustaining capital budget with the majority of expenditures directed to stripping, mine development for Candelaria's underground, tailings and mining equipment purchases and replacements. Expansionary capital expenditures are forecast to be $445 million, and this includes the 50% expenditure related to our 50-50 joint arrangement between the company and our partners, BHP for the Vicu�a project. This ramp-up in expenditure gets us ready for a sanction decision on Vicu�a as early as the end of this year. Included in expansionary capital expenditures, we also have $35 million in expansionary CapEx at Candelaria, which includes preproduction stripping related to Phase 13 in the open pit. Exploration this year is estimated to be $53 million, and we will target drilling almost 70,000 meters between Caserones, Candelaria and Chapada. The drill program at Caserones will primarily focus on defining the size of the Angelica deposit, both in terms of leachable copper resources and the underlying copper molybdenum sulfide mineralization, where we are targeting a maiden resource next year in calendar year 2027. Additional drilling at Caserones will be directed towards new discoveries and testing at least 2 new district exploration targets, Centauro and Cordillera. At Candelaria, drilling is designed to continue expanding the underground resources and also growing the shallow La Espanola deposit and neighboring La Portuguesa target. At Chapada, additional drilling at Sa�va will continue to further define higher-grade resources that will be incorporated into an updated resource estimate later this year, which will also be embedded within the updated technical report for Chapada. I'll now hand it back over to Juan Andres to give an update on the Sa�va project. Juan Morel: Thank you, Jack. As mentioned at our CMD last year, we are advancing key growth initiatives at our Chapada mine, including the installation of an additional ball mill and the development of the nearby Sa�va satellite deposit. The ball mill installation will allow a finer grind size, which is expected to increase recoveries by approximately 5% for both copper and gold for the entire life of mine. At the same time, ore from Sa�va deposit will provide higher grade ore, helping to offset the lower grade material at Chapada and further enhance overall plant performance. The pre-feasibility study for Sa�va has been completed and a feasibility study has been initiated. We are targeting to make a sanctioning decision in the second half of 2026, and we expect construction of the new ball mill to begin by the end of 2026 or early 2027, which will put the commissioning of the ball mill near the end of 2027. Permitting at Sa�va will continue to advance in parallel and potentially, we could see first ore from Sa�va in 2029, subject to permit time lines. The pre-feasibility study highlighted an average production increase of 17,000 tonnes per annum for copper and 32,000 ounces per year over a 5-year period for Phase 1. We anticipate this profile will improve as the mine plan is optimized to include Phase 2. I will now turn it back to Jack. Jack O. Lundin: On Monday, we announced the results of the Vicu�a Integrated Technical study, signifying an important milestone for this impressive district scale project. At full capacity, the district is expected to produce over 500,000 tonnes of copper, 800,000 ounces of gold and 20 million ounces of silver each year. The project benefits from a first quartile cash cost profile and will be built to generate sustained significant cash flow for many decades throughout the cyclical nature of the base and precious metal sectors. Furthermore, the stage development approach is designed to use cash flows to fund subsequent expansions, optimizing capital efficiency and value creation. It is great to start off in 2026 with these recent company highlights and on the heels of a record-breaking year for the company. Divesting our European assets simplified our portfolio and strengthened our balance sheet, allowing us to focus on future growth across our South American sites. Our partnership in the Vicu�a District positions us for multiyear growth toward becoming a top 10 copper producer. Filo del Sol, one of the largest undeveloped copper, gold, silver deposits globally and our joint venture with BHP creates a pathway to form a new multigenerational mining district. Anchored by consistent operational performance, we delivered record revenue of $4.5 billion, declared our 39th consecutive quarterly dividend and returned a total of $256 million to shareholders through dividends and share buybacks, highlighting our financial discipline and commitment to shareholder returns. Lundin Mining is uniquely positioned with a strong balance sheet, funding commitments for our ambitious pipeline of growth, a simplified portfolio and a strategic partnership with BHP in the Vicu�a District, offering unparalleled growth opportunities for our stakeholders. With that, I would like to open the lines for questions. Thank you. Operator: [Operator Instructions] Our first question comes from Johannes Grunselius with [ SB1 Markets ]. Johannes Grunselius: Yes. It's Johannes. I have 2 questions. So the first one is on Caserones, where you had really good grades, as you highlighted. I can see that your annual sort of copper output is [ 158 ] or something and your full year '26 guidance is [ 130 ] to [ 140 ]. Are you seeing that more conservative now than you did when you launched the guidance in 1 in December? That's my first question. Juan Morel: Johannes, this is Juan Andres. We -- as I mentioned on the presentation, we have seen a significant improvement in the performance of the cathode plant. So we are forecasting more cathode production. And that is somehow offsetting some of the drops in the grades in the following year, but we are maintaining our guidance overall as previous years. Johannes Grunselius: All right. Okay. So it was sort of in line with your expectations, the Q4 volumes. They didn't surprise you. Juan Morel: No, it was as expected in the mine plan. Johannes Grunselius: Okay. Okay. Okay. Good. And the second question, and you partly answered it in your presentations. But when I look at the OpEx versus, for example, your ore volumes in Candelaria, Caserones, it's a pretty high increase in OpEx per tonne ore mined and ore milled. And you mentioned there was some negotiations with unions that could explain that. But could you -- how should we view it? How much did cost move up sort of on an underlying basis? And is this like in line with the mining industry right now in Argentina and Chile? Teitur Poulsen: Johannes, it's Teitur here. I mean, first off, I mean, it's a great result that we managed to land these 5 agreements with the unions at Candelaria ahead of schedule because that eliminates any risk of any production disruption in 2026. But we are not disclosing the exact details of what those bonus payments are. The sequence here is that every 3 years, we enter into negotiations with the unions. And normally, what happens is you're paying certain one-off bonuses to the labor force in order to extend stability for the next 3 years. And the way we account for that is that whenever we pay these bonuses every 3 years, we expense that payment in the quarter where the payment occurs. So that did elevate the, as you say, the Candelaria absolute costs in Q4, but the return from that is that we now have stability over the next 3 years. And at Caserones, the absolute costs are also up, and that's simply because we report the production cost as per the sold volume, not the produced volume, and we sold an elevated amount of volume for Caserones in Q4. So that's what's driving a higher absolute production cost. But if you look at it on a unit basis, it's as low as it was inQ3. Operator: Our next question comes from Daniel Major with UBS. Daniel Major: Just on the Sa�va update, I'm just looking at the slide from the Capital Markets Day on the scoping study. And I mean, you're sort of guiding for a similar rate of production. I think it was 15,000 to 20,000 tonnes per annum of copper -- it's now [ 17 ], it's fractionally lower gold. But the parameters seem somewhat different. I mean the CapEx has gone down from [ $155 million ] to [ $110 million ]. The grades are lower. The throughput is lower, but the production is the same. Can you just run us through what the difference is between what you're presenting on now relative to the Capital Markets Day and kind of what's changed, particularly the reduction in CapEx? Was that just a conservative initial assessment? Or has the scope changed much? Juan Morel: Daniel, this is Juan Andres. Thank you for the question. So in -- during the CMD, we guided based on a conceptual study. And as we move into the pre-feasibility study, of course, we increased the level of understanding of this opportunity. In the original CapEx estimate, we have considered a secondary crusher for the addition of the ball mill. During the PFS, we learned that, that was not necessary. So that was basically removed from the CapEx estimate. And the rest of the scope remains the same. So we have the ball mill, which is roughly $60 million, $65 million. And then for the Sa�va itself for the open pit is another $45 million for road construction, liners for the waste dumps and a water treatment plant. So that is basically the scope. So that is what triggered this CapEx reduction. Of course, there were some minor adjustments to the mine plan, given also changes in the metal prices that were used for mine design, and that explains the small changes in the tonnes and grades. Daniel Major: Okay. Second question, just around the treatment and refining charges. I think Antofagasta settled what looks like the benchmark essentially close to 0. Would it be fair to say that you're following similar terms? And then is there any difference in the realization when we look at what you're sort of putting in your accounts for treatment and refining charges, -- is that going to dramatically decline? Or are there any additional charges incremental to what a pretty close to 0 benchmark represents? Teitur Poulsen: Yes. Those are also the numbers we are hearing. Certainly, for volume going into China, I think it will be segmented a little bit more than what normally was the case. So we will have to see what the Japanese rates land up and other rates. But generally speaking, it's trending very well. I mean within our cost guidance for 2026, we have assumed 25 and 2.5. So I think we're likely to land ahead of what we assumed in our guidance. So I think that's as much as we can say. And obviously, then depending on the blend of how much we sell on the fixed-term contracts versus spot markets, that might ultimately also impact the weighted average TC/RC charges we have for the full year. Daniel Major: Okay. But you've assumed 25 and 2.5. So there's obviously quite a bit of downside even though it's a relatively small number. Okay. Yes. And then final one, I'll let someone else go. Just wanted to follow up on some of the discussions in the call earlier in the week around streaming in Vicu�a. I mean it felt like the narrative from BHP on their call following the announced transaction at Antamina was the reason they were happy to stream that was that there wasn't a huge amount of long-term growth optionality beyond life extension, which made up with the same dynamic in Vicu�a. Can you just give us another summary of how you're viewing streaming in the district and confirm whether it would be at all possible that one party out of the JV would stream and the other would not. Jack O. Lundin: Daniel, it's Jack here. So I think as we were mentioning and as we released on Friday last week, we've upsized our near finalization of upsizing our revolving credit facility up to USD 4.5 billion, which would put us firmly in position to be fully financed for our portion of the build. Now that also gives us the optionality to look at other forms of financing, streaming being one of them. We're seeing that there are some uniquely structured streaming deals being announced in the market, and we're obviously following what our partners, BHP are doing at Antamina. I think it opens up optionality and opportunities for us. But I think also, as we've mentioned, the Filo deposit is still open in all directions, and we see significant upside potential for the resource to grow, and that includes silver qualities and quantities. But of course, you can structure a deal where you're having step-downs or arrangements where you don't have to run the stream in perpetuity. So we're looking at opportunities, but I would say it's still lower down on the probability list for us in terms of financing. And if there were to be one party working on a different form of financing than another, then as part of the JV, the partners would have to get together and align on what that is. But right now, I think we're in a really good position as it pertains to our funding strategy. Operator: Our next question comes from Sathish Kasinathan with Bank of America. Sathish Kasinathan: My first question is on the long-term outlook, the 3-year outlook. So your 2028 guidance, which currently calls for a modest drop in copper production versus 2027. I guess there is upside from Sa�va, which could start in the second half of 2028. Can you talk about some of the other opportunities you highlighted at the Investor Day, mainly the underground expansion at Candelaria and then the Angelica target at Caserones? Jack O. Lundin: Yes, I can talk about the growth projects, and I'll hand it over to Juan Andres to talk about the 2028 production guidance range. So for Candelaria underground, as we mentioned on the call, right now, the focus for us is to be in-sourcing the mine production operator in the underground. And in order to accommodate that smooth transition, we've lowered the throughput assumption from the underground, and we'll be exiting 2026 getting back to kind of that 14,000 tonne per day baseline production rate. Once we've been able to do that, then we'll look at putting a plan in place to potentially grow in increments up to what could be around 22,000 tonnes per day in the underground, which translates to around 10,000 tonnes of copper per annum for Candelaria overall. Angelica is a very exciting exploration play right beside Caserones. We've got a number of exploration targets that we're following up on through our drilling season this year at Caserones. And really, what we're looking at is high-impact holes that are near the existing infrastructure of Caserones that could quickly translate into mineable inventory to potentially feed higher-grade material to the sulfide concentrator or even more oxide material for our dump leach, which as we have been announcing and talking about the cathode plant is running exceptionally well due to upgrades that we've made to our overall kind of leaching plan. So yes, we're going to be chasing up those opportunities in addition to the Sa�va project, which we just spoke about, and I'll hand it over to Juan Andres to talk about 2028. Juan Morel: Yes. In our guidance in 2028, we have not yet included any of these opportunities yet. So as we move forward, we will be including those. So I don't think there's... Jack O. Lundin: No. And Sa�va is not part of our -- we haven't fully sanctioned it yet. We look to do that before the end of this year. I mean the Chapada plant upgrade for the extra ball mill is something that we will be proceeding on. And right now, the PFS outlined us getting into first production actually in 2029, not in 2028. Sathish Kasinathan: Okay. Understood. Maybe one question on the Chapada stream. So Chapada currently has a stream on the primary metal production. With the change in ownership there with the acquisition of Sandstorm. So have you had any initial talks with the new owners and whether you can potentially take advantage of the current strong gold price and convert it into a gold stream instead of a primary metal stream? Jack O. Lundin: No, we haven't had any discussions since the change of ownership on that stream, but something that we'd obviously entertain potentially in the future. Operator: Our next question comes from Cody Hayden with Deutsche Bank. Cody Hayden: You kind of touched on it already, but as we approach a potential sanctioning decision at Vicu�a later this year, I was wondering if you could comment on how we should be thinking about the balance sheet and capital allocation. Is there any consideration on updating any of your policies? Are you sort of in a holding period until financing agreement is confirmed at Vicu�a? And then second, I noticed the calculation of net debt has been updated to exclude lease liabilities. I was wondering if you could just explain a bit of the rationale behind this change. Teitur Poulsen: Yes, I can address just on the capitalized leases. Most of those actually relate to the Caserones operations. But we just think it's a cleaner story. It's less confusing if you just segregate the actual external debt as debt when we talk about the net debt. The leases are -- financially, it has to be classified as debt, but they really relate to the operations of the Caserones mine. So that's why we prefer to separate the 2, and we are always very clear as to when we talk about net debt that it excludes capitalized leases. So there's nothing more to it than that. We just feel it's a simpler way to communicate the position of the balance sheet. Jack O. Lundin: Yes. And with respect to kind of our capital allocation, I think we've been very consistent in our messaging. We will look to remain distributing capital to shareholders in absolute terms of around $220 million through dividends and our buyback policy. We've got growth opportunities that we're pursuing. And then we've got this upsizing of our revolving credit facility that we're on the cusp of finalizing. And so that puts us in a really good position, right, being in a net cash position. We entered 2025 with a debt of around $1.3 billion, thankfully, to the conclusion of the sales of our European assets and other transactions, we've been able to pay down our debt in addition to the strong cash flows being generated. So I think we're in a very strong position, which gives us the ability to maintain returns to shareholders, pursue our brownfield opportunities at our existing operations and then go after the big growth opportunity with Vicu�a. So we're in good shape. Operator: Our next question comes from Craig Hutchison with TD Cowen. Craig Hutchison: Most of my questions have been answered, but I just wanted to circle back on Sa�va. Just looking at the production profile, it seemed to me pretty accretive, particularly given the high gold grades in year 1. But is any possibility you could give us some kind of sense in terms of what the NPV uplift would be from this project? It's just difficult to kind of understand just based on only having initial capital and some of the grades. But is this a pretty material uplift in terms of how you view the NPV for Chapada overall? Jack O. Lundin: Yes, absolutely. It definitely impacts the overall value of Chapada, adds a significant amount of NPV to the asset. We use base case kind of consensus pricing for the sanctioning decision and for our economic model. But if you were to use spot pricing, I mean, this would significantly enhance the overall value of Chapada. And so these are the exact type of projects that we're tasking our sites to go out and look to pursue given that Chapada has stabilized the operation and is generating strong cash flows year-over-year. I think Sa�va plays a key role to improving the overall value. And I will say as well, targeting before the end of this year, we're going to be updating the technical report, which will update the resource and reserve for Chapada. It will incorporate Sa�va as a reserve as well, and it will include kind of the development plan and overall strategy for making that part of the core of the operation. Craig Hutchison: Okay. Great. I guess you can't give us some kind of a sense of what it's -- what that NPV uplift is at this point? Or we have to wait until sort of year-end? Jack O. Lundin: Yes. We're not disclosing that at this time. But yes, but you'll be able to see it in the near term. Operator: Our next question comes from Matt Greene with Goldman Sachs. Matthew Greene: Congrats on a great year. If I could just carry on that question on Sa�va, Andres. What do you -- I guess, firstly, just a clarification point because I think the language is changing a bit here. At your CMD, you talked about incremental production, and now we're talking about offsetting low-grade material. So I just want to confirm that is still incremental production on top of what the mine plan you presented at the CMD? And then just kind of how you -- since the scoping study in this PEA, has your approach to how you're thinking about this project changed at all? I mean metal pricing has gone up. I guess, are you solving for NPV? Are you solving for capital intensity, the ability to bring this to market quickly? I'm just kind of keen to know if your approach towards this project has changed at all since the CMD. Juan Morel: No. And in general, the approach has not changed, Matt. And we're still aiming for bringing production earlier in the life of mine of Chapada and taking advantage of the current commodity prices. So we're aiming for low intensity -- low capital intensity opportunities as we highlighted during the CMD. And to your initial question, it is incremental production. So we're basically deferring or delaying low-grade material from Chapada and replacing that with higher-grade material from Sa�va. And those 17,000 tonnes of copper are actually incremental over the previous life of mine of Chapada. And just to add one more comment. This is the first phase of this project, which is this near-term opportunity. But as we continue with the study of the project, the feasibility study, we'll also be working on the pre-feasibility study of the remaining of the ore body, which is still very attractive, but we need to understand more the deposit and how we're going to bring that project forward. Matthew Greene: Yes. Got it. That's clear. And I guess just taking a step back on the concentrate markets. You touched on TC/RCs earlier, but I don't think that really tells the whole story, just given the tightness, not getting to get penalized as much on purities, free metal. I think your bargaining power as a mining concentrate producer right now is quite favorable. So is this I guess, changing the way you're thinking about how you produce your concentrates across your mines. I mean, are you able to lower the grade of your concentrates, perhaps mine material if you do have it that has higher impurities and be quite opportunistic in this market? Is this something that is perhaps opening up a few opportunities? Juan Morel: Yes. We have been looking at opportunities from that regard. We are testing some different approaches in Chapada, for example, where we're making a trade-off between lowering the grade of the concentrate and increase our recovery significantly. So we are testing those opportunities. We have seen, on the other side, an incredible increase in the concentrate grade in Caserones as we mine through an area of the deposit where recoveries are higher and concentrate grades are highest, is basically driven by the metal, but those are the kind of trade-offs that we're testing now. Matthew Greene: Okay. And is that looking quite promising? Is that all reflected in your guidance? Or could that be a little bit of upside, you think? Juan Morel: No, they're not yet totally reflected in our guidance. Operator: That will conclude our question-and-answer session. This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by, and welcome to the SEEK Limited Half Year Results Call for 2026. [Operator Instructions]. I will now hand the call over to SEEK Limited CEO, Ian Narev. Please go ahead. Ian Narev: Thank you. Good morning, all. We are here on the lands of the Wurundjeri Woiwurrung people of the Kulin Nation. I'd like to pay my respects to the elders past, present and emerging. We've got the usual crew here, Kendra, Peter, Simon, Grant, Dan and Pat. And thank you all very much for joining us. I'd only to tell you that these results happen at a pretty volatile time in terms of equity markets and today is not a sales job. The numbers are going to speak for themselves. And we'll add to that our perspective on the main drivers of the numbers and what that means for the future. In terms of our take, I've been generally encouraged by our Board to overcome my natural conservatism and talk about the business. So let me say that over the next hour and in the course of discussions we'll have with many of you over the coming days, I think it will be clear that as a management team, we have a very strong sense of confidence in the position of the business today and in its prospects for the future. We've got a combination of market leadership positions, brand strength, customer trust, technology backbone, product depth and breadth and perhaps most importantly, the data that come from all of those strengths. And that puts us in a unique position to continue and accelerate years of innovation. That takes a lot of hard work, but we've got as good a starting point as we could want. And the momentum, as I said, is clear from the results. As you can see from Slide 6, shares up, yields up, operating leverage is clear. We've got a record dividend. The balance sheet is strong. We know that the translation to the bottom line still needs to come a bit more. And particularly, we can answer questions about the Zhaopin write down in Q&A if people want to know more, but we are well on the way. This is the latest in a series of results we've delivered exactly what we said we would and probably a bit more. This is the best of that series of results. And as we discussed at our Board meeting yesterday, it's probably as good a set of operational results as SEEK has ever delivered. So the momentum is accelerating. I won't go into the detail on Slide 7 and 9, but the message there is very clear. Short-term results are as planned. Progress against our core strategic priorities is very strong. More important than that are the drivers of those results, and I'll just spend a minute on Page 10 because those drivers of the result are the connection between the strength of the results and the confidence in the future. On the top box, put very simply, we are 1 decade on from the establishment of our AI function with that name. We're 2 years on from elevating the function to my direct reporting line, and we can see the benefits of years of doing that investment right through the results. And you can see hundreds of product releases in the last 6 months using AI capability, placement share and yield growth, not prospects, but delivered these results. A high proportion of the benefits come from the data advantage we have. And a very important part of, again, not what we think, but what we've learned is that in this environment, and we believe in the period ahead, competitive advantage doesn't come from AI models. It comes from the extent to which the models can access unique proprietary data that other models can't, and that translates into tangible benefits for customers who, as a result, choose you and will pay for what you offer. You understand SEEK well enough to know we run a marketplace with very complex preferences, not on one side, but on 2 sides of the market. So using data to help elicit those preferences and more significantly to match them creates the value that, as I said, makes people choose us and pay, and that's not a thesis. The evidence is right through the results. It's evident in placement share, it's evident in yield growth, and we've got a long way to go. And you can see that in the second box there, we talk about having roughly 0.75 billion data points, most of which can't be replicated and scraped. And we know from daily experience how to translate that into the products that matter to customers. The last thing I'll say before handing to Grant is that the matching that we're seeing is better than ever, and we really feel we are still only at the start of what we can do. And I just want to dwell on one point, particular words in that first bullet point where we say the most obvious benefits from proprietary data, not just what customers want, but how realistic is it. And I think there's one thought to keep in your head here. There are many models, interfaces that can do a good job of having conversations with people to decide what they want. The big question is what do you need to show people how realistic that is and where they should target their attention. Likewise, on the hirer side, great to have the tools, and we're building them and to elicit what the hirer needs. The question is who are the people out there, how do you target them and how do you get the best person possible. That depends on marketplace data, not on conversational interfaces. You need both. But with the interfaces without the data, you just cannot deliver that experience. The last thing I'll say and that Kendra will talk about this more a bit later, because we've learned so much over a long period of time, we know which investment works. We do more of that less than the other stuff, and we retain our confidence that we continue the investment we need within the target cost envelope. With that, I'll hand over to Grant to carry on for us. Grant Wright: Thanks, Ian. So Slide 11 speaks in a bit more detail to what Ian mentioned about how unique data and our AI capability is driving our 3 strategic priorities of placements yield and operating leverage. If I start with placements, our marketplace, as Ian said, is fundamentally about facilitating 2-sided trusted connections. The candidates trust us to deliver relevant results, but also provide realistic feedback about competition and their chances of getting the role. Hirers always want to understand what's out there, but also who's available and interested right now. That distinction between what looks good on paper to one side versus what's real and agreed to on both sides is critical to reducing wasted effort creating placements. And as AI noise increases in the market, this becomes even more important to generate placements. That's where we have unique data that cannot be scraped to DMZ. We see close to 1 billion and decisions on our marketplace every day. So that's candidates becoming active and being open to looking at opportunities. It's the jobs they review and save. It's what they apply to and then the jobs that they prioritize as their preferred applications that they're very interested in. It's the criteria that hires want to target on. It's who they search for, who they review, who they shortlist and who they contact. That data drives better matching, which leads to more activity, which leads to more data and therefore, drives better matching. So these actions that reveal people's real availability, intent and priorities drive those placements and create even more activity on our platform. That same 2-sided data also enables us to sustainably grow yield because we see real hiring activity and competition. We can predict, understand and manage performance and price. Our pricing system monitors supply and demand for about 45,000 labor market segments across APAC. That data enables us to provide attractive options for hirers to pay for more performance and the choices they make between those options and the performance they want gives us data on willingness to pay, which allows us to then further improve our pricing models. Lastly, on operating leverage, as Ian said, we've been investing in for over a decade. So we're not starting from scratch here. We've got advanced capability in building, deploying and optimizing AI models as well as a strong focus on responsible AI to make sure that we manage risk and retain trust with our users. And we're continuing to experiment and test to ensure that the innovations and algorithms we deliver have real customer impact. So that combination of existing capability, including applying AI internally for efficiency and then the experimentation to make sure that the innovation we're delivering is delivering real customer value enables us to deliver placement and yield growth while maintaining our operating targets -- operating leverage targets. Slide 12 then demonstrates how our proprietary data and AI capability are creating real value today, particularly through personalized matching and AI targeting. Our key inputs on the slide speak to the proprietary data that I talked about previously on both sides of the marketplace. The conversational AI products, live tracking of actions on our platform, verification through CPaaS and reputational products like reviews and reference checks give us a complete view of the requirements, preferences and importantly, the trade-offs and willingness to pay that both sides are willing to make a match. We then use that data in a wide range of AI models. So that includes proprietary ML models that we build in-house. It's LLMs fine-tuned on seat data and it's new technology emerging like sequence models, which is essentially the concept of a large language model that applied to behavioral data. So rather than predicting the next word, aims to predict the next action. We're also experimenting with agentic search systems to further advance our search capability. These prediction models are then used across the marketplace to deliver capabilities, including recommending targeting criteria to hirers based on what we know matters, to predict and manage performance outcomes and set our prices, to deliver highly personalized matches to candidates that manage both what they're interested in and what they're a good fit for. Our increasing ability to predict fit also allows us to target high candidates through exclusive outreach products for advanced and premium ads. And then we explain those matches using generative AI on both sides of the marketplace to increase confidence and encourage people to engage with the opportunities that will drive a placement. And it's this combination of the unique 2-sided data and our AI capability that's continuing to show up in increased value for customers. So candidates are now 1.5x more likely to see and apply for relevant jobs due to the quality of our matching and explanations, and that's underpinned our placement share growth of 7 percentage points over the last 3 years in ANZ. On the hirer side, hires are seeing the benefits of increased performance in advanced and premium ads by high targeting and they're opting to pay for increased performance, increasing depth adoption, which has grown 2.7x over 3 years and underpinning our ability to grow yield sustainably at 15% compound over the last 3 years. So we're seeing these results really show up for customers in our investment in AI. I turn to Simon on Page 13 to talk about how that shows up across our product suite. Simon Lusted: Thanks, Grant. Moving to Page 13. I want to take this opportunity to drill into a little bit more detail on how this AI and data capability is showing up in examples of actual features delivered on SEEK over the last few years. We've broken this into the candidate side and the hirer side. What we're going to talk about is all live product in market that's been delivering for candidates. I want to give you a bit more flavor of the type of impact we're seeing from these capabilities. And our long-run investment in AI infrastructure, we were pretty really to integrating LLMs and natural language search into our core job search discovery experience. That delivered immediate uplift, which continue to compound as Grant and his team retrain models on our data today. But perhaps more important, it put us in a position to experiment pretty aggressively over the last few years with a range of different conversational experiences. We have 2 pretty exciting experiences in market right now, and we plan to use this learning to evolve and improve our candidate search and discovery experience over the next few quarters. While we were doing that, we also saw the opportunity in these capabilities just to do more of the work on behalf of candidates. So we launched our intelligent career feed, which uses candidates profile data, their behavior, all the data Grant talked about to do more of the reasoning on behalf of candidates. And that's given us a really big lift in the number of applications that come from this very low effort engagement experience. In fact, it's less than half the effort to find a relevant job through using our career feed than it is in manual job search. In addition, as our recommendations have become more precise, it's putting us in a position to talk to candidates off our platform with much higher fidelity, much higher cut through. We've really driven huge improvements in our -- the way we notify candidates, and that's allowed us to tap into monitoring job seekers who perhaps aren't active enough to be on SEEK at that time, but are willing and open to engage in new opportunities. That's delivered a 2x growth in channel performance in just a couple of years. And as Ian mentioned, it's not just whether the job is available, it's whether that job is right for you and whether you're a fit and whether the person on the other side is likely to want to shortlist you or progress you. And so we've been doing a lot to help explain to candidates how and in what ways they might be a fit. This has been particularly pleasing because what we found is that many candidates are a little bit hesitant to step outside their frame of reference. And when we can share with them that they actually are potentially a strong and high fit for this role, we're driving much greater levels of engagement and application, which is driving placements. And as mentioned, we've been investing in trust for a long time now. We've always thought that the labor market was sort of noisier than it had to be. And we've got a big team in [ APAC ] over 100 people now. We're in every market across APAC, and we're really scaling our ability to verify trust with new AI models that allow us to add authority, check identity and really deeply understand who is real and whether what they're saying on our marketplace is a genuine claim. And as Grant mentioned, the new products like Strong interest where candidates are able to nominate a few jobs that are their particular priorities. That's all underpinned rather by our trust infrastructure. On the hirer side, we're becoming more of an adviser through the job ad posting process. We're using our market data to explain the marketplace, help hirers build more quality ads, reducing effort, and that's driving up conversion of new hires to job posting. We've made big step-ups in our dynamic job ad pricing accuracy. And what that means is we're better able to understand whether a candidate's actions and the ad they're buying will lead to a placement. That's given us a lot of confidence to align prices to value. Grant mentioned our AI targeting. That's really been central to our ad ladder refresh. We've got an AI targeting feature that's bundled into the advanced ad and the premium ad, which really delivers a material difference in placement outcomes. And similarly, we're explaining to hirers why a candidate might be a great fit. So we're not only saving them time, but we're improving the chances that they make a placement by connecting them with candidates that they might not have considered otherwise. We're also getting further into the placement process. We launched in the last half our reference checking product, which is a full voice agent, a voice agent will interview a referee. It cuts the time to give a reference in half. It generates higher quality data, and it takes what was previously a messy offline event and brings it into our platform in a structured and actionable way. And this is the kind of data and the kind of trust that an intermediary can leverage to help both parties in a way that we don't think many can. So as individual features, I've tried to give you a flavor of how we're applying these capabilities to improve in many different places. But taken together as a system, I think I'm hoping to give you a flavor of how these benefits compound in each other. They lead to stronger, deeper understanding of our candidates and hire preferences, better matching not just more placements, but higher quality placements that drives ROI for hirers and that drives up their willingness to pay. So we're really excited about the progress we've made. But as Ian mentioned, we do still feel like we're just at the start, and we've got more opportunity opening up over the next few years, and it's an exciting time for us. Peter Bithos: Thanks, Simon. I get the privilege of talking about how the data and products that Grant Simon just talked about, pull through into the actual numbers in each of the regions. And just a reminder, kind of the system that we're trying to build here is great data plus great products equal more jobs. And then you combine that with a great brand and great on-ground execution in every single country, and you hopefully drive results across APAC. And actually, that's what I get to talk about here today. So I'll start with ANZ. For those of you who remember last time, I kind of noted last time was actually first time where in a down market, we were able to drive ANZ growth and gain share. This time, actually, the results are even better. So it remains a down market, we were able to drive double-digit revenue growth, gain share, highest share in recent history in ANZ with a 17% yield uplift. So volume is slightly down due to macro, but share up yields and revenue growth well into the double digits. How that happened is explained on the bottom right-hand side of Slide 15, which I won't go into the details, but essentially, it was product driven. So a large chunk of the revenue and yield performance you can see is a dramatic shift in the types of products being offered and taken up by our customers. And those are the products that Grant and Simon just talked to. So you see a dramatic step-up in depth penetration, driving both placements and yield. If I go to Slide 16 and talk about the macros for a minute, it still remains a slightly down market. But I would say the biggest news positive on Slide 16 is the dash on the upper left, where we're seeing New Zealand turnaround after a period of substantial decline over 2 or 3 years. So we're pleased to see New Zealand volumes up on PCP. As for the rest of the slides, you can see the macro kind of stabilizing across ANZ from the previous few years. So good to see a relatively stable macro environment in an area where we can really drive share and drive the business pretty hard. That translates to now not just an increasing share, but importantly, an increasingly large gap in ANZ between us and the second largest competitor. So not only is it at record levels, but the delta between us and competition is now at record levels. And so whether it's the core variable pricing, the depth, the AI products, we're really pleased. It's a very strong result for ANZ. For those of you who have been following the Asia journey, would know we're going through quite a lot of commercial transformation, launching and rolling out freemium, which I'll talk to in a couple of slides. This half continued that journey. We had a full 6 months of Singapore, which we launched late in the second half, and we launched Hong Kong, our largest market. And I think if you kind of took a step back and you said if we were able to generate real revenue growth and launch 2 of our largest markets in freemium as well as have a full year effect of all the emerging markets and produce the results we have, we'd be very, very pleased. So we think it's a really strong performance. You can see paid volumes down. I'll talk to that in a little bit. Revenue up. Placement share as the survey calls it slightly down. But the survey, it's within the statistical variability and noise. We're kind of pleased with the long-term trajectory and all the other indicators that we crosscheck are really strong. And so we're pleased with that result. Paid ad yield, very similar story, and this is very consistent with what we've been doing since unification. Any benefits we're able to launch, we roll it out across APAC, and we seek to get those benefits across APAC. So you can see the advanced and the depth penetration equally shifting in Asia, just the same. You can see Slide 19 and then a few slides later on Slide 20 and 21, really tell the story of freemium as we go. So if you look at Slide 19, you can see the monthly ad volumes on the right-hand side. You can see the total ads increasing as we roll out the markets. You can see the mix shift slightly changed between paid and free between the pink line and the purple line. But then you can start to see now the monthly unique hires, which we've called out as a leading indicator that we need to get right longer term, now 18% up PCP, very pleased. So -- and then as we get more ads on the platform, the marketplace strengthens, we get more unique visitors, and you can see that in the bottom left. So strengthening of the flywheel in the Asian markets is occurring, and you can see it in multiple metrics on Slide 19. Slide 20 just talks to the placement and yield, which I talked to you previously. I'd note across APAC, for those of you that follow the placement over time, every 2 to 3 years, probably 3 to 4 years, we reset the sample size and also supplier. We'll be doing that. That's kind of a normal part of the cycle, and we'll reset the survey in the next set of results. So that's just a note for those of you that follow that. And then last, Slide 21 just talks to the progress in the rollout of freemium. Two weeks ago, we launched Malaysia. It was our last market. So we are now freemium in all markets. So when we get to FY '27, it's a clean full year. We're excited about that, but we're right now, I'm just happy with the results that we've gotten and shows the strength of the business and everything Grant and Sean spoke of. So I'll hand over to Kendra. Kendra Banks: Thank you, Peter. Good morning, everyone. I'll begin with Slide 23 and talk to how all of this you just heard results in our finances for the first half. So we reported revenue of $601 million. That's up 12% compared to the same period last year or 11% when you exclude Sidekicker, which was not included in our prior period results. We delivered again on our commitment to operating leverage as total costs grew 8%, excluding Sidekicker, 3 percentage points lower than the revenue growth rate. This operating leverage is going straight to earnings growth. EBITDA was up 19% and adjusted profit of $104 million, up 35% for continuing operations. We reported, as you know, a $356 million impairment charge against our investment split across continuing and discontinued ops. The appendix slide outlines the details showing how the Zhaopin investment as accounted in our books went from $529 million in June down to $182 million this period. This is a noncash impairment and reflects changes in the last 6 months, which will help set the business up for a stronger future. Back to our core business. Our financial performance and trajectory are strong, and this provides the Board confidence to announce a record dividend amount of $0.27 per share. That's an increase of 13% from the prior year. Turning to Slide 24. Our commitment to operating leverage is clearly evident in these results. As I mentioned, excluding Sidekicker, revenue of growth of 11% exceeded total cost growth of 3%. We primarily focus that increased expenditure on our ongoing and growing investment in AI product and tech and the IT infrastructure and compute costs, which support the product experience. We fund this increased investment by being efficient with our run-the-business costs so that the total cost growth continues to be contained in our mid- to high single-digit total targets. As a reminder, we think about costs as a management team on total cost of OpEx and CapEx to create the right incentives. But of course, we do account for it split into OpEx and CapEx according to the accounting standards. The result for this half is a 7% increase in OpEx and 24% increase in CapEx, and that weighting isn't really a surprise with the prioritization towards grow the business activities, particularly the AI-focused product development that's delivering tangible results. Slide 25 talks to the drivers of adjusted profit, up 35% from last year. The growth was led by strong EBITDA performance, partially offset by a few below-the-line factors. The D&A was higher in line with the increase in CapEx over the platform unification years. Share-based payments expense increased. This included a one-off share grant to all employees and also includes the accounting standards requirement to value share payments on the date of grant, which happen to be close to a recent peak in our share price. Partly offsetting these were lower interest costs and a partial reversal of the Zhaopin performance fee following the impairment. Slide 26 is cash flow performance. I won't go through the detail here other than to say there's nothing unexpected. And as I said earlier, strong cash flows enabled higher dividend returns to shareholders. On Slide 27, our debt position was broadly stable. Our net leverage ratio continues to improve. It's down from 2.3x a year ago to 2 and is well within our target of less than 2.5x. And of course, that's driven by growth in EBITDA. Slide 28 outlines the performance of the SEEK Growth Fund. A reminder, we look at total portfolio value, including the portfolio valuation plus distributions from the fund. As of the 31st of December, this value was up 1% year-on-year. The fund's return on invested capital since inception is now about 33% with an IRR of 8%. There's more detailed appendix on the fund's 4 largest businesses as always. Also considering the fund, you'll have seen in the press today their announcement that they are commencing a process to sell their stake in Employment Hero. On Slide 29 is our capital management framework, which remains unchanged. Strong operating cash flows providing capacity to execute on our strategic priorities and provide dividend growth. Looking ahead, as you know, the fund opens a liquidity window in the 2026 calendar year, following which they must use reasonable endeavors to fulfill a liquidity request within the next 12 to 24 months. In the lead up to this, the Fund's Trustee Board is in active discussions on the optimal approach to maximize long-term value, and we will update you as the year progresses. Finally, briefly on Slide 30, our sustainability commitment continues to be a priority. Employment platforms like SEEK are uniquely positioned to drive fair hiring, and we're continuing to evolve our strategy and approach to expand our impact, strengthening platform controls using AI, working with other experts and organizations to continue to elevate fair hiring standards. Perfect. Ian to touch on the outlook. Ian Narev: Thank you, Kendra. I'll be quick because we want to get to questions and I've learned over time, stick to what's on the page where we talk about guidance. The headlines are here, as you would expect in the half, we tightened the range. And as you will see on the right-hand side, that means for those of you who like to work to the midpoint, which we know many of you do. The guidance is a range, but it gives you a sense of where the midpoint ends up. And the only additional commentary on that, as you can see here is that the revenue and EBITDA is expected to be in the top half of the original guidance. So range contracted. We've done some on the midpoint for your benefit, but it remains a range, but we expect to be in the top half of the original guidance for the revenue and the EBITDA. So look, I think you heard here, I mean, I'll just quickly summarize a very strong result for us. There are no guarantees of success in this business, and we're going to need sustained hard work to maintain the momentum and to make the most of the opportunities. But we've got the foundations we need. And to come back to where I started, I think you'll hear a very strong sense of confidence from the management team based on the results we've seen and the assets we know we've got. And now it's up to us to continue executing. So with that, I'll hand over to Q&A. Operator: [Operator Instructions] Your first question comes from the line of Eric Choi from Barrenjoey. Eric Choi: So my 2 questions. The first one is just on monetizing placement share. So your placement share has obviously gone up to 36% now, but I think SEEK is probably only still doing 15% to 20% share of total placement costs in Australia. So my question is, can SEEK evolve its revenue model to be less reliant on total job ad volumes, but instead more on placement outcomes? Because I guess that might make you less impacted from any AI disruption of job volumes and it kind of still suggests there's plenty of scope to grow your yield over a long period of time. Ian Narev: I'll quickly answer that, Eric, and then hand over to see if Simon wants to add anything. The short answer is if you -- this is quite important for the business. If you look top down at the amount any business is paying for successful placement, all our research shows we have plenty of room to move. Every bit of research shows that what we get for a placement is at the very low end of people's propensity to pay if it's a good match. That gives us a lot of confidence as long as we deliver the match. So we are nowhere near what we would consider to be a ceiling. At the moment, you can also see from here the combination of placement share and yield growth means there's a lot of money value we can create and value we can share through our current model. So we don't see an enormous need to evolve urgently, but we keep looking for ways to share the value with the customers. The team spend enormous amount of time on that. And at the moment, we're happy with what we've got, but we've got other things in the pipeline that we can experiment with and see how they go. I don't know, Simon, whether you want to add to that? Simon Lusted: Yes. Yes, I do. I think we obviously think about this a lot, Eric. The key unlock for us for so much of our marketplace is knowing that a placement happens. I mean the real -- what we want to earn as much or generate as much value as we can when our customers make a placement and less when they don't. And so a lot comes down to our ability to predict whether a placement is going to occur given all the factors. And there's really 2 ways we're coming at that. We talked a little bit about that today. We've got great prediction engines. We've got the opportunity to play further down in the selection process. So we see more about how far candidates get. And that allows us to understand, well, how much value are we creating? And then the other way is just to play directly in the placement. We're doing that with guaranteed hire with SmartHire, which we talked about. Sidekicker is obviously in the placement. So we're thinking about these things. But the real unlock is the degree to which we can drive up our confidence in that placement probability. And we feel like we're making really good progress there, and there's a lot more to do, opportunities opening up for us in lots of different areas. Eric Choi: Lusted, quick follow-up. I'm dumber than you. So can I just ask something a follow-up in dumb terms? Like everyone is worried about AI agents connecting employees and candidates directly. Just listening to your reasoning, like if there's a noisy world where employees are getting spammed thousands of applications by AI bots, it's -- you seem to be suggesting you're going to be giving higher quality matches probably because you've got, I don't know, intent availability data. So are you sort of saying your placements become more valuable in that world? Simon Lusted: Yes. I mean I think what the matching is about sending strong signals of intent and quality. And if that gets easy to imitate at scale, then the role for an intermediary who can reinforce the rules, add trust and help candidates and hirers negotiate in a high-trust environment. That goes up, not down, granted. Operator: Your next question comes from the line of [ David ] from [ Fabris ]. Unknown Analyst: Can I firstly ask about the ad ladder pricing model and strategy? I mean I appreciate you touched on it through the presentation. But can you help us understand whether you're running periodic price increases and then augmenting this with dynamic pricing? Or you're leaning much harder on dynamic pricing now and have moved away from those periodic price rises? Peter Bithos: Yes. So actually, that's a really great question that gets to the heart of this result. This particular result, whether it is both Asia or ANZ, on about half of the yield uplift is being driven by product take-up of new products, right? So it's customers reacting to the probability to place expressed in, say, the advanced ad, saying, "I want that, I'm willing to pay for it," and they're making that decision by themselves. And our job is to educate the customer on the choices that they have. So this is not -- we continue always on the journey of variable pricing and making sure we price to the value we're creating. But this particular result is actually the strongest led by the products that we've actually created. Ian Narev: I'll just add one point to that. Those of you who have been following since we did the dynamic pricing in 2019 know that the probability to place is a driver of the dynamic pricing model. So in the nonproduct-driven parts of it, the more confidence we've got in the propensity to place, the more the dynamic pricing model creates more value when we share in it. So even the nonproduct part, don't think of that as blood price increases. A big part of that is the data on the marketplace utilizing the dynamic pricing model to increase the value and the price because of the confidence in the placement. And that is a really important part of understanding the confluence of investments we've made over a long period of time. Unknown Analyst: Yes. Got it. And then just continuing on, I guess, with the products here. Just that ANZ ad ladder penetration, I mean, if you look at the advanced tier, it looks like it's settling around mid-teens. And I think it was there in July, it was there in December and it was there through the period. Can you share with us where you think that optimal level of penetration may be and how you get there? Or on the flip side, what levers do you have to improve that penetration? Peter Bithos: Yes. So that uplift -- so there's 2 things. One, we think there's further upside. Simon and Grant are working on new stuff, and we look forward to the customers taking that up, too, right? So like increasingly, depth is kind of part of the core revenue. It's not the thing on top. So -- and you can see that in the results. Advanced Ad in particular, pleasingly, we saw growth through the half, driven as our sales channels and marketing channels educated the customer and the product tweaks that we presented. So it's not a one-off. It's something we're driving into the business, and then we're looking forward to further improvements in to come. So this is kind of a -- we can do more of this, and we have very high confidence in that. Ian Narev: Can I just add another thing for the benefit of a bit of historic context for questions you've asked for years? We've had questions for years, if volumes go down, do you get a procyclical effect on yield. Page 15 shows volumes down to yield up 17% and a really very strong performance from what we called the depth products. Now what does that tell us? Even when the volumes are coming down in this kind of economy, what we've learned is when these products transparently show a hirer that they've got a greater chance of a good placement more quickly, they pay for it. And we don't think that's anywhere near exhausted. And we're learning and there's more to go that it's probably less dependent on the economic cycles than we thought, and that's a really good message for everybody to a question we've all been talking about now beyond the 7 years I've been around. Operator: Your next question comes from the line of Bob Chen from JPMorgan. Bob Chen: Two questions from me. I mean just firstly, a clarifying one. Just looking at your cash flows, especially on the free cash flow line, it's obviously sort of come off a little bit. It looks like there is a bit of seasonality in there. Do we expect that to sort of normalize into the second half? Kendra Banks: Yes. So cash conversion is always lower in the first half than the second because -- primarily because we pay out our employee bonus in the first half and revenue seasonally is slightly higher in the second. So that's what we expect to see. And the shift year-on-year is because we did pay a slightly higher bonus that came out of cash in this half than we had the previous year. Bob Chen: Okay. Cool. And then maybe a more sort of general question around AI as well as that investment and monetization. Are we to sort of expect that the monetization of this investment in AI is largely through your depth of tiering as opposed to additional AI products on top? Simon Lusted: I'll have a go at that. I think largely, we think, as Peter outlined, we launched a new ad ladder, and we said at the time, there's a lot of room for us to build new features, especially AI-driven features and enhance those ad ladders and drive more depth. So that is a big part of our future. In the last half, we launched a new add-on called assist. That add-on is really focused on monetizing the value we plan to deliver through things like automating reference checks, better ranking, helping people complete the hiring process more efficiently. I think that's more a long-term product lever, but we are trying to create a frame through which to monetize the efficiency elements of the AI work that we plan to do over the next little while. Operator: Your next question comes from the line of Lucy Huang from UBS. Lucy Huang: I've got 2 questions as well. So firstly, just looking into FY '27, how should we be thinking about the contribution from some of the growth drivers on yields, given like this year, we've had advanced ads, new product like next year, there won't be new advanced ads. So will we be leveraging more on dynamic pricing? Or do you think advanced ad penetration could still be a larger component of the growth there? Peter Bithos: Yes. Lucy, it's Peter. I'll pull you up one level, which is instead of advanced ads specifically, the profit growth, which is we have new products and new constructs that allow buyers to get placements in various high confident ways. And we take those products and constructs and drive it into the base through our sales channels and our brand and our presentation through the product. That is a formula we want to continue. So advanced ad will be complemented by other things over time. But the underlying dynamic that you now have a system of for base price, we have sophistication in the way we price to value as we increase the probability to place. And we now have a system across 8 markets to produce products that are taken up in a very aggressive and fast way. And we're bullish that system will continue. Lucy Huang: Understood. And then also recently, we've noticed you've got a people search tab on the SEEK Australia website. Just wondering if you can talk through how that feeds into the strategy for the company moving forward? And any early kind of statistics you can share on how many profiles there are, how often people are tapping into this database? Simon Lusted: Great question. So we've got within the APAC Group, 45 million candidate profiles until now largely been only accessible to hires who purchased our premium talent search product. We've made the decision that a candidate profile should very much be at the core of the SEEK experience, and we can add trust to that. We want to make that profile more useful for candidates all through the hiring process. They should be able to share it with others, find each other, et cetera. So we made the decision to make candidate profiles free and publicly searchable for candidates who opt into it. We're really pleased with the rate at which candidates are opting in. It's really encouraging. And we think overall, it will not only strengthen our flywheel, candidates be more likely to keep their profiles up to date, invest in adding trust to it. It will drive and improve their job-seeking experience. But we also think that will drive freshness and depth, which will allow us to monetize through a more premium talent search offering, which we plan to launch in FY '27. So it's part of a broader strategic play to put the candidate much more at the center of our marketplace, not just the job, but the candidate, and it's going very well. Operator: Your next question comes from the line of Entcho Raykovski from E&P. Entcho Raykovski: So my first question is around the cost base and your comment that there are efficiencies in the cost base that are enabling greater growth investment. I wonder if you're able to quantify the extent of those efficiencies. I may be difficult, but is it sort of thinking 10%, 20% savings, sort of what that does to the velocity of product rollout. And I'm curious whether there's been a further step change over the past 6 months in those efficiencies with the developments we're seeing in AI. Kendra Banks: Sure. Thanks, Entcho. So when we talk about efficiencies in the cost base, I'd point to a few things. The first is still seeing the benefits of the APAC unification, particularly in the commercial areas, where Peter's teams now run APAC sales and service marketing and all the kind of associated tools and corporate costs that support APAC, still seeing that benefit coming through in terms of tighter functions. The second is across the business in every function, we have very high take-up of AI as a core -- the AI tools internally as a core part of people's workflows. And we are seeing there -- it's a few points of efficiency in lots of different areas that's driving cost efficiency and allowing us to reinvest in the grow the business areas. And then in the grow the business areas, so product tech and AI, we certainly are seeing accelerated product development velocity. We haven't kind of disclosed a particular number there. But certainly, you can see it in the kind of pace of AI product rollout, while we are getting efficiency in terms of that product velocity flow and reinvesting it in continuing to develop our products. Entcho Raykovski: Okay. And my second question is around the employment sell-down. Are you able to talk about the rationale for it given it's obviously a fairly weak underlying market for high-growth stocks in theory, might have been a better time 6 months ago. And then is the fund running an open process or do they have a buyer lined up already? I'm conscious that KKR was the buyer 12 months ago. So not sure if they're the ones who are looking to up their investment. Ian Narev: I'd just say a couple of things. The decision to sell is entirely the funds. We don't control it. When asked our opinion, it's consistent with our goals as an investor to get liquidity over time, so we're fully supportive. Number two, the assets, terrific business done very well for the fund. It's obviously subject to value. And after this long and with this degree of understanding, they will sell if and only if they get a price that they think is good value. But number three, there's really no evidence at this stage that what we've seen in public markets, which has got all sorts of other drivers has translated into private markets. If it really has to this extent, that means the process wouldn't be successful. There's no evidence of that at the moment, and they'll find it out. In terms of who the likely buyers are, et cetera, that's something we have no visibility over. Operator: Your next question comes from the line of Fraser McLeish from MST Marquee. Fraser Mcleish: Great. Just a couple. Just firstly, on SME volumes. I don't think you've given your normal update on what percentage of your volumes are coming from the various customers? Have you got update on that? And then my sort of related question is to what extent, particularly in your SME volumes, do you think they are -- you've got unique listings that aren't going on to other platforms? That's my first one. And then just also, you've obviously outperformed -- you're going to outperform your high single-digit yield target again this year. You're just confirming that sort of over the cycle, high single-digit yield growth is still the target? Peter Bithos: I'll let Kendra speak to the second question of the long-term yield growth. On the first question on SME, actually, when you get into the details, you're right, we didn't disclose it here, but partly because actually, there's nothing distinct or different in SME volumes to what the overall story in ANZ is. I'm assuming you're talking about ANZ. Actually, if anything, the depth penetration was a little bit stronger in SME. And the volumes are pretty consistent with the overall market. So share is up in SME, yield is up in SME, and we're very pleased with the results and SME wasn't differentially performing in any notable way. Fraser Mcleish: Do we have unique ads? Peter Bithos: In terms of our unique ads position, very similar to the flywheel, slightly strengthening, but again, not uniquely against our other segments. Kendra Banks: Fraser, thanks on your question on high single-digit medium-term outlook for yield. We are still maintaining that as our medium-term outlook. We remain very confident, as already discussed, in the ongoing fast to future yield growth and that core dynamic that our customers are not that price sensitive when they're making a solid good placement, and we've talked a lot about how we plan to continue improving that delivery. However, as you know, we will always manage our pricing and yield to ensure marketplace health alongside. And therefore, despite delivering double-digit yield growth now multiple periods in a row, we're maintaining our high single-digit yield growth medium-term guidance there. Fraser Mcleish: Great. Sorry, can I follow up very quickly just on that unique ads? I guess where I'm coming from is just with AI proliferation and having unique listings is potentially going to be more important. So I'm just wanting to try and understand the extent you have unique listings that aren't necessarily on other platforms. Peter Bithos: Yes. So what we look at when we call unique listing, we then double-click and say, is it a unique listing that is directly on our platform versus pointing to a different place. So anybody can scrape and point to a different place and do that. Having said that, the large competitors in the marketplace don't scrape the direct ads from each other. And so we have a large corpus of unique ads that are available on SEEK, and that's remaining constant and consistent over the past few halves. Operator: Your next question comes from the line of Tom Beadle from Jarden. Thomas Beadle: Just my first question is just a follow up from [ choice ] on the cost side. I mean it's obviously nice to see that you've got your costs well under control and the positive [ choice ]. I mean if we take the breakdown of your cost base that you provided at your Investor Day, that growth in BAU bucket, I mean, what level of growth did you see in each bucket? And I guess I'm interested to hear any commentary you have around AI-related cost growth and just any other cost pressures in areas that are worth highlighting? Kendra Banks: Sure. Thanks, Tom. So if we look at that run the business, grow the business split, I sound run the business for very low single digits, and then you can kind of do the math on the rest in terms of high single, low double in terms of our grow the business investment. And that includes all of the AI cost that we're facing into in terms of the cost of the team, the models we use, the compute cost, et cetera. So we still feel confident that the AI cost growth that probably is noticeable in the coming years, we can, at this point, confidently say is within our total cost growth target. Ian Narev: And the other thing I think is your question, I'm looking at Grant here. We have under Grant's leadership, a protracted long-term piece of work just on using the same understanding of technology that drives our customer-facing platform to look for productivity opportunities inside SEEK. I mean you might want to just talk about a couple of areas, Grant, that we're really focused on. Grant Wright: Yes. So Kendra mentioned supplying and encouraging AI tools for everyone at SEEK through their individual processes. We have an internal AI tool for that. We also use Glean, which provides enterprise search and agents and our staff are running about 5,000 agents a month at the moment to help with those individual tasks. The bigger opportunity we see is really reengineering the big processes in the business. And so we now have a team going into those core processes to help people map define them and do good process excellence work as well as bring those AI tools into that. So that's in train as well as then looking at our big opportunities for transformation in sales and service and product development and AI coding. What you tend to find in AI coding is that you can get big efficiencies today in writing the code, but writing the code is only a proportion of that cost base. So we're also looking at how we reinvent that process to become more efficient. Some of the examples of things we're doing sales meeting prep agents to drastically lower the time to pull the information and have a high-quality conversation. So raising the quality of conversation across the board and reducing time and effort. Real-time customer feedback monitoring and products. So we just get much more insight to all our product managers about what's happening over time, which previously was a big time sink and also meant that you couldn't get all that feedback synthesized. So this is showing up all over the business in these sort of processes. We've automated credit checks for our external things through agents. So there's lots of examples of more a process opportunity, and we really want to, in the next year, take that to our big processes and think about how we reengineer them with AI. Ian Narev: The other thing I'd do just to add to that, our beloved Head of Engineering, James Ross, this is what I did in the holidays video that he sent to a bunch of us was a 1-hour video showing him experimenting with the latest developer productivity tools. They're very meaningful. So all these evolutions and revolutions on coding productivity, which the market is sort of looking at a gas and wondering whether they will disrupt our business. Well, we've made clear on the customer side that the data is the advantage. On the internal side, we've got people experimenting with these things as they come out. And as Grant said, we now want to map that to a really good process capability, but we think the opportunity is very meaningful. Thomas Beadle: Great. And just, I guess, the second question just on volumes. I realize there's a little bit of caution in your commentary. I mean, can you just give an update on what you're seeing on volumes over the first 6 or so weeks of the second half across your markets? Kendra Banks: Well, our January SEEK employment report will come out, I think, in a couple of days' time, and we'll give that insight. But as you can see from our guidance, at least on AU, it's very likely that volumes stay about where they are for the foreseeable future, and that's built into our guidance. Operator: Your next question comes from the line of Nick Basile from CLSA. Nicholas Basile: First question on placement share in ANZ. I think there was a stat there that SEEK now has a 4.9x lead versus the nearest competitor, which is, I think, up nicely on some more recent data points. So I'm just interested if you can sort of help us crystallize what you think the key to that result is and how we think about the sustainability of it going forward, I guess, particularly given you're telling us you're going to reset the data points or the survey data you collect, would just be helpful to understand how you're thinking about it. Peter Bithos: Yes. So the key is actually everything that Grant and Simon talked about in their part of the presentation. So effectively, the product and the platforms and you can kind of look at it as a line item product like Advance where the platform overall as the system all of it is getting better. And it's getting better differentially against all other options in the market. And pleasingly, in our recent results, it's getting better against our next largest competitor and so all of that is happening. And it's happening because of the underlying data and AI and the capabilities. And because it's happening because of that, there is nothing that we would see would change that trajectory. Ian Narev: I would just add with the normal point that we make, look at the placement share over a number of periods. And particularly now we're going to refine the methodology, we'll see what happens. It's a great story, both in Asia and ANZ. We probably are concerned less about movements half-on-half, more over 3, 4, 5 periods. That's what we'll continue to look at, but the signs are very good. Nicholas Basile: Okay. Great. And a second question, just on the growth fund. I guess curious how you are sort of rating the performance of the growth fund. I think the IRR of 8% perhaps wouldn't necessarily suggest it's adding a huge amount of value relative to other investment alternatives. But of course, interested to know how you think about perhaps the intangibles associated with this strategy that investors need to consider, for example, playing in the start-up space is an important strategic consideration for SEEK and/or somewhat of a cost of doing business. Ian Narev: Yes. Look, I think the IRR in and of itself looked at in the absence of anything else, is probably less than many people might think it would have been against the benchmarks of what other like funds have done over that period of time. It's actually not bad at all. And we have the capability inside, the team is very strong. So that is what it is. Interestingly, and I'll just remind people, in 2021, we were fielding calls about the valuations that the assets have gone to the fund, the fund is going to have a windfall and we said no. These are very fair market prices at the time. It was always going to be hard to earn the carry, and it's been hard to earn the carry. But we feel that the team is doing a very good job of it. And as a major investor, we're very confident in them. I don't think the informal connections are in and of themselves a rationale to be in the fund or not in the fund, but we talk a lot, and there's a very helpful and healthy 2-way dialogue on that, which I think is good for both us and for the fund. Operator: Due to time constraints, we will now end our Q&A session. I will now turn it back to Ian. Please continue. Ian Narev: Yes. Look, again, thank you all for your time. I think you've heard the main messages. The only thing I'd like to say just at the end is that there are a couple of people who have contributed to this result, who will be departing. Number one, Graham Goldsmith has done an absolutely outstanding job for all of our shareholders as Chair of SEEK and from a management team has provided a really great balance of challenging us and supporting us, and we will really miss him. Luckily, the Board has done a very good job in finding a successor. And likewise, as much as people know, it will pain me to say so, Dan McKenna has really done a great job as our Head of IR, and you've all interacted with him. This is his last result, and he's been a terrific contributor. So we want to thank him before he heads off overseas. And again, in Pat, we've got a ready successor standing in. So I just want to acknowledge the 2 of them. Thank you all again for your time, and we'll no doubt catch up with many of you over the coming days. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Good morning. My name is Carmen, and I will be your conference operator today. I would like to welcome everyone to the Chemours Company Fourth Quarter 2025 Results Conference Call. [Operator Instructions]I would like to remind everyone that this conference call is being recorded. I would now like to hand the conference over to Brandon Ontjes, Vice President, Head of Strategy and Investor Relations for Chemours. You may begin your conference. Brandon Ontjes: Good morning, everybody. Welcome to the Chemours Company's Fourth Quarter 2025 Earnings Conference Call. I'm joined today by Denise Dignam, Chemours' President and Chief Executive Officer; and our Senior Vice President and Chief Financial Officer, Shane Hostetter. Before we start, I would like to remind you that comments made on this call as well as in the supplemental information provided on our website contain forward-looking statements that involve risks and uncertainties as described in The Chemours SEC filings. These forward-looking statements are not guarantees of future performance and are based on certain assumptions and expectations of future events that may not be realized. Actual results may differ, and Chemours undertakes no duty to update any forward-looking statements as a result of future developments or new information. During the course of this call, we'll refer to certain non-GAAP financial measures that we believe are useful to investors evaluating the company's performance. A reconciliation of non-GAAP terms and adjustments is included in our press release issued yesterday evening. Additionally, we posted our earnings presentation on our website yesterday evening as well. With that, I will turn the call over to Denise Dignam. Denise Dignam: Thank you, Brandon, and thank you, everyone, for joining us. During today's call, I will begin by discussing a few recent developments across Chemours in addition to highlights from our recent performance. I will then turn it over to Shane, who will provide details around our outlook for the first quarter of 2026 and key drivers for the full year ahead. Finally, I will provide updates on our meaningful progress against our Path to Thrive strategy before taking your questions. First, as we should in January, we have reached an agreement to sell our Kuan Yin site. Since the shutdown of our titanium dioxide operations at this facility in 2023, we've been actively decommissioning the site and preparing to sell the remaining property. I'm happy to report that the estimated net proceeds of $300 million we expect to receive from the landfill will make a significant impact in reducing our outstanding debt and support our continued progress towards lowering our targeted net leverage below 3x. I'm proud of our team's effort to get us to this point. Additionally, I want to welcome Mike Foley as the new Business President of TT. And joining Chemours, Mike brings extensive leadership experience in the chemicals industry, running multiple business units with experience centered on operational excellence. As an established leader, I'm confident that Mike will continue to drive improvements in our titanium dioxide business staying true to our value-based commercial strategy, strengthening reliability across our asset base and advancing our long-term cost position initiatives. Turning to our fourth quarter results. We are pleased with the robust cash flow generated and the ability to drive sales performance within our expectations. Net sales met expectations largely due to TSS achieving record sales driven by continued strong Opteon adoption and consistent commercial performance across all divisions. We posted solid earnings overall. However, for the APM business due to near-term end market weakness, we shifted our focus to promote cash flow as the quarter progressed. -- resulting in certain noncash charges and the sale of certain products to reduce inventory levels. These decisions enabled us to make meaningful steps towards driving cash flow while setting a foundation for improved earnings as we get deeper into 2026. While these incremental costs resulted in us just missing the low end of our earnings range, we are pleased with our ability to generate strong quarterly free cash flow of $92 million, which we believe is more reflective of Chemours' longer-term cash generation potential to drive value for our shareholders. With this background, I'd like to provide some additional context on our business level performance. Our TSS business reported a fourth quarter record for Opteon sales with double-digit growth of 37% compared to the prior year quarter, in line with our expectations. Overall, TSS' top line increase was primarily due to higher pricing and moderate volume increases, supported by a favorable mix for Opteon refrigerant blends driven by the U.S. AMX residential HVAC equipment transition and opportunistic sales for certain Freon refrigerants. This could not have been achieved without the TSS team's excellent commercial execution, which resulted in new sales opportunities and efficient use of our quota allowances. TSS had record annual sales in 2025 despite a year with subdued shipped HVAC units in the residential stationary OEM market. Additionally, these efforts led to overall annual Opteon refrigerant growth of 56%, making up 75% of total refrigerant sales in 2025, up from 56% the year before. top line success helped to drive annual adjusted EBITDA margins of 32%, up from 31% in the prior year. Despite additional costs of approximately $22 million in liquid pooling and next-generation refrigerants R&D investment over the same period. Moving to TT. In the fourth quarter, the TT team had strong execution with our top line performance results coming in line with our expectations and our adjusted EBITDA remaining ahead due to stabilized pricing and cost performance. While we continue to operate in a more tepid global market experiencing volume seasonality in certain key markets, we have maintained a strong result in implementing our pricing efforts across all key end markets. To these efforts and our pricing announcement in December, we experienced pricing stability between the third and fourth quarter, laying the groundwork for continued pricing strength in 2026. We are confident in our conviction of our value-based commercial strategy and remain resolute in this approach. Our overall objective to drive improved operational and longer-term cost performance remains unchanged. Consistent with that, we shared in the third quarter we have calibrated our production expectations to be more closely aligned with anticipated market conditions, and we continue to challenge what we can control. including improvements on all our costs while continuing to prioritize cash flow generation in the business. As part of our recent strategic portfolio management initiatives for TT we commenced a restructuring of our mining operations in early January, including the temporary idling of 1 of our mines in North Florida and transitioning to a third-party earthmoving contractor. This revised approach will support our overall cost efforts and promote improved cash generation. Shifting over to APM. While our cash flow driven changes weighed on our earnings results this quarter, the decisions we made strengthened our cash generation, even as we navigated headwinds in certain cyclically sensitive end markets, notably in auto and industrial construction, which we believe will stabilize as we get into early next year. Entering the first quarter of 2026, the APM business in Performance Solutions observed a strengthening order book, particularly within the semiconductor sector, which shows preliminary signs of recovery. Additionally, growth was noted in data center materials and other key end markets. In January, Washington Works, a key manufacturing facility experienced a disruption that necessitated a temporary shutdown, limiting our capacity. This event was traced to equipment affected by a local utility service outage in August, which is integral to our fluoropolymer supply chain and involves complex chemical processing technology. Although operations have now resumed the unplanned outage coincided with challenging winter weather resulting in delays to the restart. Our strategy has always included additional work on these assets and for Q1 of 2027. Despite less an ideal earlier timing, these efforts are critical to ensuring long-term reliability and establishing operational stability to meet improving demand for APM's Performance Solutions products. Lastly, I would like to briefly address corporate level performance, which demonstrated a significant decrease in expenses compared to the same quarter last year. This cost reduction reflects ongoing efforts in expense management and underscore the progress achieved through our operational excellence pillar as part of the Pathway to Thrive strategy. With that, I'll turn it over to Shane to walk through our first quarter outlook and key drivers for the full year 2026. Shane Hostetter: Thank you, Denise, and good morning, everyone. As was shared in the earnings materials available on our investor website, I now would like to discuss our expectations for the first quarter and factors that will drive our business as we look ahead. Beginning with TSS. For the first quarter, we project net sales to rise sequentially in the mid-20s to 30% range, primarily attributable to favorable seasonal trends and continued growth in Opteon refrigerants, where we are also forecasting a sequential increase of 30% to 40% in the first quarter. This sustained double-digit Opteon refrigerant expansion is expected to be driven by the continued regulatory adoption associated with government mandates under the U.S. AIM Act. Adjusted EBITDA for TSS is also anticipated to grow sequentially, ranging from $170 million to $185 million, also driven by seasonality and the continued transition to our Opteon stationary refrigerants. As we look beyond the first quarter, we expect year-over-year double-digit growth for Opteon refrigerants to continue into the second quarter of 2026, but will then begin to normalize to more typical seasonal patterns in the second half of the year as year-over-year comparison points will reflect the regulatory-driven market demand we saw in late 2025. Additionally, we believe that pricing strength stemming from favorable pricing mix for Opteon blends and opportunistic pricing in free on refrigerants will continue into 2026. Also, we expect benefits from cost out efforts throughout 2026, including our recent Corpus Christi capacity expansion, which will be partially offset by increased raw material costs primarily due to R32, a key component of our stationary preference. Overall, we anticipate that the confluence of these factors will underpin strong sales and earnings growth for TSS in 2026, with consistent overall margins compared to that of 2025. For our TT business, we expect sequential net sales to decrease in the low to mid-single-digit percentage range in the first quarter. In our recent reporting, we split out our mineral sales from our TiO2 pigment sales to provide greater visibility in line with recent strategic decisions. In the first quarter, we anticipate that our mineral sales will be down 60% sequentially driven by sales timing and the impact from the recent changes in mining efforts while our TiO2 pigment sales are expected to be down in the low single digits. The slight anticipated decline in TiO2 pigment sales during the first quarter is due to weaker seasonal volumes in non-Western markets, which will offset the volume increases we expect in Western markets. supported by our global pricing efforts as highlighted in the previous quarter across all of our regions. Our global pricing improvement is driven by our pricing announcement in December of last year, which we have seen signs of strong adoption globally as we continue to demonstrate our value-based commercial strategy within our TT segment. It is our expectation that overall average global pricing for TiO2 pigment should be generally in line with the prior year quarter. For the first quarter, we expect TT's adjusted EBITDA to be between breakeven and $5 million. This low level of EBITDA is due to the timing of mineral sales, paired with an additional approximately $17 million of net costs we expect in the quarter tied to inventory and ore mix as well as overall impacts from low plant utilization. The combined force of these near-term impacts is expected to result in higher net costs for the quarter. However, TT is positioned to grow earnings and cash flow during the year. Beyond the first quarter, we see a year where our top line will be driven by positive TiO2 pricing trends across regions and stabilized volumes in Western markets, followed by non-Western markets as the year progresses. For pricing, we've already seen expected increases start to take form through stabilized Q4 pricing, which has reflected growth into 2026. Our portfolio and operational initiatives will continue to drive improved earnings as the year progresses with a clear realization of important cost savings efforts becoming more visible, further underpinned by improved cash generation. Now for our APM business. In the first quarter, we expect net sales to decrease in the high teens percentage range sequentially due to sustained market weakness, combined with customer timing and constraints from the Washington Works outage. Adjusted EBITDA is projected to range from breakeven to $5 million. primarily due to the previously referenced outage at the Washington Works facility. This outage is expected to result in a negative impact of $20 million to $25 million for the quarter, with most of this effect attributable to restricted sales associated with the facilities interruption. As Denise noted earlier, the plant has returned to normal operations and will be a key contributor to the improved earnings we anticipate in APM throughout the rest of 2026. Specifically, we see a return to more profitable quarters for APM after the first quarter of 2026, with progressively improved sales and earnings as we move further into the year. While the overall top line will include lower net sales due to closure of the Advanced Materials SPS Capstone line in 2025, and we plan to replace those lost sales with an increase of specialty-focused Performance Solutions products with higher bottom line contributions. Although we are facing constraints from our outage, demand remains strong in the semiconductor and data center end markets, which are driving current and anticipated sales growth of our Performance Solutions products. These are sectors where we see tremendous inroads for APM's chemistry to help enable the growth and adoption of artificial intelligence across global economies. While we expect some negative cost effects to carry over slightly into our second quarter, we plan to counter these through increased operations at our Washington work site and the increased realization of existing and continued cost reduction efforts as production improves. While the year did not begin as we had planned, we are confident that APM will finish strong in 2026 as we work to recover lost volume on our plant circuit at elevated levels and continue to drive commercial and operational excellence. Through these initiatives, we anticipate adjusted EBITDA to be slightly higher than 2025 levels, while cash generation will see meaningful improvement. On a consolidated basis, we anticipate our first quarter net sales to increase in the range of 3% to 5% sequentially with consolidated adjusted EBITDA expected to range between $120 million to $150 million. Also, we anticipate corporate expenses to range between $45 million and $50 million. Our capital expenditures for the first quarter are expected to be in the range of $50 million, with free cash flow reflecting a use of cash not to exceed $100 million. For the full year 2026 at a consolidated level, we anticipate overall net sales growth to be between 3% and 5% and adjusted EBITDA to range from $800 million to $900 million, primarily driven by increased TSS and APM Performance Solutions demand, expected pricing strength in TT and further benefits of more pronounced cost realizations in TT and APM throughout the year. Additionally, we expect capital expenditures to be between $275 million and $325 million, with free cash flow conversion to be above 25%, supported by improved earnings and working capital improvements that we expect to realize as the year progresses. As we advance into 2026, we remain committed to executing our Pathway to Thrive strategy, and are focused on prioritizing a platform of robust cash flow generation annually going forward via various initiatives across all areas of the company. We view these cash flow efforts to be based in driving clear performance goals across our cash conversion cycle, which we are already seeing take for. These initiatives will take time to fully implement, but we believe improved cash generation in 2026 serves as a starting point where we anticipate further free cash flow expansion in the future. Through these efforts, coupled with approximately $300 million in net proceeds from the sale of our Kuan Yin facility, which will be used to reduce our debt. We anticipate our net leverage ratio to be below 4x adjusted EBITDA by the end of 2026. This is a key milestone that further positions us to achieve our long-term objective of a net leverage ratio of below 3x adjusted EBITDA across economic sites. Given these perspectives on the first quarter and full year 2026, I'd like to now hand the call back over to Denise to share her thoughts and perspectives on our strategic execution under Pathway to Thrive. . Denise Dignam: Thank you, Shane. As we look ahead to 2026, it is important to build upon the substantial strategic progress achieved in 2025. Our Pathway to Thrive strategy remains central to how we make decisions allocate capital and conduct our business operations, and I believe our team has demonstrated notable success in delivering results across every pillar of the strategy. Starting with operational excellence. We continue to advance the disciplined work in driving cost out and making meaningful step-change improvements in how we operate. We fulfilled our commitments for 2025, delivering at least $125 million of gross controllable cost savings. While these efforts have been more visible at the corporate level and through SG&A, we believe that this work will become more clear as operational levels improve, primarily across our TT and APM businesses this year. In the case of TSS, our focus on operational excellence and controllable cost improvements has been concentrated around the completion of capacity expansion efforts at Corpus Christi. This expansion represented a sizable capital investment made in late 2024 and has established a foundation for TSS to further vertically integrate and reduce reliance on third-party YF purchases. While this has provided benefits in 2025, over time, this will provide a substantial cost upside for TSS in support for increased customer demand in connection with the global low GWP transition. More recently, we formally rolled out the Chemours business system, which we have established to embed lean principles to reduce waste and drive increased productivity across the organization. Our team is energized by this effort, which we are already actioning across our manufacturing circuit. Our enabling growth pillar is where we continue to demonstrate the strength of our market positions and the value of our innovation. As we've shared, TSS delivered another great year, breaking quarterly records as adoption of our Opteon refrigerant accelerates. We also made meaningful progress towards commercializing our 2-phase liquid cooling solution, including the qualification of our fluid by Samsung Electronics and the start of a manufacturing agreement with [Navin] Flooring where we are targeting initial commercial production in the third quarter of 2026. Public and next-generation refrigerant growth opportunities reflect important ventures serving as long-term growth opportunities, where we look to continue to invest at a rate of roughly $5 million per quarter. These ongoing investments also contribute to expanding our overall presence in high-value data center and semiconductor end markets, where we are experiencing sustained growth and continued order book strength in APM's Performance Solutions products, particularly in high-purity PFA sales. Furthermore, we anticipate that TSS' double-digit data center growth achieved in 2025 will persist and serve as a catalyst for increased refrigerant sales. Across our businesses, we are sharpening commercial effectiveness and investing selectively where our differentiators position us to win and support long-term growth. Turning to portfolio management. We made decisive progress across the portfolio to drive significant economic value to Chemours. Outside of the Kuan Yin site sales, and the restructuring of mining efforts in our TT business, we continue to advance our European asset review, which will extend into 2027. After completing the APM SPS Capstone business exited 2025, we are now announcing the closure of our Real Estate Paul site in France, originally intended for additional hydrogen development. This decision aligns our industrial operations with current market demand. Moving now to the significant progress made under our strengthening the long-term pillar, which includes reaching a proposed judicial consent order with the state of New Jersey. This milestone provides greater clarity for our stakeholders and reflects our continued commitment to advancing measurable progress in resolving legacy liabilities in close partnership with our MOU partners. With responsible manufacturing at the center of how we deliver essential chemistry, we also reported strong progress against our 2030 corporate responsibility commitment goals. At the same time, independent government level assessments, including from the EU Industry Research and Energy Committee and the U.S. Department of are reinforce the essential role fluoropolymers and gases play across critical industries. Building on Shane's remarks, our recent efforts have positioned us to generate more cash with our previous working capital headwinds clearly behind us. Going forward, we aim to grow earnings, improve free cash flow conversion and continued deleveraging. As we close out 2025 look ahead to our opportunities in front of us, I want to emphasize that Chemours is focused on executing with discipline across every pillar of pathway to thrive, and we believe by remaining dedicated to doing the hard work now that will provide strong returns to our shareholders through long-term stable value creation. The progress we've made gives me great confidence in our trajectory. I want to thank our employees for the focus, resilience and commitment they have demonstrated throughout 2025. With the talent, technology and portfolio we have today, and the clarity of strategy guiding us and confident in our ability to deliver for customers, communities and shareholders in 2026 and beyond. Thank you for your continued support. With that, I'd like to open the line for your questions. Operator: [Operator Instructions] Our first question comes from Pete Osterland with Truist Securities. Peter Osterland: I just wanted to start on the TT segment. Could you share some more detail on the assumptions for TiO2 volume growth that are embedded in your 2026 guidance? What do you expect the global industry to grow volumes at this year? And how would you expect your volume growth to compare to the industry average? Denise Dignam: Sure. Peter, thanks for the question. I would say our outlook is that demand is stable and there's not major demand triggers. Our outlook is really based on -- we announced a price increase in December we've seen, I'll say, strong yield of that price increase. We talked about flat pricing from Q3 to Q4, flat year-over-year pricing as we head into Q1 and we feel really good about that. So that's kind of how we see it progressing stabilized demand with our pricing power. Peter Osterland: Great. And then just switching gears, I just wanted to follow up on your comments on your legacy liabilities. Do you have a lot of sight for meaningful progress towards resolving what you have left during 2026. Any key items or dates to be watching out for this year that you could share? Denise Dignam: Sure. We've made significant progress in the fourth -- our fourth pillar, strengthening the long term. And we're really proud of the work that was done in -- with New Jersey, really kind of laid a framework and hopefully, you can see how we're going to progress going forward. The 2 other areas where we're focused and continue to make progress is in our West Virginia facility as well as in North Carolina. So I would expect to hear additional information relative to those facilities as we progress the year. Operator: Our next question comes from the line of John Roberts with Mizuho. . John Ezekiel Roberts: It seems like there are a lot of mix effects running through the APM segment. Maybe you could peel apart some of the different end markets there to let us know how much some are down and where some of the strength is? Denise Dignam: Yes. Thanks, John. I mean as we said in my prepared comments, things like auto, industrial production, those things are down. But -- there's a real opportunity in our Performance Solutions portfolio of products. If you think about PFA and the expansion that we did in our Teflon product line, there's a lot of demand related to the AI search and the build-out of data centers which is also building out the semicon and all of the demand for additional memory that those chips will need. So it's really, I would say, in those -- in that area really a pull on the AI side. John Ezekiel Roberts: And my understanding is there's still some more maintenance to be done in 2027 on washing works. Why not pull all of the 2027 maintenance until whatever downtime you've got here in the March quarter of 2026? Denise Dignam: Yes. Actually, thanks for the question. All of the -- we have regular turnaround. So that's something that happens every 3 years at our site. So we had already had that plan for the beginning of next year. We actually pulled all the maintenance related to the situation, the disruption in January forward. So we've actually taken scope out of that turnaround. There's still more work to do. It's just a regular turnaround. But yes, we have pulled that forward. And really, our decision was we wanted to have really reliable operations and to make sure we did not -- that particular issue that hit us last summer did not continue to pull it down. We really wanted to make sure we had stable operations. So I would call it more of the turnaround more of a tune-up versus significant maintenance work that would drive stability. Operator: It comes from Arun Viswanathan with RBC Capital Markets. Arun Viswanathan: I guess my first question is just on the Q1 and the full year guide. So the midpoint for Q1 is 135, looks like the full year midpoint 850. Maybe you can just talk a little bit about how -- what are some of the bridge items as you move into Q2? I imagine, obviously, there's seasonality for both TSS and TiO2 that's pretty pronounced in Q2 and Q3. But I guess I'm just curious what else we should think about or some disruptions that you had last year in the middle of the year as well. Obviously, is it your assumption that those don't repeat. Maybe you can just understand how you plan to see that uplift from, say, the 135 to maybe a $200 number or so for the middle of the year. Denise Dignam: Thanks, Aaron. Yes, we have full confidence in our full year guide. As I said in the prepared comments, we expect earnings growth in all 3 of our businesses. I'm going to turn it over to Shane to give you a bit of the walk. Shane Hostetter: Arun, so specific to kind of -- you got the midpoints right in Q1 and year-end guides and then you really -- as we look at Q2, right, just thinking through what happened in Q1, we are looking at low ranges of 0% to 5% in TT and APM that is inclusive of some, what I'll call, unusual items specific to APM, we had the Washington Works outage of roughly $20 million to $25 million of an impact. And then for TT, we had roughly $17 million of inventory and really mix areas around the ore. So as you think about that with the midpoint of the guide in the first quarter, the $40 million in addition to that onetime it's going into next year or going into the second quarter, it's a good start. Then as you pointed out, it's really seasonality. It's really strength in our refrigerants and Opteon business. It's getting the price in the fact that Denise had earlier talked about in TT and continuing that momentum as well as pricing over assess. And we're going to continue to control what we can control across each one of our businesses and getting cost out across on that side, which is going to progress as the year goes on as well. Arun Viswanathan: Great. And then as a follow-up, just on the free cash flow, you noted that, obviously, your teams did a lot of good work in Q4 to harvest some of that, especially in -- could you just maybe walk us through, I guess, Denise, you may have mentioned that $92 million is more reflective of the quarterly run rate of cash flow generation. So is it also the implication is that you feel comfortable that free cash flow could eclipse $300 million or $350 million as you go through the year? Shane Hostetter: Yes, Arun, why don't I take that one. First of all, I'm very proud of the team of what we've done in Q4, ending the year driving free cash flow over our high end of the range. As we look ahead, Denise talked about the normalization thinking through what the cash generation capabilities of this business are, we're really thinking that as reflective of the full year. As you probably know, right, we are seasonal as it relates to working capital. And I mentioned in my script that in Q1, we don't anticipate over $100 million of outflow, but we do anticipate an outflow in Q1 given working capital seasonality. But for the full year, we wholeheartedly stand by the above 25% free cash flow guide, and we feel comfortable attaining that. So really excited for the capabilities of the team and really driving through cash conversion through unlocking further working capital and really hitting the mark on earnings to generate that cash flow in '26. Operator: Our next question comes from the line of Duffy Fisher with Goldman Sachs. Patrick Fischer: First question is on TT. Can you walk through the 3 geographies that have some antidumping activities going on in India, Brazil and Europe? And just -- what have you seen in those areas already from those antidumping actions? And what do you think is still left on the come for the Western players? Denise Dignam: Duffy, thanks for the question. I mean we see that there is -- we're seeing benefits from the antidumping duties. If you look at Brazil, we see really high duties really good market for us out of our Mexico facility. So really feel very good about that. India, I'm sure you know, there's been a little bit of back and forth. We're confident that those duties are going to come back, but it's just a process that has to come through. We've seen in Europe that, obviously, we've had some uplift in Europe there has been some currency changes since this dumping went in, which gives some benefit to Chinese producers, but it's not anything that is going to dramatically change our view of Europe. Patrick Fischer: Fair enough. And then jumping to TSS, can you walk us through what impact has kind of the bringing online of Corpus Christi been either increased costs? Is it ramping -- and then what's left as far as benefit as that plant fully fills out? Denise Dignam: Yes. So what we talked about in our -- before with TSS is that it was going to be a 2-year ramp. So you could see last year, we talked about improvement in margin that comes from cost out as well as price. So we saw -- started seeing some improvement last year. The second half of that facility will be ramping up this year. So we will continue to see improvement there. The technology we have is the lowest-cost technology in the world. So we feel really good about the tailwinds that we're going to get from that facility. Operator: Our next question comes from the line of Josh Spector with UBS. James Cannon: You have James Cannon on for Josh. I wanted to touch back on the ore mix impact that's flowing through in TT this quarter. I know there's some noise around some legacy purchase contracts. And I was wondering I think the last 1 of those continues to run through, I think, this year or next year. Is any of that something that we should be modeling continuing? Or is it something that should be contained in the first quarter? Denise Dignam: Yes. I would say that for the first quarter, the change in our mix was really related to the winter interruption and the need to consume higher grade ore. Definitely, as you've said, we had 2 contracts, long-standing contracts that were unfavorable. One is completed, 1 is finished, and we're working through the second contract right now. we have laser focus on our input cost in the TT business. So you will continue to see that improving over the year. We also talked about our restructuring that we've done in our mines in -- by taking down 1 mine, it's all aimed towards lowering our input costs. One of the primary costs that go into our plants and actually a competitive advantage for us. James Cannon: Okay. Got it. And then on the -- just a follow-up on the Freon side. It seemed like you called out some opportunistic sales that drove a pretty solid sequential in the quarter. My math gets me to a first quarter guide that has continued growth there. Can you just talk through what you expect on that side of the business without the transition happening this year and new step downs as far as I'm aware. Shane Hostetter: Yes. Thanks for the question. We're pretty happy with some of the tailwinds we saw in the fourth quarter related to the Freon business. As we look ahead, in my script, I mentioned really thinking through the tailings of pricing around both Opteon and Freon, and we can look at '26 and see that continuing. So we're really proud of both the execution on the Opteon side and Freon side in '25, and we'll continue to execute and grow in both next year. Operator: Our next question comes from the line of Hassan Ahmed with Alembic Global Advisors. Hassan Ahmed: Just wanted to revisit some of the questions asked earlier on TT. Particularly as it pertains to you guys as volumes, you obviously reported volume declines in Q4 and the volumes aren't looking that great for Q1 as well. And I'm just trying to sort of think through the antidumping duty side of things, the 4 countries, large regions, in particular, where those antidumping measures have been announced. I mean if I sit there and think through for lack of a better way of putting it, the volume that is up for grab, it's around 800,000 tons, right? So I mean, what is baked into that $800 million, $900 million EBITDA guidance that you guys have given in terms of any potential antidumping related market share gains for you? Denise Dignam: Yes. Hassan, thanks for the question. When you think about us in TT for the year, we're really focused on executing on our price increase. And I know you're smart, and you can figure it out, kind of put the pieces of the puzzle together. We are really focused on our pricing. Our pricing was a global price increase all regions, there's no mix impact. So while we talk about the duties and they clearly have been helpful, we are really focused on delivering value and creating value for this business through our pricing efforts. Hassan Ahmed: But I mean, just any sort of guidance in terms of the market may typically grows at 2% to 3%? I mean, will you be in line with the market? Will you be better than the market in terms of volume growth? Denise Dignam: Yes. We are projecting a stable market. I don't think anyone sees any big reason to expect significant growth. Again, we're focused on value and our pricing and with stable volumes. Maybe I'll kind of take it up a level 2. We have -- I talked about seeing growth in our businesses throughout the year. we're super proud of what was accomplished with our TSS business. We are coming off a record quarter, a record year, strong foundation. If you look at what we've been able to do, we have a leading market position with OEMs in the aftermarket -- and we're really close to our customers. And we are very, very well positioned for growth this year in TSS. Additionally, as we talked about with APM, as we look at the AI trend, we also see great opportunity for growth there as well. Hassan Ahmed: Understood. And as a follow-up, Denise, if you don't mind, just sticking to the TT side of things. I mean a lot of folks you guys included, had talked about 1.1 million tonnes of capacity rationalizations since 2023. Are you guys still comfortable with that figure? And what are you guys seeing in terms of potential rationalizations in China on the back of anti involution? Denise Dignam: Yes. I mean we're so confident in that. I mean, those announcements were made, they're all public. We feel we feel confident in that. As far as additional with anti evolution, I really can't speak to that at this point. We don't know that we've seen much more than that. Operator: Our next question comes from the line of John McNulty with BMO Capital Markets. Caleb Boehnlein: This is Caleb on for John. I was just hoping you could provide a little bit more color on what would get you to the high end of the range and the low end of your range for the full year? Shane Hostetter: Sure. Thanks, Caleb. As I think about the range of possibilities here, I think it really depends upon a couple of things. The high end, depending upon market evolution how the actual economic returns comes. -- if there's further rate cuts, for instance, and that really has impact on the overall market. I would say the other parts on the high end is really just overall cost out and thinking through where the net inflation and cost improvements go side. I would say then finally, would be really continued execution on the pricing side and broader adoption across the businesses. I would say, on the low end of the range, continue to thinking through the cost inputs and thinking through if there's additional costs that we're not seeing right now as we kind of evolve throughout the year. I would say on the opposite side of what I just said, if there's less price receptivity going through there. And then I would say on the other areas is if there's any thoughts around volume depression on the adaptation right side. Denise Dignam: Yes. Maybe I'll just add on to that. I think we've been -- we're focused on things we can control. So I would say the market would be the really a key variable in that. Caleb Boehnlein: Okay. That's helpful. And then for TSS in the -- over the past couple of years, you've seen the benefit of the AIM act and then the H2L transition. Going forward, how do you see the growth algorithm for that business kind of playing out? And especially relative to your previous commentary for like mid- to high single-digit sales growth over the longer term. Denise Dignam: Yes. Thanks for that question. So I would say coming into the first part of this year, we still see significant growth from HFO transition, whether it's additional units the mix of HFC versus HFO units that get sold as well as replenishing inventory that was drawn down in the fourth quarter. So we see that through the first half of the year. One thing to keep in mind is this is a pretty depressed market when it comes to the residential segment. So we see as new units are put on and as the housing market picks up, we see substantial growth there. So we will continue to grow in line with the residential segment. But the other areas to focus on our growth in data centers and chillers and some of the other spaces where we participate. Operator: Our next question comes from the line of Vincent Andrews with Morgan Stanley. Vincent Andrews: I just kind of want to follow up on that a little bit. Could you talk about what your residential HVAC customers are doing. It seems like they're reducing production for various reasons. Is that leading to a destock from you? And can you help us understand how much of that mix -- how much of your mix that is now versus other parts of the TSS business, whether it's data centers or aftermarket and how much of those are going to contribute this year volumetrically? Denise Dignam: Yes. Thanks for the question, Vincent. Yes. I mean, first of all, I want to say that we have -- hopefully, we've established a lot of credibility in this business to this point and what we see going forward. I kind of laid out what we thought was -- what we believe is going to happen as we enter this year. So we do see our customers Actually, inventory was drawn down in the fourth quarter. So we do see some of that coming back in the first half of the year as well as the -- the HFC to HFO transition of the mix of what gets sold to customers. We also see on that, the aftermarket that comes with those installations. So we see solid growth, especially we'll talk about the first half double-digit growth for this space. Vincent Andrews: Okay. And Shane, if I could ask you on the cash flow, the target to do at least 25% conversion this year. What are the things that are inhibiting you in 2026 from doing better than that from getting up to, say, 40% or 50% conversion. I noticed there were some line items for full year '25, whether it was an inventory build or your payables went down a couple of hundred million dollars and also a fair amount of movement in the crude liabilities and other liabilities, which I know is below the working capital line. But maybe you can just help us reconcile some of the important lines on the cash flow statement this year? And what's going to help you year-over-year and what's going to inhibit you? Shane Hostetter: Yes. Thanks, Vincent. First, we put out at least 25%, and I really feel comfortable with that, and we will obviously strive to be more than 25% as we go forward into '26. Specific to the areas that I will keep in mind, it's story a lot is around inventory and getting our DIOs improved. We do -- earlier, there was a question around contracts and TT that are going to wane through the year. Unfortunately, that is a headwind coming into the year because that is mandated high-grade ore that we had to fight against, but we feel very confident, even though we will have additional ore put on that throughout each 1 of the businesses will have inventory reductions outside of that. So I think the inventory is a big story. I think navigating, as you just mentioned, other areas around cash conversion and driving up DPO as well as being efficient on the collections is certainly areas that we'll focus on. And then going forward, I really feel that the CapEx in this company is going to increase year-over-year, but that's really around -- we talked about planned maintenance activities or in the year. So I think it's going to kind of impact our free cash flow in a given year compared to last year as well. So all in all, I think really the story here is we're control what we control, really confident in that 25% number and really will drive ahead to get them even more into the year. Operator: One moment for our next question. It comes from Jeff Zekauskas with JPMorgan. Jeffrey Zekauskas: In the titanium dioxide segment, actually, your revenues in North America and in Europe were flat to up, the issue was in Asia, where for the year, your revenues went from roughly $660 million to $465 million. So you're down 30% in Asia. What happened in Asia? And where is that business going? Denise Dignam: Yes. So I mean, as we've talked about, our strategy is we're focusing on the fair trade markets, and there's been in India in particular. So I mean, that was a trend that was happening for us as we move towards the fair trade market. And India, there was a pullback on the tariff. So -- as I said, we're confident it's going to come through, but I'll say it's temporary. Jeffrey Zekauskas: Okay. So secondly, there's a focus on free cash flow generation. And basically, if you look at Chemours from, I don't know, 2019, your inventories used to be $1.1 billion, and now they're $1.6 billion, and even this year, they're up 7%. And your revenues over that from 2019 to 2025 were up about 5%, inventories are up 50%. What's all that inventory? Is it titanium dioxide? Is it something else? Why do your inventories keep growing? And what can you do about it? Shane Hostetter: Thanks for the question, Jeff. I think certainly, it's -- obviously, we are carrying more inventory than we need right now from that side and we'll own to that. When you look at back to 2019, as you mentioned, we're different business right now. As we think about TSS with Corpus Christi up and running in other areas. So you can't really look at the past trends, but I own up to the fact that their inventory is an area that we are concerned reduce. Certainly, as I mentioned earlier on the call, we have contracts to take-or-pay contracts with a high or that is areas that we don't necessarily need, but we can use so that some of that that's put on there. But I would say across each 1 of the businesses that we're carrying too much inventory and we have stretch goals in 2016 and beyond to get it back to more normalized levels on that area. Operator: So we have reached the end of our Q&A session. Thank you for joining the Chemours Fourth Quarter 2025 Results Conference Call. You may now disconnect.
Operator: Thank you for standing by. This is the conference operator. Welcome to the Eldorado Gold Fourth Quarter 2025 Results Conference Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Lynette Gould, Vice President, Investor Relations, Communications and External Affairs. Please go ahead, Ms. Gould. Lynette Gould: Thank you, operator, and good morning, everyone. I'd like to welcome you to our conference call to discuss our fourth quarter and year-end 2025 results in addition to details of our 2026 guidance and overview of our 3-year production outlook. Before we begin, I'd like to remind you that we will be making forward-looking statements and referring to non-IFRS measures during the call. Please refer to the cautionary statements included in the presentation and the disclosure on non-IFRS measures and risk factors in our management's discussion and analysis. Joining me on the call today, we have George Burns, Chief Executive Officer; Christian Milau, President; Paul Ferneyhough, Executive Vice President and Chief Financial Officer; and Simon Hille, Executive Vice President, Operations and Technical Services. Louw Smith, Executive Vice President, Greece, is at site today and not able to join the call. So Simon Hille will speak on his behalf for Skouries and Olympias. Our releases yesterday detail our fourth quarter and year-end 2025 financial and operating results as well as our 2026 guidance and 3-year production outlook. They should be read in conjunction with our year-end 2025 financial statements and management's discussion and analysis, both of which are available on our website. They have also both been filed on SEDAR+ and EDGAR. All dollar figures discussed today are U.S. dollars unless otherwise stated. We will be speaking to the slides that accompany this webcast, which can be downloaded from our website. After the prepared remarks, we will open the call for Q&A, at which time, we will invite analysts to queue for questions. I will now turn the call over to George. George Burns: Thanks, Lynette, and good morning, everyone. I'll begin with an overview of our fourth quarter and full year 2025 results and highlights and then provide an update on construction and the time line at Skouries. I'll then hand the call over to Paul to review the financials and then to Simon with an update on projects and operations. Following that, Christian will provide an update on our 2026 guidance and 3-year production outlook before I conclude with some closing remarks. It's been a busy start to the year. We have continued to execute on a clear value creation strategy, achieving the high end of 2025 production guidance, launching a quarterly dividend to formalize a capital return framework and advancing a disciplined exploration program that reinforces the company's discovery strategy. The announced acquisition of Foran Mining further strengthens the company's long-term growth pipeline, adding a high-quality Canadian copper-gold development asset and enhancing portfolio diversification with a focus on per share value creation and sustainable free cash flow growth. Turning to Slide 4 and our fourth quarter and full year highlights. 2025 was a year of strong execution and meaningful progress across our portfolio. We delivered safe gold production at the upper end of our guidance, finishing the year with 488,268 ounces. This performance was supported by another strong year at Lamaque Complex, steady contributions from Kisladag and Efemçukuru and a solid finish at the Olympias mine, bringing it back on track. Solid operating execution, combined with a favorable gold price environment drove strong financial results, including $1.8 billion in revenue, $743 million in operating cash flow and $316 million in free cash flow, excluding Skouries investment. In Greece, we are reaching a key inflection point. The first production from Skouries later this year, together with the Olympias expansion and ongoing advancement of the Perama Hill project, Greece is set to deliver meaningful growth. This momentum is complemented by the continued long-life potential at the Lamaque Complex, supported by production from the Triangle deposit, development from the Ormaque deposit and a robust exploration pipeline and by our Turkish operations, which remain a stable cash-generating foundation for the company. Turning to Slide 5. In the fourth quarter, our lost time injury frequency rate was 0.55, an improvement from the LTIFR of 1.02 in the fourth quarter of 2024. While there is always room for improvement, this safety performance also comes during the peak of our construction activities at Skouries. We continue to implement multiyear programs to support continuous improvement in workplace safety, supporting our vision of everyone going home healthy and safe every day. During the quarter, we achieved safe production of 123,416 gold ounces at $1,894 all-in sustaining cost per ounce sold. Simon will speak further to each of the assets' performance later in the call. With a strong balance sheet, we are well positioned to advance our growth pipeline while maintaining flexibility to return capital to shareholders. As previously announced, we were active on our share repurchase through the NCIB program, and we repurchased approximately $204 million of shares during 2025. Additionally, we announced in January the initiation of a quarterly dividend program, which commences in the first quarter of '26. Coupled together, these mark an important milestone in delivering value to our shareholders and reflect the company's strong financial position and confidence in executing our growth strategy. At Skouries, first concentrate production has been modestly delayed and is now expected in early in the third quarter of 2026 with commercial production anticipated in the fourth quarter. This timing adjustment is expected to increase construction capital by approximately $50 million. The delay relates to primarily required replacement of the cyclone feed pump variable frequency drive capacitors in the process plant due to moisture damage that occurred while in storage. And secondarily, our power line connection delays resulting from a slower-than-expected approval of the detailed engineering and delayed ramp-up of the subcontractor. Prior to commissioning, final electrical regulatory authority approval requires completion of inspection and energization protocols. Importantly, the project is mitigation measures well underway and Skouries remains a multi-decade high-quality asset expected to generate meaningful cash flow in the second half of 2026 and beyond. Ramp-up of first production towards commercial production is expected to accelerate as the project team will continue to complete additional areas as we advance toward first production. We see the impact of the delay is minimal when looking at the long-life nature of the asset, and we are confident in the delivery of this multi-decade mine. With that, I'll turn the call over to Paul for a review of our financial results. Paul Ferneyhough: Thank you, George, and good morning, everyone. Turning to Slide 7, I'll summarize our fourth quarter and full year 2025 financial results. Consistent and reliable operational performance through the fourth quarter enabled us to deliver results at the high end of our tightened production guidance, while operating costs for both the quarter and the full year remained within expectations. Strong gold prices contributed positively to operating cash flow, further supporting the execution of our strategic and operational investments. Net earnings attributable to shareholders from continuing operations were $252 million or $1.26 per share in the fourth quarter. For the full year, net earnings attributable to shareholders totaled $520 million or $2.56 per share. Net earnings increased both for the full year and the fourth quarter compared to the prior year periods, driven by higher revenue, partially offset by increased production costs, including higher royalties and losses on derivative instruments. After adjusting for onetime nonrecurring items, adjusted net earnings for the quarter were $126 million or $0.63 per share. The primary adjustments in the quarter included a $104 million recovery related to the recognition of deferred tax assets and a $27 million unrealized gain on derivative instruments. For the full year, adjusted net earnings were $355 million or $1.75 per share. Adjustments during the year primarily included a $178 million recovery related to the recognition of deferred tax assets, a $39 million unrealized loss on derivative instruments and a $19 million foreign exchange gain related to the translation of deferred tax balances. Free cash flow in the fourth quarter was negative $55 million or positive $109 million when excluding capital investment in the Skouries project. For the full year, free cash flow was negative $233 million or positive $316 million when excluding Skouries. Cash flow generated by operating activities before changes in working capital totaled $752 million for the year compared to $636 million in the prior year. The increase was primarily driven by higher revenue, which rose to $1.8 billion in 2025, supported by higher average realized gold prices, partially offset by lower production volumes during the year compared to 2024. Production costs for the full year increased to $678 million from $564 million in 2024, primarily due to higher royalties, which accounted for approximately 40% of the year-over-year increase. Royalty expense totaled $124 million, up from just over $79 million in 2024. The balance of the increase reflects labor cost inflation across the operations, notably in Turkiye, where local inflation continues to outpace devaluation of the local currency, the strengthening euro impacting Olympias and increases at Lamaque related to labor and contractor costs required to support the Triangle Mine as it operates at greater depth. Fourth quarter total cash costs of $1,295 per ounce sold were at the lower end of our tightened guidance range and $1,176 per ounce sold for the full year. The year-over-year increase was primarily driven by higher royalty expenses driven by regulatory change in Turkiye and by the stronger gold price environment and overall lower gold volumes sold. Higher total cash costs resulted in increased all-in sustaining costs for both the quarter and the full year. AISC in the fourth quarter was $1,894 per ounce sold and $1,664 per ounce sold for the full year. Year-over-year comparisons were also impacted by higher sustaining capital expenditures in 2025. Growth capital investments at our operating mines totaled $74 million in the fourth quarter and $218 million for the full year. At Skouries, growth capital investment totaled $475 million for the year, including $137 million in the fourth quarter. Accelerated operational capital at Skouries amounted to $35 million in Q4 and $86 million for the full year. Current tax expense was $85 million in the fourth quarter and $229 million for the full year. This full year $115 million increase compared to 2024 was driven by improved profitability across all jurisdictions. Deferred tax was $118 million recovery in the fourth quarter and a $207 million recovery for the full year, primarily related to the recognition of deferred tax assets in Canada and Greece. Turning to Slide 8. Our balance sheet remains strong and provides the flexibility to support growth initiatives while returning capital to shareholders. Total liquidity was approximately $976 million at the year-end, positioning us well to complete construction at Skouries, support ramp-up and continued disciplined capital allocation, including to our recently announced dividend program and ongoing NCIB repurchases. During the fourth quarter, we purchased and canceled approximately $80 million of Eldorado shares under the NCIB. Following our additional investment in AMEX announced in December, our year-end cash balance was $869 million. Before turning the call over to Simon, I'd like to take this opportunity to announce that commercial terms for the Skouries concentrate offtake arrangements have been agreed and contracts are being finalized ahead of execution. These contracts cover approximately 80% of planned copper concentrate production over the next 2 to 3 years at terms significantly better than those assumed in the Skouries 2022 technical study. With that, I'll hand the call over to Simon, who will provide an update on our operations, beginning with Greece. Simon Hille: Thanks, Paul, and good morning, everyone. Let's begin with Slide 9, which highlights the progress at our Skouries copper-gold project. As George outlined, we have adjusted the timing of our Skouries project. However, I want to be very clear, the project continues to make strong progress and execution on the site remains solid. As of the end of 2025, overall construction has reached 90%, and our focus is firmly on delivering safe and high-quality startup. The open pit is operating ahead of plan. Substantial ore stockpiles have been established and grade control drilling is substantially complete from Phase 1, which has confirmed the first 3 years of production. While the timing has shifted modestly, the fundamentals of the project are unchanged, and the team is executing with discipline as we move towards the first production. Turning to Slide 10. Photos here and on the following slides illustrate the advancement of the work underway. Work in the process plant remains focused on mechanical, piping, cable tray and electrical installations in preparation for first ore. As mentioned, recent inspections have identified the need to replace the cyclone feed pump variable speed drive capacitors in the process plant, which experienced moist damage during storage. We have ordered and expect to install temporary replacement equipment in Q2 with permanent equipment in Q3. The prefabricated electrical distribution room for the compressors has been installed with cable and terminations progressing. The reagent areas are advancing in line with the commissioning plan. Moving to Slide 11. Two of the 3 tailings thickeners are mechanically complete with electrical cabling and instrumentation installation underway. The third thickener not required for start-up is in progress in line with the plan. Water testing is complete, piping installation is advancing and the support infrastructure, including pump house and flocculant building is moving forward. Slide 12 focuses on filtered tailings plant, which remains on the critical path with electrical installation and commissioning being the final step. The prefabricated electrical room was installed and electrical work is advancing. We're also making steady progress on the tailings handling infrastructure, including the stacking conveyance system. The accessibility and productivities of the tailings infrastructure have been mildly affected by recent rain fall above the historic levels. However, these are short-term challenges that the team is actively managing. As seen on Slide 13, construction of the crusher building is advancing well. Concrete work is complete. The crusher is mechanically installed, electrical work is underway. Conveyors to the coarse ore stockpile and the process plant are in place. The stockpile dome assembly is progressing. The installation of the prefabricated electrical distribution room was completed and electrical cable installation and terminations are in progress. Moving to Slide 14 and Olympias. Fourth quarter gold production was 18,473 ounces. And all-in sustaining costs were $1,676 per ounce sold. Progress continued on the planned mill 650,000 tonnes per annum expansion during the quarter. All of the major equipment, including the verti-mill, flotation cells, thickener, cyclones and e-room have been delivered and installation has commenced. We expect progressive commissioning and ramp-up in the second half of 2026. Turning to Turkiye on Slide 15. Kisladag production totaled 41,140 ounces with all-in sustaining costs of $1,933 per ounce sold. On the growth initiatives, the long lead procurement for the whole ore agglomeration circuit is underway with installation targeted for 2027. The new secondary crusher has been ordered with delivery expected in the second half of 2026 and the geometallurgical study to assess future screening needs to remain on track for completion in the second half of 2026. On Slide 16, at Efemçukuru, fourth quarter gold production was 14,496 ounces at all-in sustaining costs of $2,536 per ounce sold. Compared to Q3 of 2025, gold production was lower due to lower grade and recovery despite higher mill throughput. And now moving to Lamaque on Slide 17. Lamaque delivered production of 49,307 ounces at all-in sustaining costs of $1,392 per ounce sold for the fourth quarter. During the year, the second Ormaque bulk sample was processed, and this higher-grade ore was treated in a blend with the Triangle ore and performed very well. We look forward to advancing Ormaque into production later this year. And with that, I'll turn the call over to Christian for an overview of what's ahead. Christian Milau: Thanks, Simon, and good morning. Turning to our 2026 guidance and 3-year outlook. Eldorado enters the year from a position of strength. Skouries' exciting value proposition is unchanged. It's a high-quality, long-life asset that will generate strong cash flow for decades. As it advances towards production, Skouries will be transformational, resetting our production profile and cost base well into the next decade. Slide 18 outlines our consolidated 2026 guidance and 3-year growth profile. From our existing portfolio, we expect production to increase by approximately 40% in 2027 versus 2025, supported by a solid base of relatively lower cost operations. The addition of Skouries further accelerates this growth, enhancing scale, margins and long-term cash flow generation. For 2026, we expect total gold production to be between 490,000 and 590,000 ounces with copper production of between 20 million and 40 million pounds. On a consolidated basis, all-in sustaining costs are expected to be between $1,670 and $1,870 on a per ounce of gold sold basis. Growth capital and operations is expected to be between $375 million and $405 million and sustaining capital is expected to be between $140 million and $165 million for the year. As previously announced, we've increased our planned exploration investment for 2026 by 60% compared to 2025. We expect to spend between $75 million and $85 million during the year, focused on resource conversion drilling at Lamaque and Efemçukuru, resource growth and discovery programs in Quebec, Turkiye and Greece. All-in sustaining costs at Skouries are expected to be between negative $100 and plus $200 per ounce of gold on a net of by-product basis. Over the life of the mine of Skouries over the life of mine, Skouries is expected to be a low to negative all-in sustaining cost mine given spot and higher copper prices in the current market and forecast by market commentators. As a result, Skouries will have the potential to transform Eldorado into one of the highest free cash flow yielding companies in the sector for 2027 onwards, with free cash flow yields estimated by some groups of over 20% based on their gold and copper price forecasts. Given we anticipate Skouries' first production in early Q3 2026, commercial production in Q4, we have provided cost guidance for our current operations. Following commercial production at Skouries, we expect to issue updated consolidated cost guidance later in the year. On Slide #19, we provided the mine-by-mine 2026 detailed production guidance. At the Lamaque Complex for 2026, production is expected to be between 185,000 and 200,000 ounces, reflecting the start-up of Ormaque. Our focus remains on advancing Ormaque development and continuing resource conversion drilling at both Triangle and Ormaque. In Turkiye Kisladag, we expect 2026 production of 105,000 to 130,000 ounces. Expected production compared to the previously guided range has been impacted by a high waste stripping year, coupled with longer-than-planned leach cycles and lower grade stacked. The higher metal price environment has opened up a significant opportunity for the Kisladag open pit to allow us to evaluate the opportunity to move from $1,700 to $2,100 pit shell, which is expected to unlock the western area of the pit to support resource expansion. To facilitate this opportunity and assist in resolving ongoing geotechnical challenges at the open pit, we expect to increase waste stripping in 2026 by 6 million to 8 million tonnes. The mine optimization plan is expected to be beneficial in the long term by improved balancing of ore and waste movement and supporting consistent year-over-year performance. At Efemçukuru, we expect production of 70,000 to 80,000 ounces in 2026. Costs are expected to be higher this year due to increased labor, electricity and royalty expenses. Finally, in Greece and Olympias, production is expected to be between 70,000 to 80,000 ounces, reflecting the ramp-up of the 650,000 tonne plant in the second half of the year. Our focus will be on executing the plan, managing feed blends and supporting stable flotation performance. Higher gold production and improved payability terms are expected to support lower unit costs, though quarterly variability will continue due to timing of by-product shipments. With the portfolio we're genuinely excited about and clear path to cash flow inflection, we believe we are well positioned to create long-term sustainable value. And I'll now turn it back to George for concluding remarks. George Burns: Thanks, team. Our 2025 performance reflects the dedication and capability of our employees and contractors across the organization. I want to thank our teams for their ongoing commitment to responsible production, safety, operational excellence and collaboration. As we look ahead to 2026, our focus remains on safely delivering Skouries, strengthening our operating foundation and continuing to create long-term value for our shareholders. Before we conclude, I want to briefly revisit the announcement we made almost 3 weeks ago regarding the combination of Eldorado and Foran. Together, we bring 2 high-quality assets entering into production in 2026, in addition to 4 operating mines that support near-term growth and long-term value creation. The combination enhances free cash flow potential, strengthens our production base, improves our cost profile while maintaining a strong balance sheet to fund growth, advance exploration and return capital. It also adds meaningful copper exposure alongside long-life gold production, creating a more balanced and resilient portfolio. Overall, this creates a compelling platform for growth and operational excellence that will drive sector-leading cash flow per share. We're confident in the opportunities ahead. Thank you for your time today. I'll now turn the call back to the operator for questions from our analysts. Operator: [Operator Instructions] The first question comes from Cosmos Chiu with CIBC. Cosmos Chiu: Maybe my first question is on Kisladag. As you mentioned, in the 3-year outlook, 2026 guidance is lower than what there was before. And I think you explained why part of it, lower grade, higher strip. But how about 2027? I noticed that 2027, your 3-year outlook is also lower than what you had previously disclosed. So the reasons in 2026, are they also sliding into 2027? Simon Hille: Cosmos, this is Simon. Thanks for the question. So yes, as we explained, we are looking to open up the Western area. I think that's going to provide us with a new ore source, and we're quite excited what that could do for us by adding some more mine life into Kisladag. So that's one of the positives coming out of the extra stripping required this year. As we look forward into sort of 2027 and beyond, we are probably setting up the mine to be in that range that we've sort of 150,000 to 160,000 ounces on a steady year-on-year basis. However, there will be focus on making those profitable ounces through cost initiatives and other things. But that's sort of the outlook for right now. We don't see it really spiking in any given year. Cosmos Chiu: So I guess to confirm, it sounds like 2027 numbers that you've given today, 140,000 to 160,000 ounces has incorporated some of the potential impact from an increase from a $1,700 an ounce to a $2,100 an ounce pit shell. Is that what I'm getting? Simon Hille: Yes, I think it's fair to say that. Cosmos Chiu: Okay. And then so in terms of the stripping then, the 6 million to 8 million tonnes of pre-strip in 2026. Is that going to stay high then potentially if you move to a $2,100 an ounce pit shell? I'm just trying to figure out if that's a good sustainable number of tonnage to use to think of continue on a going basis. Simon Hille: Yes, that's a good question. To clarify, we typically move roughly around 20 million tonnes of waste every year. And so that's been driving our -- it's split across growth and sustaining capital. Beyond -- for 2026, what we're flagging is an increase -- an extra increase on top of that of roughly around 6 million to 8 million tonnes. The extent of that moving forward will be, I think, fairly modest. This year is probably where we're trying to open up the area. And the $2,100 shell was, I think, always a part of our long-term plan with the metal prices moving in the direction they have. Cosmos Chiu: Great. And then maybe just another question, switching gears a little bit. George, as you mentioned, it's been almost 3 weeks now since you announced the acquisition of Foran Mining. You've had a chance to talk to a lot of investors and shareholders of both companies. How has the reception been so far? George Burns: Thanks, Cosmos. Yes, we're out explaining to both sets of investors why this transaction is really a 1 plus 1 equals 3 transaction. I think our shareholders are listening to the benefits that flow to both sets of shareholders. In the case of Eldorado, this is a compelling opportunity to have a multi-decade life asset with massive exploration upside. We also, with our balance sheet, know we can lower the cost of capital relative to a development company and then accelerate investment in things like a lead circuit and doubling the capacity of the plant much faster than the Street is assuming. So we're selling the benefits, compelling benefits to our shareholders, and it's going to be up to them and a shareholder vote in the not-too-distant future. So we remain optimistic. Operator: [Operator Instructions] The next question comes from Tanya Jakusconek with Scotiabank. Tanya Jakusconek: Can you hear me? George Burns: Yes. Tanya Jakusconek: I don't know, George, if you want to take this or maybe Simon wants to take this. I just want to circle back to Skouries. With this delay that we've had, does this give us any -- I'm assuming it gives you a little bit more breathing room on the tailings. Maybe just review the tailings and you mentioned weather, Simon. Are we getting drier weather? Does this help us a little bit on the tailings side is what I'm asking, this additional time. George Burns: Yes, it's George. So yes, a couple of things I'd point out. So this 3- to 4-month delay in getting to first concentrate does give us some breathing room in really 2 areas. The plan all along on the plant construction was to get 2 filters up and running and begin the ramp up. With this delay, we're going to be able to get more of that equipment finalized before first concentrate. So we'll have more than 2 filters at start-up, and we'll have a number of other equipment required for ramp-up complete before we start. So that's a positive. And yes, I mean, we've seen heavy rains in the Mediterranean, both in Greece and in Turkey. Some record rainfalls are hitting the area. So it's a nuisance when you're out trying to do earthworks, open pit mining, but these haven't caused any significant delays in the construction. It's just we're being transparent about those issues. So for sure, the delay in start-up will advance all of our earthworks and put us in a better position for a solid ramp-up in the second half. Tanya Jakusconek: Mean you're going to have a very big -- well, I'm going to say big, but you're going to have a nice stockpile ready to feed that mill. And I think Simon mentioned we've done the drilling for 3 years of mining, detailed drilling in the pit. So we've defined for 3 years with a nice stockpile. Is that safe to assume that I'm understanding it correctly? George Burns: You are. We're going to be in a fantastic position to feed the mill. We're at more than 1.5 million tonnes today on the ground stockpiled. And with this 3-month delay, that stockpile is going to grow even further. So the beauty in all this, we're going to have more ore than we're going to process this year. We're going to be able to select the higher grade, more valuable ores to feed the plant. So we're in a great position from a mining perspective, great position from an ore body quality perspective. We've got 3 years of the open pit infill drilled, confirming the grades and recovery. And the underground has been unfolding very positively. We're 900 meters ahead on development. We're going to do 4 test stopes this year rather than 2. And the 2 test stopes that -- one that we've completed mining, the other one is roughly half completed. Fragmentation was excellent. The cavity is holding up. It's increased our confidence to go to larger stopes this year. So the 4 stopes we're going to mine this year around 97,000 tonnes compared to the 2 last year were just over 60,000 tonnes. So we're in a great shape for mining. This delay does allow us to have the plant more ready for a faster ramp-up. And it's unfortunate we had an issue with one of the key pieces of equipment, but I think we're in good shape for a strong year. Tanya Jakusconek: And George, I'm assuming that with these -- with the issues on the cyclone feed pump, all other areas have been checked, like we're not -- checks have been done is the only damage the nothing else be checked? George Burns: Yes. I mean that's a great question. To put it in context for this concentrator, there's over 4,000 pieces of electrical mechanical equipment. There are 891 motors, and there are 190 variable frequency drives. And so yes, all of this stuff has been inspected. Unfortunately, with the cyclone feed pump -- let me back up. All the electrical equipment had been stored since 2017 in warehouses that were constructed in the first phase of construction. I think that's a testament to the original design of this that often doesn't happen at the beginning. So when we went into care and maintenance in 2017, the electrical equipment was stored under cover. What we have found is we put this VFD into the motor control center just days ago. There were some signs of some moisture damage on this particular unit. And as a result, we got the manufacturer involved, opened up the capacitors and found this damage. And we've remarkably been able to find the quickest solution is to repurchase new capacitors. The repairs are going to take longer. And essentially, that's our critical path now to start up. So to answer your question, all of that equipment had been stored other than this one piece. These capacitors were marked cyclone feed pumps on the crating. And we now believe these were stored outside for a while and then later brought into the warehouse. So unfortunately, we were just in the phase of installing these, brought them into the MCC, notice a bit of moisture damage on the outside of the gear and got the manufacturer there to open up this electrical equipment and found the damage. No other equipment had any of those indications and all the additional variable frequency drives have been checked and confirmed to be okay. So we think we're out of the woods on any repeats to this unfortunate issue. Tanya Jakusconek: Yes. It sounds like the manufacturer is working with you, and I think Simon said they've already been ordered, and I think we're expecting them on site soon. George Burns: Yes. So the replacement new capacitors have been ordered. The rebuild of the damaged capacitors will come in Q3. So our best estimate from accelerating the manufacturing and shipment to site is we will be ready to run in 3 to 4 months from our late Q1 original date. Tanya Jakusconek: Okay. And then just maybe just turning to the power line connection. So I'm assuming the subcontractor is there now ready to working away and the critical path there is just getting that approval from the regulators. Is that how I should think about this power line? There's nothing else that needs to be done? George Burns: Yes. I mean we wanted to just point this out being transparent. We've talked all along that the dry stack tailings facility was the critical path. and that the power line and substation were not too far behind it. We did have some slippage in the detailed engineering. And just to describe this part of the infrastructure, it won't be owned by Eldorado. This is being constructed for our project, but it will be owned by the regulatory authority in Greece. And so it involves 11 power transmission poles and associated line and then this main substation. So the engineering took a bit longer. The subcontractor that's constructing it wanted full sign off before they started the work, and we saw some slippage there. But we've mitigated that. And with this delay now on the capacitors, we'll have this energized and ready ahead of time. But we did want to point out that we're not also in control of the inspection. So once the construction is complete, the regulator will come out and inspect all of that infrastructure that will be handed over to them, and they'll make the final determination when it's ready to flip the switches and energize our plant. And we've got temporary generators on site that we can do our commissioning on all areas of the plant with the exception of our grinding mill. So we have to have this power for that final commissioning and then start up. So at this point, it's not the critical path to actually the capacitors. We just wanted to highlight there was a bit of slippage, and we're focused on mitigating that. Tanya Jakusconek: Okay. So just so that I know when is that going to be ready, the power plant? George Burns: We expect the power plant in late Q2 and then shortly after that, the capacitor is up and running for the cyclone feed pumps. Tanya Jakusconek: Okay. Good luck with all of that. I'll be asking again on the Q1 call. George Burns: I'm sure you will. Operator: That's all the questions we have for today. This concludes the question-and-answer session and today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Hello, and thank you for joining us for i-80 Gold's 2025 Fourth Quarter and Full Year Results Conference Call and Webcast. Today's company presenters include Richard Young, President and Chief Executive Officer of i-80 Gold; Paul Chawrun, COO; and Ryan Snow, CFO. Before we continue, please note that today's comments may contain forward-looking statements, which involve risks and uncertainties. Actual results could differ materially. I ask everyone to refer to Slide 2 of the presentation, which is available on i-80 Gold's website to view the cautionary notes regarding the forward-looking statements made on this call and the risk factors related to these statements. Following today's formal presentation, we will open the call to your questions. I will now hand the call over to Richard. Please go ahead. Richard Young: Well, thank you, Joanna, and hello, and thank you for joining today. Starting with Slide 3. In 2025, we made significant progress advancing our development plan and recapitalizing the company's balance sheet towards our goal of creating a mid-tier gold producer. From an operating standpoint, we achieved our 2025 production guidance with consolidated gold output of just under 32,000 ounces that would have been at the higher end of the range had we not had the buildup in inventory at the end of the quarter, and Ryan and Paul will talk about that in a few minutes. Our production does continue to ramp up as Granite Creek ramps up. In parallel, we advanced drilling, technical studies and permitting across our portfolio of projects during the year, keeping us on track towards delivering on key project milestones in our development plan. Drill results, particularly at Granite Creek, were highly encouraging and support our decision to expand the infill and resource expansion programs in 2026. From a development perspective, we began construction of Archimedes, the company's second underground mine. We also capped off the year with the completion of the engineering study for the refurbishment of the Lone Tree process plant, which remains the cornerstone asset in our hub and spoke strategy to process material from our 3 underground mines. The Board has approved the notice to proceed to Hatch engineering for the full $400 million Lone Tree refurbishment. We also executed on a series of recapitalization initiatives and subsequent to year-end, secured a financing package of up to $500 million. The recapitalization is transformational for us as it allows us to advance our development plan unencumbered by the balance sheet. Importantly, the capital that was raised was secured with top-tier financial partners, including Franco-Nevada, National Bank of Canada and Macquarie, who all share our long-term vision for the company and follow extensive due diligence. Their participation is a testament to the quality of our projects, our team and our execution plan. And now I'd like to turn the call over to Paul for a detailed update on that development work. Paul? W. Chawrun: Thank you, and hello, everybody. Turning to Slide 4. Operations and development work progressed well over the quarter with mining at Granite Creek and advancement rates at Archimedes performing better than planned. We continue to increase our bench strength by hiring talented personnel in the key areas essential to execute on our growth plan, such as geology, mining and metallurgical engineering as well as supply chain, community relations and the Lone Tree project owners team. I'm also pleased to report we achieved our safety performance targets, finishing the year with an improved TRIFR of 0.62, including an incident-free fourth quarter. At Granite Creek underground, mining activities continue to ramp up due to reduced water-related impacts to mine operations, adjustments to the mine sequencing, and the delineation of additional high-grade areas through short-term drilling that were not included in the original resource model. As a result, we mined more mineralized material for the fourth quarter and the full year period year-over-year. In the fourth quarter, we mined just over 41,000 tonnes of high-grade mineralized material, including approximately 15,000 tonnes of high-grade oxide material at a grade of 11.19 grams per tonne gold, approximately 26,000 tonnes of high-grade sulfide material at just over 9 grams per tonne gold, plus an additional 19,000 tonnes of incremental low-grade oxide material at just over 3 grams per tonne gold. For the year, we mined approximately 142,000 tonnes of high-grade mineralized material, including just over 70,000 tonnes of oxide mineralized material at over 11 grams per tonne gold, close to 72,000 tonnes of sulfide material at 9.08 grams per tonne gold, plus an additional 73,500 tonnes of incremental low-grade oxide material of just below 3 grams per tonne gold. Total gold production was 3,600 ounces and 23,000 ounces for the quarter and full year period, respectively. And this refers to the gold available for sale at the third-party processing facility, which contributes to the total gold sold of approximately 5,200 ounces and 21,600 ounces, for the quarter and full year period. Due to timing delays with the third-party processing, the sulfide stockpile was higher than expected at an estimated 6,500 ounces of recovered gold. We expect to process this material in the first quarter of 2026. Water inflows remained stable during the quarter. The upgraded pumping system that was commissioned in the third quarter facilitated effective water mitigation in active mining areas. And as a result, we expect to exceed waste development this year as the main decline rate increases. Construction of a second larger water treatment plant commenced in December and is tracking to begin operating by the end of the second quarter of 2026. This plant is designed to facilitate the ultimate discharge of water away from the underground workings as currently the water removed is recirculating back into the system. Overall, I am pleased with the operational improvements at Granite Creek, and this is a credit to the operating team at site. Moving to exploration on Slide 5. We completed the infill drilling program in the South Pacific Zone, along with 7 target tests in December, which included approximately 16,000 meters of core drilling over 46 holes and an additional 6 infill holes to test and confirm the continuity of mineralization. Assay results outlined in the January 20 press release demonstrated a robust high-grade mineralization throughout the South Pacific Zone, suggesting the potential for expansion to the north and at depth. Encouraged by what we are seeing, drilling advanced beyond the current structural boundaries, opening a new untested area to potentially expand the mineralized envelope. As we continue to drill, we are focused on an initial spacing to about 140 feet for the overall deposit and progressively narrow that spacing to increase our understanding as we move closer to planned mining areas. We have since established a preliminary resource estimate to support the Granite Creek underground feasibility study. Due to additional work required on the mine plan, such as optimization of sequencing with the new resource model, incorporation of ongoing productivity improvements based on current performance, and the incorporation of geotechnical engineering work, the feasibility study for Granite Creek underground is now planned for completion in the second quarter. Results from the 2025 drill program will be combined with infill drilling data from 2023 and 2024 to produce an updated mineral resource estimate using 3 years of additional data. A $10 million exploration drill program is planned in 2026 to test high potential targets and to further delineate resources. Overall, we remain encouraged by the longer-term potential at Granite Creek underground. Turning to the Ruby Hill property on Slide 6. Construction of Archimedes commenced in early September. Underground development is advancing ahead of expectations, reaching approximately 680 meters by year-end. Beyond permitting and development, a key focus over the coming months is advancing towards the exploration drift to support continued feasibility level technical work with initial mineralization expected to be intercepted by the third quarter. Infill drilling commenced in the Upper 426 zone in Archimedes during the fourth quarter. A substantial $25 million to $30 million drilling program is planned for Archimedes in 2026, comprised of over 175 holes and over 60,000 meters. This work will form the basis of a feasibility study planned for completion in the first quarter of 2027, which is earlier than indicated in the PEA by approximately 1 year. Moving to the Mineral Point open pit project on Slide 7, which also sits on the Ruby Hill property. Engineering and technical work continues to support permitting and define the timing of a pre-feasibility or feasibility level study. In 2025, approximately 8,600 meters of surface core drilling was completed to support the geotechnical, metallurgical and hydrogeology studies for baseline data to advance permitting and engineering work. A substantial $40 million to $45 million drilling campaign is also planned for Mineral Point in 2026, targeting approximately 131,000 meters plus an additional $5 million for permitting and technical work. Mineral Point currently hosts the company's largest gold and silver mineral resources with the potential to become the company's largest gold producing asset. It currently sits within Phase 3 of development plan. However, we now have the financial flexibility to accelerate the feasibility study and permitting, thanks to the recent financing package. Turning to Slide 8. Cove is an advanced stage exploration project and the company's third plant underground mine. Over the last 2 years, roughly 41,000 meters of infill drilling was completed on 30-meter spacing across the Gap and Helen zones. The results of this work delivered meaningful advances for the Cove project, which significantly strengthened our geological understanding and improved our confidence in continuity and grade. It also improved our understanding of the metallurgical response to optimize feed and gold recovery in the autoclave. The Cove feasibility study is nearly complete. However, additional work is required to revise the mine plan and cutoff grades to the new gold price estimates, and to further evaluate the capital cost reduction and design optimization opportunities with the dewatering program, which has pushed completion into early Q2. In parallel, permit applications are also underway as part of an ongoing EIS process. Moving to Slide 9. At Granite Creek open pit, work to advance the project continues. Technical work has been underway to advance the project towards either a pre-feasibility or feasibility level study and trade-off analyses are being conducted to optimize the project economics. Geotechnical drilling in support of baseline site investigation engineering was deferred in 2025 due to ongoing operating permit updates for Granite Creek underground located on the same property, pushing the start of drilling into 2026, resulting in a time line that is under review. Early-stage permitting activities will continue in 2026, followed by commencement of baseline field studies in 2027 in preparation of an EIS. Turning to Slide 10 for a look at the Lone Tree plant. During the fourth quarter, we completed a Class 3 engineering study for the Lone Tree plant refurbishment, as Richard mentioned. We recently received a positive construction decision from the Board. Lone Tree is a cornerstone asset central to i-80 Gold's hub and spoke mining and processing strategy designed to process high-grade refractory feed from our 3 underground gold projects: Granite Creek, Archimedes, and Cove. The autoclave is designed to process up to 2,268 metric tonnes per day, delivering a total annual throughput of approximately 820,000 metric tonnes, assuming an 85% plant availability. The processing circuit will incorporate an integrated pressure oxidation and carbon-in-leach circuit capable of processing both refractory and non-refractory mineralized material. Work is progressing as planned with Hatch engineering, such as advancing long lead engineering packages, further optimization of the execution plan, operating permit-related engineering and the progression of detailed engineering to support a first gold pour in December of 2027. The submission of the necessary permit applications for the primary environmental permits are on track and are planned to be completed in the first quarter of 2026. The plant is permitted for the existing operational components in use. However, the approval of new and revised permit applications pertaining to the air quality, water pollution, mercury emissions and reclamation management for the new plant design requires updating. Restarting the autoclave will mark a major turning point in advancing the company's development plan by providing increased processing capacity, meaningful improvements to our margins per ounce of gold and translate into stronger free cash flow generation. Slide 11 outlines the company's 2026 guidance. Overall, the 2026 guidance is largely in line with the preliminary economic assessments published in the first quarter of 2025 with the following exceptions. At Granite Creek, as previously disclosed, the impact of groundwater was not reflected in the PEA. Key aspects of the 2026 mine plan, when accounting for the water ingress impacts from 2025 are: an increased development rate compared to the PEA to recover lost development time, higher growth capital due to the additional dewatering infrastructure, and higher recovery rates and increased processing costs associated with the toll milling agreement entered into after the PEA was completed. As a result, for 2026, when compared to the most recent Granite Creek PEA, approximately 20% more material is expected to be mined. Mining, G&A, development and sustaining costs are in line and the infill and step-out drill programs have expanded to the successful outcome of the 2025 program. At Archimedes, tonnes and grade mined and development costs are largely in line with the most recent Archimedes PEA. The exception is production and processing costs related to the new toll milling agreement entered into after the PEA was finalized. And the feasibility study-related costs have been brought forward to 2026 from 2028. The cost to bring forward the Archimedes infill drill program is approximately $10 million higher so that an exploration drift can be constructed and cover the additional cost of drilling longer holes earlier than was planned from the upper levels. For Mineral Point, Technical and permitting work was brought forward from 2028 to 2026, where an overall infill and step-out drilling, technical work and early permitting activities are expected to total approximately $50 million, the costs of which are covered under the new Franco-Nevada royalty. Other permitting, technical work and holding costs are largely in line with the PEAs. And with that, I will now turn over the call to Ryan for the financial review. Ryan Snow: Thank you, Paul. Turning to Slide 12. Gold sales for the year increased to approximately 28,200 ounces compared to 21,500 ounces in the prior year period reflecting the advancements made at Granite Creek, as Paul outlined earlier, slightly offset by a lag in the timing of third-party processing. This lag resulted in over 6,500 ounces of sulfide mineralized material in inventory, which we expect to process in the first quarter. When reconciling tonnes mined, gold produced and gold sold, there are 2 factors to keep in mind. First, there's often a timing difference between mining and production when using a third-party processor, and our agreement allows for up to 120 days for delivered material to be processed. Second, our high-grade oxide material is subject to a 59% payability factor, which impacts gold sold relative to contained ounces produced. We effectively forgo the 41% of contained ounces per ounce sold. Total revenue from gold sales increased to approximately $95 million for the year compared to $50 million in the prior year due to selling approximately 6,700 more ounces at an increased realized price of about $1,000 an ounce despite the inventory buildup referenced earlier. Gross profit for the year improved to $11.5 million compared to a gross loss of $15.7 million in 2024, mainly due to the gross profit from Granite Creek being positive in the second half of 2025. The company reported a net loss of just under $200 million or $0.10 per share, while adjusted loss was $123 million compared to $111 million in the prior year. The roughly $75 million difference between net and adjusted loss was related to noncash fair value revaluation losses, which are mainly attributable to the increase in metals prices and our share price during 2025, and a noncash write-down at Lone Tree for assets that were deemed obsolete under the updated refurbishment estimate released in December. The adjusted net loss was largely due to increased predevelopment evaluation and exploration expenses as development work increased across multiple projects as part of the company's development plan. Also, as a reminder, under U.S. GAAP, which we transitioned to in 2024, predevelopment, evaluation and exploration costs are expensed until we declare mineral reserves. We closed the quarter with a cash balance of approximately $63 million, down from the previous quarter due to a larger-than-normal buildup of finished goods and stockpile inventories at year-end, as well as the continued investment in drilling programs to support the planned technical studies and the development plan, investments in Archimedes and Granite Creek development, along with early-stage activities under the limited notice to proceed at Lone Tree. The year-end balance is in line with our expectations under the recapitalization plan. Moving to Slide 13. I'm very pleased to present the status of our recapitalization plan. We recently announced the culmination of a very competitive process that resulted in a financing package of up to $500 million. This financing package includes a commitment letter with Franco-Nevada for a $250 million royalty, and a gold prepayment facility for up to $250 million with National Bank of Canada and Macquarie Bank. The $250 million Franco (sic) [ Franco-Nevada ] royalty is in exchange for a 1.5% life of mine net smelter return royalty, stepping up to a 3% life of mine net smelter return royalty on January 1, 2031. This royalty will apply to production from all mineral properties in the portfolio. Upon closing, $225 million will be made available to the company, of which $25 million is required to be allocated to the advancement of Mineral Point in 2026. An additional $25 million of the royalty financing is also expected to be made available in 2026 to further the advancement of Mineral Point, following the expenditure of the initial disbursement towards the project. This will allow us to allocate $50 million for resource expansion, infill drilling, technical work and early-stage permitting activities at Mineral Point in the year. The gold prepayment facility with National Bank and Macquarie includes an initial advance of $150 million at closing with the obligation to deliver approximately 40,000 ounces of gold over a 30-month period beginning in January of 2028. It also includes an accordion feature that provides access to an additional $100 million for a 24-month period upon closing of the facility and subject to customary conditions and lender approval. We anticipate executing the accordion feature in the first half of 2027, at which point the number of additional gold ounces to be delivered will be determined. Total ounces to be delivered for the full $250 million gold prepayment facility are expected to represent less than 15% of total gold output over the projected period of January 2028 to June 2030. The company established the facility with National Bank and Macquarie with the goal of transitioning the gold prepay into a corporate revolver to fund the development of Mineral Point following the completion of Phase 1 in the development plan. Moving to Slide 14. Proceeds from the financing package, combined with the previously disclosed equity offerings completed by the company in the second quarter of 2025, represent over $800 million in funding to support i-80 Gold's growth objectives. This assumes the full exercise of warrants related to the May 2025 equity financing over the next 18 months. The company expects the final steps to complete the recapitalization plan targeting an overall amount of $900 million to $1 billion to be completed by the end of the first quarter. The company recently issued a notice of redemption of its existing convertible debentures as part of the recapitalization plan to provide the required security under the financing package. The convertible debentures are expected to be extinguished on March 16. Once complete, the recapitalization is expected to fully fund Phase 1 and Phase 2 of our development plan, which is anticipated to increase annual production to approximately 300,000 to 400,000 ounces of gold from less than 50,000 ounces currently. Finally, I would be remiss if I did not take this opportunity to thank all the internal and external parties that have been involved in this process and led to this great outcome. With that, I'll turn the call back over to Richard. Richard Young: Well, thank you, Ryan. And finally, turning to Slide 15. As we look ahead, we're entering a pivotal period that positions the company to unlock meaningful shareholder value. 15 months ago, we laid out a new development plan. 12 months ago, we filed 5 PEAs that demonstrated the value within that development plan, and then we've spent the last 12 months moving that plan forward, advancing the technical work and completing the recap. As we look forward over the next 12 to 18 months, we will publish feasibility studies for our 3 high-grade underground projects as well as likely a pre-feas for our flagship Mineral Point project and potentially our Granite Creek open pit project. We will commence and be well advanced in the refurbishment of the Lone Tree autoclave, and we will be ramping up Archimedes production, our second underground mine. So the goal of the Board and the management team over the next 12 to 18 months is to move our current valuation from trading at a very significant discount to NAV to something closer to NAV as we continue to execute on the development plan that we laid out 15 months ago. So we appreciate your continued support, and we continue to look forward to updating you as we continue to execute on this development plan. And with that, Joanna, we will open it up to questions. Thank you. Operator: [Operator Instructions] The first question comes from John Tumazos at John Tumazos Very Independent Research. John Tumazos: Maybe the press release was a little bit concise in describing the Lone Tree $400 million plus CapEx to restart the autoclaves. On a very simple level, the autoclaves are fixed steel vessels. And if they sit there idle 10 years, they're not going to rush through. So what are the ancillary things that have to get changed or that became obsolete or the changes in design, I don't think you're going to put oxide material through the autoclave vessel. So maybe there's separate circuits -- some -- please describe all the different changes certain to account for the autoclave project costing so much money. W. Chawrun: Yes, John. So first of all, the autoclave vessel, it needs to be rebricked with -- they actually call that refractory as well. So that's a bit of a cost. The other thing is the CIL circuit itself, the tanks need to be replaced. We need to install some vessels for some of the off gas. The other big cost is the filtration system. So we're going with filtered tails and stacked facilities. So it won't be the conventional slurry. And then the other thing is just upgrading and some of the instrumentation. And then you add that all up with all those components and it comes to $430 million in today's capital environment. John Tumazos: Did you go out to other engineering firms besides Hatch and get alternative proposals? W. Chawrun: This project has been worked on for approximately 4 years, so no. There's a full explanation on our website. I encourage you to take a look at those details. Richard Young: And John, just as a reminder, Hatch actually built this facility back in the '90s, they knew it better than any other group. They are a global leader in autoclave technology, and we're pleased to have the A team on this refurbishment. Operator: [Operator Instructions] The next question comes from Don DeMarco from National Bank. Don DeMarco: So first off, at Mineral Point, I see that some of the predevelopment work has been moved forward from 2028. So by accelerating this work, does it provide the potential to develop or realize value on this project sooner than its current positioning in Phase 3? Richard Young: Don, yes, thank you. Yes. So from our perspective and really even from the time that I joined, it was clear that Mineral Point was the most valuable asset within the portfolio and anything that we could do to accelerate its development would be beneficial to shareholders. So as a result, and with higher gold prices and the recap that we've done, we now have the financial flexibility to advance the drilling and technical work and advance permitting, and we are looking at every option available to us to accelerate that permitting and the ultimate development, likely, we're targeting ahead of the original schedule in the development plan. And just for a reminder to the broader group, based on the PEA, we would expect to average roughly 280,000 ounces of gold equivalent production over a 17-year mine life. at AISC costs of about $1,400 an ounce. Now with this infill and step-out program that Paul mentioned, we do believe that there are opportunities to expand the resource and ultimately, reserve base of this project through the program that's been designed for 2026. Don DeMarco: Okay. Great. Well, we certainly look forward to that, and it's interesting about the expansion opportunity there. My next question then, just looking at the production guidance, I mean, we're seeing higher production year-over-year. But without the details on costs or terms of the toll milling contracts, what's the best way to model these ounces and capture the year-over-year margin upside in a strong gold tape? Richard Young: So I guess a couple of things. So the sulfide toll milling charge is about $275 to $280 per tonne, which is about 3x higher than what ultimately it will be when we put it through our own facility. Don, we're in a bit of a holding spot until the tech report is done. We will have the tech report completed in the second quarter. And with that, you'll have a lot more detail on Granite Creek and sort of the various elements of the cost structure. But until then, our hands are kind of tied, but that news will come out in Q2. And just to remind everyone, we are now a U.S. registrant. So we're not able to disclose the results of feasibility studies until the tech report is filed. And so that's why we'll see the Cove and Granite Creek tech reports in Q2 as we complete those tech reports and publish them. But we'll have a lot more detail on Granite Creek in Q2 as well as Cove and then Archimedes to follow roughly about a year later. Don DeMarco: Okay. Great. Well, we look forward to that. In the interim, we see that the production is higher year-over-year and the gold price is higher year-over-year. Richard Young: Thanks, Don. And just as a reminder, we did generate gross profit at Granite Creek in the second half of the year as we had guided at the outset. And with these higher metal prices, it will generate free cash flow where we expect it to even after development costs, growth capital and the additional infill and step-out drill programs that we've got planned for 2026. Operator: Thank you. We have no further questions at this time. I will turn the call back over to Richard Young for closing comments. Richard Young: Well, I'd like to thank everyone for joining us on this Friday morning. We're excited by the progress that we've made over the last 15 months. And we believe over the next 15 to 18, we're going to be a long way advanced on completing Phase 1 of our development plan, which will take production to 150,000 to 200,000 ounces per year at strong margins and free cash flow, as well as moving forward on Mineral Point and our Granite Creek open pit as part of Phase 2 and 3. So a lot more news to come as we progress through the course of this year. So thank you very much for your time this morning. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.
Operator: Welcome to Mirvac Group's First Half 2026 Results Briefing. [Operator Instructions] Please be advised that today's conference is being recorded. It's now my pleasure to hand over to Mirvac's CEO and Managing Director, Campbell Hanan. Campbell Hanan: Well, good morning, everyone, and welcome to our half year results call. Joining me is Courtenay Smith; Richard Seddon; Scott Mosely; and Stuart Penklis. I'd like to begin by acknowledging that we present today from Gadigal land, and I'd like to pay my respects to elders past and present. At our full year results in August, we spoke about the momentum that was building across the business. So it's pleasing to present our results today having delivered a strong half year performance and even greater visibility of earnings growth in FY '26 and beyond. What you'll notice in these results is a material pickup in residential sales in both build-to-sell and land lease, like-for-like income growth in all of our asset classes, positive leasing spreads in all of our asset classes, and valuation growth in all of our asset classes. You will also notice that we've made significant inroads in securing future development pipeline opportunities beyond FY '28. And we have continued our strong track record of capital partnering, completing a major 50% joint venture with Mitsubishi Estate at Harbourside, a key objective at the start of the year. We've recapitalized our LIV BTR fund with Australian Retirement Trust, positioning the fund for growth. And we've completed a $430 million capital raise within MWOF. It's been a very busy start to the financial year. You can see the solid progress across all parts of the business with every business unit contributing to the 10% growth in group EBIT. EPS was up 5% and NTA growth has returned, increasing $0.04 to $2.30 per security. It's also pleasing to see headline gearing moderate to 25.8%. We are also executing against our key strategic objectives. Two years ago, we outlined a focus on enhancing the quality and cash flow resilience of our investment portfolio, and we've made excellent progress with our industrial and living EBIT up 15% year-on-year. Our office portfolio allocation has reduced from 65% to 51% today. And importantly, we've almost doubled our exposure to premium-grade assets over the past 6 years to now sit at 60%. Premium grade is the most resilient asset type in office, and this is reflected in our consistently lower vacancy rate. Our repositioned portfolio is now delivering strong operating metrics. As mentioned, each asset class has positive re-leasing spreads, positive like-for-like rent growth and positive valuation growth led by build-to-rent, which illustrates our confidence in the growing capital demand for this asset class. We have a strategic objective to be the leader in the living sector, and we've made excellent progress here. We now have one of the largest operational BTR portfolios in Australia and recent development completions are leasing well. The fund's recapitalization will support future growth with 2 new BTR projects identified. Our growing land lease portfolio secured another 2 sites, bringing the platform to over 7,500 lots, with sales in the first half up 50%. This is becoming an increasingly important part of our strategy and provides future opportunity to accelerate our MPC business. And our creation capability is a key differentiator, and we're unlocking value and improving returns with residential sales up 38%, margins increasing to 22.5% and positive leasing in all of our developments. The execution of these initiatives is providing enhanced visibility of earnings growth in FY '26 and beyond. Our existing investment portfolio continues to grow its earnings contribution with a further $100 million of future NOI currently in production to be realized over the next 3 to 4 years. We also have additional NOI to be realized from our land lease and uncommitted commercial development pipeline. Our committed developments will also drive a $2.3 billion increase in our funds under management across our established growth platforms as they complete, generating new recurring management fee streams, with further fund growth to come from the deployment of recently raised capital across MWOF and further expansion of our LIV BTR fund. Our commercial development pipeline will unlock development profits and development management fees in coming years, along with NTA gains as the projects complete. Our residential growth outlook is supported by a significant step-up in active MPC projects, where we expect to move from 11 communities last year to 16 over the next 12 to 18 months and a step-up in apartment completions on normalized margins. This year, 2 new MPC projects have had their first releases with near sellouts of both. Our recent restocking initiatives support the next wave of value creation opportunities beyond 2028. Sustainability remains important to our business. With 80% of the largest corporate tenants having net zero targets in place, we remain focused on reaching our net zero goals by 2030. This month, we launched our first ever integrated Mirvac brand campaign, which you may have seen at the start of today's webcast. This campaign highlights our amazing brand and celebrates our imagination as our unique competitive advantage. We've been keeping our brand a secret for too long, and this campaign will make sure that we share that story more broadly to raise awareness and enhance value across the group. I also want to call out our recent efforts in learning and development with the continued rollout of our Mirvac Masters program. This is a series of university-style modules across development, asset management and investment management that have been accredited by the University of Sydney. This investment in our people has been recognized as the best learning and development program in Australia. Our employee engagement has returned to top quartile and is an important reflection of our culture and ability to attain and attract talent. With that, I'll now hand over to Courtenay to talk through our financial results. Courtenay Smith: Thank you, Campbell, and good morning, everyone. Today, we're pleased to share financial results that reflect the effective execution of our strategy with increased contributions from every part of the business and a strong balance sheet that positions us well for future growth. Firstly, to the earnings result. We delivered a strong first half with operating profit after tax of $248 million or $0.063 per stapled security, up 5% on the prior half. The investment segment contributed $307 million, up 2%, driven by development completions in living and industrial and improved leasing outcomes in retail. These were partly offset by office asset sales. The funds segment contributed $19 million, up 38%, driven by the completion of 2 further assets in the LIV BTR fund, along with improved asset valuations and increased leasing activity. The development segment contributed $111 million, up 37%. Within this, commercial mixed-use was $27 million with contributions from our committed projects such as 7 Spencer Street and 55 Pitt Street as well as development management fees from Harbourside. Residential contributed $110 million, up 9%, reflecting higher settlement volumes, improved average sale prices, contribution from the sell-down of Harbourside and development management fees from joint venture projects. Net financing costs were $129 million, an increase of $19 million compared to the prior half, primarily due to lower capitalized interest. This was partly offset by a decrease in gross interest expense, we are seeing -- where we are seeing the benefit of reduced debt levels and lower cost of debt. Our statutory profit for the half was $319 million, significantly higher than the prior half and includes $120 million of positive investment revaluations across all sectors. In summary, strong execution over the past 6 months has yielded increased contributions from every part of the business. Turning to the balance sheet. We've continued to actively manage capital, and our balance sheet is in a strong position. Gearing has reduced to 25.8%, well within our target range, and we have maintained strong credit ratings and have interest cover of greater than 3.5x, well above our covenant requirement. Our average cost of debt is 5.3%. And after refinancing $1.3 billion of bank debt at average margins of around 115 basis points this half, we have a further $3 billion of existing long-term debt with average margins of around 180 basis points, representing an opportunity to capture upside as these facilities mature in coming years. Following the creation of the Harbourside partnership with Mitsubishi and the sale of 25 (sic) [ 23 ] Furzer Street now completed, we have clear pathways to fund committed projects and are now focused on future growth opportunities. New opportunities acquired this half have been achieved on capital-efficient terms, ensuring that we maximize returns and make the most effective use of our capital. To support these and other future opportunities, we have multiple sources of funding available to us, providing flexibility as we grow. We have $1 billion of available liquidity with no maturities in the next 12 months. We have a distribution policy of between 60% to 80%, balancing distributions with retained earnings to fund development. And our team has built a strong and consistent track record in active capital management with over $9 billion raised over the last 5 years, $6 billion from capital partners, improving the velocity of our development capital, unlocking value, strengthening returns and generating management fees, and around $3 billion of asset sales, which have reweighted and improved the shape of our investment portfolio. In summary, as a result of active capital management, our balance sheet is in a strong position, and we are set up to support future growth. I'll now hand over to Richard. Richard Seddon: Thank you, Courtenay, and good morning, everyone. We continue to execute our strategy with discipline and focus. We've up-weighted living and logistics through development completions, while sharpening our office exposure through the sale of non-core assets. This has further improved the quality, sustainability and resilience of the portfolio. The outcome is clear, 98% occupancy, 4.4% like-for-like growth and positive valuation movements in every sector. What I'm most excited about is how this positions us for the future. We have clear visibility of growth with further opportunity for rental reversion, $100 million of future income from our committed development pipeline with strong delivery and pre-leasing momentum and a resilient valuation outlook underpinned by robust fundamentals at a time in the cycle where quality and location matter. In office, we've fundamentally repositioned the portfolio for a market recovery that rewards quality. 60% of our office portfolio is now premium grade, up from 34% in 2019, and the benefits are evident in the numbers. Occupancy is strong. Like-for-like growth is positive and successful leasing progress has reduced our forward expiries to just 12% over the next 2.5 years. Market conditions are improving. We're seeing positive net absorption in all major CBDs, double-digit effective rental growth in Sydney and Brisbane and the lowest supply outlook in 30 years, potentially on record. Our committed office developments provide clear visibility of future income and further uplift portfolio quality. In industrial, our strategy to up-weight to the sector through development continues to deliver. NOI is up nearly 80% in the past 7.5 years. Occupier demand has clearly shifted towards quality, and our 100% Sydney focus positions us extremely well as evidenced by strong leasing performance and recent completions at Aspect. Further growth is underpinned by around 17% of under-renting to play for, continued delivery of our secured pipeline with the first stage of SEED, now DA approved and construction set to commence ahead of the Western Sydney Airport opening later this year and structurally low vacancy with constrained supply in Sydney. Industrial remains a long-term growth engine, and our Sydney-focused portfolio is exceptionally well placed. In retail, we continue to benefit from the strength of our urban catchments as highlighted in the operating metrics on this slide. The metric I'm most focused on is driving improved sales productivity through active management of our assets. In fact, of the 34 new partners we've introduced in the past 18 months, we've already seen a 50% improvement in turnover. With resilient trading conditions, extremely tight occupancy and a continued decline in retail floor space per capita, we're confident in the opportunity for further growth. So retail is not just about the footprint, it's about driving productivity and our centers are delivering. Our living exposure continued to expand and perform with EBIT up 15%. Our build-to-rent portfolio of around 2,200 completed apartments is delivering exactly the resilient performance we expected with 6% like-for-like growth and the strongest valuation uplift in the portfolio at nearly 4%. LIV Anura and Albert are leasing up strongly with Anura already at 76%. In land lease, momentum remains very strong. New home settlements were up 21% in the period. Sales are up 50%, comparable EBIT growth is up 50%, and we expect to be selling across 7 new projects over the next 18 months. We've increased total platform sites by 23% since acquisition just over 2 years ago with a further 580 sites secured. So living is performing very well and provides significant runway for further growth through these 2 established market-leading platforms and will continue to be an increasingly important part of our portfolio. I'll now hand to Scott. Scott Mosely: Thanks, Rich. Good morning, everyone. We've had an amazing period of execution in our funds business, which continues to attract quality institutional capital to the platform, which is attracted to our asset creation capability, our deep sector expertise, our alignment model and our strong fiduciary mindset. Our third-party capital has grown to $17 billion with the funds under management component growing by over $1 billion in the 6 months, reflecting our BTR completions and broader valuation growth. Capital demand for our established vehicles across living, office and industrial remains strong, with all 3 vehicles completing equity raisings or asset acquisitions over the last 12 months. All have visible growth opportunities and importantly, have capacity to invest. The recapitalization of our BTR fund with Australian Retirement Trust marks an important milestone, not just for our fund, but for the entire sector. Our LIV BTR fund now has 5 income-producing assets, generating core to core plus inflation-linked low volatility returns. ART's investment reflects the unique quality of our platform and the attractiveness of this living asset class to sophisticated domestic investors. ART is aligned to our 5,000 apartment medium-term target, and we now have 2 new opportunities in exclusive due diligence since closing the recapitalization in December. MWOF's $430 million equity raise from a broad range of investors demonstrates there is capital demand for office portfolios with the highest quality assets in the best locations. The fund is extremely well placed to assess investment opportunities at this point in the cycle, having no redemptions in the queue, no secondary units being marketed, gearing at 26%, a reaffirmed A- credit rating and further inbound equity interest. Over the period, the fund was the #1 performing fund in the MSCI Index and transacted on over 100,000 square meters of leasing deals at greater than 8% spreads. Our Mirvac Industrial venture has grown to $1.7 billion over the last 3 years, and we've got clear visibility for further industrial partnering opportunities now that Aspect Central and SEED Stage 2 are set to introduce capital over the next 12 months. We have embedded FUM growth of approximately $2.3 billion as our development assets reach completion, but that is before we consider on-market opportunities and our replenished development pipeline. So there is clearly momentum in the business with $13.9 billion of high-quality institutional capital coming on to the platform in the last 3.5 years. This ability to continue to attract highly aligned capital not only provides us with diverse funding sources to expedite our development pipeline, but it is also generating recurring management fees and co-investment income across our development, asset management, investments and our funds business. I'll now hand to Stu. Stuart Penklis: Thank you, Scott, and good morning. We've had a strong first half with significant momentum in the development business with sales up 38%, a strong recovery in margins and significant restocking of our pipeline. This momentum gives us clear visibility of earnings and the recovery of returns. The success we've had in restocking our pipeline includes securing 3 major opportunities at the right time in the right locations and in the right structures that will drive the next wave of value creation and growth for Mirvac. These transactions are aligned with our strategy and leverages our core capabilities and are expected to deliver above hurdle returns with future capital partnership potential. At the upcoming new Hunter Street Metro in the heart of Sydney CBD, we expect to deliver approximately 70,000 square meters of premium state-of-the-art office space with an end value of around $3 billion and a yield on cost above 6%. With expected completion in 2034, Hunter Street will deliver into a deeply undersupplied market, positioning us extremely well for the next commercial cycle. At Blackwattle Bay on the site of the former Sydney Fish Market, we expect to deliver approximately 800 apartments in a precinct we know extremely well in close proximity to our successful Harold Park and Harbourside developments with first settlements targeted for 2030. Finally, at Karnup in Western Australia, we expect to deliver approximately 1,500 new homes in partnership with the WA government in one of the fastest-growing catchments in Australia. Turning to commercial and mixed-use. We have good visibility of earnings over the next few years, underpinned by significant progress on our committed projects. Construction costs are stabilizing with stronger competitive tendering and programs returning to normal, creating a more supportive environment for new project commencements. Pre-leasing momentum is also encouraging, particularly given the tightening market conditions. At 55 Pitt Street in Sydney, we have AFLs in place for 40% of the building, including Baker McKenzie, Aon and MinterEllison and discussions on the remaining space are progressing well. Construction is advancing with the new iconic terra-cotta facade installation now well underway. At 7 Spencer Street in Melbourne, construction remains on track with practical completion expected in the half. A new heads of agreement has increased leasing to almost 25%, and we're in advanced discussions that would take pre-leasing towards 60%. At Aspect Industrial Estate in Western Sydney, we completed Aspect North and Aspect South to follow this half. These precincts are now 91% leased. At SEED, adjacent to the new Western Sydney Airport, we've received Stage 1 DA approval with construction to commence in the coming weeks. Across these major projects, including Harbourside, these projects will generate significant and valuable development management fees during construction. Turning to residential. We delivered a strong first half with momentum building across all key metrics. Sales were up 38% year-on-year, supported by particular strong growth in our masterplanned communities with Victoria up 99% and New South Wales up 141%. Leads were up significantly with the December quarter delivering the highest level of inquiry in 4 years, overcoming market sentiment around increasing interest rates. Settlements were up 22% year-on-year, and we're now 90% secured for full year with a notable improvement in gross margins. Our focus on design, quality and investment in upfront amenity continues to differentiate Mirvac and win market share. Our projects are attracting upgraders and downsizers who have built up significant equity, ensuring demand across our portfolio remains resilient through the cycle. We continue to focus on innovation and modern methods of construction and completed our first volumetric prototype prefabricated home at Cobbitty. Capital partnering will remain a key feature of our strategy, helping us unlocking earnings, recycle capital and enhance portfolio returns. A good example of this is our recent JV with Mitsubishi at Harbourside, which unlocked value and created capacity for investment into future opportunities. Our restocking efforts over the past 2 years have been significant with more than 12,000 lots secured in capital-efficient structures and on above hurdle returns. We've made strong progress on rezoning and planning across our residential business, including at Wantirna South in Melbourne, the largest infill housing development in Victoria, which will deliver more than 1,700 built-form homes. At Green Square in Sydney, we have converted proposed commercial to residential with the project expected to deliver over 1,300 homes into this new town center. The underlying market fundamentals remain supportive, including strong population growth, continued undersupply, resilient house price and rental growth expectations and an increasingly supportive state planning process. And it's important to note that we remain uniquely positioned across the full residential spectrum: growth corridors, middle and inner rings with the capability to deliver land, built-form housing and apartments. This is a major competitive advantage in this point in the cycle and allowing us to provide diversity, which allows us to respond to the market swiftly changes in demand. Finally, our restocking success sets us up for a material step change in project activity. Over the next 12 months, we expect to launch 5 new developments, including our trading projects from 11 to 16. This activation is already underway with strong releases at Mulgoa, followed by the near sellout of our first release at Bullsbrook in WA just 2 weeks ago. First sales at Monarch Glen in Queensland are scheduled to take place in just a few weeks' time. We will also see a significant increase in apartment completions heading into FY '27 with 4 projects settling in the year. These are already over 60% presold on average, providing strong visibility of earnings. So with a material step change in sales activity, a recovery in margins and more new project releases to come, we are well placed to deliver continued momentum and growth across our development business. I'll now hand back to Campbell to conclude. Campbell Hanan: Thanks, Stu. As you've heard this morning, Mirvac is in great shape, and we have now a balance sheet that can fund our growth. Our repositioned investment portfolio is well placed to outperform. In an environment of higher bond rates, the quality and location of what we own will become increasingly important for future total returns. We've made great strides in our capital allocation strategy and stand to benefit from organic like-for-like growth and new quality investment income as developments complete. We're seeing improved returns from our development business with a stabilization in costs, higher margins and strong sales volumes across our residential build-to-sell and land lease businesses, providing near-term confidence around earnings growth. Restocking our future development pipeline for FY '28 and beyond has been a key focus area. Securing opportunities at better than hurdle returns and on capital-efficient terms will be important contributors to future earnings. And finally, we continue to attract capital to invest alongside us, improving the capital efficiency of our business and boosting returns through the corresponding fee streams. We're pleased with our strong progress to date and are focused on executing our key objectives in the second half, particularly around residential settlements and capital partnering initiatives. We reaffirm earnings guidance of between $0.128 and $0.13 per stapled security and a distribution of $0.095. I'll now open up for questions. Operator: [Operator Instructions] Our first question comes from Tom Bodor at Jarden. Tom Bodor: I was just interested in your development expectations of $270 million of earnings this year. And just considering that in light of your $3.2 billion of invested capital, that return being below 10%, how should we think about this normalizing? Where could it get to over time as your 0 margin projects roll off? Campbell Hanan: Look, thank you. Thanks for the question, Tom. And yes, without doubt, the development returns in the business have been hurt a little bit by the increased costs that we noticed in the last couple of years, but we're now moving through that, as you've seen, and we're starting to get a much better return on our invested capital. But Stu, did you want to talk to that? Stuart Penklis: I think to Campbell's point, we are seeing improvement in margins across the portfolio, and that's a key focus of the business to continue to improve those returns. We've done some great restocking, as we mentioned, at above hurdle benchmarks. And as those projects start to commence and coupled with the projects in the field, as I mentioned, we're moving from 11 to 16 projects, all of which are performing extremely well. We'll continue to see improvement in the returns from the development business. Tom Bodor: But from a ROIC perspective, I mean, can you get to mid- to high teens? Is that realistic? Stuart Penklis: Yes. Look, as we said, we will -- with the roll-off of those projects that were heavily impacted by COVID over the last few years, we expect to get back to our through-cycle returns. Tom Bodor: And then on the Serenitas minority or sort of JV partners, how do you think about funding the buyout of those partners and the timing of that intention you might have? Campbell Hanan: Look, that's probably a little bit of a hard question to answer because it's obviously not our asset to sell. Yes, we are interested in the opportunity of increasing our exposure to Serenitas. Look, I think as we get our balance sheet in better shape, which has been a key focus for the last 2 years, it starts to open up opportunities. I think as liquidity in office markets and investment property full stop starts to improve, it gives us optionality. So to that extent, we'll just continue to monitor and respond to any opportunity that may present itself at a future time. Operator: The next question comes from Lauren Berry at Morgan Stanley. Lauren Berry: Just another one on land lease. Like you said multiple times how important this segment is to you going forward. I was just wondering if you've given any thought to potentially doing some land lease on balance sheet rather than in the Serenitas venture? Campbell Hanan: Yes. Look, we have. We've got a really great platform in Serenitas as is, and we certainly have lots of future opportunity with our own land bank. And that's things that we'll consider over time as we understand the ownership opportunity. Lauren Berry: Okay. And -- there's obviously been a change in the interest rate environment as reported. Could you please give us a little bit more color on how your January and February sales have been tracking and whether there's any incentives placed across the projects? Campbell Hanan: Look, I might start, and then I'll hand to Stu. Look, I think our inquiry levels were similar in January as they were in December, and they're certainly similar again in February. Look, I just can't stress enough, there is a chronic undersupply of housing in Australia. And that chronic undersupply is going to be there for a while, and there is a lot of pent-up demand that is looking to find a solution to this housing problem. So to a certain extent, one interest rate movement is probably not enough to move the needle. We certainly haven't seen any evidence on the ground. And Stu, in particular, spoke to a recent release where we had 100% sellout in our Bullsbrook first masterplanned release in WA. Stu, did you want to add to that? Stuart Penklis: Yes, Lauren, the only thing that I'd add to that is really sentiment around interest rates going up really occurred in September and October. And as I mentioned in my speech, we've seen just continued momentum across our projects, particularly from a leads perspective, leads are obviously the strongest they've been in 4 years in the December quarter, and that has continued in January and February. I think the resilience of our portfolio, particularly obviously not heavily reliant just on first homebuyers and that focus on upgraders and rightsizes, particularly the contribution coming through from the middle ring and particularly the contribution coming through from New South Wales exposure has just demonstrated, I think, the resilience of the portfolio that we have. Operator: The next question is from David Pobucky of Macquarie. David Pobucky: Strong first half result implies a 49%, 51% oEPS skew across the halves, so a bit better than we had expected. Did anything land in the first half versus your prior expectations of landing in the second half, particularly around CMU? Campbell Hanan: Courtenay, do you want to take that? Courtenay Smith: Thanks, David. Look, I think all parts of the business have performed well, which you can hear from the results. I think resi settlements performed a little better. The NOI uplift like-for-like growth was a little better. So I would say it's across the business, the performance has been strong, which is why we're indicating that all parts of the business is up. David Pobucky: And just the second question on the office portfolio, 275 Kent Street and Westpac's 12-year lease there. If you can provide any update on that, please? Campbell Hanan: Rich, do you want to take that? Richard Seddon: Yes. Well, I think as we mentioned in the previous period, we've been busily leasing up a portion of the skyrise space, which was handed back. We've made great progress on half of that, which has contributed to the improved performance across the NOI line for our office portfolio. Westpac do have an expiry coming up in 2030. And naturally, we'll be progressing discussions on that one as we get closer to that time. Operator: The next question is from Suraj Nebhani at Citi. Suraj Nebhani: Two quick ones. Firstly, on the disposals, you called out $0.5 billion. Where are you looking to sell? And across the portfolio, should we see more potential for disposals? Or is this sort of the last year where we see a lot of disposals coming through? Campbell Hanan: Look, I think so. Thanks for the question, Suraj. I think you'll continue to see sales as part of our longer-term strategy. But ultimately, we've got key strategy objectives in our asset allocation plan. And I'd just ask you to keep referring to that. You'll see that we want to keep trimming office, but certainly not premium grade office. We're probably slightly overweight retail at the moment. We're fast approaching market weight of where we want to be in industrial. So you'll still see a little bit of trimming on the edges. But the most important thing is obviously that we're adding a whole lot of new real estate to the portfolio, that $100 million of NOI we keep referring to is going to be an important ingredient in growing our investment portfolio. And we're focused on growing the investment portfolio contribution. This has been a part of the business that hasn't grown for a number of years. It's been a funding source to ensure that our balance sheet is in good shape. Now that the balance sheet is in good shape, for the first time in a long time, we've got a growth profile in the investment portfolio, which we think is very important. Suraj Nebhani: Perfect. And one for Stuart on two specific developments. Firstly, on 7 Spencer, comfort levels on leasing that up before completion? And what sort of structure is there? Do you have to provide any guarantee? And then secondly, if you can clarify what happened on Green Square with the zoning conversion that you've talked about? Stuart Penklis: Yes, certainly. So I'll start with 7 Spencer Street. As I said, during the period, our commitments have ticked up to 24%, and we've got good line of sight through negotiations at the moment to get us around 60% pre-committed as we complete that building in the second half. We're comfortable with the allowances that we have in the feasibility in terms of the balance of that space. Turning to Green Square. Green Square has obviously been a very successful and long-dated project with multiple stages. But however, more recently, that project has been called in or has qualified for a state government approval process. And essentially, as part of the original master plan, a segment of that site was earmarked for a 45,000 square meter commercial office building. We have been able to navigate through state government a pathway to convert that to residential. And ultimately, the next 2 stages of that project will deliver approximately 1,300 additional apartments to what has already been delivered into the precinct. So a very important and good outcome for Mirvac in terms of being able to pivot to residential and obviously respond to the need for critical housing here in Sydney. Operator: The next question comes from Richard Jones at JPMorgan. Richard Jones: Just in terms of the timing around proposed sell-downs of Aspect Central in Kemps Creek and Stage 2 at Badgerys Creek, do you envisage that will happen in the second half? Campbell Hanan: We're targeting one of those for the second half. And then the other one is likely to drag into FY '27. Richard Jones: Okay. And just in terms of the new BTR opportunities, can you comment on what yield on cost you would expect on putting new money into BTR and I guess, how you, I guess, justify that as the best use of capital? Campbell Hanan: And I might turn to Scott for that, given it's a fund question. Scott Mosely: Yes. Thanks, Richard. Firstly, I'd just say the recapitalization of the fund has allowed us to actually broaden the mandate of that vehicle. Previously, it was purely debt to core, and it's gone through a period of completing 4 developments, which is through, and now we're actually getting stabilized income. But with that new mandate, the vehicle now has the ability to consider not only debt to core, but stabilized income-producing assets as well as fund-throughs. And so the yield on cost will depend whether that's a fund-through deal or a full develop to core opportunity. And right now, we do see some opportunities to participate in fund-through deals where, as you'd expect, that yield on cost is lower, but we think that we can target in the range of 65 to 85 basis points yield on cost spread to core cap rate, which is making commercial sense for those investors. Operator: The next question is from Ben Brayshaw at Barrenjoey. Benjamin Brayshaw: A question for perhaps Stuart. If you could comment, please, on the production outlook for the communities business, just with the 5 new projects coming online that you referenced in the presentation. Just wondering whether that implies that communities can operate at a sustainably higher volume? And could you quantify roughly when that might be reflected in the sales or the settlement rates for communities, please? Stuart Penklis: Yes. Look, I think you're already starting to see the tailwinds of those projects starting to contribute to our sales numbers. Obviously, over the second half of '26, just with our existing projects, we propose to release around 800 additional lots. And then the new launches in projects such as Monarch Glen and Bullsbrook, you'll start to see those also contributing. So it is a significant step change in terms of what the MPC business will be contributing to the overall portfolio from a volumes perspective. And I think importantly, what we've seen in recent times is, as I mentioned earlier, obviously, Queensland and WA continue to perform extremely strongly. We've seen New South Wales and particularly projects such as Mulgoa, Cobbitty and Menangle contribute significantly to the sales numbers. And we've obviously also now seen Victoria start to improve, particularly in the Southeast corridor. And that's reflective of, obviously, some of the comments I made probably at full year last year in terms of the immigration and the significant immigration that's happened over the last 24 to 28 months. And those immigration numbers now starting to contribute to sales sort of as they've settled and started to buy. So we'll continue to see a strong contribution from MPC, both in land, but also in build for housing. Benjamin Brayshaw: And could you just give a high-level update on how the 3 Victorian apartment projects are tracking? Just interested in how confident you are in those being delivered at the target margins for residential? And any feedback on presales over the last 6 months? And finally, just a comment as well on Prince & Parade. It looks like the timing might have been pushed out a little bit. So if you could clarify that as well. Stuart Penklis: No, Prince & Parade, firstly is still on target to complete next year. Albertine will be completing in the next few months, and Trielle will be completing in FY '27. So all those projects have held program, held budget. We have seen a tick up in sales. And I think we've moved from -- across those projects in '27, an uptick from 50% to 60% on average being presold. Inquiry has improved and particularly as we've started to complete the first wave of display apartments, again, very heavily weighted towards owner-occupiers, upgraders, downsizes. So we are seeing an improvement in the Victorian market, albeit it has been a pretty tough environment down there for the last few years, but we certainly feel like we've turned a corner there. Benjamin Brayshaw: I'll just clarify my question around Prince & Parade, the annexures show that the expected settlement is now spread across FY '27 and '28. Hence, my question as to whether it's been deferred. Stuart Penklis: No, no. Sorry, that's probably just the allowance in the settlement tail extending into '28, but the practical completion date hasn't changed. In fact, we're hopeful that we might be able to bring it in a month earlier. Operator: The next question is from James Druce at CLSA. James Druce: Can we just go through how you're seeing the second half this year in terms of residential margin? I think you commented on sort of Richard's project, a question around which commercial development profits will be coming through second half. But just also just comment on the settlement skew and how secured that is. Campbell Hanan: So just on the -- maybe start with settlement skew, 835 settlements in the first half. We've guided to sort of 2,000 to 2,300. So clearly, we've got a skew to the second half. The timing of -- just in terms of sales, kind of just over 90% sold. So really, that comes down to risks around weather or risks around titling, which are risks that exist always. So we're working through those. We've got stock on the ground, which is the last 9-odd percent that we need to sell, which will help us get there. But we're largely through it. We've sold more of those through January and February as well. So that sort of feels okay. Is there anything on the development pipeline that you want to call out, Stu? Stuart Penklis: No. I suppose the point I'd make is that, that remaining sort of 9-odd percent and the projects contributing to that 9% are achieving the required sales rates to hit our target. So we remain comfortable in terms of, obviously, the settlement range that we've provided. And I think the other question that you asked just in terms of earnings from CMU in the second half. And obviously, we spoke about the SEED project, and we also spoke about contributions continuing from 55, 7 Spencer Street and development and construction management fees coming through on Harbourside. James Druce: Okay. And just on the gross margin, how you're seeing that in the second half? Stuart Penklis: In line with what we've stated in the first half. James Druce: Okay. And then just a question for Stuart. How do we think about restocking for the high density or inner ring projects? I mean it still sounds like only really the luxury projects stand up at the moment. Are you seeing any change there? Stuart Penklis: Yes. Look, I think that we've been very focused on unlocking value from not only our existing pipeline. So Green Square is a great example where a rezoning and state government pathway has given us ability to obviously achieve additional yield and through conversion from commercial to residential. So that sort of middle to upper market, we think, continues to be very attractive for our business. Obviously, we continue to see a number of opportunities, particularly as planning progress has been made with state governments and the state government here in New South Wales is obviously very, very focused on the delivery of additional housing. So we're seeing a lot of landowners looking -- coming to Mirvac to look to partner. So that's really great in the sense that there's an abundance of opportunities. We're certainly picking the eyes out of the right opportunities. And to my earlier point, being able to recycle capital out of projects, bring capital partners in to ensure we've got the capacity to be able to pick up these opportunities at the right time in the right location is a key focus of the business. So I think we've obviously had a very successful restocking program over the last few months, and we continue to ensure that we're well positioned to be able to secure that next wave of opportunities in the inner and middle ring. Operator: The next question comes from Cody Shield at UBS. Cody Shield: I don't want to labor the point, but just to be crystal clear around Aspect and SEED, which one of those projects will be slipping into '27 in terms of partnering? Campbell Hanan: Look, it's probably likely that Aspect Central will and SEED Stage 2 is more likely to fall into this year is sort of the target. Stuart Penklis: And I might just add with SEED, we've been able to secure our Stage 1 DA, obviously, ahead of many in the precinct with the M12 opening later this year and the new Western Sydney Airport also opening, we're well positioned, obviously, with earthworks due to commence in the next few weeks. So an exciting time in terms of our opportunity to be able to capitalize on demand in that precinct. Cody Shield: That's great. And then just a small one. There's been a change in the treatment of DevEx for land lease. Could you just walk me through the change there? Campbell Hanan: Yes. Courtenay, do you want to speak to that? Courtenay Smith: Yes. Look, I think the first thing to say is the land lease business is performing really well, as Richard talked about, sales are up. EBIT is up period-on-period. We've had a change in ownership on a like-for-like period. So it went from 47.5% to 40%. And then we have had a change in the allocation of some of the development costs. And the way to think about it is we're allocating some of the civil costs to the development to unlock the value of the home essentially. Longer term, you'll see that value come back in the NTA even from next year. And we've done that because we think that's the most appropriate treatment of those civil's costs to unlock the value of the home. But otherwise, the business is performing well. Richard has talked about the sales, as I said, and we're really happy with the performance of it. Operator: The next question is from Adam Calvetti at Bank of America. Adam Calvetti: Look, just on -- you've moved your -- you had a slide that showed the value creation of profit energy uplift that's been moved and you haven't disclosed where that value that number is. I think it was $540 million for the full year. Any idea of how that's trended or what we can expect? Campbell Hanan: Look, probably part of that movement is timing. So as we finish projects, clearly, the value is created. You see that come through the NTA line, and there'll be more of that this year, particularly as we finish. We stabilize BTR assets, you'll see that start to participate in the income line and certainly Aspect South, which is due for completion shortly. And I think as Stu mentioned, now 91% leased, you'll start to see contributions to both NTA and contributions to income, which really will lead into a slight second half, but predominantly an FY '27 contribution. Adam Calvetti: I mean just looking at the future years, is it still safe to assume that $540 million is intact? Campbell Hanan: It will shift because we're actually starting to work our way through it. And I think the most important thing we're trying to highlight in this set of results is that, that earnings expectation that comes from delivering new projects, we're now actually finishing these projects. And so with that, you'll start to see the development contribution start to diminish because we're actually finishing projects. Hence, the focus for us now on earnings contribution beyond FY '28. We've got a pretty full pipeline up until '28. The focus beyond '28 has been important to us, and we're seeing some really good opportunities, which we've executed on, which we've announced today. Adam Calvetti: Okay. Great. And then just on 7 Spencer Street, I mean, you've got some -- you've done one deal there, and you've got a percentage that's in discussions. How does those incentives levels track versus underwriting? Are they in into any of the development profit that you're expected in the second half and going forward? Campbell Hanan: So Stuart, do you want to take that? But maybe just to start with, we are always updating feasibilities to ensure that they reflect current market conditions. And certainly, there's nothing that we're seeing or dealing which is irrespective of that at this point. But Stuart, do you want to add any further color? Stuart Penklis: Yes. No, it's precisely that. The feasibility reflects where current incentives are at, and we've got adequate allowance to see the letup of that building through. Operator: The next question is from Sholto Maconochie at Millennium Capital. Hello, Sholto, please ask your question. Okay. It seems we can't hear from Sholto. So as there are no further questions, I'll now hand back to Campbell for closing remarks. Campbell Hanan: Well, thank you. Look, thank you to all of you for taking time today to hear our half year results presentation. We look forward to meeting with as many of you as we can over the coming weeks. But thank you for your time.
Operator: Good day, and welcome to The Western Union Fourth Quarter 2025 Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Tom Hadley, Vice President of Investor Relations. Tom, please go ahead. Tom Hadley: Thank you. On today's call, we will discuss the company's Fourth Quarter and Full Year 2025 Results, 2026 outlook, and then we will take your questions. The slides that accompany this call and webcast can be found at westernunion.com under the Investor Relations tab and will remain available after the call. Additional operational statistics have been provided in supplemental tables with our press release. Joining me on the call today is our CEO, Devin McGranahan, and our CFO, Matt Cagwin. Today's call is being recorded, and our comments include forward-looking statements. Please refer to the cautionary language in the earnings release and in Western Union's filings with the Securities and Exchange Commission, including the 2025 Form 10-K, which will be filed later today, for additional information concerning factors that could cause actual results to differ materially from the forward-looking statements. During the call, we will discuss some items that do not conform to generally accepted accounting principles. We have reconciled these items to the most comparable GAAP measures in our earnings release attached to our Form 8-K as well as on our website, westernunion.com, under the Investor Relations section. I will now turn the call over to our Chief Executive Officer, Devin McGranahan. Devin McGranahan: Good morning, and welcome to Western Union's Fourth Quarter 2025 Financial Results Conference Call. It was great to see many of you at our Investor Day last fall for the launch of our Beyond strategy. We are excited about building a Digital First, Retail Enabled, Consumer Services Company that is powered by payments and innovation. We remain optimistic about the longer-term outlook for our business as we believe our core retail remittance business will improve as migration patterns normalize, and we work to increase both our revenue and share gains in this important market. We believe that our focus on becoming market competitive, driving productivity, expanding our payments capabilities and growing share within higher-growth corridors and geographies is the key to delivering on this vision. A key element of our strategy has been to build everyday financial services that can leverage our global brand and our extensive payment capabilities. As these products and services gain critical mass, they will moderate some of the swings we have seen in the core remittance business as they tend to be less correlated with immigration trends. As witnessed in this quarter where our Consumer Services business continued to perform which allowed us to report a reasonable quarter against a difficult macro backdrop, demonstrating the benefits of our global and now multiproduct business model. For the fourth quarter, we reported revenue of $1 billion. On an adjusted basis, this was a decline of 5% year-over-year. Consumer money transfer transactions were down 2.5% in the quarter and cross-border principal growth was up on a constant currency basis, speaking to the resilience of our customer base and their perseverance in the current macro environment. In this quarter, we again saw incremental improvement in transactions as Q4 was better than Q3, coming off of the lows that we saw in the second quarter of 2025. We continue to focus on operational efficiencies as we seek to benefit from our scale. This strong operational focus allowed us to deliver at the top end of our earnings guidance this year even in the face of these macro-driven revenue headwinds. Adjusted earnings per share came in at $0.45 compared to $0.40 this quarter a year ago. Our retail business in the Americas continued to face headwinds associated with the current geopolitical environment. And while it may be too early to say that we have reached bottom, we are potentially seeing some stabilization. We did see strong performance in many corridors and geographies offset by continued weakness in the Americas across several large corridors, most notably U.S. to Mexico. Although from a transaction growth rate perspective, the U.S. to Mexico quarter improved hundreds of basis points relative to the third quarter. Our branded Digital Business increased transactions 13% and adjusted revenue by 6% in the quarter, with gains driven by some of the new relationships that we have recently signed in the Middle East earlier in the year. Consumer Services adjusted revenue was up 26% in the quarter and roughly 30% for the full year, driven by growth in Travel Money led by Euro Change as well as growth in our bill payments business. We expect Consumer Services to have another strong year in 2026 as our Travel Money business is expected to approach $150 million in revenue, up from nearly nothing a few years ago. We see a market opportunity for a globally branded Travel Money franchise as the market remains very fragmented and some of the prior large global players have retreated since COVID. Given the strength of our brand, our global footprint and strong retail distribution, we believe there will be many more opportunities for geographic expansion. A hallmark of the company for many years has been a strong commitment to returning excess capital to shareholders. Over the past year, we delivered again with above-average industry margins and a return of over $500 million via dividend and share buybacks. I am also excited about the capabilities we've been building on the M&A front. The deals we were able to do in 2025, and I now look forward to welcoming Intermex into our family, hopefully, in the second quarter of this year. Matt will discuss our fourth quarter results and 2026 outlook in more detail later in the call. Switching briefly to the macro environment. While economic conditions globally remain reasonable with inflation rates declining in key markets around the world, and GDP outlooks remaining relatively strong. The landscape for human capital mobility continues to shift each and every day. For example, in the last quarter, we saw an election in Chile that will have implications across the region for immigration and mobility. Also a change in leadership in Venezuela for which the implications are still being assessed. These kinds of macro conditions provide a dynamic and constantly changing environment for our business. While we expect them to stabilize over time, in the near term, we believe that companies with larger and more global operating models are better positioned to withstand disruption in any individual country or region. On the policy side, the U.S. remittance tax went into effect on January 1 for all cash-based international money transfer transactions originated in the United States. I would like to take a brief moment to call out the strong work our team did and the flexibility of our new retail platform that enabled us to implement attacks across all our channels and all our partners flawlessly. We have received positive feedback from both send and receive side partners on our relative execution. With that said, through the first 6 weeks of this year, we have not seen a material impact on our business, but we continue to monitor the situation closely. Since the beginning of the year, however, we have seen an uptick in our prepaid cards and our V-Go Money Wallet. We launched the V-Go Money Wallet in the U.S. in March of 2025, since then, we have onboarded over 30,000 customers and have a couple of thousand weekly active user base now. An important note here is the vast majority of these customers are the result of a money transfer redirect. We have spent very few marketing dollars on customer acquisition. This is a powerful and effective approach to building our digital wallet customer base. These payout customers who traditionally have taken their money and left Western Union are now becoming weekly active users who are frequently using their debit card at points of sale and about 1/3 of them are initiating new international money transfer transactions. While these numbers remain small compared to the scope of our overall U.S. business, they do highlight the power of the model we are building. As you know, the U.S. wallet is an extension of our broader wallet strategy. Our goal is to create a 2-sided network that makes it easy for our customers to move funds cross-border while staying within the Western Union ecosystem. In addition to our U.S. wallet, we are continuing to see strong results out of our wallets in both Argentina and Brazil. In Brazil now, we have onboarded roughly 20,000 customers since our launch in May of last year. And in the most recent month, we have redirected roughly 5% of all inbound transfers to the country into our wallet. This saves commission expense as well as gives us an opportunity to increase retention and potentially monetize our receiver base like we are seeing in the U.S. as referenced above. For context, in Argentina, which we launched earlier than Brazil, we are now up to 17% of all inbound remittances ending up in our wallet in that country. We have anticipated launching a wallet in Australia later this year, and we continue down the path of developing a wallet for Mexico as we await regulatory approval for our pending acquisition. In addition, we believe that we will see an expansion of our wallet capabilities in Singapore, the Philippines and potentially Israel as well, all in 2026. Since the beginning of 2026, our sale of prepaid cards has also gone up with now over 1,000 agent locations enabled to sell prepaid cards we are seeing a market-driven increase, which we believe may be because of the remittance stacks. Linkages between this consumer services product and our core business are high with over 30% of all transactions being Western Union money transfers and 60% of newly loaded cards being used to send a cross-border remittance with Western Union. Two years ago, we began a program to enable digital payment acceptance in our point of sale for retail agents. We firmly believe that the retail experience and value proposition is more than just being about cash. It is about the trust needed for an important transaction that comes from personal assistants in-language, culturally appropriate communications and high-quality service in the event of an issue. As more and more of our customers have access to payment and banking products, we need our retail systems to support card-based payments. The passage of the remittance tax has accelerated this transition in the U.S. with debit cards now accounting for 15% of all retail funding in the U.S. in the month of January on our Western Union point-of-sale system. This is up materially over the last several months. Another focus in the U.S. market in the quarter was U.S. to Mexico. The team has been working hard to identify market and agent segment opportunities to focus on, driving promotions and pricing strategies and increasing our digitally directed payout services. That said, while it is still negative on a year-over-year basis, we are beginning to see improvements on a quarter-over-quarter basis with last summer being the low point. And while corridors like Mexico, Venezuela, Ecuador, Nicaragua and Colombia continue to decline. We have begun to see transaction growth in the quarter to a number of other important corridors, including Brazil, Guatemala, Jamaica and the Philippines. The Bank of Mexico data would seem to indicate that the worst may be behind us with principal growth in the most recent reported month going slightly positive on a year-over-year basis improving materially from the summer lows, although there may have been some pull forward in that number as customers look to move money ahead of the implementation of the U.S. retail remittance tax. Despite these short-term headwinds, we believe the long-term trajectory remains clear. Global migration is not disappearing. It is adapting. People will continue to move in search of opportunity, education and family and Western Union will continue to provide trusted compliant and accessible financial services. As the market continues to evolve, we continue to see a shift towards the digital channel particularly among younger and more technologically savvy customer cohorts. This varies by region and country, but the trend is generally consistent globally. It does not mean, however, that a growing digital business necessarily means a shrinking retail business. In Scandinavia, for example, a region that is highly digital and has nearly eliminated the use of cash. Our retail business grew transactions and revenue double digits last year. What does it mean? What it does mean is that the most attractive and growing part of the market, we will have to be able to compete with digital natives, that do not have the complexity or the history of a large retail business. To do this, we believe we have 2 real sources of competitive advantage. First, we see our strong brand recognition and the large base of existing customers as the key building blocks to cost effectively build our digital business without having to overinvest in non-scalable marketing expense. Second, our unit economics for key functions like compliance, tech, network management, payout costs and customer service benefit from our overall scale as the largest remittance player in the market. Now that we have largely achieved price competitiveness we believe these benefits can be more easily transferred into competitive advantage. In the end, there will only be a few players that will have the scale to effectively compete on a global basis digitally. We believe we are well positioned to be one of them. To capture this opportunity, we have to deliver a digital-first customer experience throughout the entire journety across the majority of our markets. With the launch of our Beyond platform in 2025, we believe we now have the infrastructure to achieve this goal. We are planning to have all of our markets on the Beyond platform by the end of 2027. This will be a meaningful acceleration to the work that we have been doing to modernize our technology and experience over the past 2 to 3 years. Second, we need to translate our brand strength and market presence into scalable gains in new customer acquisition. Over the past 12 to 18 months, we have seen a flattening of our customer acquisition trends outside of the Middle East and we need to improve upon that. These opportunities will be accelerants to our digital business, which has now grown in transaction double digits and revenue mid-single digits for 2 straight years. Our digital business now accounts for over 40% of the principal we send around the world. And as the world continues to move more digital, we will continue to move right along with it. You see this with our payments network, where we have made meaningful progress in creating one of the largest at scale funds in and funds out platforms anywhere in the world. Today, we have over 300 funds in types that we support and billions of accounts and wallet endpoints in our digital funds out network. We are using this network not only to drive both our retail business and our digital business, but to launch new businesses like our recently announced digital asset network. As a matter of fact, I just returned from a trip to Dubai to visit some of our large partners in that region. There may not be a region in the world that is moving to digital at a more rapid pace than the Middle East. Last year, we announced 2 partnerships in the Middle East to complement our existing business there. As you know, these markets are difficult for traditional MTOs given the restrictive ownership and [ licing ] requirements in most of these Middle Eastern countries. These partnerships are with well-known digital native brands who have accumulated large customer bases and essentially function as super apps or financial ecosystems for their customers to provide a wide range of telecommunications and financial services. We are pleased to be partners with these institutions and offer them the benefits of our payout network and our scale that few others can match, which enables us to win their business. Next, I would like to provide a quick update on our digital asset strategy. At our Investor Day a few months ago, we laid out an ambitious plan to use our assets in new and unique ways and to become a more meaningful player in the digital asset economy. Over the last few months, we have successfully minted our first U.S. dollar payment token, US DPT and have moved it between our treasury department and our agents wallets. These pilots are focused on leveraging on channel settlement to reduce dependency on legacy correspondent banking systems, shortened settlement windows and improve our capital efficiency. We see significant opportunities for us to move money faster and at lower cost without compromising compliance or customer trust. These milestones put us on a path to meet our expectation of offering our payment token to the market by the middle of this year. I'm happy to report that we remain on schedule and we were looking forward to our market launch. Finally, we are expanding our partnerships and capabilities to allow our customers to move and hold stable coin digital assets and to allow them to have more control in how they manage and move their money. In many parts of the world, being able to hold a U.S. dollar-denominated asset has real value as inflation and currency devaluation rapidly erodes an individual's purchasing power. We are working with [ Rain ] and Visa to bring the first US DPT stable card to market and are targeting an initial launch of more than a dozen countries later this year. I look forward to continuing to update you on these initiatives as the year progresses, and we are excited about the opportunities in front of us. Finally, I would like to take a moment to highlight several new agent wins. Over the last 2 years, we have invested heavily in modernizing our retail technology platform making both integration and ongoing experience management significantly easier. We believe our partner OS platform is now the gold standard in the industry for large retail networks. Combining these improvements with our move to a more competitive consumer value proposition and the extensive work we have done on our agent support model, we are seeing renewed momentum and interest from large distribution networks. A little over a month ago, we put an announcement out that we have re-signed the Deutsche Post. This was 1 of the 2 significant European agents we lost a couple of years ago as they made the decision to exit the remittance business. With our improved market position and capabilities, Deutsche Post has decided to return to the remittance business with a multiyear exclusive relationship with Western Union and a planned relaunch sometime in the middle of this year. This will be a great addition to our German business, and we look forward to offering our services across the Deutsche Post network. Second, we recently signed an exclusive 5-year contract with Canada Post. This is a new win for us and a competitive takeaway Canada Post is expected to begin offering Western Union service in the majority of its 5,600 locations in the coming months and we look forward to servicing our Canadian customers throughout the post extensive network. This win should help bolster our North American business and provide a substantial retail network across Canada. Third, we have recently signed a long-term exclusive contract with the California grocery store chain Vallarta Markets, which caters to the Latino community across the state. This is a new relationship for Western Union, and we look forward to offering our services to customers and Vallarta locations. Lastly, we announced at Investor Day, we have gone back to being exclusive with Kroger for Money Transfer. This builds on the 40-plus year relationship we have had with the company. We look forward to continued collaboration and are excited to see now what we can accomplish together in this exclusive partnership. With these partnerships that I have discussed today, we expect at least an incremental $100 million of retail revenue per year when fully ramped. I am excited not only about these 4 opportunities, but about the future prospects as our pipeline continues to remain robust. The changes we have made to our retail technology platforms, our agent support, our improved pricing and our leading payout network has put us in a position to grow our agent base for the first time in several years. In closing, I want to reiterate our confidence in the path we're on. Western Union is transforming, becoming more digital, more agile and more aligned with the evolving needs of our global customer base. We are expanding our product suite. Modernizing our platforms and unlocking new opportunities for growth across all of our channels. We are positioning Western Union to lead in the future of cross-border and accessible financial services across the globe. It is a privilege to be the CEO of this wonderful and now 175-year-old company. I am proud of what we have been able to accomplish so far. I would like to thank our Board of Directors for their continuing support and our combined commitment to drive shareholder value. I would also like to thank my leadership team and our nearly 10,000 employees for their laser focus on delivering for our customers even in these tough times. Thank you all. I will now turn the call over to Matt Cagwin, our Chief Financial Officer. Matthew Cagwin: Thank you, Devin, and good morning, everybody. I'm delighted to be here today to walk you through our Fourth Quarter and Full Year results as well as our 2026 financial outlook. For the full year, we delivered GAAP revenue of $4.1 billion. Adjusted revenue came in below our outlook, reflecting ongoing industry disruption. Adjusted revenue growth, excluding Iraq, was down 2%, driven by growth in Consumer Services and Branded Digital, offset by the Americas Retail business. In the fourth quarter, GAAP revenue was down $1 billion, and our adjusted revenue was down 5%, driven by our Consumer Services and Branded Digital business offset by the Americas business, which continues to struggle with macro headwinds. The deceleration relative to Q3 was largely due to the slowdown in consumer services as communicated last quarter. In 2025, our full year adjusted operating margin was 20%, up from 19% in the prior period. Adjusted operating margin in the quarter was 20% compared to 17% in the prior year, benefiting from our continued cost discipline. For the full year, we delivered adjusted EPS of $1.75 in which benefited from higher adjusted operating profit and fewer shares outstanding, offset by higher interest expense, which landed us at the top end of our guidance range of $1.65 to $1.75. Adjusted EPS was $0.45 in the fourth quarter compared to $0.40 a year ago. Adjusted EPS benefited from our cost management discipline as well as fewer shares outstanding partially offset by higher interest expense. The adjusted tax rate for the quarter and the full year was 12% and 13%, respectively, consistent with the same prior year. Now turning to Consumer Services, which contributed 14% to total revenue this quarter. Fourth quarter adjusted revenue grew 26% driven by growth in our Travel Money business as well as growth in our bill pay business. I'm pleased to share that in 2025, adjusted revenue from Consumer Services grew almost 30%, we continue to believe that our Consumer Services business will grow double digit annually over the next several years. This growth will come from continued market expansion of existing products as well as potential new product offerings and through inorganic growth strategies that can benefit from Western Union's brand, scale and global nature of our business. As Devin highlighted, we are continuing to evolve our portfolio, moving beyond remittances to build a broader suite of consumer services. Travel Money demonstrates what's possible. In just a few years, we've grown from a few million dollars to over a $100 million business and we believe there's more to come. This illustrates the power of our brand, global footprint and unique capabilities. Now transitioning to Consumer Money Transfer or CMT. For the full year, CMT adjusted revenue, excluding Iraq, was down 6%, while transactions excluding Iraq, declined 1%. In the fourth quarter, CMT adjusted revenue declined 9%, while CMT transactions declined 2%, driven by the slowdown in our retail business as industry conditions remained challenging throughout the quarter. U.S. immigration policies have continued to impact customer activity. These dynamics have been present for most of the year and remain a factor in our results in the fourth quarter. Customers continue to send fewer transactions but with higher average principal per transaction. Our PPT increased roughly 5% in the fourth quarter compared to the prior year on a constant currency basis. We see this as a new normal for the industry. And in the short term -- we see this new normal in the short term, and we continue to look for ways to improve in this environment. In the fourth quarter, our Branded Digital business grew adjusted revenue by 6%, with a 13% increase in transactions. This marks the ninth straight quarter of solid revenue growth. Our performance in this environment reinforces our confidence in the Western Union brand. We have also seen strong Branded Digital transaction growth across the globe, underpinned by the Middle East, APAC and the Americas. Account payout transactions continued their strong momentum, growing over 30% in the quarter. For the full year, adjusted revenue grew 6% and transactions grew 12%. As Devin highlighted, a big contributor of branded digital growth over the past couple of quarters has come from some of the new digital partnerships in the Middle East. These relationships have led to a substantial growth in transactions but a more muted growth in revenue as they are primarily account-to-account transactions where revenue per transaction is lower than our traditional Western Union license business. This will likely cause a spread between transaction growth and revenue growth to remain elevated. We are even likely to see an increase in transaction growth rate over the next couple of quarters as these partners are gaining real traction in the market. Turning to our retail business. Overall, the performance in our retail business was similar to Q3 on a transaction basis and slightly worse on a revenue basis. We will continue to see softness in North America. But from a growth rate perspective, North America transactions improved a couple of hundred basis points in the fourth quarter compared to the third. Although some of these improvements may have been pulled forward ahead of the new remittance tax as it went into effect on January 1. APAC also improved in the fourth quarter from a revenue growth rate perspective, while Europe, Middle East and LACA slowed slightly. Now turning to our cash flow and balance sheet. In 2025, we generated $544 million in operating cash flow compared to $406 million in the prior year period. Included in this year's number is approximately $220 million in cash taxes paid related to the transition tax. We're excited to have these tax obligations behind us and look forward to the additional flexibility that we will have to invest our free cash flow in support of our business or to return it to our owners. Western Union continues to be a cash flow machine with adjusted free cash flow conversion of over 100% for the past 3 years. In 2025, our CapEx was $151 million up 15% from the prior year. CapEx increased slightly due to higher technology infrastructure spend and a busy year in new agent wins and renewals, which drove a slightly higher CapEx number. We expect CapEx to remain elevated in 2026 due to the strategic wins and the addition of Intermex. We continue to maintain a strong balance sheet with cash and cash equivalents of $1.2 billion and debt of $2.9 billion. Our leverage ratios were 2.9x and 1.6x on a gross and net basis, which we believe continues to provide us ample flexibility for capital return or potential M&A while maintaining our investment-grade credit rating. I'm pleased to report that in 2025, we returned more than $500 million to our owners with $305 million paid in dividends and $225 million used to repurchase shares. Now moving on to our 2026 outlook, which assumes no material changes in macroeconomic conditions. Our adjusted revenue outlook for 2026 is for 6% to 9% revenue growth inclusive of Intermex which we now expect to close in the second quarter of this year. Our adjusted EPS for the full year, we believe will be between $1.75 to $1.85. This includes higher interest expense as we look to refinance our existing notes coming to maturity in Q1, which are currently yielding 1.35% to something closer to today's interest rate environment. This also assumes roughly $100 million of stock repurchases for the full year as we look to integrate Intermex and potentially execute our robust M&A pipeline. We believe that EPS will accelerate as we go throughout the year as our Travel Money business is seasonal. It has less fixed cost coverage in the first and fourth quarter of the year. In addition, some of our expense benefits related to incentives that hit in Q1 of 2025, will occur later this year. In both the benefits of our operational efficiency programs announced at the Investor Day, as well as the benefits related to Intermex integration will ramp as the year progresses. Thank you for joining the call. And operator, we're ready to take questions. Operator: [Operator Instructions] Our first question comes to us from Tien-Tsin Huang at JPMorgan. Tien-Tsin Huang: Thanks for going through all of this. So I'm just trying to -- I'm thinking what to ask here. So maybe on the outlook with just January and February trends that you talked about. I'm curious how that informs your outlook in terms of what you learned. It sounded like there's no real impact yet from the [indiscernible] so far, but you're monitoring what's happening across a lot of different countries, including Venezuela. So what's baked in the outlook in terms of assumptions? And I'm very curious on what you're assuming for Intermex in the outlook in terms of either contribution or impact from some of the trends that you're seeing in the early part of the year? Matthew Cagwin: Tien-Tsin, thanks for joining the call so early in the morning. A couple of things here on your question. So we are 6 weeks into the year. We are seeing an improvement relative to our Q4 performance 6 weeks into the year. As you know, we saw the slowdown in the Americas, in particular, the U.S., starting in the second quarter of last year. So we'll start to lap those harder comps we have here in Q1 as we get into Q2, 3. So all that will make the continuing progress we've seen in the first couple of weeks, get even easier as the year progresses. And then as far as Intermex concerns, they have not published yet, so it's not fair for me to give their numbers, but you could imagine their North America-centric business. So the results are largely consistent with what you've seen both in our results today and largely consistent with what Euro net published, something on that line will give you a good sense of where they are, and we factored them into say Q2 close. So you can think about the middle of the quarter. Tien-Tsin Huang: Middle of 2Q. Got it. And then just my follow-up then. The retail agent wins stood out to me. It sounded like many were exclusive. Devin, you talked about $100 million incremental revenue, one's fully ramped. A couple of questions there. Just it sounds like there's a pipeline for more of these deals given your distribution. Correct me if I'm wrong there. And I'm curious, is there anything to share on the cost for this exclusivity and maybe the margin profile of these deals, if there's anything different than what we've observed in the past. Devin McGranahan: Thanks, Tien-Tsin. We are excited about it. They are exclusive deals, which is part of the strength of the Western Union brand in model with large strategic partners. We believe that these will be meaningful as they are largely competitive takeaways, so they benefit both our inbound and our outbound. So in the example of Canada, adding incremental distribution. This is similar to what we saw when we added the U.K. Post, adding incremental distribution, particularly in some of the less metropolitan areas will increase inbound into Canada. We saw that also when we lost the Deutsche Post again, which has great coverage in the nonurban areas, we saw inbound to Germany go down. So for us, these kinds of networks not only benefit outbound in the country, but help our global model and our global footprint because they provide important payout services in places where it's difficult to sustain an independent agent on money transfer remittance kind of revenue only. So we see them both as a network benefit overall, but also as great partners with great brands in these markets. Matt can talk about the economics, but they are generally consistent with our overall branded large network economics. So these are not deals that we bought. These are deals that we won based on strong value proposition, good technology and great partnership. Matthew Cagwin: Let's build on Devin's point for 2 things here. I think what it's closing was there's probably if you take away 2 takeaways on this. We alluded a quarter ago or maybe 2 now about a pipeline building. These are -- we knew these were well on the way at that time. We put a lot of money into rebuilding our retail platform and having what we believe to be the gold standard now in the marketplace. So we believe this will be the first of many coming over the next 2 years. And then from a margin standpoint, you should view this, Tien-Tsin, is it will contribute to our overall OI. So it's better than our OI. Devin McGranahan: The other thing, Tien-Tsin, in my tenure, it's great to talk about adding so that instead of talking about losing. So it's a great transition for us. Operator: Our next question is from Darrin Peller at Wolfe Research. Darrin Peller: Can we touch on the digital transaction growth for a moment? I mean, I know -- it's good to see the 13%, and I know that you wanted to see that even accelerate over to the mid-teens over time. But we're also -- I'd like to hear more about your view of what you're doing there to keep that sustainably in that rate or better. and your conviction around that. But I'd also love to hear more about the spread. I know at the Investor Day, we talked about that spread narrowing a bit. You touched on it earlier in your prepared remarks. So maybe just revisit that again, if you don't mind, I mean, what should we expect on the spread between the transaction growth and the revenue growth rate there? And what's driving the spread now still a little bit wider? Devin McGranahan: So Darrin, let me take the transaction and the potential for acceleration and then I'll let Matt take the spread question. By the way, thanks for joining early in the morning. We see market opportunities. So we are excited about our business now in the Middle East. For many years, we had a tougher Middle Eastern product and platform and strategy. Licensing is tough in those markets. And so we went to market with a model we call the digital master agent, which was really one of our retail agents partnering with us to try to do digital. We still have that model, but we've expanded our model again with the improvements in our technology platform to be a bit more partner aligned with some of the larger digital players who have amassed critical mass of customers in that region across a wide range of products, telecommunication, financial services. And so it's opening up for us a market opportunity and a customer base that we had trouble accessing in our old digital master agent model in the region. So we see potential there to accelerate. We also see regions in the world like in Europe, where we believe we are underperforming the market and with some changes in the approach, model leadership, we'd like to see some acceleration there, which again would be additive to the current results that we're publishing. I'll let Matt talk about the gap. Matthew Cagwin: We actually alluded to this last quarter, our Q3 as we were ramping these partners, the gap would be wider for the year as we ramp it. Devin also had in the prepared remarks a minute ago, we've seen our new customer and our non-Middle Eastern business growth narrow a little bit, flat line. We are working hard on that to get it back. That will get the core non-Middle East to accelerate and narrow the gap. But as the Middle East is contributing to this, it is what's causing the widening. The other thing as you know is we launched the program, I guess, been now 2, 3 years ago where we did the new go-to-market strategy, is that happen, we saw each region we went to accelerate and grow in the last part of that really is the Middle East where we're doing through partners. So -- and then they come to RPTs. Darrin Peller: Okay. All right. That's helpful. And just a quick follow-up would just be your comments around what you're seeing with regard to the corridors impacted by migration policies in the U.S. Just I want to make sure I understand it. Are you saying that it's gotten to a point where you think it's now stable. Maybe it's a little bit better. We see a new norm in Mexico, for example, was stabilizing. I mean I know it's pressuring transactions, especially on the retail side. But do you think we're at a new steady state now? Or I'm just curious where you're seeing the data. Devin McGranahan: Yes. So we -- the summer was pretty dramatic. Bank to Mexico [ Data ] was negative. In 2025 for the first time, Darrin, in over a decade. And so it's a tough situation, and it's an important corridor for us given its relative size. And so we pay a lot of attention to that. We did see it turn positive at the end of the year, and we're continuing to see some reasonable trends in the first part of this year. That's had it does, as evidenced on the chart, jump up and down. October was starting to head in the right direction and then November fell off a cliff, December came back pretty well. So we think that is moving directionally in the right direction, and now we have a couple of months in a row that look a little bit better. It's not where it was. Historically, it's growing mid-teens month-over-month, quarter-over-quarter, year-over-year, but at least it's not descending at mid-teens like it was in the summer months. The rest of the LACA regions is becoming a bit mixed, right? And so we see certain markets like Nicaragua, where we're still seeing reasonably low performance and others that are starting to stabilize and in some cases, even begin to grow again like the Guatemala. So I think we're seeing stability. But again, as I said in the prepared comments, any given day, an election or a geopolitical change can happen that disrupts the region again for another 3 to 6 months. Operator: Our next question comes to us from Will Nance at Goldman Sachs. William Nance: I wanted to just ask the digital question in a slightly different way. I mean it sounds -- I totally hear you on the Middle East and some of the mix shift dynamics you're expecting around the spread just relative to the revenue growth rate that you just saw when you put all the moving pieces in a blender, like how are you thinking about absolute levels of digital revenue growth over the course of the year? And then I'll just ask the second question now, but I was wondering if you could put a finer point on the [ IMXI ] revenue assumptions assumed in the guide for the closing just so we can kind of true up the models ahead of the close. Matthew Cagwin: I put those 2 tough questions together. So on the branded digital side, what are we expecting, what's built into the guide. We've now had 2 years of mid-single-digit growth. We have built into our guide a modest improvement in that. We think there's meaningful improvement opportunity, but our guidance includes a very modest improvement driven by -- we think we're going to continue to accelerate in the Middle East, and we think we can reinvigorate our growth rates for new customers in many other markets. On the Intermex side, we have built into our model a Q2 close as I talked about with Tien-Tsin a minute ago, you can view that as something closer to the middle. And we've assumed a growth rate is commensurate with our North America [ Orias ], North America business growth rate. So you look at industry growth rates for that. Operator: Our next question comes to us from Rayna Kumar at Oppenheimer. Rayna Kumar: So I also want to ask about Intermex. I think you guys put out a $0.10 a share accretion number for the first year. Do you still expect to hit that target with Intermex. And I'll ask my follow-up as well. You had some nice commentary on is the partnerships and products you're adding with stable coin. I'm wondering if you're actually starting to see some demand from consumers to send stable coin. And are they utilizing the on and off ramping for stable coin? Matthew Cagwin: Rayna, thanks for joining the call today. To your first question on Intermex, when we had the announcement later part or middle of last year, what we had indicated at the time was a $0.10 from the first full year. And our thought process there is we need some time for integration. There's a meaningful amount of synergies that we are confident we can go get. We're more confident today in those synergies than we were when we signed the deal because we've had a lot of time to do some integration planning. The deal is coming a few months earlier than we thought right now, subject to regulatory approvals, there's still a few states that get approved in one country from a change of licenses, all the competition stuff of material substance is done, but there is a few more lingering regulatory things to go. With the deal coming a few months earlier, it will be accretive this year. It's in our $1.75 to $1.85 but the $0.10, you should view more as a 2027 activity for us as we get the benefits of all the synergies that we're working on. Devin McGranahan: Let me try to take the stable coin question. As you remember from Investor Day in the prepared comments, we are most bullish on the use of stable coins to create efficiency in the global movement of money, particularly between us and our partners to increase speed allow us to move money 24/7 and for Matt to get capital efficiency out of that process. I also talked about launching the stable card which we believe doesn't require senders to necessarily choose to open a digital asset wallet, by a stable coin, send a stable coin, it will enable a traditional retail or digital center to have their customer receive a stable coin-based asset in the stable card, which we believe has value in our remittance countries for allowing the receiver to have more control over exchange rates and the ability to hold a U.S. dollar-denominated assets. We have not seen strong market demand from our center-based clamoring to send money via stable coin. We have, however, seen and we believe that this is a market opportunity for us people who already have customer bases with digital asset wallets are looking for ways to exchange those digital assets back into [ fiat ] currencies. And so what we've talked about is our digital asset network, and we continue to sign partnerships with existing digital asset players who own digital asset wallets and customer bases looking for those on-ramps and off-ramps. And so that's another part of our digital asset strategy that's coming along, and I will talk about more about that on the next earnings call. Operator: Our next question is from Timothy Chiodo at UBS. Timothy Chiodo: So you mentioned a few times now around some flattening of your customer acquisition trends outside of the Middle East. I was hoping you could dig into this a little bit more on 2 levels. One is a recap of some of the initiatives that you have to address that flattening. But also, what are you seeing in the competitive environment, whether it's around advertising spend or promotions or other initiatives that might be impacting that flattening of customer acquisition that you mentioned. Devin McGranahan: Thanks. Great question. I think there are 2 things that have transpired over the course of, call it, the last 12 to 18 months. The market for value propositions for new customer acquisitions has gotten increasingly competitive as global macro forces have put pressure, particularly on lower scale players, you're seeing aggressive -- increasingly aggressive new customer offers. And so one of the things that we're evaluating is how do we compete with that and still maintain our rigor in terms of our ability to have the high returns on acquisition cost to lifetime value. And so we're looking at how some of our models work and how we are going to go to market compete with these more aggressive new customer acquisition offers. The second thing that we're seeing is has search is changing and a genetic AI and how people go to market, the traditional model of buying lots of space on Google or in the Apple store is a shifting landscape now in terms of how you gain access to customers and where those customers are actually shopping and looking for opportunities to send money. And so we are shifting our go-to-market strategy to align better with the kind of emerging landscape for digital customer acquisition. Operator: Our next question comes to us from James Faucette at Morgan Stanley. James Faucette: Appreciate all the details and color here. I wanted to follow up a little bit just on recent trends. As you mentioned a lot of volatility in the latter months of 2025. How do you think about like what are the kind of primary drivers there? And just trying to think about the things that you're looking at to extrapolate out for the rest of this year, especially given the month-to-month volatility. Devin McGranahan: Great question. I think the month-to-month volatility has caused us to have a much more dynamic operating model. So Historically, this was a relatively predictable calendar-driven, holiday-driven, paycheck driven business. And many of us have publicly said that we could pretty much tell you what the next week, month, quarter was based on trends and the calendar. With some of this more dynamism in terms of the landscape, we have to be a lot more agile, recognizing where the trends are moving and shifting both our approach to go to market but also in some cases, our model for agent incentives and/or for marketing dollars to recognize where the strengths are and start to quickly address where we're seeing market change is on a much more dynamic basis. But it has become the new normal for us. And so we are doing the best we can in this new normal to adjust our operating model to a more dynamic approach to dealing with it. Matthew Cagwin: If I can just take one step back to build onto Devin's answer. You have to keep in mind the fact that we are global. We're in 200 countries. So we do have some puts and takes. The conversation we're having right now is a few countries in Latin America, U.S. and Mexico, which has been up and down over the last 6 to 9 months. Holistically, it's been very similar across the U.S., the Latin American corridor starting in Q2 last year. So we will start to lap that as we get into the second quarter and start having easier comps. So any given market is volatile. The economy as a whole to a step down in Q2 for this industry and we will start to lap that as we get into the second quarter. James Faucette: I appreciate the nuance there and color. Just want to ask quickly to -- if you could compare and contrast a little bit around the European retail versus U.S. business. And in particular, I'm trying to get a sense from you how you think about what a realistic time frame is to transition the U.S. model to look more like Europe and maybe more importantly, at least for me and modeling purposes, what investment is going to be required? Devin McGranahan: Thank you for the question. The important impetus to transforming the U.S. model as we've talked about publicly, is the close and then the integration of Intermex into Western Union. The Intermex model, as we've said publicly, is very similar to our European model with a much more tactical location-based strategy that relies on kind of agent level and corridor level activities and strategies. And so with the a little bit of acceleration into the second quarter from our original belief on when the deal would close, I think that helps us move forward in terms of the transformation of the North American and particularly the U.S. retail business. Operator: Our final question is from Bryan Keane at Citi. Bryan Keane: Hi, guys. Thanks for all the details here on the call. Just want to ask about Consumer Services growth. Obviously, that's been the strength and powering a lot of the top line. Can you talk a little bit about what we should expect for growth rates this year and some of the key driving factors? And then I'll ask my second question. I think Matt, what people are trying to figure out is the actual revenue dollar amount assumed in the Intermex transaction. And then maybe just what that means for organically the business this year ex-acquisition? Matthew Cagwin: So Bryan, I'll work my way backwards. On your second one, the simple answer is our organic is going to be close to flattish. And then Intermex will help us get closer to the 6% to 7%. We think we'll get some positive growth, but call it flattish. And then for your question on Consumer Services, we have our last quarter of the acquisition we did last year, which will help power Q1 to be very solid from a consumer services standpoint. And then I intentionally talked about, we see a path for double-digit growth going forward as we continue to expand products as we continue to look at inorganic activities and we expanded in new marketplaces. So view it as higher in Q1 and then working its way down closer to our double digit. And then you may have some tuck-ins as the year progresses. Devin McGranahan: Thanks, everybody. Operator: There are no more questions in the queue. Thank you for joining The Western Union Fourth Quarter 2025 Results Conference Call. We hope you have a great day.
Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Hudbay Fourth Quarter 2025 Results Conference Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded today, February 20, at 11:00 a.m. Eastern Time. I would now like to turn the conference over to Candace Brule, Vice President, Capital Markets and Corporate Affairs. Please go ahead. Candace Brule: Thank you, operator. Good morning, and welcome to Hudbay's Fourth Quarter and Full Year 2025 Results Conference Call. Hudbay's financial results were issued this morning and are available on our website at www.hudbay.com. A corresponding PowerPoint presentation is available in the Investor Events section of our website, and we encourage you to refer to it during this call. Our presenters today are Peter Kukielski, Hudbay's President and Chief Executive Officer; and Eugene Lei, our Chief Financial Officer. Accompanying Peter and Eugene for the Q&A portion of the call will be Andre Lauzon, our Chief Operating Officer. Please note that comments made on today's call may contain forward-looking information, and this information, by its nature, is subject to risks and uncertainties, and as such, actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, please consult the company's relevant filings on SEDAR+ and EDGAR. These documents are also available on our website. As a reminder, all amounts discussed on today's call are in U.S. dollars unless otherwise noted. And now I'll pass the call over to Peter Kukielski. Peter Gerald Kukielski: Thank you, Candace. Good morning, everyone, and thank you for joining us for today's call. 2025 was a transformative year for Hudbay as we achieved the third consecutive year of record financial performance. We delivered record annual revenues of more than $2 billion, record annual adjusted EBITDA of over $1 billion and record annual free cash flow generation of more than $380 million. Our diversified operating platform demonstrated resilience and enabled us to deliver our 11th consecutive year of achieving copper production guidance and fifth consecutive year of achieving gold production guidance. We also outperformed our twice improved consolidated cash cost guidance, demonstrating industry-leading cost performance. These achievements are even more remarkable considering the significant challenges we had to overcome with wildfire evacuations in Manitoba and social unrest in Peru last year. We are delighted to have secured Mitsubishi as a premier long-term partner for our Copper World project in a precedent-setting joint venture transaction. This transaction enables us to unlock significant value in our copper growth pipeline, further solidifies our financial strength and significantly reduces our share of future equity contributions for the development of Copper World. Our prudent strategic financial planning and execution has enabled us to achieve our balance sheet deleveraging goals ahead of schedule and lowered our cost of capital. We now have the financial flexibility to sanction Copper World in 2026, embark on generational investments in our operating portfolio and commence increases in shareholder returns with our first-ever dividend increase as part of our holistic capital allocation framework. This will allow us to continue to deliver attractive growth and maximize long-term risk-adjusted returns for our stakeholders. Slide 4 provides an overview of our fourth quarter operational and financial performance. The fourth quarter underscored our commitment to operational excellence with standout performance in Peru, driven by high-grade Pampacancha ore, record monthly throughput achieved at the New Britannia mill in Manitoba and the successful completion of the SAG mill feed system in British Columbia. We achieved $733 million in record revenues and $386 million in record adjusted EBITDA during the fourth quarter. We produced 33,000 tonnes of copper and 84,000 ounces of gold in the quarter despite an 8-day power outage in Manitoba and lower throughput levels in British Columbia. Our operations in Peru had a strong finish to the year with a final quarter of Pampacancha mining activities. Fourth quarter net earnings were $128 million or $0.32 per share, reflecting strong gross margins as a result of higher metal prices and $25 million received for business interruption insurance from the mandatory wildfire evacuations in Manitoba. After adjusting for the insurance proceeds and other noncash items, fourth quarter adjusted earnings was $0.22 per share. We continue to demonstrate industry-leading cost performance in the fourth quarter with consolidated cash costs of negative $0.63 per pound and consolidated sustaining cash cost of $0.94 per pound. These costs significantly improved compared to the third quarter, primarily as a result of higher copper production and higher gold byproduct credits. Turning to Slide 5. Hudbay's unique diversification in copper and gold, coupled with our relentless commitment to cost control, enables us to maintain industry-leading margins and deliver strong and reliable cash flows. Operating cash flow before change in noncash working capital was $337 million in the quarter, a meaningful increase compared to the third quarter, reflecting higher copper and gold sales volumes from normalized operations after the temporary interruptions and higher metal prices. After accounting for the capital investments to sustain production, we generated $228 million in free cash flow during the quarter, bringing annual free cash flow to $388 million in 2025 and achieving new quarterly and annual record levels. While the majority of revenues continue to be derived from copper, revenue from gold continues to represent a growing portion of total revenues with 41% of gold revenues in the fourth quarter. Our deleveraging efforts continued in the fourth quarter as we repurchased and retired an additional $39 million of senior unsecured notes through open market purchases at a discount to par. We are proud to say that since the end of 2024, we have reduced our long-term debt by $185 million, bringing our total debt levels to $1 billion today. We ended the quarter with total liquidity of $994 million, including $569 million in cash and cash equivalents and undrawn availability of $425 million under our revolving credit facilities. Our net debt-to-EBITDA ratio further improved to 0.4x at the end of December. After year-end, our cash and cash equivalents balance increased to $992 million with the closing of the Copper World joint venture transaction in early January. This increases our adjusted total liquidity to over $1.4 billion and further lowers our net leverage ratio to 0x. This financial transformation demonstrates the benefits of our diversified operating platform, industry-leading costs and prudent balance sheet management. We are extremely well positioned to prudently reinvest in our portfolio of attractive, high-return brownfield and greenfield opportunities to drive production growth and long-term value creation. In Peru, we exceeded the top end of the annual gold production guidance range and achieved the copper production guidance range despite the impact of a temporary operational interruption due to social unrest as shown on Slide 6. Our Peru operations had the strongest quarter of the year in the fourth quarter as we continued to see strong copper and gold grades from Pampacancha, and we processed less ore from low-grade stockpiles compared to the prior quarter. We continue to optimize the mine plan with more ore mined from Pampacancha during the quarter than previously expected, resulting in the accelerated depletion of Pampacancha in late December as opposed to early 2026. The operations produced 25,000 tonnes of copper, 33,000 ounces of gold, 731,000 ounces of silver and 325 tonnes of molybdenum during the quarter. Production of copper, gold and silver increased by 38%, 25% and 27%, respectively, compared to the third quarter due to higher ore milled as the third quarter was impacted by the temporary operational interruption. Mill throughput increased to 7.6 million tonnes in the quarter due to higher mill availability than the third quarter, partially offset by the scheduled semiannual mill maintenance shutdown in the fourth quarter. Milled copper grades increased by 26% compared to the third quarter with higher grades from Pampacancha and less ore processed from stockpiles. Milled gold grades also increased with a strong gold contribution from Pampacancha. Mill recoveries were in line with our metallurgical models based on the ore being processed. Fourth quarter cash costs in Peru were $0.57 per pound of copper, decreasing by 56% compared to the third quarter with the benefit of higher gold byproduct credits, partially offsetting higher profit sharing. Full year cash costs in Peru outperformed the low end of the guidance range and improved by 8% from 2024 due to lower treatment and refining charges and higher by-product credits. Fourth quarter metal sold was higher than the prior quarter as some copper concentrate sales in the third quarter were impacted by ocean swells and were deferred to the fourth quarter. While copper concentrate inventory levels normalized at the end of last year, there were elevated levels of precious metals contained in the inventory concentrate due to a higher portion of Pampacancha production in the second half of the year, resulting in a shift of some precious metal sales from December 2025 to 2026. We continue to advance the installation of pebble crushers in Peru to increase mill throughput rates starting in the second half of 2026, which will allow Constancia to deliver steady annual copper production despite lower grades from the depletion of Pampacancha. These efforts align with the Peru Ministry of Energy and Mines regulatory change to allow mining companies to operate up to 10% above permitted levels. Turning to Slide 7. Our Manitoba operations were previously tracking within the 2025 guidance ranges despite the wildfire impacts. However, as a result of the weather-related power outage in October and the subsequent ramp-up period required to restore full operations, gold and zinc production fell below the low end of the respective ranges. That said, we successfully achieved guidance for copper and silver despite these interruptions. Performance in the fourth quarter demonstrates that our Manitoba operations have normalized following the significant wildfire disruptions. Our Manitoba operations produced 47,000 ounces of gold, 3,000 tonnes of copper, 6,000 tonnes of zinc and 214,000 ounces of silver in the quarter. Full year production in Manitoba was lower than the prior year as a result of production deferrals from the wildfires, the weather-related power outage and associated ramp-up to restore full operations. However, we continue to focus on safety and achieved a 15% reduction in total recordable injury frequency in 2025. At the Lalor mine, the focus was on stabilizing production after resuming operations. Lalor averaged over 4,200 tonnes per operating day in the quarter, strategically prioritizing mining from the gold zones to ensure feed for the New Britannia mill. Gold grades slightly increased compared to the third quarter as we continue to improve ore quality and focus on prioritizing gold zones at Lalor. Consistent with our strategy of allocating more Lalor ore feeds to New Britannia to maximize gold recoveries, the New Britannia mill achieved average throughput of approximately 2,300 tonnes per day in December, reaching a new monthly throughput record. Stall mill continued to focus on process optimization and enhancing gold recovery initiatives, which resulted in achieving over 70% gold recovery from our base metal ore stream. The Stall mill processed significantly less ore in 2025 compared to 2024 in alignment with our strategy to allocate more Lalor ore feed to New Britannia. The 1901 deposit delivered 6,600 tonnes of development ore in 2025 as the project progresses towards full production in 2027. During the year, the team focused on establishing 1901 underground infrastructure and haulage and exploration drifts. Manitoba sales volumes in the fourth quarter reflect a rebuild of inventory levels as operations normalized. Manitoba Gold cash costs in the fourth quarter were $705 per ounce, increasing compared to the third quarter, primarily due to higher overall costs in the quarter as operations normalized. Despite the production headwinds in 2025, full year gold cash costs were $549 per ounce, a 9% improvement from 2024 and outperforming the lower end of the cash cost guidance range. The strong cost performance was supported by the prioritization of high-margin gold production over byproduct zinc production. In British Columbia, we continue to focus on advancing our multi-year optimization plan centered on ramping up mining activities and implementing standardized operating practices as shown on Slide 8. We produced 4,700 tonnes of copper, 4,000 ounces of gold and 57,000 ounces of silver in British Columbia in the fourth quarter. Production was lower compared to the prior quarter, primarily reflecting reduced mill throughput caused by unplanned maintenance on the primary SAG mill. Full year production achieved the guidance range for gold and silver, while copper production fell below the low end of the guidance range because of the impact of the primary SAG mill unplanned maintenance and a higher amount of low-grade stockpiled ore processed throughout the year. Mining activities continue to focus on executing a 3-year accelerated stripping program to unlock higher-grade ore starting in 2027. Total ore mined in the fourth quarter was 2.4 million tonnes, a 32% increase from the third quarter as we optimized the mining sequence and enhanced maintenance practices, which increased mining rates to a targeted 300,000 tonnes per day in December. To sustain this momentum, a new production loader was commissioned in January 2026, and the new shovel is currently scheduled for deployment in March. Mill enhancement initiatives continued in the fourth quarter with the successful completion of the permanent feeder for the second SAG mill in December. The second SAG mill continued to demonstrate positive contributions to overall throughput in the fourth quarter. The mill processed 27% less ore in the fourth quarter compared to the third as a result of unplanned maintenance on the primary SAG mill to address localized damage to the feed and head. Operations were further constrained by elevated clay content in the ore and the planned decrease in feed pile to accommodate the construction and tie-ins for the second SAG expansion project. The team implemented several additional initiatives in 2025 to mitigate further challenges and build long-term mill reliability, including completing crushing circuit chute modifications, installing advanced grinding control instrumentation and a redesigned SAG liner package. Despite throughput constraints, fourth quarter milled copper grades were 18% higher than the third quarter, driven by higher grades in ore mined. Copper recoveries improved to 78% and gold recoveries saw a 7% increase over the third quarter. While the primary SAG mill continues to operate under a reduced load, it is being rigorously monitored ahead of a feed and head replacement in mid-2026. The mill remains on track to achieve its permitted capacity of 50,000 tonnes per day in the second half of 2026. British Columbia cash costs and sustaining cash costs were higher than the prior quarter, largely driven by the ramp-up of mining activities advancing the accelerated stripping program, combined with the impact of lower production and byproduct credits due to the lower mill availability. Despite the headwinds in the second half of 2025, the business unit demonstrated strong cost discipline, enabling the operations to achieve the full year cash cost guidance range. I'm now going to turn it over to Eugene Lei to introduce our capital allocation framework. Eugene? Chi-Yen Lei: Thank you, Peter. Turning to Slide 9. Hudbay has a proven track record of prudently allocating capital to high-return brownfield investments such as New Britannia gold mill refurbishment project and the development of the high-grade Pampacancha satellite deposit. Both these investments have delivered significant free cash flows and contributed to our recent deleveraging efforts. These deleveraging achievements have been part of our financial transformation over the past 3 years. Hudbay has moved from being overleveraged and capital constrained to a preferred position where we can strategically allocate capital across the portfolio to maximize value and generate the highest risk-adjusted returns, creating long-term sustainable value for all our stakeholders. Three years ago, when I became CFO, we put in place our 3 prerequisites plan known as the 3P plan, outlining financial criteria needed to be achieved prior to sanctioning Copper World. We have successfully executed all of the financial elements of the 3P plan and with prudent strategic financial planning over the last few years, we have completed the deleveraging of our balance sheet. We are proud to have the strongest balance sheet in more than a decade and are one of the lowest debt leverage companies in our peer group. Together with the strategic investment by Mitsubishi, Hudbay is very well positioned to both sanction the Copper World project and embark on generational investments in our operating portfolio in 2026. These investments include allocating capital to high-return brownfields projects at our 3 operating mines and advancing our world-class development and exploration pipeline. To provide transparency and continued financial discipline, we have implemented an enhanced capital allocation framework to provide a holistic approach around capital allocation decisions. This includes growth capital reinvestments in the business through near-term brownfields projects, long-term greenfield projects, strategic investments and exploration, while also considering debt repurchases, share buybacks and dividends. Our capital allocation framework is embedded in our annual financial planning cycle. The framework assesses capital allocation opportunities against key elements such as preserving a strong balance sheet, strategic fit for growth and diversification, accretion across key financial metrics, performing a rigorous risk assessment and applying accountable investment governance practices. Consistent with our capital allocation framework and our recent financial transformation, we are now in a position to commence increases in shareholder returns in the form of a quarterly dividend. We are pleased to introduce a new quarterly dividend of $0.01 per share, which represents an annual increase of 100% over our former semi-annual $0.01 dividend. This increases our total annual dividend amount to $0.04 per share. Thanks, and I'll hand it back to Peter for our 2026 strategic objectives. Peter Gerald Kukielski: Thank you, Eugene. Our key company objectives for 2026 are summarized on Slide 10. We continue to focus on operational excellence, advancing organic growth opportunities and prudently allocating capital to deliver attractive high-return growth. At the core, we intend to demonstrate continued operational excellence to enable substantial free cash flow generation while maintaining industry-leading cost performance. We plan to achieve this by investing in high-return brownfield growth opportunities across our operating platform, such as the mill throughput enhancement projects. We plan to prudently invest in our attractive organic growth pipeline to deliver long-term production increases. This includes completing the Copper World definitive feasibility study, progressing the New Ingerbelle permitting and development, advancing studies on our regional satellite properties in Snow Lake, executing our large Snow Lake exploration program to look for new anchor deposits, initiating a pre-feasibility study at Mason, advancing Flin Flon tailings reprocessing project analysis and preparing for Maria Reyna and Caballito exploration to provide significant long-term upside potential in Peru. With a strengthened balance sheet and our first ever dividend increase, we entered the year with unmatched financial flexibility. In 2026, we intend to maintain strong financial discipline by implementing our capital allocation framework to maximize returns. This will be achieved by continuing to reduce total debt, sourcing efficient project level financing for Copper World and evaluating all types of capital redeployment opportunities to generate the highest risk-adjusted returns. Turning to Slide 11. As I mentioned earlier, 2025 represents the 11th consecutive year in which Hudbay achieved its annual consolidated copper production guidance, which includes every year since Constancia declared commercial production. 2025 also represents the fifth consecutive year achieving our annual consolidated gold production guidance since establishing stand-alone gold production guidance after Snow Lake became a primary gold-producing operation. In 2026, consolidated copper production is expected to increase by 5% to 124,000 tonnes using the midpoint of the guidance range. This is driven by higher expected production in British Columbia as a result of mill throughput ramping up to the target 50,000 tonnes per day in the second half of the year, partially offset by the depletion of Pampacancha in December 2025. Consolidated gold production in 2026 is expected to decrease by 9% to 244,500 ounces as a result of the depletion of Pampacancha. However, unstreamed gold production is expected to increase in 2026 with higher gold production in Manitoba as operations normalize following the wildfires, and we continued to achieve strong performance at the New Britannia mill. In Peru, 2026 copper production is expected to be relatively consistent year-over-year at 82,500 tonnes as higher mill throughput is expected to largely offset the grade decline with the depletion of Pampacancha. Peru gold production is expected to decline to 17,500 ounces with the depletion of Pampacancha. The short-term mine plan changes in 2025 to optimize the mine plan during the period of social unrest resulted in reduced stripping activities in 2025, which has caused some grade resequencing in 2026, but we expected higher copper production in Peru in 2027 and 2028. In Manitoba, 2026 gold production is expected to be 200,000 ounces, reflecting a 15% year-over-year increase as the operations normalize after the unprecedented wildfires. We expect to see continued strong mill throughput at New Britannia continue to operate above 2,000 tonnes per day in 2026, far exceeding its original design capacity of 1,500 tonnes per day. In British Columbia, 2026 copper production is expected to be 30,000 tonnes, representing a 26% increase from 2025 production levels. This increase will be driven by the throughput improvements in the second half of the year. We expect to release an updated 3-year production outlook with our annual mineral reserve and resource update in late March. Slide 12 summarizes our cost guidance. 2026 consolidated cash costs are expected to remain at historically low levels within a range of negative $0.30 to negative $0.10 per pound of copper. Cash costs this year will continue to benefit from higher gold production as a byproduct and our continued focus on maintaining strong operating cost control across the business. Sustaining cash cost guidance for 2026 is expected to be within $1.70 to $2.10 per pound of copper, benefiting from higher copper production and higher byproduct credits, offset by higher expected sustaining capital expenditures. In Peru, 2026 copper cash costs are expected to be between $1.70 and $2.10 per pound, reflecting steady unit operating cost performance, offset by lower byproduct credits with the depletion of Pampacancha. Peru cash costs will benefit positively from lower treatment and refining charges and lower electricity rates with a new renewable power contract in effect. In Manitoba, gold cash costs are expected to be between $500 and $800 per ounce in 2026, remaining at industry low levels, driving strong margins at current gold prices. In British Columbia, copper cash costs are expected to decrease in 2026 to a range of $1.50 to $2.50 per pound. The decrease will be driven by higher copper production, higher by-product credits and higher capitalized stripping related to the accelerated stripping activities. Capital expenditures in 2026 include approximately $96 million of capital deferrals from 2025, higher growth capital spending as we reinvest in several high-return growth projects and onetime sustaining capital expenditures. Total sustaining capital expenditures are expected to be $435 million and total growth capital expenditures at the operations are expected to be $140 million, excluding Copper World joint venture spending. The growth capital for Copper World is expected to be $135 million. In Peru, 2026 sustaining capital is expected to be maintained at $140 million, which includes about $20 million of deferrals from last year and $18 million in onetime heavy civil work projects, offset by lower spending on tailings dam raises. Growth capital in Peru of $40 million relates to the installation of 2 pebble crushers to increase mill throughput starting in the second half of 2026 and includes $13 million of capital deferrals from 2025. In Manitoba, sustaining capital expenditures are expected to temporarily increase to $105 million in 2026, including $5 million of deferred capital, $20 million in onetime expenditures related to a project at New Britannia to lower nitrogen levels and $12 million for an accelerated 1-year construction project for a dam raise at our Anderson tailings facility. Underground capitalized development at Lalor is expected to return to normal levels after reduced levels in 2025 from the wildfires. Manitoba growth capital is expected to be $15 million this year related primarily to the development of exploration platforms and haulage drifts at the 1901 deposit. In British Columbia, 2026 sustaining capital expenditures are expected to be $60 million, an increase compared to 2025, including a $5 million onetime expenditure for the replacement of the feed and head of the primary SAG mill as well as $13 million in capital deferrals from 2025. We expect to incur $130 million of capitalized stripping costs in 2026 related to the continued accelerated stripping program. BC growth capital expenditures are expected to increase to $85 million, including $10 million in capital deferrals with the remaining capital related to early works and infrastructure development for New Ingerbelle. As we continue to advance Copper World towards a sanction decision, we expect capital expenditures to be $135 million, excluding post-sanctioning construction costs. This growth capital has been largely funded by the proceeds from the Mitsubishi joint venture received in January 2026 and relates to feasibility study costs and continued derisking until a sanctioning decision. It includes $35 million of capital deferrals from 2025 and approximately $60 million for accelerated long lead items and derisking activities. Post-sanctioned construction costs will be updated at the time of project sanction. Looking at exploration expenditures in 2026, we expect an increase in spending to $60 million as we continue to execute the multi-year extensive geophysics and drilling program in Snow Lake as well as spending allocated to New Ingerbelle inferred resource conversion efforts. As part of our long-term growth pipeline, Slide 13 summarizes the threefold strategy we are executing in Snow Lake as part of the largest exploration program in the company's history in Manitoba. The first objective is to execute near-mine exploration, including underground and surface drilling at Lalor. This past year's significant progress was made with the completion of the initial exploration drift at the 1901 deposit, which saw positive step-out drilling and delivered some zinc development ore to the Stall mill. Underground drilling is planned for 1901 from the new exploration drift to upgrade and expand the mineral reserve and resource estimates. Activities at 1901 over the next 2 years will focus on exploration, definition drilling, ore body access and establishing critical infrastructure for full production in 2027. We also plan to complete underground and surface drilling at Lalor to continue expanding mineral resource and reserve estimates. The second strategic focus area is on testing regional satellite deposits within trucking distance of the Snow Lake processing infrastructure to identify potential additional ore feed to fully utilize the available processing capacity. In 2026, we plan to advance activities at many of our satellite deposits, including Talbot, New Britannia and Rail, testing for both base metal and gold potential. We will touch more on Talbot, a highly prospective target on the next slide. And the third strategic focus area is on exploring our large land package for a new potential anchor deposit to significantly extend the mine life of our Snow Lake operations. In 2026, we will continue the ground electromagnetic survey and extensive airborne geophysics survey. In early January, we announced the signing of an amended option agreement with JOGMEC and Marubeni to expand the Flin Flon exploration partnership for 3 projects in the Flin Flon region, including Cuprus-White Lake, West Arm and North Star. Turning to Slide 14. In July, we commenced an extensive summer drill program at the copper-gold-zinc Talbot deposit focused on expanding the known mineralization at depth. Talbot is located within trucking distance of the Snow Lake processing facilities, making it an ideal deposit to potentially provide supplemental feed to our mills. As part of the initial drilling program in 2025, Hudbay drilled 6 holes to test the continuity of the Talbot deposit at depth with all the holes yielding positive results and 4 of them returning mineralized intercepts with economic potential. The image shows a 3D view of the deep holes drilled at Talbot confirming continuation of the mineralization at depth. As shown in the image on the slide, the drill results indicate that the mineralized footprint of Talbot has doubled. We have commenced the 2026 drilling program in January with 6 drill rigs turning, including 1 rig focused on continuing to expand the footprint of the deposit at depth. An additional hole provided a significant intercept of visible copper mineralization over approximately 20 meters and assays are pending. This year, we plan to progress a PFS and prepare an updated mineral resource estimate utilizing our standard method that has a high reserve conversion rate. Turning to Slide 15. Our Copper World project in Arizona continues to achieve key milestones to progress towards sanctioning later this year. The closing of the strategic joint venture partnership with Mitsubishi validates the attractive long-term value of Copper World as a top-tier copper asset and endorses the strong technical capabilities of Hudbay. Together, we will continue to advance this high-quality copper project and unlock significant value for all of our stakeholders. With the closing of the transaction, Mitsubishi's initial cash inflow of $420 million will be used to fund the remaining feasibility study and pre-sanctioned spending in addition to initial project development costs for Copper World once we sanction. Mitsubishi will also contribute the remaining $180 million within 18 months to complete its initial 30% stake and will continue to fund its pro rata 30% share of future capital contributions. Copper World feasibility activities are underway, and we are on track for the completion of a definitive feasibility study in mid-2026. We have allocated growth capital expenditures in 2026 for accelerated detailed engineering, certain long lead items and other derisking activities, and we continue to expect to make a sanction decision in 2026. We are very well positioned to build one of the next major copper mines in the United States while continuing to maintain a strong balance sheet and reinvesting in other growth opportunities across our portfolio. Before we conclude, I want to take a moment to highlight the New Ingerbelle expansion permits at our Copper Mountain Mine just received and announced. This is a very exciting milestone for the British Columbia team as we expand growth optionality for Copper Mountain. The receipt of these permits is an important step to enhance the copper and gold production profile at Copper Mountain. It secures a longer mine life, preserves more than 800 jobs and ensures continued economic benefits and long-term financial stability for the region. We received the amended Mines Act and Environmental Management Act permits through the coordinated authorizations process managed by the British Columbia Major Mines Office. Throughout the permitting process, we proactively engaged with the local communities and the upper and lower Similkameen Indian band to ensure transparency. We recently finalized refreshed participation agreements with the bands, reinforcing our commitment to strong Indigenous partnerships. The New Ingerbelle permit ensures that we'll be able to advance this BC major project and extend our partnership with the local communities to facilitate additional growth investments at Copper Mountain and further add to our 99 years of successful operations in Canada. Concluding on Slide 16. 2025 demonstrated the benefits of Hudbay's diversified operating base, our unique copper and gold exposure and our operating resilience. I'm extremely proud of the performance we were able to achieve despite the many operational interruptions. Our continued focus on cost control enables us to maintain industry-leading margins and deliver strong and stable cash flows. Once Copper World is in production, we expect our annual copper production to grow by more than 50% from current levels. This will reinforce our position as one of the largest Americas-focused copper producers with a well-balanced and geographically diversified portfolio of assets. Our expected production will be weighted approximately one-third each in Canada, the United States and Peru and further enhanced Hudbay's exposure to copper, representing more than 70% of consolidated production and revenue. I have no doubt that we will continue to see more transformations as we execute on our growth strategy and prudently invest in our world-class pipeline to deliver the highest risk-adjusted returns for our stakeholders. And with that, we're pleased to take your questions. Operator: [Operator Instructions] The first question is from Ralph Profiti with Stifel Financial. Ralph Profiti: Peter and Eugene, this capital allocation framework is coming at a time when we're seeing the biggest spread between actual metal prices and spot metal prices and consensus metal prices. And when you talk a little bit about some of the commodity price scenarios, I'm just wondering how would you characterize your approach versus the past on some of the scenario analysis that you do? And how are you going to balance crowding out opportunities versus metal prices being used versus buy versus build context? I'd like a little bit on that, please. Chi-Yen Lei: Thanks for your question. And I think this is an ideal time to unveil this capital allocation framework because of the volatile markets that you described. So as you know, we have a proven track record of allocating capital to high-return opportunities. That's what netted us the New Brit gold mill and then the Pampacancha investment, and that's achieved 25% IRRs over the past few years and helped us deleverage our balance sheet. Now with Mitsubishi on board, that really essentially helps us fully fund the Copper World project. And so we're going to be able to go into the end of this decade, having delevered the company, funded and built Copper World and now have the opportunity to fund greenfield projects and brownfield high-return projects at each of our operating sites. When we run and to best determine how to allocate that capital, running this process allows us to run various scenarios, use varying prices and even opportunities to finance some of this growth. And so when we use this holistic approach, we are able to balance the growth aspects and prudently fund them, but while also keeping an eye to capital returns. And so we're ramping into the first dividend increase in our company's history. It's nominal, but it's a start. And as you saw last year, when we implemented the NCIB, these options or opportunities are on the board to be compared with reinvestment in our portfolio. So we're going to test these as these opportunities as they come. As you know, we have a very skilled technical services team and our operations are always looking for ways to enhance production and enhance mine life, and we'll weigh those opportunities at varying prices to the balance sheet and have an opportunity to increase returns to shareholders once we've determined the optimal structure. Ralph Profiti: Helpful. I appreciate the descriptive answer. And if I can just switch more to a technical question. Peter, what is Q3 going to look like in British Columbia on the SAG rehabilitation work? What does downtime look like? How does it -- what is tie-in time required? And I'm just wondering what happens to sort of throughput in that scenario in that quarter. Peter Gerald Kukielski: Thanks, I mean, great question. I think that as I mentioned in the comments that the planned replacement of the feed head will be early in the third quarter. So we continue to operate pretty carefully in the interim. But we still expect the operations to stabilize and improve progressively through that period. There will be a project period of, I imagine, several weeks during which we replace that head. But I don't expect there to be anything abnormal that's not provided for in our guidance. But Andre, do you want to perhaps elaborate on it a little bit? Andre Lauzon: Sure, sure. So the team is doing an excellent job. The parts are procured. So we've cast 4 sections, 2 have passed QA/QC, and we have a team over there inspecting there as we speak. Tentatively, as Peter mentioned, it's about a month of work. We'll be able to continue to run our SAG2 at the same time, and the teams are working through the details of that. It's scheduled, like you said at the beginning of Q3, which is probably straddling around July, August. We're looking for opportunities to pull that forward. We don't know exactly what that is right now. It's still they're inspecting, looking at shipping and all of the details of getting that in place. And so as we get to report next quarter, I think we'll definitely have a lot more clarity on the timing of that is like the opportunity of pulling it forward if we're able to do that is obviously ramping up the higher throughput sooner, which will improve our -- what we're forecasting for the year. But right now, it's scheduled on that end. But right now, as it stands, the back end of the year is probably about, call it, 20-ish percent higher than what the front half is of the year on a total metal. So if you want to give that sort of cadence, but the improvement, if we can pull it forward a bit as we know, then that will be a positive to the year. Operator: The next question is from George Eadie with UBS. George Eadie: Can I ask at Manitoba, just clarifying the updated 3-year production guide, that won't include any new drilling, will it? And secondly, just when we -- when exactly in the year will we get the next tech report for Manitoba, potentially bringing in Talbot and some other satellites? Peter Gerald Kukielski: Thanks for the question. So we haven't decided that we're producing a tech report for Manitoba this year. A lot of what we're doing, I mean, the current technical report is still valid in terms of production at Lalor. And our thinking with respect to another revised technical report at some point would be in order to bring in some of the other -- the results of other drilling that we're performing in the region, but it's not determined yet when that would be. Andre, perhaps you could elaborate. Andre Lauzon: Yes, sure. So it's a great question. I'd say is there's so much going on in Manitoba right now. And it's on all fronts. So we've seen some positive success with drilling 17 zone, the high-grade gold down plunge of Lalor. We now know the plunge direction. And so we'll be targeting an exploration drift to do this year to get to that area. The Talbot area is very exciting. There are 6 drills going at site right now. About 5 of them are doing definition drilling to prepare to be able to have that, call it, maiden Hudbay reserve for that. So the teams are working actively on pre-feasibility studies to be able to understand how we're going to mine it, ramp versus shaft, all of those details in optimizing it. And to date, the drilling as indicated, like Peter had mentioned, doubling the footprint of what we know, and it's open in many directions still. So that's also very exciting. The gold, there's a ton of optimization going on right now around New Britannia. We're looking at improving our flash flotation. And what that allows us to do, like although we have a permit at 2,500 tonnes per day, we're seeing some really high copper grades, which is great. And what we have to do is slow down the mill a little bit during when we're seeing those really high grades. And so the teams are looking on optimization there at New Britannia. We have a SART plant coming in at the end of the year, and that's also going to reduce our costs with reduction in cyanide, but also improvements on recoveries. We have some additional things we're looking at Stall. And if I complicate it even more, New Brit mill is sitting on top of New Brit mine. And that mine for close to 20 years, about 1.5 million ounces. And we -- since with the real run-up in gold prices, probably wasn't on our radar for a number of years. And so now we have teams actively looking at putting together a plan is like what do we actually have and what's the potential? And there'll be a lot more to come on New Britannia mine. So that's quite exciting. So why I say all of that is there's so many moving parts on how do you fit all of that into a technical report. And so it's just around how -- what's the timing to do that? And so I think we'll be able to give snippets later this year around what does it starts to look like. But to put all that in, we're very, very confident on sustaining about 185,000 ounces per year profile at a really good all-in sustaining, probably less than $1,200 an ounce long into the future. And I didn't mention as well as we're looking at optimization of cut-off within the mine as well. And that also has the potential to bring low-cost capital good grade ounces that were on the cusp before at $2,000 or so an ounce now at much higher prices. So we're looking at a lot of things. And so hold tight, I guess, is what I'd say is there's going to be some really good stuff coming. Chi-Yen Lei: If I could add with some comments in terms of catalysts, the 3-year guidance will be released along with our reserve and resource update at the end of March, and that will show this extension of this higher gold production at Lalor and Snow Lake that Andre speaks of at 185,000 ounces, well beyond kind of what was contemplated in the technical report. As Peter highlighted, we're looking at ways to daylight what would be the longer-term profile and with all the opportunities that Andre highlighted, we hope by the end of the year that we'll be able to catalyze many of those projects and be able to provide the market with this 5- to 10-year outlook at these new levels, and we think they'll be very value creating for Manitoba and Hudbay. George Eadie: Yes. No, that's super detailed and helpful, guys. Thanks very much. And maybe just one more, if I can sneak in kind of similar, but Mason, like the comments about that in the release, the PFS, like when could that be completed? And will we see the outcomes, I guess? And any updates on a potential partner even there? Peter Gerald Kukielski: Sure. So we're currently starting to work on Mason. We're building the team. We're kicking into pre-feasibility study work. I would expect that we would complete a pre-feasibility study in Mason later on next year. For sure, we would not contemplate partnering Mason at this early stage. But as we progress through the pre-feasibility study, we would look at opportunities to do that based on the work that we do. But partnering is not something that we're contemplating there right now. Andre Lauzon: Yes. It's the right time. It's the right time right now. Eugene mentioned about our capital allocation framework and investing in different opportunities. It was somewhat parked for 2 reasons. One, because our availability of capital to spend on doing that because we have to do geotechnical drilling, hydrology, getting all of the key things to really put a robust pre-feasibility together. And we are waiting for some clarity with the federal government around the placing waste rock and tails on federal land. That has now been resolved. And so with both of those in our back right now is we are ramping up like as what Peter said, and building the team to accelerate that project because it is the next to copper world, like it's the next largest undeveloped copper deposit there in the U.S. It's a great project. Operator: The next question is from Fahad Tariq with Jefferies. Fahad Tariq: Maybe just on Peru, can you let us know what the latest is on the Maria Reyna and Caballito permits and what's happening there? Peter Gerald Kukielski: Yes, absolutely, for sure. It's -- there's been no change to the remaining steps for the drill programs, which includes the government's prior consultation process with the local community. And given the environment in Peru right now, I think this process is likely delayed. Remember that this is an election year coming up. We've had a change in President. So the time lines are quite difficult to predict as we've learned from Pampacancha several years ago. I think that predicting -- although we can't predict the permitting time lines, I think let's get through the elections. We're confident we will get the permit. I just can't tell you when it will be. But I am extremely confident that Maria Reyna and Caballito play a big part in value creation at Peru in the future. But at the moment, I can't provide you with an accurate time line. Fahad Tariq: Okay. I understand. And then maybe just switching gears to Copper World. I know we're still waiting for the feasibility study, but just thoughts around the copper price assumption that you might be using or how we should be thinking about CapEx relative to the $1.3 billion, which is the current estimate? Chi-Yen Lei: I can address the copper price assumption. And as you saw in the PFS, this is a very robust project. It generated close to 20% IRR at $3.75 copper. It is the highest-grade undeveloped copper deposit in the Americas. And as we update the pricing for the feasibility study, we'll be moving toward consensus prices, which is today moved from -- moved in the area of $4.50 to $4.75 per pound of copper. We'll obviously do various pricing scenario analysis around those prices, but I would expect that it would be in that range at this moment. Peter Gerald Kukielski: And on the CapEx side, I would say, recall that the PFS was issued in October of '23, so 2.5 years have passed. So of course, there's going to be a little bit of escalation. There's been some tariffs introduced on key equipment that might be procured from outside the country. So we expect there to be some escalation, but we don't expect it to be material. Andre Lauzon: Yes. And different than the response from Maria Reyna with the government, like this is fully in our control to deliver the feasibility and the team is doing an excellent job. Like we're within 1.5% of our schedule. So we're tracking right now at about 67% out of about 68%. And so the team is doing an excellent job building a world-class feasibility. And so we expect it to come to FID at the times that we had forecast. Chi-Yen Lei: And the collaboration with our JV partner, Mitsubishi has been excellent. We've had our first JV Board meeting. They're on site with all of the decisions and have contributed. And so for those that were worried that this would delay the DFS, it does not, as Andre said, we're right on schedule. Peter Gerald Kukielski: Sorry, I'll just go back to the Maria Reyna and Caballito question. I think I was saying I can't predict when it's going to be. It's going to happen for sure. It's going to happen, but it may not be this year, but it's coming. And what I can say is that our communities and our partners are incredibly eager to get going on it. It's just a process that's got to be followed. And we know how Peru goes, especially during an election year. It's still a great copper destination, will continue to be. So just hold tight it's going to happen. Andre Lauzon: Yes. And we've refreshed the team, too, right? So brand-new minted Vice President down there in South America, very familiar with the area, coming out of some of the challenges that we had through the summer with some of the communities. We refreshed the team for Uchucarcco and Chilloroya. And so those are the people that will carry this through to the final. Operator: The next question is from Orest Wowkodaw with Scotiabank. Orest Wowkodaw: A couple of follow-ups. Your CapEx guidance for this year at Copper World, $135 million, should we anticipate that, that could increase if you FID the project in the second half of the year? Or will that just start in '27? Chi-Yen Lei: The CapEx guidance that we provided of $135 million is basically the feasibility study plus the early works we need to continue to keep schedule for potential first production in early 2029. With the FID, we'll provide sort of the rest of the spend for the year, but I do not expect that to exceed the $420 million that we've already received from Mitsubishi. So if you think about sort of the funding, I would say that we would expect Copper World to be cash flow positive from a Hudbay consolidated perspective this year. The $420 million contribution obviously came in January. We're going to spend about $135 million leading into the FID decision. On FID, the Wheaton payment becomes due, the first $180 million. And so we expect to be in a very good position from a funding perspective. So that's why one of the reasons we carved out the Copper World JV spending from the growth CapEx of the company because it's more than fully funded. Orest Wowkodaw: So that $135 million, that's basically all pre-FID. Chi-Yen Lei: It would be -- it will be all pre-FID, but it's -- some of the spend would have been post FID. So it's basically ensuring that we move the project along as soon as possible, and we have the endorsement with Mitsubishi to proceed in this manner. Orest Wowkodaw: Okay. And then just shifting gears, I just wanted to clarify something you said earlier. Did I hear correct that you're suggesting that you can maintain 185,000 ounces of gold in Manitoba for the next 5 to 10 years? Chi-Yen Lei: That's the goal. And we'll be able to tell you that number for the next 3 years with our 3-year guidance. And the opportunity this year is to pull all of the projects that Andre speaks of and put them in buckets so that we can talk about the long-term production horizon of Snow Lake, which is targeted to be at that level for the next 5 to 10 years. Orest Wowkodaw: Okay. And the end of March then update will just be the 3-year guide, and then we'll have to wait for the rest after. Is that right? Peter Gerald Kukielski: More to come. Operator: The next question is from Emerson [indiscernible] with Goldman Sachs. Unknown Analyst: So I have 2 questions here. First one, just trying to understand, I mean, what is the pecking order of the projects that the company have right now? I mean there are a lot of stuff going on. So Copper World is obviously a priority, but then you have Ingerbelle expansion, 1901 development deposits, Mason project right now. And also -- so just trying to understand here what is the priorities apart from Copper World? And also on Copper World, just trying to understand here if you guys could bring forward the concentrator leach facility that was expected by 2032. Just because, I mean, you have been seeing U.S. administration putting copper as a critical mineral. So I think could make sense, right, to bring that project forward so you can sell copper cathode domestically? And just a final question on Manitoba. Just trying to understand here how could the asset's economics profile change with this ramp-up in production coming from 1901, Talbot, et cetera. So would we still see the same level of all-in cash cost for the asset or that could change in light of this new ore coming from those deposits? Peter Gerald Kukielski: These are great questions, thank you. So in terms of priorities, you're absolutely right. So Copper World is just such a transformational project for our company that it is. So it's a clear priority in terms of the activities that are underway by the U.S. business unit. And of course, it occupies a lot of attention from corporate management, from our Board, et cetera. But it is a U.S. business unit priority and a company priority. That said, as Eugene described in his words about capital allocation, given the company's situation balance sheet-wise, the strength of our balance sheet going into this year, we do have capital available for the lowest risk-adjusted return projects at each business unit, and we want each business unit to push projects forward for consideration in that pecking order. So yes, you spoke about New Ingerbelle. We're super excited to have received the New Ingerbelle permit yesterday. And of course, that will be a priority in British Columbia once the SAG mill 2 and second SAG mill project has been completed fully and ramped up, it will become a priority there. In Peru, of course, the priority is getting the pebble crushing circuit done and then looking forward towards getting permits whereby we could further expand production over there. Manitoba, of course, you've heard about what our priorities there is that we're growing that whole asset up into something pretty amazing. So in terms of your question with respect to the economic profile there, we would target and expect that the economic profile or all-in sustaining costs would remain roughly of the same order of, let's say, $1,200 or so an ounce because we don't have to develop any new infrastructure. Everything is close to infrastructure. And then with your question with respect to Copper World and concentrate leaching and bringing that forward, we certainly would consider bringing it forward, but we don't want to start construction of that facility while we're still building the Copper World mine itself because we don't want to divert the attention of the project team. But it may make sense as we progress through construction that we look at bringing it forward so that we can actually continue to utilize the same team that's actually building the mine out itself. So I would say more to come on that. So Andre, would you -- anything that you would add? Andre Lauzon: I think you characterized it really well. It just feels like a $15 billion company. There's a lot of things going on in all areas and lots of growth going on in each different business unit. And so it's not -- they're all competing for capital. But the way, as Eugene set it up earlier on is we set ourselves up so that we can invest in all of the different areas. We have great projects in each of the different areas. And so it's just a really exciting time. And yes, there's a lot going on. Chi-Yen Lei: Maybe to summarize, Emerson, the budget for 2026 and the guidance for 2026 for growth capital includes funding for all of these projects already. And so they have been -- they've gone through the process. These are the best projects that are in each of the business units, and they're accounted for. So for example, there's $80 million of growth capital for British Columbia allocated to advance New Ingerbelle. For example, there's $40 million of growth capital allocated to Peru for the pebble crusher and $50 million to $60 million of exploration and development work in Manitoba for 1901 and exploration. So we are going to be able to build Copper World and fund advancements and increases in throughput and high-return projects at each of our business units to be able to come out of the decade with not only a new mine, but also refreshed and improved mines at 3 of our existing sites. Operator: The next question is from Craig Hutchison with TD Cowen. Craig Hutchison: I just want to follow back on Eugene's comments and Orest's question on Manitoba. The extension of the production and grade profile for gold for the next 5 to 10 years, is that being driven by resource conversion? Is it more just the exploration step out? Or do you also include some mill throughput expansions there? Andre Lauzon: All of those. All of those. So there's -- we've been drilling and exploring around Lalor mine for the last couple of years, right? And we've been pretty silent on what we've been finding, but we've been getting success. And so part of that is conversion of resource to reserve. Some of it is some new discovery. We talked about the satellites. So Talbot would be considered a satellite. There's a number of other ones in our portfolio. The real unknown is obviously New Britannia mine, right? So the best place to find is right in the shadow of a headframe and like that itself is a company maker. And so if you take all of that and then what you said is around the improvements. So we're challenging recovery. We're up over 70% recovery at Stall. We're looking at it with, like I said, the SART process at New Britannia, which is in our project for the end of the year. Hot tails as we look at the opportunity to get even more from Stall and even precious metal reprocessing from the tailings there. And then the Flin Flon one that someone mentioned earlier on that we didn't talk about, we're into the depths of pre-feas. We're working on and we're in the final stages of solving how to get the precious metals out of the zinc plant residue. And that is like the solution for the back end of the Flin Flon tails and the team is working on a really unique, but it's a process to convert pyrite to pyrrhotite and run it through our autoclaves and then use the solution that we have for the zinc plant. So that's moving along quite well, too. And so yes, no, we have a lot of -- there's a lot of gold to add to our portfolio from new discovery all the way through to getting better at recovering it and bringing new deposits online. So yes, it's an exciting few years ahead of us for sure. Craig Hutchison: Great, guys. And just maybe on New Ingerbelle, now that you guys have the permit in hand. Is that something that could positively impact your production in, say, 2028? Is there much capital to bring that project into play? Andre Lauzon: You're talking New Ingerbelle mine or the mill. Craig Hutchison: New Ingerbelle, the permits. Andre Lauzon: New Ingerbelle, sorry, and still on goal. Peter Gerald Kukielski: You're still in Manitoba. Andre Lauzon: I'm still in Manitoba. So -- yes, new Ingerbelle, yes, absolutely. So we have about 2 years of construction we have to do. It's very straightforward, haul roads, East haul road, West haul road, build the bridge, some ponds to build and then we'll be into it. And what's really neat about it, and we alluded in the press release is it's pretty much if you look at the long term, the copper grade is a little bit lower, but it's very close. But it's almost 60% to 100% higher gold grade. It's a really, really big improvement in grade. And the stripping is like we're running at almost like a 5:1 strip right now, it's about 3x less. And so from a profitability standpoint, not only are we increasing the gold through that increased throughput, but we're going to be spending a lot less on stripping. So it's -- New Ingerbelle is -- will be transformational for Copper Mountain in the 2028 range. Peter Gerald Kukielski: And there's also exploration upside at New Ingerbelle too. So we could... Andre Lauzon: $20 million of drilling going on, and we're exploring at Ingerbelle for upside potential to expand that high-grade gold, copper resource and -- as well as there's some targets on the Copper Mountain side as well, too. So yes. Craig Hutchison: So it sounds like that something could come into 2028 time frame based on the 2-year build. Andre Lauzon: That would be the plan, I would think, is where we'd be, yes. Craig Hutchison: And just one last question for me. Just on costs. It looks like you guys are using pretty conservative metal prices for your C1 calculations. Can you tell us what you're using for your TCRC costs just to get a sense of whether there's some potential upside there from a C1 cost perspective? Chi-Yen Lei: They didn't seem that conservative at the beginning of the year, but they are today. So we're definitely enjoying the benefits of the higher prices. On the TCRC front, we're -- our assumption is 0. So again, we're entering into deals that are lower -- that are below 0. So again, there could be a little bit of upside there. Operator: The next question is from Anita Soni with CIBC World Markets. Anita Soni: Most of them have been asked and answered, but I just want to clarify on BC. With the tie-in in the second half of the year, do you expect there'll be any impact into 2027 from the, I guess, the delay in that tie-in? Andre Lauzon: No, not at all. No, it's scheduled to ramp up, like there's -- like right now, even with the reduced mill capacity, we're seeing upwards sometimes above 40,000 tonnes per day at the current -- with the current restrictions that we placed on it. And so all of our processes are all being prepared right now for that ramp-up once we have that new feed-in shell in place. So we don't anticipate anything that's really problematic. Like -- there's no new feeders, nothing. It's just changing it and running at a heavier loading rate in the mill. So right now, we're being conservative on the bearing pressure in terms of the amount that we actually feed into the mill, but it's literally turning up the dial. And the mine itself has made some really, really great strides to increasing their production rate. So we're seeing averaging around 280,000 tonnes per day, which is unlocking high-grade copper coming in, in the mid part of the year as well, too. Anita Soni: Okay. So then on Jan 1, 2027, what's the throughput rate we should be using? Andre Lauzon: We should be using 50,000 tonnes a day. That's where we anticipate to be. Operator: And our last question is from Martin Pradier with Veritas Investment Research. I'm sorry, Martin, we're unable to hear you. It's a very corrupted line. Are you speaking directly into your microphone? Okay. Unfortunately, I think we're going to have to move on. So I would like to hand the conference back over to Candace Brule for closing remarks. Candace Brule: Thank you, operator. And Martin, please feel free to e-mail us your questions given the technical difficulties there. But thank you, everyone, for joining us today. If you have any further questions, please feel free to contact our Investor Relations team. Thank you and have a great day. Operator: This concludes the conference call for today. You may now disconnect your lines. Thank you for participating and have a pleasant day.
Operator: Thank you for standing by, ladies and gentlemen, and welcome to EuroDry Limited Conference Call for the Fourth Quarter 2025 Financial Results. We have with us today Mr. Aristides Pittas, Chairman and Chief Executive Officer; and Mr. Anastasios Aslidis, Chief Financial Officer of the company. [Operator Instructions] I must advise you that this conference is being recorded today. Please be reminded that the company announced its results with a press release that has been publicly distributed. Before passing the floor to Mr. Pittas, I would like to remind everybody that in today's presentation and conference call, EuroDry will be making forward-looking statements. These statements are within the meaning of the federal securities laws. Matters discussed may be forward-looking statements, which are based on current management expectations that involve risks and uncertainties that may result in such expectations not being realized. I kindly draw your attention to Slide #2 on the webcast presentation, which has the full forward-looking statement, and the same statement was also included in the press release. Please take a moment to go through the whole statement and read it. I would now like to turn the floor over to Mr. Pittas. Please go ahead, sir. Aristides Pittas: Good morning, ladies and gentlemen, and thank you all for joining us today for our scheduled conference call. Together with me is Tasos Aslidis, our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the 3- and 12-month period ended December 31, 2025. Please turn to Slide 3 of the presentation. Our financial highlights are shown here. For the fourth quarter of 2025, we reported total net revenues of $17.4 million and net income attributable to controlling shareholders of $3.2 million or $1.14 earnings per diluted share. Adjusted net income attributable to controlling shareholders for the quarter was $2.4 million or $0.87 per diluted share. Adjusted EBITDA for the quarter was $7.5 million. Please refer to the press release for the reconciliation of adjusted net income and adjusted EBITDA. Tasos Aslidis will go over our financial highlights in more detail later on in the presentation. Since the initiation of our share repurchase plan of up to $10 million, which was originally announced in August 2022 and subsequently extended in 2023, 2024 and 2025, we have repurchased 334,000 shares of our common stock in the open market for a total of $5.3 million. The timing and pace of repurchases under the program is executed in a disciplined manner at management's discretion. Please turn to Slide 4 to view our recent developments, including sale and purchase, commercial and operational highlights. During the quarter, we sold motor vessel Eirini P, Panamax dry bulk vessel built in 2004 for $8.5 million. The vessel, one of the oldest and the longest held assets in our current fleet was delivered to new owners and unaffiliated third party on October 21, 2025, resulting in a gain just shy of $1 million. The transaction forms part of our ongoing fleet renewal strategy. From a chartering standpoint, our fixtures during the fourth quarter were predominantly short term. We concluded just 1-year time charter for motor vessel Christos K and Ultramax dry bulk vessel at a rate of $15,500 per day. representing a shift from our prior strategy of maintaining full market exposure by employing our vessels either on index-linked charters or on short-term contracts when market rates were lower. If rates continue to increase, we intend to also increase our longer-term cover by fixing more ships on longer charters. Currently, 4 of our vessels are employed on index-linked charters at 115% of the average Baltic Supramax 10 time charter average index through at least November 2026, maintaining full exposure to market movements. The remaining 7 vessels are employed on time charters with duration ranging from approximately 1 month to just over 3 months. The specifics of the charters fixed during the period are outlined in the accompanying slide. We continue to use FFAs occasionally as a hedging strategy. And in November 2025, we entered into a forward freight agreement whereby we sold 180 days of the Supramax 10TC-average for the first quarter of 2026 at an average of $12,012 per day, which was equivalent to approximately 2 vessels. Just yesterday, we completed the freight to sell 90 days of the Kamsarmax 5TC-average index for each of the second and third quarters of 2026 at average of $19,250 for the second quarter and $17,250 for the third quarter, equivalent to 1 vessel. Finally, we had no idle or commercial off-hire periods during the quarter. Please turn to Slide 5 for our current fleet profile. EuroDry's current fleet consists of 11 vessels with an average age of approximately 14 years and a total carrying capacity of about 765,000 deadweight tons. In addition, we have 2 Ultramax vessels under construction, each with a capacity of 63,500 deadweight tons, which are scheduled for delivery in the second and third quarters of 2027. Upon delivery, our fleet will expand to 13 vessels with a total carrying capacity of about 893,000 deadweight tons. Next, please turn to Slide 6 for a further update on our fleet employment. As of February 2026, our fixed rate coverage for the remainder of the year stands at approximately 22% based on existing time charter agreements. This figure excludes the 4 vessels employed under index-linked charters, which while subject to market fluctuations continue to provide secure employment. Turning to Slide 8, we will go over the market highlights for the fourth quarter ended on December 31, 2025, up until recently. Panamax spot rates declined sharply from approximately $14,600 per day in the fourth quarter of 2025 to about $9,650 per day by late December before recovering to roughly $13,500 per day. As of February 13, 1-year time charter rates have increased further above prevailing spot levels with Clarksons assessing the standard Panamax 1-year time charter rate at approximately $16,250 per day. During the third quarter, the Baltic Dry Index -- during the fourth quarter, the Baltic Dry Index and the Bulk Panamax Index recorded year-over-year increases of approximately 47% and 52%, respectively, reflecting a significant improvement compared to the same period last year, supported by stronger-than-expected demand for minor bulks, active grain trade flows and the tightening in vessel supply driven by longer voyage distances and regional trade disruptions. However, despite this rebound, freight markets remained volatile, reflecting the ongoing macroeconomic uncertainty and the uneven regional trade activity. Please now turn to Slide 9. According to the IMF's January 2026 World Economic Outlook update, the global economy is projected to maintain resilient expansion with GDP growth now forecast at 3.3% in 2026 and 3.2% in 2027, reflecting a slight upward revision to the outlook relative to last October's projections. Despite a relatively stable medium-term outlook, there are still meaningful downside risks. These include the possibility that expectations around technology-driven growth proved too optimistic as well as the risk of escalating geopolitical tensions. Ongoing trade frictions and broader geopolitical fragmentation continue to create uncertainty for the global economy. The recent events in Venezuela and the threatened military activity in the Middle East are reminders that external risks remain always present. That said, some trade pressures are expected to ease in 2026, which could help reduce the drag from tariffs on overall growth. In the United States, growth is projected to remain broadly steady with GDP growth expanding by approximately 2.4% in 2026 and 2% in 2027, although business and consumer sentiment appears subdued and inflation is expected to ease towards target only gradually. In January 2026, the Federal Reserve left interest rates unchanged, highlighting ongoing improvements in economic conditions while signaling a cautious approach towards future policy adjustments. Among emerging markets and developing economies, India is forecast to remain one of the fastest-growing major economies with GDP growth projected at approximately 6.4% in both 2026 and 2027, which is undermined by robust domestic demand and investment momentum. Recent trade agreements, including the newly agreed U.S.-India trade deal are expected to reduce trade-related uncertainty and together with easing financial conditions and stronger corporate balance sheets could help unlock a renewed private investment cycle. The ASEAN-5 region is also projected to maintain solid growth with expansion of 4.2% in 2026 and 4.4% in 2027, supported by strong domestic investment and technology exports. Meanwhile, China's growth trajectory is expected to moderate with GDP growth forecast at 4.5% in 2026, down from 5% in 2025 and easing further to 4% in 2027, reflecting the pressures from the weaker external demand, subdued manufacturing investment and ongoing challenges in the property sector. Turning to the dry bulk sector and how broader economic trends translate into vessel demand. Clarksons projects trade growth of 1.9% in 2026 and 1.4% in 2027. While this reflects a moderation compared to previous years, it still points to continued expansion in dry bulk trade volumes, albeit at a more measured and moderated pace. Please turn to Slide 10. Let's review the current state of the order book in the dry bulk sector. As of February 2026, the order book stands at approximately 12.4% of the existing fleet. Although higher than the 7.5% recorded in 2021, it remains among the lowest levels in history. For context, the order book accounted for 66% of the fleet in 2008 and approximately 24% in 2014. The current limited ordering activity reflects shipyard capacity constraints, high newbuilding costs and uncertainty surrounding future fuel technologies and environmental regulations. Turning to Slide 11. Let us now look at the supply fundamentals in a little more detail. As of February 2026, the total dry bulk fleet consists roughly of 14,600 vessels, representing around 1.1 billion deadweight tons. According to Clarksons latest estimates, new deliveries as a percentage of the existing fleet are projected at 4.2% for 2026, 3.9% for 2027 and 4.3% for 2028 and beyond. with actual fleet growth expected to be slightly lower due to slippage and demolition activity. Looking at the fleet age profile, roughly 11% of the global fleet is over 20 years old, representing vessels that could be considered for scrapping if market conditions moderate or environmental regulations become more stringent. Please turn to Slide 12, where we highlight our dry bulk market outlook in Q4 -- market outlook. In Q4 2025, dry bulk carrier market strengthened with average Supramax and Panamax time charter rates rising roughly 8% from Q3, reaching the highest levels in two years. Seasonal demand for dry bulk cargo supported this momentum, but the usual holiday slowdown didn't hit as hard as expected. New trade routes, most notably the growing bauxite trade from West Africa are shaping market dynamics, creating fresh opportunities and changing the traditional supply-demand pattern in the sector. The bauxite trade has seen a significant lift, growing from approximately 5% to over 15% of Capesize cargo volumes. Capesize vessels remain at the forefront of this activity, but smaller segments also saw meaningful improvements during Q4, highlighting the broad-based strength across the dry bulk market. Looking ahead to 2026, our outlook points to a picture broadly similar to 2025. However, markets remain unpredictable due to ongoing geopolitical disruptions, making forecasting particularly challenging with risks on both the upside and the downside. While dry bulk demand growth may continue to lag behind fleet expansion, factors such as off-hire period for special survey and slower operating speeds should help maintain overall market balance. Within the dry bulk segment, Capesize vessels are expected to outperform smaller classes, driven in large part by the expanding bauxite trade. At the same time, Guinea's Simandou iron ore project is set to significantly increase global supply once production ramps up. Backed in part by Chinese investment and aligned with Beijing's broader resource strategy often associated with the Belt and Road initiative, the project is designed to diversify China's iron ore sourcing. Over time, this could reduce China's dependence on imports from Australia and Brazil and potentially displace lower-grade domestic production. Meanwhile, Chinese purchases of U.S. soybeans remain an important factor following the October trade truce with agricultural flows continuing to influence supply and demand. Additionally, any normalization of Red Sea routing patterns could slightly reduce effective vessel demand if ships revert to traditional routes. But on the other hand, broader geopolitical developments may continue to redirect trade flows and thus reduce overall fleet efficiency. On the supply side, newbuilding activity remains relatively restrained. Shipyard capacity is largely constrained through the next several years and continued uncertainty around future fuel technologies amid rising orders of methanol and LNG fueled vessels. The overall order book to fleet ratio remains low by historical standards, which could provide a supportive backdrop for charter rate recovery if demand strengthens. That said, order book varies by segment. For Panamax and Ultramax vessels, order books are trending close to historical median levels, whereas the Capesize order book remains near historical lows. Although the industry is clearly shifting towards alternative fuels, the pace of transition is likely to be more gradual than initially anticipated due to technical and economic complexity as well as delays in finalizing the IMO net zero framework. Looking further ahead, 2027, visibility remains limited. Global growth and geopolitical developments will play a decisive role. While fleet growth is expected to remain moderate, currently projected rate expansion may not be sufficient to materially tighten the market. At this stage, we assume a broadly balanced market. Geopolitical and economic uncertainties could sway the market in either direction. Let's now turn to Slide 13. As of February 13, 2026, the 1-year time charter rate for 75,000 deadweight Panamax vessel stands at $16,250 per day, slightly higher week-over-week and comfortably above the historical median of $13,375 per day. In the asset market, 10-year old Panamax bulk carrier values remained firm despite the correction of approximately 8% from the mid-2024 peak. Current prices at around $27 million remain well above both the historical median of $16.7 million and the 10-year average of approximately $18.7 million, underscoring the continued resilience in secondhand valuations. This sustained strength also reflects structurally higher newbuilding prices driven by inflationary pressures, a limited shipyard availability and the cost of complying with environmental regulations. At the same time, healthy liquidity and cautious fleet growth expectations continue to underpin investor confidence in the sector. While today's prices represent a moderate pullback from the mid-2024 peak of roughly $29.5 million, they still remain very elevated by historical standards. Concluding my part of the presentation, I would like to highlight our profitable fourth quarter of 2025 and the continued strengthening of our liquidity position. Following the sale of the Eirini P, the refinancing of the Yannis Pittas loan and the funding of a substantial portion of the delivery installments of our motor vessel series, which is under construction, our balance sheet has become much more robust. This enhanced liquidity positions us to pursue additional investments should attractive and accretive opportunities arise, something we admittedly don't see in this high valuation environment. Looking ahead, however, we remain focused on disciplined capital allocation, operational efficiency and delivering profits for the benefit of all our shareholders. And with that, may I pass the floor over to Tasos for his part of the presentation. Anastasios Aslidis: Thank you very much, Aristides. Good morning from me as well, ladies and gentlemen. As usual, over the next 4 slides, I will give you an overview of our financial highlights for the fourth quarter and full year of 2025 and compare them to the same periods of 2024. For that, let's turn to Slide 15. For the fourth quarter of 2025, we reported total net revenues of $17.4 million, representing a 19.9% increase over total net revenues of $14.5 million during the fourth quarter of 2024. This was the result of the higher time charter rates our vessels earned in the fourth quarter of last year compared to the same period of the year before, which was partly offset by the lower average number of vessels operated in the fourth quarter of 2025 as compared to the year before. Interest and other financing costs for the fourth quarter of 2025 decreased to $1.6 million as compared to $1.9 million for the previous year. Interest expense during the fourth quarter of 2025 was lower mainly due to the decreased interest rates of our loans, the SOF rate plus the margin on average as well as the decreased average debt that we carried during the period as compared against to the quarter of the year before. Adjusted EBITDA for the fourth quarter of 2025 was $7.55 million compared to $1.85 million achieved during the previous -- the fourth quarter of the previous year, an increase of more than 300%. We recorded a $0.7 million gain on the sale of our MV Eirini P during the fourth quarter of 2025 against no sales that we recorded during the fourth quarter of 2024. Basic and diluted earnings per share attributable to controlling shareholders for the fourth quarter of 2025 were $1.14 calculated on 2.8 million approximately basic and diluted weighted average number of shares outstanding compared to a loss per share of $2.28 calculated on 2.7 million basic and diluted weighted average number of shares outstanding for the fourth quarter of 2024. Excluding the effect on the net income attributable to controlling shareholders for the quarter of the unrealized gain on derivatives and the gain on the sale of the vessel, the adjusted earnings per share, again, attributable to controlling shareholders for the fourth quarter of 2025 would have been $0.88 and $0.87, respectively, basic and diluted compared to an adjusted loss of $1.33 per share for the year before -- for the quarter of the year before. Let's now look at the numbers for the full year 2025 and compare them to the full year of 2024. For the full year of 2025, the company reported total net revenues of $52.3 million, representing a 14.4% decrease over total net revenues of $61.1 million during the 12 months of 2024, a result both of the increase -- of the decreased number of vessels we operated and the lower -- slightly lower time charter equivalent rates earned by our vessels on average during the full year of 2025 as compared to the year before. Interest and other financing costs for the 12 months of 2025 amounted to $6.9 million compared to $8 million for 2024. Again, this decrease is mainly due to the lower interest rate allowance paid and partly offset by the higher average debt we get during the whole year of 2025, again, as compared to the previous year. Adjusted EBITDA for the 12 months of 2025 was $12.55 million compared to $9.4 million achieved during 2024, a 33% increase. For the full year, we recorded a $2.8 million gain on sales of vessels, both the Eirini P that we sold in Q4, but also Tasos that we sold earlier in the year. Again, we had no vessel sales to report for 2024. Basic and diluted loss per share attributable to controlling shareholders for the 12 months of 2025 was $1.55 compared to basic and diluted loss attributable to controlling shareholders for 2024, which was $4.62. Excluding the effect on the net income attributable to controlling shareholders for 2025 of the unrealized loss on derivatives and the net gain on sale of vessels, the adjusted loss per share would have been $2.5 basic and diluted compared to an adjusted loss per share of $4.10 for 2024. Let's now move to Slide 16 and look at more numbers there. As usual, in this slide, we report our utilization rates for the fourth quarter and full year for the 2 years we are comparing. Let's look first at the quarterly results, the fourth quarter of 2025. For that quarter, our commercial utilization rate was 100%, while our operational utilization rate 99.6% as compared again to 100% commercial and 99.4% operational for the year before. On average, 11.2 vessels were owned and operated by us during the fourth quarter of 2025, earning an average time charter equivalent rate of $16,260 per day, compared to 13 vessels that we operated during the same period of the previous year, which earned on average $12,201 per day. a significant improvement of the daily earnings. Our total operating expenses, including management fees, G&A expenses, but excluding drydocking costs were $7,869 per vessel per day during the fourth quarter of 2025 compared to $7,087 per vessel per day during the same period of 2024. If we move further down this table, we can see also -- at the bottom of the table, we can see the breakeven -- the cash flow breakeven rate, which takes into account in addition to the operating expenses I mentioned, drydocking expenses, interest expenses and loan repayments without balloons expressed in dollars per day basis. Thus in total, for the fourth quarter of 2025, our daily cash flow breakeven rate was $13,231 as compared to $11,259 for the fourth quarter of 2024, partly reflecting the higher drydocking expenses we incurred during that period. Let's move to the right part of the slide and look at the yearly results, again, starting with the utilization rate, which I'll go very quickly. All of the utilization rates we recorded were around 99% or -- between 100% and the time charter equivalent rates we earned were $11,642 on average for 2025 versus $13,039 on average for 2024. We see here that while the fourth quarter of 2025 was significantly higher than the fourth quarter of 2024, the whole year on average ended up producing lower time charter rates because the market at the beginning of the year was lower. Our total operating expense for the year, including management fees and G&A expenses, again, excluding dry docking costs, averaged $7,422 in 2025 compared to $6,967 in 2024. The cash flow breakeven for the full year ended up being $12,345 for 2025 compared to $13,221 for 2024, again, the reduction primarily due to lower drydocking expenses on average for the full year. Let's now move to the next slide, Slide 17, to review our debt profile. As of December 31, 2025, our outstanding debt stood at $103.7 million with an average margin of about 2%. Assuming a 3-month SOF rate of around 3.65% as of February 18, you can see that the cost of our senior debt on average was 5.65%. The chart in the upper part of this slide shows our debt amortization schedule with debt repayments of $12.2 million during 2026, $21 million in 2027 and $17 million in 2028, inclusive of balloon payments of $1.2 million, $10.2 million and $6.7 million, respectively. Please note that although we have arranged the debt financing for 2 Ultramax newbuildings, our current debt figure that I quoted you includes only the portion of 1 of the 2 loans that we used to finance part of the predelivery payments. Please also note that the 2027 and 2028 repayment figures I gave you include repayments of the 2 set loan facilities that we have started drawing to finance our Ultramax newbuildings, which are scheduled for delivery in the -- during the second and third quarters of 2027. Turning to the bottom of this slide, we can see our cash flow breakeven estimate for the next 12 months, broken down by its major components. Our EBITDA breakeven level is $7,478 per day and our overall breakeven level -- cash flow breakeven level for the next 12 months is expected to be around $11,663 per vessel per day. Let's move now to my last slide, Slide 18, to review some highlights from our balance sheet in our usual brief style. This slide offers a snapshot of our assets and liabilities and hopefully provides a concise picture of our financial position. As of December 31, 2025, cash and other assets in our balance sheet stood at approximately $31.8 million, while advances for newbuildings amounted to about $14.4 million and the remaining part on the asset side of our balance sheet is our vessels, which at their book value stood at about $166 million, resulting in a total book value of our assets of about $212 million. On our liability side, as I mentioned, bank debt is a big part of our liabilities, which stood at the end of last year at $103.7 million, while we had other short-term liabilities of $5.9 million, all in all, representing about 66% of our overall liability side. This results in a book value for our shareholders' equity of about $93 million, which translates in a net book value per share of $31.8. However, based on our internal and external valuations of our ships, the market value of our fleet exceeds its respective book value. We estimate it's worth about $214 million versus a book value of $166 million, meaning that the about -- the difference of about $48 million should be added to the value of our shares. If we do that, we will come up with a net asset value per share in excess of $48 per share. If we compare this to the recent trading range of ourselves, although it has increased in the last few days, of about $17, it becomes evident that there is significant potential upside for the owners of our stock. And we hope both our shareholders and prospective investors will appreciate that, hoping that narrowing of this discount will provide significant returns to their investment. And with that, I will pass the floor back to Aristides to continue the call. Aristides Pittas: Thank you, Tasos. And let us now open up the floor for any questions we may have. Operator: [Operator Instructions] Our first question is from Tate Sullivan with Maxim Group. Tate Sullivan: I was just looking first at your noncontrolling interest and income to the joint venture partners. And if I recall, you started that arrangement with NRP partners a couple of years ago. Are you happy with how the JV has gone? Is that still a source of financing or transactions that you look at going forward in this current market there, please? Aristides Pittas: Yes. I have to say we are very happy with the conversation that we are having with NRP and the investors that they have found who contributed in this project. Everything is going -- moving ahead smoothly. We are happy that the Norwegian market is starting to hear more and more about EuroDry. And we look forward to perhaps doing more such deals, yes. Tate Sullivan: And if you can, is that mostly Norwegian -- is that a Norwegian-based entity? Or have you shared that? Aristides Pittas: Yes. It's a Norwegian-based entity and the investors within this group are mainly Norwegian. Tate Sullivan: And separately, in your presentation, you had a great data point on bauxite as a percent of Capesize cargoes. I was wondering if you do have sort of a similar cargo present, not bauxite for your fleet, but a cargo breakdown for your fleet with per ship carrying capacity of about 60,000 to 82,000 deadweight tons each. Is it more soybeans, as you noted, more demand? Or might you have a rough mix on... Aristides Pittas: We can offline present you with the data of the various ships that we have and what they have carried, if I understood correctly during the year. We can discuss it. Tate Sullivan: And your present -- just can you comment on coal demand? Has that decreased meaningfully compared to iron ore demand and soybeans? I didn't see coal mentioned in your presentation. Aristides Pittas: Yes. Coal is a commodity that for the last 5 or 6 years, we are saying that it reached peak consumption, and it's never happened up to date. So actually, I think this year was pretty steady. Going forward, it is certain that coal will be a smaller percentage of the mix of energy. But as an absolute value, I think it will continue growing. Operator: Our next question is from Hans Baldau with NOBLE Capital Markets. Hans Baldau: Congrats on a good quarter to end the year. For the fixed rate coverage for 2026, that stands at 22% currently. And it was mentioned that you'd be open to fixing more long-term charters. And with the cash flow breakeven for the next year at $11,663 and the current rates sitting well above that, how are you thinking about expanding coverage? And do you have an idea in mind of what -- how many -- what percentage of the fleet you would fix to long-term charters this year? Aristides Pittas: It's difficult to say because it depends a lot on how the market evolves. But right now, we're seeing a strengthening market day by day. We did take some cover yesterday as we fixed an FFA contract, as I said during the presentation, we fixed 90 days for Q2 at $19,250 and another 90 days of Q3 at $17,250, which is a hedge to the open vessels that we currently have. So we will fix more at these levels, but I can't say how much more. Hans Baldau: Okay. And you mentioned that we're modeling 2026. It looks very similar to 2025. And right now, the rates to start 2026 are much stronger than they were to start 2025. Can you talk more about the similarities that you're seeing between 2025 and 2026? And are you expecting rates to return to 2025 levels? Or what do you -- why is it similar to 2025? Aristides Pittas: Indeed, 2026 has started off very strongly and stronger than what we expected. So we might be surprised on the positive side during the year. But there are so many uncertainties about how trade will develop, what will happen in the geopolitical arena, will ships start going back through Suez or not? Will there be further embargoes, tariffs? So it is really a very difficult market to predict. What is easy to see is the supply of ships, and we expect the supply of ships to increase by about 4%, take away 1%, 1.5%, 2% for scrapping and delays. We see that the fleet will not increase considerably. But really to make a call about how strong demand will end up being is extremely difficult. So the average rate for 2026 could end up being similar to 2025. Of course, we hope that it will be even higher. Anastasios Aslidis: I think the current rate -- the current FFA market indicates a higher level. But as Aristides said, you know, there are many uncertainties that... Aristides Pittas: And if you took into account the FFA market just 2 weeks ago, it indicated exactly the same. So it's -- the market changes and the opinion on the market changes very quickly. Hans Baldau: Okay. And lastly, could you add some more color on your fleet renewal and modernization strategy? Are there -- the Santa Cruz and the Starlight and Blessed Luck are all on the older side. Can we expect those to be offloaded during the year? Or how are you thinking about that? Aristides Pittas: We haven't taken any decision yet. Indeed, we are down just to two 2004 built ships and one 2005 built ship. So 3 are relatively old. We may be -- if we are selling them, we might be buying more modern tonnage. This is a strategy that we discuss continuously, but there's no fixed decision yet. Operator: Our next question is from Poe Fratt with Alliance Global Partners. Charles Fratt: Aristides, Tasos, the macro has been pretty well covered. I had a micro question. Tasos, maybe I missed it, but can you just highlight whether there was a change to your reported numbers for the fourth quarter of 2024? And then can you talk about the claim that you settled, I think, in the fourth quarter of '25. And then can you talk about the cash impact of that insurance claim and then whether that's totally closed out or whether we might see some adjustments in 2026? Anastasios Aslidis: Yes. We had to recognize that claim in our Q4 numbers after we issued the press release, but it was included in our 20-F information in our audited results. So that's why you might see a difference compared -- if you compare to the press release, but compared to the 20-F, that the recognition of that claim was included. And then that situation was resolved, and we recovered the $1.4 million that we record here as other operating income. I think that situation is now closed. We don't expect anything on either side, either positive or negative. Operator: There are no further questions at this time. I would like to turn the conference back over to Mr. Pittas for closing remarks. Aristides Pittas: Thank you all for listening today's presentation, and then we will be back in 3 months' time with hopefully another quarter of good results. Anastasios Aslidis: Thanks, everybody. Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.
Daniel Thorsson: Okay. Good morning, everyone, and welcome to Q4 presentation with BTS. My name is Daniel Thorsson, analyst at ABG Sundal Collier. And with us today, we have Jessica Skon, CEO of BTS. So I'll let you present the fourth quarter. I will have a couple of questions afterwards. And for both analysts and investors joining the call, feel free to add questions in the chat, and I will ask Jessica the questions afterwards. Jessica Parisi: Perfect. Thank you. Hi, everybody. Good morning. So let me start with an executive summary. Q4 marks a turning point for us. It brings an end to our quarter-over-quarter decline in profit results for the last 3 quarters. Just to remind you, 2 out of our 3 units delivered growth in 2025, and we expect Europe and other markets to continue to deliver the revenue and profit growth during 2026. The North America turnaround, which has been all of our focus for the last 2 quarters, is progressing very well. The unit is expected to return to moderate organic revenue growth and significantly improved quarter-over-quarter EBITDA performance already in the first quarter. We have continued to have breakthrough AI innovations during 2025, which is benefiting us in 3 significant very strategic ways. Number one, we have a much more competitive portfolio, one that we are getting daily feedback from our clients that is ahead of our competition within our space. Number two, we have implemented and pushed new services that help our clients with their own AI maturity and adoption going from initial training to workflow reinvention. And number three, which has just been absolutely profound, and we're learning from ourselves and bringing it to the market, is we continue to, I would call it, radical simplification of our internal operations. And in the fourth quarter, we even had a second wave of breakthroughs, which led to productivity gains. And we expect to reestablish earnings growth throughout 2026. We go into more details. The fourth quarter 2025, yes, it was a continued weak revenue performance in BTS North America, which we're very disappointed by, which resulted in a poor quarter. This wasn't a surprise. It was seen for the last few quarters, but it marks an end to that trend. Almost half of the Q4 profit decline was due to noncore things. So it was due to a mix of currency headwinds and then the severance that was related to our AI-based rationalization in the fourth quarter. BTS Europe had a revenue slowdown in the fourth quarter, but that was temporary. And Q4, the year before was an exceptionally strong quarter. BTS Other Markets had solid growth, but profit decline, which was due to BTS operations in Asia and specifically in our Thailand operations, Korea and China. If we're looking forward to the full year or if you look go backwards to the fiscal year 2025, obviously, this was a very disappointing year for us with no growth, a 25% decline in EBITDA. But it's important, I think, to remember the real story of 2025. It's a mixed picture. BTS operates in 3 units. 2 of the units, which is half of the business performed very well, very well, and you could say in a tough market, especially in Europe. So with continued growth in BTS Europe and BTS Other markets in both top line and bottom line. Half of the business did poorly. That was North America, with very weak revenue and profit performance. We've made a lot of organizational shifts back in June and the organizational turnaround is progressing very well, both from bookings when rates are up, opportunity pipeline is growing and so forth. We are very proud of the year. It was not wasted in true BTS fashion. We are, I think, can be very proud of our internal AI innovations and our external ones, and we're bringing those learnings to the market. So if we look forward into 2026, as I mentioned, the BTS North America turnaround is progressing very well. The unit we expect will return to organic revenue growth in the first quarter with significantly improved profit already in the first quarter, which should be 1 quarter ahead of schedule. We expect BTS Europe and other markets to continue to deliver on revenue and bottom line performance in 2026, and the AI innovation will continue to benefit us in 2026. If I double-click into the AI innovations of the year, I've made a time line for you all. Basically, we made a Wonderway acquisition in 2024, which you remember. That gave us kind of an AI technology platform that does AI conversational practice. In the first 4 quarters, basically of its existence, we have it in 115 different projects, 28,000 users, and we have clients who are now doing self-service on that platform. But in addition to that, we've launched an AI super companion coach that goes across our leadership development initiatives. On our executive communication practice, we've launched a Digital Mirror. To support our end-to-end coaching portfolio, we have AI coaching fit for purpose, 3 different offerings for our clients. And these AI coaching offerings are not stand-alone. They're also integrated in Teams, Slack and Salesforce CRM. We have retrofitted and completely changed our simulation platforms across the business, giving our clients the ability to enjoy speed to develop, scale to deploy and for some clients who want to, they can build their own simulations. And within our CRM offering, we've also launched an agentic practice offering for our go-to-market sales clients. It was a really big year of innovation for BTS. If you add up the revenue associated with our AI services and our AI technology, it was $19.6 million in bookings last year, which will obviously carry forward into 2026. And so now as we -- when we talk to our clients about partnering with them, we have our traditional practices, which you're used to seeing, and we've built those out with your support over the years. And now we're overlaying essentially our own AI technology offering across our practice areas. And the feedback that we're getting in the market is, yes, there's plenty of shiny objects and HR tech start-ups, but most of our large clients are looking for an integrator. They're consolidating. They're looking for less vendors. And I think BTS is very well positioned to play that role. We have been innovating with companies for 40 years, how they learn, how they drive change, how they improve performance, and now it feels like the beginning of the next era. Of course, the AI productivity gains that we did in 2025 are going to have a material impact on 2026. So just to remind you, the total severance that was paid in 2025 was SEK 8 million in Q2 and Q3 and another SEK 10 million in December. Resulting in 2026, $5 million reduction in costs from our May AI breakthroughs and $2.6 million reduction in operating costs based on our Phase II AI breakthroughs, and we expect more to come. I would say a realistic conservative estimate in 2026 is probably about USD 1 million, SEK 10 million. And best feel on that right now is the majority of that would start to hit in the third quarter. So given all of this, we believe that our results will be better than 2025. This would be consistent with how BTS historically starts the year. Thank you very much. Daniel Thorsson: Excellent. Thank you very much, Jessica. I have a couple of questions, but just to let everybody know that if you have questions, feel free to write them in the chat and the Q&A field, and I will ask them to Jessica. But I start off with one in North America in Q1. You are extremely clear on recovering to growth in Q1 and also see profit going up in the first quarter versus last year. Is that driven by what you have seen in January, February or what you expect to see in March kind of... Jessica Parisi: Both. Daniel Thorsson: Both. Okay. So it has started off well and you expect to see it continue throughout Q1. It's not only that you started off slower in January, but you see that we're going to do a lot in March, and that's going to save the day. Jessica Parisi: No. we're not hoping for a hockey stick in March. Daniel Thorsson: Yes. I see. That's very clear. And on the guidance in 2026, would you consider the EBITDA guidance to be driven mainly by sales growth or lower costs if you have to divide them? It's obviously both. But which is the biggest one. Jessica Parisi: You can imagine how good it's going to be with good growth, right? So -- but it's -- I would say it is 50-50. We expect double-digit revenue growth in Europe and other markets to continue. And we expect North America, at least in the first half to have moderate organic growth. And because we did so much cost savings, that's kind of the cherry on top, right? So... Daniel Thorsson: I see. And on AI, you share very interesting proofs here with numbers, et cetera. While we can all see the reality that the global stock markets are extremely fared about AI for global management consulting firms, software firms, everything. And all the companies I talk to at least, they haven't really seen anything on the threat downside, but they see all the favors they can do internally. So where do you think the reality is on what you see? Do you see that your customers have a lower demand because of AI recently? Or do you only see that you can favor from it? Because there's a big discrepancy. Jessica Parisi: I mean, obviously, there's things that are in favor for BTS, and there are things that are posing challenges for us. Some interesting proof points, and I didn't mention this yet in the presentations, but an additional advantage for BTS is a new client base opportunities. So if you think of the AI hypergrowth companies to go after as clients, our West Coast office, in particular, is doing a great job of that. In fact, I can tell you that Anthropic has chosen us as their go-to-market enablement partner. That's the company behind Claude, for example. And they're using us both for our approach to driving change and enablement, but also using our technology as kind of an evidence point that there's also a new customer base, which is very exciting for our team. If I think about how the clients are reacting to the moment, I would say they shifted quite a lot over the course of the year. They started the year being very apprehensive, very slow to adopt AI. Many of the buyers saying we can't have it yet in our function and IT is on lockdown and they're only giving everybody one tool. By the end of the year, we saw much more of a stronger appetite to experiment, right? In terms of how can we do leadership development differently? How can we drive scale change? What should we do for our sellers? And BTS do have ideas on how to do things differently. I think they're still slow in general, but I think the appetite is changing. Yes, maybe I'll let you ask follow-up questions because there's probably a lot to... Daniel Thorsson: No, that's fair. We'll take one from the chat here from Oscar Ronnkvist from SEB. You say significantly improved EBITDA already in Q1. Can you specify what it means in terms of EBITDA year-over-year when it's up significantly and not only quarter-over-quarter in absolute terms? Jessica Parisi: I mean we're basically doing what we've historically done, right, which is we start the year if we see it, look better than as a forecast, and then we learn more as the months progress. But North America, in particular, because of the cost savings that we did in 2025, plus the return to moderate organic growth in the first quarter is what gives us the confidence. And for us, significantly better is 15% or higher. Daniel Thorsson: Okay. That's clear. The second question from Johan Sunden. It's related to this as well. How good visibility do you have for EBITDA outcome in North America in Q1 '26? It's probably similar to my question already. But the follow-up is how is license revenue expected to develop quarter-over-quarter and also year-over-year in North America in Q1? Jessica Parisi: We have good visibility. We're halfway into the quarter right now in terms of cost and revenue. In terms of license development quarter-over-quarter in North America, it's a mixed story on license. It's like old school and new school, right? So on the old school stuff, fortunately, for us, only about 2% of the company's total revenue is related to content license, and I kind of think that market is dead, right? And so we don't have that much more license for our clients to cancel from us on the content side. And at the same time, growth in our Verity product from the Wonderway acquisition and those AI technologies that I shared with you are progressing very well. So there will be a turning point sometime in 2026, where the license of the new products helps our overall license picture grow, right? My best gut feel is that will probably happen by the third quarter, but it's -- it will be a mixed bag until then. You don't anticipate any major decline in license, let me just to be clear. So it's more iterations here or there client by client. Daniel Thorsson: Yes, because licenses were down in Q3 and Q4 year-over-year. Jessica Parisi: Yes, yes. Daniel Thorsson: Okay. So not much more from this level down. Johan Sunden also had a follow-up on the EBITDA margins in North America, how they are expected to develop year-over-year in Q1. You already answered that by saying profits up more than 15%. I don't know if you would like to add anything on margins, but... Jessica Parisi: Not really, but it will be significantly better. Daniel Thorsson: Yes. No, true. We have another one on capital allocation. With a record low valuation, trading at 7x the EBITDA you actually did in 2025 and you expect growth in 2026. Why does the Board not consider buybacks as an alternative to drive extra growth? Jessica Parisi: Yes, yes, we've been talking about that. Daniel Thorsson: Okay. And what was the conclusion? Jessica Parisi: We have not concluded yet. It's been discussed. Daniel Thorsson: Okay. Discussed not concluded yet. I see. And then we have a question from Jonathan [indiscernible]. Could you please help one understand dynamics in the license sales as a percentage of revenue? It has historically been around 10% of sales, but it is now 7% and total sales are down. So that's down even more. Jessica Parisi: This is specifically unique to the North American market. And in the fourth quarter, there was one deal that we had done in the last 3 years with one more traditional software company, not an AI growth company. And they did not renew that in the fourth quarter. Instead, they said, we're not going to work this way with you because it was a new buyer, new budgets, but you're going to continue to be our partner this year. So we couldn't take that revenue in the fourth quarter like we had year-over-year. That's the real reason behind the decline in the fourth quarter. Daniel Thorsson: Do you think licenses will be back to 10% of sales over time? Jessica Parisi: They do. Daniel Thorsson: Yes, over time, in detail? Jessica Parisi: Yes, because we have a whole bunch of new technology now that's unique and in demand and supportive of the value proposition. So... Daniel Thorsson: Excellent. We have another one from Oscar Ronnkvist at SEB. Can you add some color on the magnitude or quantify the positive orders in North America? I guess it is up year-over-year. Jessica Parisi: Sure. I mean I think, I think the data point I can share with everybody here is that the bookings in North America in the fourth quarter was around 25% or 26% higher than the fourth quarter the year before. It was actually over 40%, but then when I took out the decline from that one renewal, we brought it down to 26%, 27%. That's probably the best data point I can give you in terms of increased demand coming into the -- into 2026. Daniel Thorsson: Perfect. We'll see. I think we have a couple of more here. License revenue, again, they are still under pressure. How important are these for your margins going forward? Jessica Parisi: This is going to sound silly, but not that important in the short term. And with, if the AI tech can take off in terms of the portfolio of the new products, it will be significant upside. Daniel Thorsson: Okay. Clear. And can you elaborate a bit on how your license revenue works? Are there -- are these onetime fees for perpetual licenses? Or are those recurring? Jessica Parisi: Thank you for the clarification. The license -- the old school license, which is the majority of our license, do not have a renewal date on them typically. Maybe that's 5% of them did that, right? Most of them were initiative based, and it was clients saying, okay, we want you to build a custom simulation for us, but we want to bring it in-house and deliver it and do the rollout, and we'll pay you license for the use of that simulation as a onetime event. And typically, they use it then for somewhere between 3 to 12 months and then it's over. The new tech offering has renewal dates, and it's just a different -- slightly different, more sticky service. Daniel Thorsson: Okay. That's clear. How should we think about employee growth in 2026? You are still a consulting firm, have been driven by a number of employees historically, maybe less so in the future, but how do you think? Jessica Parisi: Yes. So there's 2 categories of employees. There's our billable consultants who generate revenues for us and then there's the operational staff, right? And the operational staff about a year ago was 41% of our total employee base, and we could see we are going to have quite improvements in that total percentage. So I expect the number of operational staff to continue to decline, and we are expecting to increase the number of our billable consultants and revenue generators in all 3 markets this year. Daniel Thorsson: Okay. So net-net, you feel rightsized if we exclude future M&A, obviously, but on an organic basis? Jessica Parisi: In terms of total headcount delta, the interesting... Daniel Thorsson: In '26. Jessica Parisi: Yes. Obviously, the billable consultants are more expensive than the operational ones. We have plenty and low market as well. It's probably going to be about flat, to be honest. Daniel Thorsson: Cool. Fair enough. And we have another question from Jon Hyltner. You say that you expect growth in Q1 '26. That refers to year-over-year growth, I assume, you said. And is that both for the group and for North America? Jessica Parisi: Correct. That's quarter compared to Q1 the year before, and that would be both for North America and for the group. Daniel Thorsson: For the group. Excellent. That's clear. We have another one here. Could you elaborate a bit on how your unit economics have changed after this new AI revolution in BTS? Jessica Parisi: Not that much yet. So if you look at the average pricing across our services, we have had very little change, both in the fees we're charging to build and customize and co-create and the fees that we're using to deploy. That said, given the new simulation platforms, it is faster for us to do the customization and the co-creation process, right? So I think that our speed will yield smaller upfront fees in some cases, which will allow us to deploy faster. And for us, the revenue is in the deployment. So that's the profitable part of the business, and our clients usually want to move quickly. So I think overall, it will be beneficial to us to get to deploy faster than to quickly customize or co-create. That will be the biggest change. And then with the AI technology with much higher margins on that offering, that would obviously be the other one. Daniel Thorsson: I see. I also have a question on the full year guidance on '26 that EBITDA will be better than last year. If we look at the nonrecurring items in 2025, only -- if we assume 0 in '26 as a base case, that will drive 10% EBITDA growth. Jessica Parisi: Correct. Daniel Thorsson: On a flat underlying performance, and you already guide for growth in Q1 and for lower costs full year '26. Jessica Parisi: Yes. Daniel Thorsson: Doesn't it sound like a significantly better EBITDA guidance rather than a better EBITDA guidance? Jessica Parisi: Sure does. And we always start the year this way. Daniel Thorsson: I know. Excellent. I will see if we have any final questions in the chat. No, we don't. And I had the opportunity to have mine, and we got all the questions from the chat as well. So -- thank you very much. If you would like to have any final words, otherwise, I think this Q4 presentation is finalized with BTS. Jessica Parisi: Super. Thank you. Daniel Thorsson: Thank you very much.
Operator: Ladies and gentlemen, thank you for joining us, and welcome to the Telephone and Data Systems, Inc. Enderae Fourth Quarter 2025 Operating Results Conference Call. After today's prepared remarks, we will host a question and answer session. If you have dialed into today's call, please press 9 to raise your hand and 6 to unmute. I will now hand the conference over to John Toomey, Treasurer and Vice President of Corporate Relations. John? Please go ahead. John Toomey: Good morning, and thank you for joining us. The presentation we prepared to accompany our comments this morning can be found on the investor relations sections of the TDS and Array websites. With me today in offering prepared comments are on behalf of TDS, Walter Carlson, President and CEO; Vicki Villacrez, Executive Vice President and Chief Financial Officer; on behalf of TDS Telecom, Ken Dixon, President and CEO of TDS Telecom; Chris Bautfeldt, Vice President of Financial Analysis and Strategic Planning of TDS; and on behalf of Array Digital Infrastructure, Anthony Carlson, President and CEO of Array. This call is being simultaneously webcast on the TDS and Array Investor Relations websites. Please see the websites for slides referred to on this call including non-GAAP reconciliations. TDS and Array filed their SEC Forms 8-K including the press releases earlier this morning. As shown on slide two, the information set forth in the presentation and discussed during this call contain statements about expected future events and financial results that are forward-looking and subject to risks and uncertainty. Please review the safe harbor paragraphs in our press releases and the extended version included in our SEC filings. I will now turn the call over to Walter Carlson. Walter? Thanks, John, and good morning, everyone. We are pleased to report to you today our fourth quarter performance, review the progress made on our priorities for 2025, and share our goals for the future. As set forth on slide three, 2025 was a transformative year. Walter C.D. Carlson: We completed the largest transaction in our company's history and significantly strengthened our balance sheet. By divesting our wireless operations, we believe we have now positioned Array for success as a growing tower company and we now have the financial capacity to support TDS Telecom as it continues to expand and grow its fiber operations. Our speakers this morning will highlight many of these accomplishments in more detail shortly. But let me summarize by saying that the TDS team of associates accomplished much in 2025 during a year of significant change. As we look forward to 2026, we have five fundamental objectives for the enterprise as outlined on slide four. We plan to continue our efforts to strengthen the TDS corporate and capital structure. Vicki will share more details on those topics in a moment. We will continue to grow TDS Telecom's fiber business and work to delight our customers. Ken and Chris will share with you updated fiber address goals and other success targets. We intend to support Array's success as a tower company and continue our efforts to successfully monetize Array's remaining spectrum holdings. Anthony will highlight Array's expectations for the year. We also intend to strengthen TDS' culture while delivering strong operational and financial results across all of our businesses. I want to personally thank every associate across the enterprise for their contributions in 2025 and look forward to all that we will accomplish together in 2026. I will now turn the call over to Vicki. Vicki L. Villacrez: Thank you, Walter, and good morning, everyone. As I shared last quarter, across the enterprise, we continue to focus on moving the announced spectrum transactions forward as well as executing on our capital allocation plans. Slide five highlights our progress in these areas. In January 2026, Array closed on the announced spectrum sale to AT&T for $1,018,000,000. Of the special dividend or $726,000,000. Additionally, in January, TDS repaid the last of our outstanding term loan debt of $150,000,000. With this further debt reduction and cash from the proceeds of the closed transactions, we are pleased with the flexibility this affords us to execute on our capital allocation priorities. As a reminder, our TDS capital allocation plan has three key elements. First, continued investment in fiber. With the proceeds from the special dividend related to the AT&T spectrum, we are increasing our fiber goals. As you will hear from Ken in a moment, while we are still in the early stages, we have identified 300,000 additional fiber edge out service address opportunities across approximately 50 new communities where we believe we can be first to market and achieve returns in the mid-teens, and we are increasing our marketable fiber service address goals. Second, as it relates to M&A, we continue to evaluate fiber opportunities in a financially disciplined, accretive, business case-driven fashion. Third is shareholder returns. In the quarter, we invested $67,000,000 to repurchase 1.8 million TDS common shares bringing our total 2025 repurchase volume to 2,800,000. As announced in November, the TDS board authorized a $500,000,000 increase to the then existing share repurchase program. As of the 2025, we had $524,000,000 remaining on this open authorization. The company intends to continue to be disciplined in the timing of its repurchase activity balancing the needs of the business and market conditions as we move forward. Looking back at 2025, we made great progress in transforming our businesses. We continued to unlock significant value and generated significant returns for our shareholders, particularly in the form of transaction-related special dividends at Array. I am incredibly pleased with how we have positioned the businesses for the future and aligned our capital allocation strategy with our growth opportunities and return to shareholders. Thank you. And now I will turn the call over to Ken Dixon to discuss TDS' fiber business. Thank you, Vicki, and good morning, everyone. Kenneth Dixon: I would like to provide an update on our fiber strategy progress. We still have work to do to improve execution, modernize our systems, and continue to scale our build and install operations. The foundation we have built positions us well for the future. Before I talk about where we are headed, I want to share our 2025 full year and fourth quarter performance. As set forth on slide seven, in the fourth quarter, we added 58,000 new marketable fiber addresses, up sequentially over Q3 and up 39% year over year. For the full year 2025, we delivered 140,000 new marketable fiber addresses and expanded our broadband footprint. Execution improved throughout the year. We delivered 40,000 marketable addresses in the 2025 and 100,000 in the second half, showing momentum as our construction engine accelerated. The fourth quarter was our strongest build quarter since 2023, and it was supported by record high construction crew counts. We did not reach our 150,000 address goal. However, we continue to make progress. We know what it will take to reach the level of output that we are targeting and we are focused on carrying this progress into 2026. Looking at sales, in each quarter, we delivered sequential growth in residential fiber net adds. We ended the fourth quarter with approximately 15,000 fiber net adds, up 11% from the 2024, bringing us to approximately 45,000 residential fiber net adds for the year. Driving sales and increasing penetration across our fiber markets remains a top priority as we work to achieve our long-term objectives. We also made progress in our business transformation program in 2025. Through process improvements, organizational alignment, and targeted investments in best-in-class tools, we are strengthening the efficiency and agility of our operations, all with the focus on providing a superior customer experience. These improvements will be foundational to delivering consistent scalable performance as we continue expanding our network. We are continuing to optimize our portfolio to strengthen our strategic focus. The divestitures in 2025, which included the mid-year sale of Colorado and, in December, the sale of our Oklahoma ILECs, have concentrated our footprint in markets with an economic path of fiber. Turning to slide eight, the progress we made in 2025 and the availability of additional capital to invest gives us confidence to expand our long-term fiber goals. We have identified 300,000 fiber address opportunities in new edge out markets that are increasing our long-term goal from 1.8 to 2,100,000 fiber addresses. With that updated target in place, let us move on to the priorities that will guide us in 2026. Slide nine sets forth our TDS Telecom priorities for 2026. First, we are focused on delivering our fiber build plan. In 2026, our goal is to deliver between 200,000 to 250,000 new marketable fiber addresses as we ramp up construction in the EACAM markets, continue expansion in growth markets, and enter targeted edge out communities. This work is critical. When we execute the build plan, we can see sales opportunities in these key markets. Second, we are focused on driving sales and expanding our fiber customer growth. We delivered approximately 45,000 residential fiber net adds in 2025. In 2026, we expect to increase that number by driving higher sales in both new and established fiber markets. Third, we are committed to creating a best-in-class customer experience. That means improving every interaction from installation to service to long-term retention and ensuring the systems and processes behind these touch points support a seamless high-quality experience. Fourth, we will continue executing on business transformation. The work underway will streamline processes and modernize systems in 2026, positioning us to operate as a faster, more efficient, fiber-first organization. As part of this work, we remain on track to deliver $100,000,000 in savings by year end 2028. These priorities align the organization for future success. I will now hand it over to Chris to walk through our 2025 results and our financial outlook for 2026. Chris? Christopher “Chris” Bautfeldt: Turning to slide 10. The chart on the left shows the last five quarters of fiber service address delivery, which strengthened throughout the year. Our address cadence quarter over quarter reflects seasonality, but it also highlights the actions we took to increase crew counts in the second half of the year. In addition, EACAM activity contributed to this acceleration as those builds started to ramp in the fourth quarter. As Ken mentioned, Q4 represents our highest production quarter since 2023, demonstrating the momentum we are seeing in our fiber build engine. On the right, you can see the continued expansion of our fiber footprint. Over the last three years, we have nearly doubled the number of fiber addresses across our markets. Turning to the next slide, the chart on the left shows the last five quarters of residential fiber net adds. In the fourth quarter, we delivered over 15,000 residential fiber net adds, representing year-over-year as well as sequential improvement. This growth reflects the investments we have made in fiber address delivery during the year. The chart on the right highlights the growth of our residential fiber connections, which have also nearly doubled over the last three years. This growth is driven by ongoing footprint expansion, as well as copper to fiber conversions. We expect fiber connections to grow as we continue to expand our fiber footprint. Turning to slide 12, average residential revenue per connection was up 2% year over year. As we have seen across the industry, fewer broadband customers are choosing to bundle with video, which puts downward pressure on this metric. In 2025, we indicated that we expected more modest revenue per connection growth, and our results this quarter remain consistent with that outlook. The chart on the right shows our year-over-year revenue comparison. As a reminder, the markets we divested accounted for $3,000,000 of the revenue decline in the quarter versus prior year. Additional detail on the recent divestitures is available in the trending schedule on our investor relations website. Slide 13 focuses on full year and quarterly financial results. Total operating revenues decreased 1% for the quarter and 2% for the full year. Excluding the impact of divestitures, revenues were flat year over year for both periods. This reflects continued secular declines in our cable and copper markets offset by growth in fiber connections and modest improvement in revenue per connection. Cash expenses decreased 4% in the quarter but were up 1% for the full year, reflecting the impact of our transformation efforts in the second half of the year. As a result of lower expenses, adjusted EBITDA improved 6% in the fourth quarter. For the full year, adjusted EBITDA declined 6% primarily due to the impact of divestitures as well as the first quarter's noncash adjustment to stock-based compensation. After a big fourth quarter, full year capital expenditures were $406,000,000 as we prioritized investments in our internal construction crews and equipment to support future builds. On slide 14, we provide our guidance for 2026. We are forecasting total telecom revenues of $1,015,000,000 to $1,055,000,000. This reflects top line growth from our fiber investments, offset by industry wide declines in video, voice, and wholesale revenues. These ranges also reflect a full year impact from the 2025 divestitures, which contributed $19,000,000 in annual revenues. Adjusted EBITDA is projected to be between $310,000,000 and $350,000,000 in 2026. The 2025 divestitures and legacy revenue stream declines put pressure on this metric, but continued advancement of our fiber program and the benefits from our transformation initiatives will help mitigate these pressures. In 2026, our goal is to deliver 200,000 to 250,000 fiber service addresses. From what we delivered in 2025, and we expect capital expenditures to be in the range of $550,000,000 to $600,000,000, up from $406,000,000 in 2025. The increased CapEx is driven by EACAM builds, continued growth in our expansion markets, as well as spending on new edge out opportunities. Before turning over the call, I want to thank the entire TDS team. Because of your hard work and dedication, we ended the year on a strong footing. We are energized for 2026 and the opportunities ahead. I will now turn the call over to Anthony. Anthony Carlson: Thanks, Chris, and good morning. As I reflect on what the Array team accomplished in 2025, I am extremely grateful for the team's hard work and perseverance during a year of enormous change and new beginnings. I am honored to have the responsibility to lead Array and look forward to growing the business over the coming years. As set forth on slide 16, Array's business portfolio has three significant yet distinct drivers of value. First, we own a portfolio of more than 4,400 towers across the United States. Originally constructed to support UScellular's wireless network, these sites are primarily located in suburban and rural areas. Notably, about one third of our towers have no competing site within a two mile radius, making them especially valuable as carriers expand 5G and other advanced technologies to meet increasing mobile data demand. Second, continue to hold wireless spectrum, principally C-band. This is a valuable asset with an existing ecosystem for deploying 5G that we are opportunistically seeking to monetize. Finally, we have minority interests in a number of primarily wireless partnerships, referred to in our financials as noncontrolling investment interests. These are passive investments that have historically generated substantial income and cash distributions. As I think about our strategic imperatives for 2026, as shown on slide 17, and how we extract value from our business, you will see the same key elements discussed last quarter: a laser focus on fully optimizing our tower operations and monetizing our spectrum. First, a brief update on our spectrum monetization process. As shown on slide 18, we have reached agreements to monetize roughly 70% of our spectrum holdings. As a reminder, in conjunction with the sale of our wireless operations on August 1, we conveyed 30% of our spectrum to T-Mobile. In addition, as previously announced, we signed agreements to sell spectrum to Verizon and AT&T in separate transactions in exchange for roughly $1,000,000,000 each. In August and October 2025, we signed additional agreements with T-Mobile to sell spectrum for total gross proceeds of $178,000,000. This primarily includes the sale of 700 MHz A block and the exercise of approximately 80% of T-Mobile's call option on the 600 MHz spectrum. In December 2025, we received regulatory approval for the spectrum sale to AT&T and that transaction closed on 01/13/2026, with the Array board declaring a $10.25 per share dividend that was paid on February 2. The remaining pending spectrum transactions are subject to regulatory approval and closing conditions. Our retained spectrum principally consists of C-band, and as I previously noted, we continue to believe this is highly attractive spectrum for 5G with an existing ecosystem that carriers can immediately put to use. While there are build out requirements for the spectrum, the first one does not apply until 2029, leaving us plenty of time to monetize the spectrum. Turning to slide 21. As noted with our Q3 results, the T-Mobile MLA significantly increases our revenue, and we continue to focus on a strong partnership with T-Mobile to ensure the integration process is well executed. The team has made material progress in Q4, processing over 2,000 applications and completing structural analyses on over 95% of the applications. This is the first key step in the integration process, and we have executed seamlessly and are now shifting focus to subsequent phases of integration. Growing colocation revenue outside of the T-Mobile MLA continues to be a key priority, and both revenue growth and new colocation application volume remains strong. In Q4, cash site rental revenue increased 64% year over year from all customers and increased 8% when excluding the T-Mobile MLA committed sites. When layering in the T-Mobile interim site revenue, the increase was 96% year over year. Also continue to see a strong pipeline with full year 2025 new colocation applications excluding the T-Mobile MLA, exceeding prior year by 47%. Like others in the industry, we disclosed in Q3 that we received a letter dated September 2025 from DISH Wireless whereby DISH asserts its master lease agreement with Array has been impacted by unforeseeable of the FCC and therefore DISH believes it is relieved of its obligations under the MLA. And despite this, DISH plans to continue to operate certain sites for a period of time. Array continues to believe that DISH's assertions are without merit, and DISH's obligations under the MLA remain intact. Since early December, DISH has generally failed to make contractually required payments. Array will take such actions it deems necessary to protect its rights under the MLA. For full year 2025, Array recognized approximately $7,000,000 of site rental revenue from the DISH MLA, and DISH has obligations at similar levels from 2026 through 2031, with a declining revenue commitment in 2032 through 2035. Slide 22 summarizes Array's financial results. Q4 was the first full quarter of T-Mobile MLA revenue, both the revenue from the MLA minimum committed sites as well as the full population of interim sites. The aforementioned T-Mobile integration volume in Q4 drove elevated service revenues as well as higher cost of operations expense due to the high volume of structural analyses conducted in Q4. Additionally, in Q4, there was a prospective change in classification of property taxes and insurance from SG&A to cost of operations. SG&A expenses in the 2025 include cost to support the wind down of the legacy wireless operations. While we began to see reductions in these costs, we continue to expect these expenses to persist into 2026 but declining over future periods. Turning to slide 24, as a reminder, T-Mobile has until January 2028 to finalize its selection of 2,015 committed sites under the new MLA. Once these selections have been made, addition to any incremental sites above the MLA commitment, Array expects to have between 800 to 1,800 tenantless or naked towers. As laid out in our strategic imperatives, we are hyper-focused on ground lease optimization and, more specifically, reducing the cash burden of our negative cash flow towers. Those efforts are coupled with our sales team continuing to aggressively market our full portfolio of towers, which will aid in reducing the naked tower portfolio. We are also assessing the future leasability of these towers and will prudently evaluate all outcomes and options over a multiyear period as we determine a path forward for the naked tower portfolio. Slide 25 summarizes the results of our partnership, or noncontrolling investment interests. This investment income and distributions are primarily from four wireless entities operated and managed by AT&T and Verizon. As discussed last quarter, investment income and distributions for full year 2025 were impacted by several onetime factors, including the impact of the Iowa partnership selling their wireless operations to T-Mobile, and distributions received from Verizon related to their transaction with Vertical Bridge. Shifting our focus to 2026, on slide 26, we provided guidance for Array for the following metrics: total operating revenue, adjusted EBITDA and OIBDA, and capital expenditures. Notably, our guidance ranges are wider than the industry norm, but there are a few key factors driving this dynamic for 2026. First, is uncertainty with the T-Mobile MLA and timing of interim site terminations, as well as the potential for incremental committed sites above the MLA minimum. And second, on the expense side, we have discussed the currently elevated SG&A expenses and the wind down of these expenses that we expect throughout 2026 and beyond. For total operating revenue, we are forecasting a range $200,000,000 to $215,000,000. This reflects a range of outcomes related to the T-Mobile MLA uncertainty and includes anticipated new colocation and amendment revenue driven from applications we received in 2025 and expect to receive in early 2026. Our guidance range does not include DISH revenues given the uncertainty related to their recent actions. For adjusted EBITDA, we are forecasting a range from $200,000,000 to $215,000,000. Given the passive nature of our noncontrolling investment interests, our guidance range assumes equity income similar to 2025, excluding the onetime events outlined on slide 25. Adjusted OIBDA guidance of $50 to $65,000,000 simply removes the equity method investments. Finally, for capital expenditures, we are forecasting $25,000,000 to $35,000,000. This range is largely driven by a degree of uncertainty around ground lease purchase volume. Our CapEx spending in 2026 will continue to include onetime tower light monitoring migration costs of about $6,000,000, as we complete our efforts to migrate tower light monitoring to our long-term solution. In closing, I want to again thank the entire Array and TDS teams who have dedicated countless hours and energy to the stand up of our tower company. Array's future is bright, and 2025 was a transformative year. I am excited about the opportunity to lead this team through a year of integration, growth, and a focus on operational efficiency. I will now turn the call back to Walter. Thank you, Anthony. Walter C.D. Carlson: As you can see, TDS is in the midst of a vital period of transformative change. The successful close of the T-Mobile and AT&T transactions have unlocked tremendous value enabling us to expand and deepen our fiber program, stand up a strong and growing tower business, and strengthen our capital structure. Let me again thank all of the outstanding associates across the TDS enterprise for the fine work you do every day to serve our customers and advance our business. Operator, please now open the line for questions. Operator: We will now begin the question and answer session. Ric Prentiss: If you have dialed into today's call, please press 9 to raise your hand and 6 to unmute. Your first question comes from the line of Rick Prentiss with Raymond James. Your line is open. Please go ahead. Morning, Rick. Rick, a reminder to kindly unmute yourself. Once more, a reminder to kindly unmute yourself by—Got it. Okay. Can you hear me? Yes. Good morning. Okay. Hey. Thanks for that. Sorry for the technical problems. Appreciate it. Anthony, good to talk to you. Thanks for the update on the DISH. We were wondering if it was in or out of guidance. So as I understand it, then DISH is completely out of your 2026 guidance from revenue to OIBDA to free cash flow then? Correct. And so any settlement from that would be upside from here. Correct. Okay. Alright. And when you think about what you are seeing in the tower leasing application area, how are you feeling about the application pipeline? It does feel like a lot of the carriers are focusing on rural America, T-Mobile, Verizon, and even AT&T. But can you give us as far as some insight into what growth rates might look like from new lease activity? And how is it coming along as far as other tower companies that have been focused as tower companies for longer than you guys? They are able to break out the cash revenue contribution, say, from escalators, versus new lease activity, versus churn, call it legacy churn versus kind of carrier consolidation churn or odd events like T-Mobile, Sprint, and Mobile UScellular and DISH. How is it coming as far as getting reporting out there on new lease active new leasing activity escalators in turn. Great. Okay. And on the TDS Telecom side, thanks for, as we called it, we want the number. So we now know the number of service addresses for the long-term target. Thanks for that, Vicki and Ken. So the 2,100,000, a couple of related questions, of course, to that is, what is the definition of long term? Because it does feel like there is a race to be first to fiber, as you mentioned. The markets you have identified, you think you have got a good chance to be first to fiber there, but help us understand why is 2.1 now the right number, what the competitive dynamics look like in that? And what is the pacing? I know you mentioned 200,000 to 250,000 service addresses this year as a target. Is that something that could accelerate? But it was kind of give us a sense what is that long term mean? What is the pacing to get there? Anthony Carlson: Yeah. So thank you, Rick, for the question. We are feeling quite optimistic about our sort of growth prospects for 2026, of course. The T-Mobile MLA for on a full year basis represents significant growth, but we also expect to see, you know, excluding DISH and excluding the T-Mobile MLA, significant same store growth. Right? So, you know, example, there are elements such as when UScellular was in the market, you provided roaming to a lot of other carriers. And so with us leaving the market, some carriers have elected to use to replace the roaming that they had with us with building up some of their own sites. So that is one element that is driving things forward. In addition, other element, other actions that we have taken, such as insourcing our sales team, and the agreement that we signed with Verizon, we have already seen positive results for in terms of driving our sales growth, and we expect that to continue into 2026. We will, we are continually in the process of evaluating which of these metrics we will put in our public reporting. Right now, we are focused on standing up an effective power company's operations. And we reserve the right to make those changes in future reporting if and as you see fit. Vicki L. Villacrez: Yeah. Rick, this is Vicki. I will just jump in here. I was really pleased. We had a really strong fourth quarter. As you know, it is our first full quarter of reporting for Array, and we will continue to focus on this as we go forward and keep our priorities in front of us. Christopher “Chris” Bautfeldt: Hey, Rick. This is Chris. I am going to take the first part of this question, and then I am going to hand it off to Ken to add more color. So, yeah, we are very excited to be raising our long-term fiber address target from 1,800,000 to 2,100,000. These goals reflect two multiyear fiber programs that we have in place. We have our EACAM program as well as our ongoing fiber expansion that we are building out to those 100 communities where we initially planted flags. Now we are taking advantage of additional edge out opportunities to further expand those strategic clusters, so these goals reflect when those builds are substantially complete. And as we shared last year, said that roughly a five-year time horizon from our initial goal was a reasonable time frame, and that timeframe has not changed with these increased goals. So still that 2029, 2030 timeframe, but we are doing everything we can to accelerate these goals because, as you said, we see a window of opportunity to be first to fiber in these new expansion markets, and we want to make sure to seize that opportunity. Kenneth Dixon: Yeah. So I will add to that. I absolutely love the markets that have been selected prior to my joining. And we still see very favorable competitive landscapes. And as Chris mentioned, we have a great opportunity to be first to fiber and continue to plant those flags in the marketplace. Also see these edge outs, candidly, where we are already building and have a presence and it allows us to expand into a bigger strategic cluster. So we are very bullish on the markets that we have chosen. And we have confidence in that incremental 300,000 to bring us to the 2,100,000. Ric Prentiss: Great. And a couple of extra color questions around that. Can you break out for us how much is going to be EACAM versus expansion markets? Because I would assume the capital spending is greater in the EACAM markets than the expansion markets. So maybe a rough breakout on how much is EACAM versus expansion of the 2,100,000 target. And then you mentioned, Ken, I think in your prepared remarks talking about focusing on sales, and that, you know, you still have a top priority and what your long-term objective is. So maybe update us on what that long-term objective is for fiber penetration. Vicki L. Villacrez: Rick, this is Vicki. I will just jump in and say our guidance is a total capital number. But, specifically, as you are thinking about the size of the EACAM program relative to our full, full fiber target. Chris, you want to comment on that? Christopher “Chris” Bautfeldt: Yeah. So raising our goals from 1.8 to 2,100,000, that is entirely for these additional 300,000 edge out communities adjacent to existing expansion communities. This does not include any incremental EACAM addresses. When we raised our guidance last year, that included 300,000 EACAM addresses. And so we are not moving off of that. Kenneth Dixon: Right. I will give you a quick update to your sales question. Obviously, address delivery creates sales opportunities. So our plan for 2026 is to continue our momentum. We are seeing very good presales volumes sixty days in advance launch. The other update I will give you is, we are spending a lot of time on sales channel development. In addition, we have brought on some new door-to-door vendors based on all of the markets that we have launched and the markets that we are expecting to bring in into these new agile opportunities. So that allows us to increase our sales capabilities. We have also put significant improvement into our dot com channel, and we have a great roadmap of go-to-market execution outlined for the remainder of 2026. We also are very focused in penetration rates. You will see us focus more on multi-dwelling unit in 2026 in addition to single-family homes, and we have also brought in some new leadership to help run sales in our call center environment and sales throughout our various distribution channels. Two folks that are very tenured in the industry and have a great background in fiber sales. Thank you. Ric Prentiss: Thanks, everybody. Thank you. Thank you. Sebastiano Carmine Petti: Your next question comes from the line of Spazdiano Petty with JPMorgan. Your line is open. Please go ahead. Hi. Thank you for taking the question. I guess maybe cleaning up there on the fiber questions. Any help in terms of thinking about the shaping of in-year service delivery? Think Ken you kind of talked about, I mean the fourth quarter delivery was, I think, the strongest you said in, you know, since 2023. How should we think about that 02/1950, you know, ratably over the balance of 2026? Obviously, weather implications in 1Q, April. So just trying to help think about that. And then I guess in the press release, I feel like the comments regarding the C-band or just spectrum monetization seemed a little bit new or, you know, a little bit more, you know, pointed. So I was just wondering if you can help update us on how you are thinking about that, the level of conversations you might be having in the market. Obviously, the reauction of the AWS-3 midyear this year, you have visibility into upper C-band next year. So any color there would be helpful. And then lastly, I will just throw it out there. As it pertains to the buyback, any interest or what is your view on potentially buying back AD shares in the market as opposed to the TDS shares given the implied look-through discount on your own shares. How does the board perhaps maybe evaluating that? How do you think about that? Thank—I will start off with the fiber goals for 2026. As I mentioned earlier, we have, I love the markets that we are currently operating in. One of the first things that the team focused on was how do we absolutely get as many crews into the markets constructing our service addresses as possible. As you saw in my opening remarks, in the fourth quarter, we had record crew counts, and we were able to keep those crews throughout those, what I would say, winter months, and that gives us confidence going into 2026. One of the other big things that we did in 2025 is we made some very strategic investments in our internal construction capacity. We added additional equipment and plan to have additional crew capacity throughout 2026. I believe one of the biggest advantages that TDS has in the marketplace is the fact that we have internal construction crews and we also have contractors throughout the marketplace. As I mentioned, with those construction crew count levels in the fourth quarter, it gave us, what I would say, a very healthy funnel of service addresses coming into 2026, which we had not had coming into 2025. So I am very bullish on what we can accomplish in 2026. And I will hand it off for the tower question. Yeah. So in terms of, you know, the spectrum, right, you know, as you know, the primary spectrum niche from a value perspective would be maintained as a C-band spectrum. We believe that spectrum is very attractive. Speech front mid-band spectrum. Is an established infrastructure ecosystem. All major carriers can use it, and it is deployable immediately. And in addition to the major big three carriers, of course, there may even be other potential acquirers such as cable, regional carriers, speculators, what have you. You know, certainly, the availability of other spectrum could affect demand. But that could be pos, that could be positive for us as well because of where companies, where potential acquirers of the upper C-band spectrum, wind up in the band range. So we think that that is potential upside for us as well. And then, you know, want to reiterate simply that the C-band is very attractive spectrum, and we are optimistic that it has significant value. I am going to hand over the capital structure questions to—Yeah. Thank you for the question. You know, Sebastiano, you know, each company's board determines their own capital allocation based on a number of multiple factors. As you know, TDS has announced that share repurchases are a part of its capital allocation plan and use of proceeds that have come from the transactions in the special dividends. The Array organization is very focused right now on standing up the new tower business. They are excited with the fourth quarter results and our outlook for next year and very focused on growing that business going forward. So I cannot comment. That is a decision that each individual board makes. Vicki L. Villacrez: Yeah. But would TDS consider buying AD shares rather than its own TDS shares? To not only accrete yourselves higher, but also buy back your stock at a discount to the market. Walter C.D. Carlson: So Sebastiano, this is Walter. I think that Vicki's given the guidance that we can offer in response to your question. Issue of share buybacks is one that each board thinks about. And we do not have any further comments at this time. Sebastiano Carmine Petti: Okay, and then one last question, is the implied EBITDA guide at TDS, does that imply ex divestitures? Does that imply growth, or how should we think about that? Christopher “Chris” Bautfeldt: Thank you. Yes, Sebastian. No. I can take this. This is Chris. So for our adjusted EBITDA guidance for 2026, we are seeing an impact from the divest as well as those legacy revenue stream declines. But past that noise, there is growth there. And, really, that is coming from not only our investments in our fiber markets, but our continued business transformation efforts, and we are really liking the potential we are seeing from that program. Michael Rollins: Your next question comes from the line of Michael Rollins with Citi. Your line is open. Please go ahead. Thanks, and good morning. Thanks for the additional disclosures in the deck today. If I could turn to slide 21. So in that slide where it walks through the tower revenues, you described 8% growth excluding the committed and interim sites. And just curious, if we take that now to 2026, what growth rate is embedded within the revenue guidance for '26. And then I have a question on TDS Telecom afterwards. Anthony Carlson: Yeah. Sure. So assuming I am interpreting correctly, your request was a sort of same store growth. Right? So I want to, like, if you take out the DISH revenue, right, the fact that that is going to zero, you know, we are expecting the growth of around 6% or so on a same store basis. With DISH included, that would be closer to, you know, if you would, with DISH included, it would be closer to zero. So flattish if you assume DISH was still around, but 6% excluding DISH. Michael Rollins: And when you, and when you think about, and thank you for that. And when you think about same store, is that the combination of existing leases and then new colocation or amendment leases signed on those locations? Anthony Carlson: Yeah. Correct. Excluding all the T-Mobile activity. Michael Rollins: Great. And including any churn, normal course churn? Anthony Carlson: Correct. Great. Michael Rollins: Very helpful. And moving over to the TDS Telecom side of the equation, you mentioned some of the issues with, you know, video take rates influencing overall account, you know, ARPU or ARPA, and just kind of curious, you know, how you are thinking about video on a go-forward basis. You know, are you able to discern in your current footprints the types of customer lifetime value churn and margin and economics of customers that are just, like, standalone broadband versus those that bundle video. And at some point, is there going to come a fork in the road where you decide, you know what? If you just kind of let video be handled by others, you know, in terms of streaming and so forth, that you could deliver a more efficient effective broadband ENL for investors. Thanks. Kenneth Dixon: Thank you. So I will tell you when I came to TDS Telecom, I was very, very happy with the video business and what I would say very strong margins out of that video business. So I do not see us looking to outsource video. I think it is a critical part of our overall value proposition to attract a bundled customer that still wants broadband. And we still do hear loud and clear from some segments, customers that if we did not offer a video bundle, they would not have chosen TDS for their broadband service. So I still think it is very important. So I would say the other big opportunity for us in long-term value and churn reduction by having a bundled customer. We see that and we think it is still very important to our business. As you know, in 2025, we launched the mobile product to have a quad play offering to our customers, and you will see us again, as we have with video bundles, also look to bundle the mobile product much stronger throughout 2026. But, we have a very healthy video business. We are happy with the margins. And I think the team has done a very good job in terms of the content packaging. And I like where we are positioned in the market for 2026. Thank you. David Barden: Your next question comes from the line of David Barden with New Street Research. Your line is open. Please go ahead. Hey, guys. Thanks so much for taking the question. So you guys have been pretty clear about your strategy to monetize the C-band. I am interested in your posture on monetizing specifically the naked towers that you foresee that may emerge over the course of this decision making that Mobile makes between now and 2008. But also the unconsolidated investment interests that you have largely with Verizon, how actively you are considering the monetization of those, or if you consider them kind of the anchor tenants of a going concern business and that we should really think about this as a terminal value run rate cash flow business or as a sale value business? Or which ones we should consider which? Thank you. Anthony Carlson: Alright. So starting on with the second question first, on the noncontrolling interests, we like the cash flow from these investments. We are not in any hurry to sell them. There is only one natural buyer for those investments. If those companies are interested in buying them at a price that is attractive to us, of course, we will entertain that, but we are in no hurry to sell them if we like the cash flows from them. In terms of the naked towers, you know, our perspective on those is this: that there is significant latent value in the majority of those naked towers. Right? Some, obviously, we will need to, at some point, decommission or otherwise exit from, although decommissioning is quite expensive, and it is an interesting math exercise to go and take a look at that versus the cost of retaining them. But we view it as an option, and it is our objective at Array to reduce the holding cost of that option, you know, as quickly as possible in order to get the potential value from those towers because we do think that there is substantial lease-up opportunity on those naked towers over the long term. David Barden: So the kind of industry standard has been to underwrite per tower per year a 0.1 incremental tenant. Is that something that you would underwrite? Or are you not confident in underwriting that, or are you more optimistic than that? Anthony Carlson: We are not going to take a position on that at this time given just how new a situation we are in with this portfolio of towers no longer having the UScellular tenants. David Barden: Got it. Thank you, guys. Really appreciate it. Sergei Dluzhevskiy: Your next question comes from the line of Sergei with Gamco Investors Inc. Your line is open. Please go ahead. Morning, guys. Thank you for taking the time. Morning. Good morning. Good morning. First question is on the TDS Telecom side. Obviously, you are increasing the run rate of the build. Although in the fourth quarter, it was pretty close to the lower end of your guidance. As you look into 2026, and maybe if you look at your past build history, and what are some of the lessons learned and maybe what are some of the best practices that you are planning to utilize in 2026 to, and going forward, to make sure that the build is more efficient and more successful. Obviously, you did not meet your target in 2025 by about 10,000. But in 2026, obviously, you feel much better about the opportunity. My second question is on the Array Digital side. And, Anthony, it is nice to meet you virtually. I guess my question is, obviously, you have made progress on improving tenancy ratio since the T-Mobile transaction and running this company as a more focused tower business. As you look into 2026 and maybe even 2027, what are some of the initiatives that are working well for you in terms of improving this tenancy ratio XT-Mobile. And also, what are some of the new things that you are potentially contemplating and maybe would focus more on in 2026 and 2027 to accelerate the tenancy rate increase. And maybe my last question is also on the Array side. So, you have talked already about your focus on monetizing C-band spectrum. Obviously, we have seen several transactions last year involving EchoStar and their spectrum. We have several spectrum auctions coming up. So maybe if you can just provide more color on how you are thinking about the monetization opportunities for C-band, maybe the timeline, and to what degree some of those developments is or is other third-party transactions or with auctions are putting or creating more urgency to find an appropriate transaction sooner rather like— Kenneth Dixon: So thank you for the question. What I will tell you is our focus is around how many crews we have out in the marketplace. That is vital to our success to deliver our targets for 2026. What we have seen at TDS in the past is that you have typically good service address delivery in the fourth quarter, but you lose most of your external construction crews through what I would say the winter months post-holiday, and then it is very difficult in the past to get those crews back in time for spring. So we have monitored that very, very closely and kept our crew counts stable in the fourth quarter. And we now are monitoring those crew counts and have those same levels here in the first quarter. So that gives us much better confidence than we have had in years past about getting off to a strong start with our service address delivery at the beginning of the year. Anthony Carlson: So, Sujay, thanks for the question, and nice to meet you virtually as well. So there are a number of initiatives that are in place that we expect will help our performance in terms of increasing our tenancy ratio. So first, as we have mentioned before, we insourced our sales team, and we believe that that is already paying significant dividends in terms of getting our tenancy ratios up. The new deal that we signed with Verizon that we announced last year also is having an impact, as well as, I mentioned, the fact that some carriers are doing roaming replacement builds for their old UScellular network. Finally, we did not have much of a focus at all on non-tower carriers within our sales team. We do have goals that are doing that now, and we believe we are seeing early results from approaching more vertical potential tenants. So all of those are elements that we believe are going to help us increase our tenancy ratio going forward in 2026 and beyond. So a couple comments on that. First, I think those transactions with EchoStar show that there is very robust demand for spectrum. You know? And I think that bodes well for the spectrum that we indeed do have. Second is that, you know, we believe our spectrum is very valuable. We believe that if we have to, the carrying costs of maintaining that spectrum are manageable relative to the potential value that we could get for it. So we are not going to be a forced seller of the spectrum, and nor do we feel that we need to be. You know, with all that said, continue to look for opportunities to monetize it. And we are going to continue to be active in pursuing those. Operator: There are no further questions at this time. I will now turn the call back to John for closing remarks. John Toomey: Thank you, and thanks again to everyone for joining the call this morning. As always, please do not hesitate to reach out with further questions or and I hope everyone has a wonderful weekend. Thank you.
Operator: Good morning, and welcome to the RE/MAX Holdings Fourth Quarter 2025 Earnings Conference Call and Webcast. My name is Tracy, and I will be facilitating the audio portion of today's call. At this time, I would like to turn the call over to Joe Schwartz, Senior Vice President of Finance and Investor Relations. Mr. Schwartz, please go ahead. Joe Schwartz: Thank you, operator. Good morning, everyone, and welcome to RE/MAX Holdings Fourth Quarter 2025 Earnings Conference Call. Please visit the Investor Relations section of www.remaxholdings.com for all earnings-related materials, including our standard earnings presentation and to access the live webcast and replay of the call today. . Our prepared remarks and answers to your questions in today's call may contain forward-looking statements. Forward-looking statements include those related to agent count, franchise sales and open offices, financial measures and outlook, brand expansion, competition, technology, housing and mortgage market conditions, capital allocation, credit facility, dividends, share repurchases, litigation settlements, strategic and operational plans and business models. Forward-looking statements represent management's current estimates. RE/MAX Holdings assumes no obligation to update any forward-looking statements in the future. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ materially from those projected in forward-looking statements. These are discussed in our fourth quarter 2025 financial results press release and other SEC filings. Also, we will refer to certain non-GAAP measures in today's call. Please see the definitions and reconciliations of non-GAAP measures contained in our most recent quarterly financial results press release, which is available on our website. Joining me on our call today are Erik Carlson, our Chief Executive Officer; and Karri Callahan, our Chief Financial Officer. With that, I'd like to turn the call over to them. Erik? W. Carlson: Thank you, Joe, and thanks to all of you who have joined us today. In 2025, we built a strong strategic foundation, and we're beginning to see the payoff. We've made great progress in enhancing our brand and our overall value proposition and we view 2026 as a year of tremendous opportunity for our company. Our franchisees, our agents and our loan originators. We accomplished all of this despite 2025 being third consecutive year of a historically slow housing market. began with a major win. As in January, we had the largest brokerage conversion in RE/MAX history, an Ontario family of visionary entrepreneurs and their nearly 1,200 agents joined RE/MAX Canada adding to the market-leading presence we enjoy from coast to coast. Engagement throughout the RE/MAX network reflects growing enthusiasm for our strategic investments in the brand, reaffirming the strength of our overall direction. At the same time, we continue to operate the business with discipline as evidenced by our fourth quarter profit and margin performance, which came in at the high end of our expectations. Given the productivity and professionalism of our network and the resilience of our model, we believe we're well positioned to capitalize on a recovering market. We're continuing to support our affiliates in growing their business and increasing their profitability. In terms of housing data and consumer insights, despite a typically slow start of the year in January, we continue to see the housing market normalizing in various ways, and that is a healthy development. According to our latest RE/MAX National Housing Report, inventory and new listings remain higher than a year ago, and the overall fundamentals suggest we'll have a more balanced market this year. Across many markets, we're seeing early signs of a more even playing field. Seller concessions are becoming more common. The negotiations are more thoughtful. And interest rates are trending downward which helps support buyer activity. We also believe some recent policy proposals could prove to be constructive to housing if effectively implemented, including those aimed at increasing the inventory of single-family homes available to individual homebuyers as well as those that aim to lower the 30-year mortgage rate. Over time, we should also see the lock-in effect of low mortgage rates continue to ease. And the results of our recently published consumer survey show that despite delays caused by affordability and broader economic uncertainty, 88% of prospective buyers still say they're likely to purchase a home in 2026. Market conditions have slowed time lines, but not the underlying demand. Also, buyers said they're looking for more than a house. They want a sense of community, too. That plays directly to our strengths as the most trusted real estate brand in the United States and Canada. RE/MAX agents are local experts who skillfully help consumers navigate complexity evaluate trade-offs and make confident long-term decisions. Turning to our operational performance. As of December 31, our overall worldwide agent count hit another all-time high at over 148,500 agents. The growth of RE/MAX agent base outside the U.S. and Canada continues to fuel new records. And now continue to make progress in stabilizing agent count, as evidenced by our best fourth quarter performance since 2021. In a difficult market, Canadian agent count finished the year relatively flat to 2024, but we started the year with tremendous momentum. It's also worth noting that the reach of our global network enables us to serve an unparalleled number of consumers. In this decade alone, since January 1, 2020, RE/MAX agents have closed over 10 million transaction sides worldwide. It's an incredible achievement. And as we continue to evolve our strategies, we're exploring new ways to lean into the tremendous opportunity this global sales power presents. As I mentioned earlier, in mid-January, we announced the largest conversion and history of our company. A family of visionary entrepreneurial real estate leaders, Vivian Risi and her children, Michelle and Justin chose RE/MAX for their 17 office Toronto-based operation, largely to deliver a wider range of tools and opportunities to their nearly 1,200 agents, both for now and into the future. We're thrilled to welcome the Risi's and their talented agents to our network. The Risi also chose RE/MAX for our global footprint, robust referral network and powerful marketing and technology platforms. These advantages should reinforce their agent's productivity and growth potential in a dynamic real estate landscape. This conversion demonstrates that the enhancements to our overall value proposition are working. As brokers both in and beyond our network recognize the power of our current competitive advantages and the momentum that we're building. This landmark conversion is just the beginning. We're increasingly encouraged by our pipeline of conversion, merger and acquisition candidates across the U.S. and Canada. We have a strong slate of sizable opportunities we plan to close and announce in the months ahead. We believe much of the excitement surrounding the RE/MAX brand is driven by the tremendous team effort that has reinvigorated our value proposition. Our innovations are centered on enhancing our competitive advantages and helping agents win more business save time and make more money, which in turn helps increase broker profitability. The new economic models we launched last year, Aspire Ascend and Appreciate continue to provide brokers with greater flexibility and a wider framework for recruiting and retention. While Q4 is always seasonally challenging, our Q4 recruitment rate outpaced last year's building on the positive trends from late Q2 and Q3. The benefits of developing and launching these new options last year should continue to emerge over time. Notably, adoption of Aspire is already over 2,000 agents and the program's educational and technology elements position these newly recruited agents for sustained careers with the network. Announced several months later, Ascend and Appreciate continue to see increasing adoption as word grows about the value they offer. Less than a year after launch, both are still trending upward. We also continue to invest in our digital marketing assets. Our 6-month Marketing as a Service platform continues to gain traction, and the results are very encouraging. For example, listings that are promoted through our platform are delivering 3x more views, 6x more active users and 5x more actions compared to similar listings that have not been promoted on remax.com. These are just some of the initial findings, but they underscore of the product's ROI and value to RE/MAX agents. Overall, the platform is scaling in line with expectations, showing resilient demand, rising paid adoption and strong effectiveness, all of which positions us for continued growth throughout the year ahead. And we've launched a newly designed remax.com and are launching a redesigned remax.ca in Canada. They both incorporate personalized content, AI capabilities that deliver better consumer engagement. Making stronger connections to agents while also furthering our monetization strategies. For example, agents can now turn listings into AI-generated videos with the click of a button. Additionally, consumers can leverage AI to redesign home exteriors and interiors of property photos on our websites, improving engagement and extending the amount of time they spend on site. Our RE/MAX Media Network continues to build meaningful momentum with a healthy mix of programmatic and direct sourcing Revenue this year is pacing ahead of forecast, which is an encouraging sign. Brands are clearly interested in taking part. So there's an ample reason to expect advertising revenue from the RE/MAX Media Network to increase significantly this year. Additionally, our lead top tier curation program continues to deliver a better agent and consumer experience as conversion rates and corresponding revenue contributions are exceeding our initial expectations. Also from a lead source perspective, we're introducing a golf lifestyle designation. This program will enable RE/MAX agents to be certified as a real estate professionals who understand club, course and real estate dynamics unique to golf properties. Our new program will include training, certification and real estate lease that position participating RE/MAX agents as trusted advisers for golfers looking to find new homes and new communities. Let me now spend a moment on important developments within our mortgage business. As we look across the broader housing and mortgage landscape, one of the consistent themes we see is the need for flexibility, particularly in how independent operators structure their business in these changing market conditions. With that in mind, we rolled out a new franchise royalty fee model earlier this year across the Motto network. The goal here is simple. To better align our economic structure with the realities of today's market was supporting long-term growth with our franchisees and the model brand. This new model reduces fixed cost through a lower flat feet and introduces a transaction-based component that scales with performance. It's designed to provide more flexibility, encourage operational excellence and support sustainable growth over time. This is not a force transition. Existing offices can opt into the new new model if they believe it benefits their business, while new franchisees will follow the updated structure moving forward. That optionality is intentional. Different stages, and we want to meet them where they are. From a strategic standpoint, this approach mirrors the thinking behind our RE/MAX fee model options, aspire send and appreciate which were designed to give RE/MAX affiliates more choice, more control and better alignment with how they choose to grow their business. As part of our continued focus on strengthening the long-term health and competitiveness of the Motto brand,we deliberately chose to terminate a number of franchisees during the fourth quarter. These decisions were rooted in our responsibility to maintain a high-quality system that reflects the standards and expectations required to deliver a consistent borrower experience. We continue to see significant opportunities within our mortgage business. These include leveraging the new fee model to grow the Motto base, drive greater adoption of wemlo processing, both from inside and beyond our motto network as well as exploring additional ways to capitalize on the hundreds of thousands of transactions RE/MAX agents close annually in the United States and Canada. We're also exploring possibilities around the thousands of leads that flow through our digital platforms. Applying both the real estate and mortgage, our fourth quarter achievements and enhancements reflect a concerted focus on strategic growth network strength and a differentiated value for franchisees, agents and loan originators alike. As we look across both industries, the pace of change requires brands to offer scale without sacrificing local expertise. All we're providing that constant support and value to our customers. And we continue to lean into our RE/MAX and Motto networks and the enthusiasm we see is very real. That enthusiasm has been fueled by the energy of new leaders who have recently joined the team. One of those inspirational leaders is Chris Lim who we just promoted to President and Chief Growth Officer of RE/MAX. Over the past 13 months, Chris has helped to modernize operations, increase support services, expand our value proposition and elevate the way consumers perceive this global brand, especially on our digital platforms. He brings a creative upscale mindset to every project and played a direct role in several major brokerage conversions, most notably in Hawaii and Ontario. Chris, congratulations. As we look toward the rest of 2026, we remain focused on executing our comprehensive growth and revenue strategy. Last year, we brought a new leadership, launched new products and services develop new economic models and strengthened the foundation for our future. This year, we're focused on driving adoption, managing outcomes and ensuring that our company and networks continue to win. With that, I'll hand it over to Karri. Karri Callahan: Thank you, Erik. Good morning, everyone. As Erik said, we are encouraged by our fourth quarter operating results and overall financial performance. Profits for the quarter landed at the high end of our expectations, and our revenue performance was solid despite a challenging housing market. Some of our notable quarterly financial highlights included total revenue of $71.1 million adjusted EBITDA of $22.4 million, adjusted EBITDA margin of 31.5% and adjusted diluted EPS of $0.30. Looking closer at revenue, excluding the marketing funds, revenue was $53.6 million, a decrease of 0.4% compared to the same period last year, driven by a decline in organic revenue of 0.4% and flat foreign currency movements. The decline in organic revenue was driven mainly by a reduction in U.S. agent count and the impact of recently introduced incentives, including the Aspire program partially offset by an increase in broker fees and revenue contributions from our new initiatives, including marketing as a service and from the monetization strategies from our flagship website. Fourth quarter selling, operating and administrative expenses increased $1.6 million or 4.4% to $37.3 million. This increase was primarily due to losses on sale and disposal of assets an increase in expenses from the timing of other events, partially offset by a reduction in certain personnel-related expenses. The resilience of our franchise economic model and our ongoing evaluation of every aspect of our business, has resulted in our ability to continue to delever despite a challenging macro and housing environment. Our total leverage ratio decreased to 3.12x as of December 31. A continuation from last quarter, our total leverage ratio remains below the 3.5x level, affording us greater flexibility from a capital allocation perspective. And importantly, we currently expect to remain below that 3.5x level throughout the year. From a capital allocation perspective, our priorities remain unchanged. We're strategically reinvesting in the business, and we'll continue to build our cash reserves. Now on to our guidance. Our first quarter and full year 2026 outlook assumes no further currency movements, acquisitions or divestitures. For the first quarter of 2026, we expect agent count increased 1.5% to 2.5% over first quarter 2025, revenue in a range of $69 million to $74 million, including revenue from the marketing funds in a range of $16 million to $18 million and adjusted EBITDA in a range of $14 million to $17 million. And for the full year 2026, we expect agent count to increase 1.5% to 3.5% over full year 2025, revenue in a range of $285 million to $305 million, including revenue from the marketing funds in a range of $66 million to $70 million and adjusted EBITDA in a range of $90 million to $100 million. With that, operator, let's open it up for questions. Operator: [Operator Instructions] Your first question comes from the line of Nick McAndrew with Zelman & Associates. Your line is open. Please go ahead. Nick McAndrew: Questions. Maybe just to start, I think as the earlier Aspire cohorts moved beyond kind of the onboarding phase, can you just talk about what you're seeing with those earlier cohorts just in terms of agent developments or productivity as some of those agents move through the program? Karri Callahan: Sure. Nick, we continue to be really excited about the Aspire program. We know that we see significant reduction in the churn of our agents as we move them up the productivity cohort. . And as we've seen in the -- it's really early that, that cohort is very small. But as those agents have gone through, we are seeing some upticks in productivity as they go through and they do the training and they get engaged with our tools, we are seeing some improvement in productivity, and we're also seeing improvement in retention within that cohort. I think importantly, as Erik said in the scripted remarks, in addition, the ASPIRE program in and of itself is really spurring recruiting activity for our brokerages. So the optionality that the program offers, I think, is another thing that has really been beneficial as we've seen the continued stabilization from a U.S. agent count perspective here in the fourth quarter, best fourth quarter since 2021 and a continued trend from Q2 and Q3. Nick McAndrew: Got it. And I guess, second, just a follow-up. Congrats on the 1,200 agent Canadian addition. And I'm just curious on whether it's the new comp structures, brand positioning or tech offerings, like anything to call out on just what's resonating with that agent base that's coming through RE/MAX and just any factors that might have led them to end up choosing remote. W. Carlson: Yes, Nick, this is Erik. And I appreciate you saying choosing RE/MAX because that's actually the way we look at it. And I think it's a combination of all of the above, to be quite frank. I mean, about a year ago, obviously, we launched the brand modernization. We've done a lot of really hard work on our value proposition. We've showed up with different people from a leadership perspective. we're really leaning in to the network. And as we're talking to prospective clients about the RE/MAX opportunity, it's not only just about tech and our education and the community, it's our global footprint, right? So 148,000 plus agents in 120 countries. -- real estate today, although it's still very local, it is worldwide. And so we're really proud of, obviously, the footprint that we have, but the tools and processes that we're putting in place to help agents and consumers find great agents around the world, right? So our MAX referral program is continuing to see improvements and additional transactions, which is very healthy. So I think the RECs are just such a tremendous family and well respected, obviously, in real estate, we're super excited that they chose RE/MAX as the next partner for [indiscernible] tomorrow. There's simply an outstanding group, and we're seeing very high retention rates right now with agents which tells us, one is Vivian and her team have a lot of respect, but also agency value in our brand and what it represents today and in the future. Operator: Your next question comes from the line of Dae Lee with JPMorgan/please go ahead. Dae Lee: Great. I guess my first one is on -- there's a lot of talk about the tutor AI-driven automation to change the industry. I'm curious like how like what are franchises in redefining optimistic about AI? And how are they responding to the automation derive. . W. Carlson: Yes. Dave, it's Erik. I'll give you a little bit of context on how we think about it and some of the feedback that we're getting from our network. I think AI for the sake of is a mistake. And I think that we're trying to be very purposeful on how we deploy automation technology, and obviously, some of that is our network, and I think just real estate agents and/or brokerages in the industry are very curious about it. there's a sense of, hey, I need to lean in. There's a sense of I'm scared of it. What we try to do here at RE/MAX is be purposeful in our approach. And so you're seeing us deploy tools and services like Max AI which resides on remax.com and CA, which helps nurture leads and helps consumers find the right real estate agent within the RE/MAX network. You're seeing us use tools from our partners at old trail like [indiscernible] which helps to really automate workflow within the e-mail system. You'd be surprised how many agents still use e-mail as a primary method to correspond with consumers, whether on the buy side or the sell side and get business done. So automate some of that work. At a very high level day, like our purpose here is to help agents win listings and win more business, do it in less time and make more money. And so when we think about AI, we think about how we can deploy AI to help achieve those 3 goals. So you're seeing us deploy whether it's through kind of our CRM and symptom and helping folks nurture their contacts, whether it's in back-office-type operations, to help automate and take cost out of the business or whether it's with consumers to help engage and find the right property, the right listing, the right agent for them to be successful. So we're -- I would chalk it up as we're taking a very purposeful approach here, but really leaning into our North Star to help agents be more successful in the market. Dae Lee: Got it. Helpful. And then as a follow-up, I'm encouraged to see momentum into 2026. I'm just curious, what are the key swing factors in the high versus the low end of your guide you're 20x revenue guide? And which KPI should we be tracking to see revenue tilt to the high and that is just positive growth for the year? And does that include U.S. business returning to positive growth as well. Karri Callahan: Yes. Great question. It's Karri. So I think we've been -- as Erik said, we try to take a purposeful approach to everything. I think that there's definitely some opportunity to push to the higher end. Obviously, we're in the -- we just finished the third straight year of a pretty depressed housing cycle. -- anything from a macro perspective would definitely be a tailwind and pushing us up to the higher end of that guide. We obviously can't control what's happening from a macro perspective. But I think we've done a great job really reinforcing the value proposition and really focusing on what we can control. So further stabilization and kind of growth from a U.S. agent count perspective. Erik mentioned in the scripted remarks, some momentum in the pipeline on the coming months in terms of additional conversions mergers and acquisition activity, that would be a tailwind in terms of acceleration beyond what we see today. And then with respect to some of our new monetization initiative, marketing as a service as well as our digital channels monetization opportunities. we're seeing significant growth year-over-year. But if that outpaces kind of our current forecast, which we're already pleased with the growth that we've included, that those are other levers that could push us to the high end of the range. . Operator: Your next question comes from the line of Tommy Mcjoint with KBW. Please go ahead. Thomas Mcjoynt-Griffith: Question on the Aspire program and the impact on the broker fee revenue line. Just wanted to get a sense of the magnitude of how much it impacted it this quarter. And then secondly, it seems like you're going to recognize that ratably throughout the year. So is there a chance for a major kind of true-up at year-end if volumes end up drastically different than you're expecting? Or how could that impact that? . Karri Callahan: Yes. Tommy, it's a great question. As Erik mentioned on the scripted remarks, we do have about 2,000 agents now that are on that and so we're seeing good adoption. And as I mentioned earlier, I think importantly, more than anything, we're also just the program offer optionality. In terms of the broker fee impact to it was not that significant, kind of a couple of hundred thousand dollars, maybe $0.5 million. With respect to just kind of how the activity will get recognized, it's just going to smooth things out a little bit over time. So we're going to start to see a little bit less seasonality in the broker fee line. To the extent that participation in that program grows. So as there's more participation, we can provide more guidance. So there's a little bit of impact in Q4, but it really wasn't that pronounced. Thomas Mcjoynt-Griffith: Okay. Got it. And given RE/MAX's sort of vast network and a number of agents, . Operator: Your next question comes from the line of [ Valentin Alvar ] with Jones Trading. Unknown Analyst: So just regarding your disclosure on the earnings release relating to selling, operating and admin expenses, can you give us some idea of ongoing versus onetime cost pressures, just to gather an idea of the run rate. Karri Callahan: Sure. also, it's Karri. So with respect to kind of what was in the information. There was a couple of things that were a little bit unusual and onetime in nature. We did have about $1 million charge with respect to some sale and disposal of assets. That won't continue into the future. And so as we think about what that kind of looks like going forward, the year-end kind of Q4 run rate of SONA looks actually to be pretty consistent into Q2, Q3 and Q4 of this year once you normalize for that. Keep in mind that Q1 is always a little bit higher for us. We're really excited for next week, which is our annual agent convention in Las Vegas. We've got over 60 countries represented and a lot of agents coming from all over the world to really experience the momentum that we're building from a RE/MAX perspective. But that does result in a little bit of increased investment in Q1, and that should look pretty consistent to Q1 of '24 and Q1 of '25. Unknown Analyst: Got it. for the additional info there. Switching gears a little bit. With where the stock is at today and the mortgage rates remaining near the 6% mark, are you more likely to engage in additional share repurchases versus Q4 also? Karri Callahan: Yes, Valentin, it's a great question. I think when you look at our model from a recurring fee perspective as well as the significant earnings to free cash flow generation that the franchise model is able to generate -- we're really pleased with the fact that we're from a leverage perspective below that 3.5x level for a couple of quarters now. So we do have some increased flexibility now as it relates to return of capital. So I think we're taking -- just given what's happening from a macro perspective, we're taking a prudent approach to capital allocation. But given where we are from a leverage perspective, I think capital allocation is definitely more back on the table than it's been, and we're looking to balance that with reinvesting back into the business and making sure that we can allocate capital to growing the business in a smart way that will generate the highest return. Operator: [Operator Instructions] W. Carlson: Operator, if I may, this is Erik. And Tommy, I know you got cut off on your question. I think we heard a little bit about private listings, happy to address. With the private listing discussion, our view really has not changed. We feel like transparency, broadest distribution for listings gives buyers and sellers the best outcome. As we've talked about a little bit before, obviously, we do have a vast network around the world. If there was a case where we had to participate in a broader private listing type network. I mean we'd be well prepared to do that. But philosophically, we think that the consumer comes first. It is the ultimate North Star not only for our brand but for our agents and our brokers serving buyers and sellers. And so we like the idea of transparency and the broadest distribution of listings. So sorry, you got cut off, Tommy, but I hope that helps. Operator: There are no further questions at this time. I will now hand the call back to Joe Schwartz, Senior Vice President of Finance and Investor Relations. Mr. Schwartz, please go ahead. Joe Schwartz: Thank you, operator, and thank you, everyone, for joining the call today. We hope everyone has a great weekend. Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Operator: Good day, and welcome to Ryerson Holding Corporation’s Fourth Quarter 2025 Conference Call. Today’s conference is being recorded. There will be a question-and-answer session later. If you would like to ask a question, please press 1 on your telephone keypad at any time. Again, that is 1 to ask a question. At this time, I would like to turn the conference over to Justine Carlson. Please go ahead. Good morning. Justine Carlson: Thank you for joining Ryerson Holding Corporation’s Fourth Quarter 2025 Earnings Call. On our call, we have Edward J. Lehner, Ryerson’s Chief Executive Officer, James J. Claussen, our Chief Financial Officer, and Molly D. Kannan, our Chief Accounting Officer and Corporate Controller. A recording of this call will be posted on our investor relations website at ir.ryerson.com. Please read the forward-looking statement disclosures included in our earnings release issued yesterday, and note that it applies to all statements made during this call. In addition, our remarks today refer to several non-GAAP measures. Reconciliations of these adjusted numbers are also included in our earnings release. I will now turn the call over to Edward J. Lehner. Thank you, Justine. Good morning, Edward J. Lehner: and thank you all for joining us to discuss our fourth quarter and full year 2025 performance. Before diving in, I would like to first extend a warm welcome to Richard Marabito, Richard Manson, and Andrew Greif, who are joining this morning’s call as our President and Chief Operating Officer, our Senior Vice President of Finance, and our Executive Vice President of Ryerson, and President of the Olympic Steel Business Unit, and all of our Olympic Steel faithful following the successful merger of Ryerson and Olympic Steel which we closed just a week ago today. It is my absolute pleasure to be working alongside you to serve both our collective shareholders and our combined employee base that is more than 6,000 strong in approximately 160 locations. I am looking forward to the great things we are going to accomplish together as a unified enterprise with significantly greater scale and expanded product and service offerings. We are in the very early days of integration—as in seven—but we have been sitting on a spring for several months and that has sprung, and we are off to an excellent start. We have established an experienced integration team focused on realizing the expected $120,000,000 in annual run-rate synergies with an emphasis on combining best practices, optimizing asset utilization, and capturing combined targeted cost and revenue merger benefits. We are highly confident in our ability to deliver on the aforementioned synergies over the next two years and are looking forward to sharing our progress with you quarterly. Turning to the business, the underlying commodity price gumbo for our mix of products increased at a faster rate than anticipated during the fourth quarter as supply-side price drivers outpaced buyer price absorption and demand was still subdued and contractionary in the quarter. By the end of the quarter, supply-side price increases had not yet materialized in our customer end markets due to contract customer pricing lags and transactional customer price stagnation. With Q4 2025 in the rearview, and as we progress through 2026, we are seeing encouraging strength in customer quote and order activity relative to the past several years and we expect to see gross margin expansion year over year and sequentially as better pricing propagates through the industrial metals value chain along with improving demand signals. We also expect operating income improvement sequentially and year over year given better manufacturing demand, improved operating leverage, and revenue growth. These encouraging trends, though still early, when looking at synchronized manufacturing growth at a more desirable duration, certainly represent the best demand start to a year since 2022. It is always better to close a merger with improving industry fundamentals and it is part and parcel of why the stage is also well set from a timing perspective for our just-completed merger with Olympic Steel. Independently, over the past four years and now together, we have both invested significantly in our capabilities with strong balance sheets leading up to the merger and now together we expect to execute on $120,000,000 of annual run-rate synergies at the cusp of what we hope to be at least a multi-quarter cyclical inflection upward. As we advance in 2026, our clear priorities are to continue integrating the combined organization in a way that preserves and enhances the customer experience as well as our employee culture. To begin realizing merger synergies as communicated to stakeholders, to improve the quality of earnings through disciplined execution of service center fundamentals across our expanded value-added service center network, and to reduce leverage to within our targeted range with updated shareholder capital allocation plans coinciding with synergy attainment. Before we get into the details of our financial results, I want to thank all of my Ryerson-Olympic teammates for their hard work over these past six months, particularly given the additional time and effort involved in consummating our merger with Olympic Steel. We also appreciate the continued engagement and support of our customers, suppliers, and shareholders as we enter this next phase together for the desired betterment of all. With that, I would like to turn the call over to James J. Claussen for a review of market conditions and financial results. Thanks, Eddie. And good morning, everyone. North American industry volumes, as measured by the Metals Service Center Institute, experienced normal seasonal decline in the fourth quarter relative to the third, decreasing by 5.8% sequentially, James J. Claussen: and 1.5% for the full year of 2025 compared to 2024. By comparison, Ryerson’s North American shipments decreased by 6.8% sequentially and less than half a percentage point for the full year, indicating market share gains for the full year of 2025 despite retracement during the quarter on majority depressed OEM program demand and shipments. Our total company tons shipped were down just under 5% quarter over quarter, in line with guidance, and approximately 3% higher compared to the fourth quarter of last year. For the full year of 2025, our total company tons shipped came in just ahead of last year, up by half a percentage point. Turning to performance at the end-market level, I would first like to note that we recently wrapped up a top-to-bottom review of our classifications and realigned our reporting to gain a clear, more accurate understanding of our business performance and better direct strategic decision-making. Utilizing these new classifications, we saw the most year-over-year volume growth in our fabrication and welding sector followed by growth in the machine shop and machinery and equipment sectors. Partially offsetting that growth was weakness in the commercial transportation sector and, to a lesser degree, by weakness in our climate sector, which includes HVAC, and in our heavy equipment sector, which includes agricultural and construction equipment. Turning to fourth quarter performance, we achieved revenue within our guidance range with volumes in line with seasonal trends. However, as Eddie mentioned, material costs rose faster than anticipated during the quarter, growth outpacing our average selling price, and the quarter expired before we were able to fully price these increases into the market. As a result, we experienced weaker-than-expected gross margin and recorded a higher-than-expected LIFO expense for the quarter. Our operating expenses came in largely as expected. In all, our net loss of $38,000,000, or $1.18 per share, and our adjusted EBITDA, excluding LIFO generation, of $20,000,000 came in below our guidance expectations. Turning to current expectations, we have been seeing very strong activity in 2026, and we anticipate finishing the quarter with tons shipped up 13% to 15% compared to 2025. Same-store revenues are expected to be in the range of $1,260,000,000 to $1,300,000,000 with average selling prices expected to be flat to up 2% quarter over quarter as fourth-quarter material price increases start to flow into the market and expand gross margins. We also expect to realize operating leverage as demand conditions improve. In all, we anticipate generating net income for the first quarter in the range of $10,000,000 to $12,000,000 before any merger-related fees. We also expect to record LIFO expense of between $6,000,000 and $8,000,000 and adjusted EBITDA excluding LIFO of $51,000,000 to $54,000,000 in 2026. Turning to our expectations for Olympic Steel, in the last six weeks of the quarter, we anticipate that Olympic will experience similar market dynamics and therefore generate accretive revenue in the range of $260,000,000 to $280,000,000 and adjusted EBITDA, excluding LIFO, in the range of $12,000,000 to $13,000,000. For our combined companies, we anticipate first-quarter revenue in the range of $1,520,000,000 to $1,580,000,000 and adjusted EBITDA, excluding LIFO attainment, between $63,000,000 and $67,000,000. Turning to our investments in the business, in the fourth quarter, our capital expenditures totaled $21,000,000, contributing to a full-year investment of $52,000,000. In 2026, we anticipate investing approximately $50,000,000 in capital expenditures on a same-store basis or $75,000,000 including a prorated expectation for Olympic Steel. We generated fourth-quarter cash from operating activities of $113,000,000 as our seasonal working capital release more than offset the net loss generated. Inventory days of supply increased by three days quarter over quarter, to 79, and was well managed considering the typical fourth-quarter trend. Our overall cash conversion cycle also remained well managed, coming in at 68 days for the fourth quarter, which is consistent with the prior quarter and 11 days leaner than the same period last year. Utilizing our cash flow generation, we decreased our debt by $37,000,000 and net debt by $34,000,000 compared to the prior quarter. As a result of continued incremental improvements in both our net debt and trailing twelve-month adjusted EBITDA excluding LIFO, our leverage ratio decreased quarter over quarter from 3.7 to 3.1 times, continuing to approach our target range of 0.5 to 2.0 times. From a global liquidity perspective, the company’s profile remained healthy during the fourth quarter and we ended the period with $502,000,000 of liquidity compared to $521,000,000 at the end of the third quarter. In conjunction with the closure of our merger with Olympic Steel, we successfully extended the maturity of our revolving credit facility and expanded its capacity from $1,300,000,000 to $1,800,000,000. We expect to utilize the facility to fund our combined general corporate needs as well as support the pursuit of synergistic growth opportunities. Turning to shareholder returns, Ryerson distributed $6,100,000 in the form of dividends, or $0.18 per share, during the fourth quarter and has announced a first-quarter dividend of the same amount payable to our now combined shareholder base. We did not repurchase any shares in the fourth quarter and ended the period with $38,400,000 remaining on our share repurchase authorization. I will now turn the call over to Molly D. Kannan to discuss our financial performance highlights for the fourth quarter. Molly D. Kannan: Thanks, Jim, and good morning, everyone. For 2025, Ryerson reported net sales of $1,100,000,000, a decrease of approximately 5% compared to the previous quarter, driven by lower tons shipped, with average selling prices flat. Compared to 2024, net sales increased by 9.7% with average selling prices 6.3% higher as well as increased tons shipped of 3.1%. As discussed, commodity prices rose more than anticipated during the quarter and resulted in a LIFO expense of $22,500,000 compared to our expected expense of $10,000,000 to $14,000,000 and compared to the previous quarter expense of $13,200,000. Gross margin contracted by 190 basis points to 15.3% and gross margin, excluding LIFO, contracted by 100 basis points to 17.3% during the fourth quarter as we were unable to price these rapid increases into the market before the end of the period. Warehousing, delivery, selling, general and administrative expenses totaled $205,300,000 for the fourth quarter, an increase of $4,900,000 compared to the third quarter driven by advisory service fees related to the Olympic Steel merger. In all, the gross margin compression and one-time expenses contributed to our fourth-quarter net loss attributable to Ryerson of $37,900,000, or $1.18 per diluted share. This compares to net loss of $4,300,000 and diluted loss per share of $0.13 for 2024. Our adjusted EBITDA excluding LIFO generation for the fourth quarter was $20,400,000, which compares to $10,300,000 generated in 2024. And with this, I will turn the call back to Eddie. Edward J. Lehner: Thank you, Molly. While fourth-quarter results were adversely influenced by ongoing recessed manufacturing conditions, we are seeing the signs of an improving manufacturing economy through the early part of 2026, and the combined potential and prospects of our merger have us aiming much higher in the quarters and years ahead. Regardless, whatever the macro gives or takes away, our determination and conviction are resolute in making good on the $120,000,000 in annual synergies we expect to deliver, and we as a team could not be more confident in the Ryerson Rise—whatever you prefer—organization that we have assembled to deliver it. As Ronnie Coleman—and you have to Google it—used to say, “Ain’t nothing to it but to do it.” With that, we look forward to your questions. Operator? Thank you. Thank you. Ready for questions. Is anybody out there? Operator: Thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing star-1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star-1 to ask a question. We will take our first question from Katja Jancic from BMO Capital Markets. Please go ahead. Maybe starting on more, I guess, near term, 4Q was negatively impacted by the fast increase in prices and not you not being able to push prices higher. Are you right now still seeing any potential pushback from your customers about fully accepting these price increases? Edward J. Lehner: Hi, Katja. It is Eddie. And, you know, we have Richard Marabito and James J. Claussen and Richard Manson and Andrew Greif and Nick in the room with us. So we could give you a really fulsome answer. I will tell you that I have been pleasantly surprised by the increase in business activity overall. When we look at quoting rates and we look at conversion rates, Richard Marabito: it is the best we have seen in a really long, long time. So that is very positive. I think getting price increases into the market, it is finally starting to happen. But I will also say if you look at mill utilization rates and you look at some of the recoveries in certain end markets, it is still somewhat uneven. It really is sort of the end market by end market and customer by customer. So it is a gradual pricing through on that side as we look at mill pricing getting through the distribution channel to customers. But for the first 45-plus days of the quarter, it has been very positive overall. Edward J. Lehner: Rick? Yeah. Thanks, Eddie. Agree. Richard Marabito: I think—and everybody knows we closed on the 13th, so the first half of the first quarter is not included in our results going forward. But I agree with Eddie. We saw and have seen a good start to the year in terms of both volumes and pricing. So we are optimistic, as Eddie said earlier in his comments, you know, it is good to close a transaction and merge and have a little wind in our sails in terms of the market. So we are feeling good about that. And, Katja, I would say this too. I mean, you know from our attendance at the BMO conferences, which we are looking forward to seeing you again next week. Last couple years, I mean, it has been a long trough, and it got very tiresome to talk about the same things over and over again. Looking at the investments that we both made individually and collectively and looking at the execution of both companies and having a lot of the CapEx really behind us. I will give you an example. Shelbyville had a record month and we had done a major expansion in Shelbyville. Edward J. Lehner: And Richard Marabito: we are starting to see, you know, the promise of those capital investments really show through in a meaningful, tangible way. And you know, the call does not afford us the opportunity to go through every single one, but just suffice to say, we are really pleased with how those investments now are starting to look when we see some operating leverage in the industry and across our assets. Operator: Given that the markets are improving, right, and you have bigger portfolio now. How are you thinking about capital allocation moving forward? And I understand that you are in the process of combining fully combining or integrating the two companies. But how should we think about that? Edward J. Lehner: Yeah. So I will start, and then I am going to kick it over to Rick. So it is important to keep the main thing the main thing, and that is Richard Marabito: really getting after the $120,000,000 in annual run-rate synergies and deleveraging. Still want to bring the debt down. People ask us about growth, but we just took a major quantum leap forward when it comes to growth through the merger. So we want to delever. We want to get the synergies. We want to go ahead and optimize the footprint of the assets. And that is job one. And I think when we get through the year, as we get through the year and we have the success that we expect, then I think we could start to keep one eye out for, you know, what may be on, you know, that horizon. James J. Claussen: Rick, what do you think? Yeah. Agree. And I think Richard Marabito: obviously, Eddie talked about continuing the dividend, which we thought was really important as a piece of the capital allocation. But yeah, I think really focusing on the cash flow and getting the debt down is job one. But certainly, continuing to look to also reward the shareholder through dividends, and then we will frame in as we move forward some more specifics on that. Operator: Perfect. Thank you, and I will see you next week. Edward J. Lehner: Thanks, Katja. Look forward to it. Operator: Thank you. If you wish to ask a question, please signal by pressing star-1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We will take our next question from Samuel J. McKinney from KeyBanc Capital Markets. Samuel J. McKinney: Hey. Good morning, guys. Richard Marabito: Hi, Sam. Samuel J. McKinney: Just going back to Katja’s first question, this was not a Ryerson-specific headwind this week. But you talked about the challenge in passing through rising mill prices to customers. Were there products, and maybe aluminum, where that struggle was more pronounced than others? Edward J. Lehner: Yeah. I would say that Richard Marabito: of the three commodities, I would say that aluminum has probably been the slowest to propagate through, but that is picking up now in terms of the ability to start to get those price increases through the value chain. But, yeah, if you are asking about aluminum specifically, I would say of the three, that is probably been the toughest when you look at when that price started to go up—around April—on a, you know, on a regression line where it really started to turn up in April and it has continued to move higher. You know, sitting here today, you know, past February, carbon—you know that story. I mean, it is like a sticky ride, right? And now finally, we have got some momentum upward on carbon, which has been good to see. And it has been somewhat gradual. It has not really spiked the way it has in years past, and that is a good story. And then stainless was really—I mean, stainless and nickel have been beat up for what I will call structural reasons and also cyclical reasons. But, you know, as Nick Weber has said, you know, we finally maybe caught a bid on stainless where we have seen that now move higher over the last several months, and so that is starting to get into the price book as well. Samuel J. McKinney: Okay. And then the first quarter same-store volume guidance up in the mid-teens sequentially, safely above your historical seasonality. Are you starting to see some restocking or some more activity from some of your major industrial customers? Richard Marabito: Yeah. I mean, the real story of 2025 for us was transactional was up 11-plus percent, and OEM was down 8%. And that was really the first time we have seen that type of decoupling when it comes to directional movements, you know, within an industrial metals manufacturing cycle. You know, so I would say that overall we are seeing, on balance—we referenced—we are seeing a stronger market consistent with a stronger PMI print, and now industrial production and orders are moving in the same direction. So we are tracking that really well. I also think it is a function of the improvements that we have made. It is a function of how well Olympic is over the last several years and how well they continue to execute. And so I think it is also us getting better and improving and bringing those investments through finally to full, you know, to full operating status. But let me kick it over to Rick and, you know, he will give you some more color. Yeah. Could not agree more. I think—and you know, Sam, just from following the Olympic story—much the same in terms of some of the concentrations of investments over the last year or two. So we had a pretty heavy CapEx—I will call it—last 18 to 24 months. A lot of those investments are really just coming to fruition right now and are phasing in over—I will call it—fourth quarter into second quarter of this year. So, again, you know, a little wind in the sails from the market plus, you know, some of the self-investment. We are optimistic about growth. Eddie mentioned the PMI finally. I do not need to—you know, we do not need to keep continuing the historical bad news, but, you know, wow. How many months in a row and how many out of two years were we going to have PMIs printing down? So, yeah, feel pretty good about the momentum in the market. Feel really good about the combination of the two companies. And really excited about really showing everybody what we are going to be able to do in terms of those synergies and really bringing the combined strengths of the two companies together. And, really, that is what it is all about—being able to service our customers better with more capabilities, additional geography, and, you know, we are on it. I tell you, we got off to a—you know, I called it—I said we want to get off to a running start. I think we got off to a sprinting start. But just excited about all that. And, again, it is good to have a little James J. Claussen: wind behind us. So, yeah. Edward J. Lehner: And Sam, let me give you a little bit more— Richard Marabito: I would say a little bit more of the inside baseball when we look at how does our company operate. I think how does the industry operate. Stability is a big thing. I mean, you are going to take a hit when you make investments. If you shut down a service center that has been in a place for a long time and you build a new one and you do greenfields—I mean, you know—greenfields will shorten your life expectancy. And I think it is hard to go through them, but once you are on the other side of them it is really, really good. So I will give you an example. Central Steel & Wire, where we moved out of Kenzie, and we moved to University Park—that was a 900,000 square foot greenfield. And when we bottomed out during the construction, just before the grand opening, volumes went down to about 520 tons a day, as an example. Okay? Well, bookings at CS&W—very proud of the team and the leadership there—bookings at CS&W are now over 780 tons a day, not including the intercompany work that they do for other Ryerson locations. So when you think about that incremental 260 tons, it is very meaningful, but I also think it is indicative of what happens when you do major CapEx greenfields and you do heavy investments in facilities, you do ERP conversions—you take a hit. And it is a hard thing to go through. But when you do get to the other side of it, things start to work and operate a lot better. And it then syncs up very well with what we see historically where if you have got the right balance of investment to go with, I would say, stable, consistent, well-performing operations, you start to really realize that upside operating leverage in your network, and things start to get and look a lot better. Samuel J. McKinney: Okay. Thanks. I appreciate all the color on that question. And then last one for me. Increasing the revolver by $500,000,000 to $1,800,000,000 in the context of trying to get back down to the leverage range. What is the chance you use this to explore more M&A, and if so, could you do this before the achievement of synergies, or are those mutually exclusive? And what do you feel you need to round out the now combined portfolio? Richard Marabito: I think we finally have, like, half the CFO questions—we will be able to pop that over to Jim and Rich. But I would just say, Sam, I mean, when it comes to M&A, we just did a huge transaction, and I want to emphasize to keep the main thing the main thing. I do not think you ever look away from what could truly be an exceptional opportunity, but you are just so much more selective because you really do not want it to fracture the attention of the organization on what it is we really have to do first and foremost, which is get our marks, get the synergies, and boost the overall performance that flows through our financials. So that really is the priority. But let me send it over to Jim and Rich. James J. Claussen: Yeah. Good morning, Sam. I mean, Eddie really really touched on it. I mean, we did amend and extend the ABL, raising it up, you know, in order to really work through this merger and put the company in a good spot to continue to grow forward. But right now, as we sit here week one in, it is full speed ahead on working through the synergy case, continuing to operate the business, serve our customers, and we will continue to work through our capital allocation plans. Richard Manson: And Rich Manson is the synergy czar. So, Rich, what do you think? Yeah. No. I think Rick said it well earlier. As soon as the merger was done, we jumped in with both feet and started sprinting. And so lots of people involved, lots of great ideas. And we look forward to tackling and hitting all the numbers that we have set forth. We will do it. Samuel J. McKinney: Alright. Thanks, guys. Good luck, and nice to talk to you again. Edward J. Lehner: Hey. Thanks, Sam. Operator: As a reminder, to ask a question, please press—We will now take our next question from Alan W. Weber from JP Capital. Alan W. Weber: Good morning. Edward J. Lehner: Hey. Good morning, Alan. Hey, Alan. Are you there? Alan W. Weber: Yeah. I am here. Can you hear me? Yeah. So a question, you know, given you guys doing the merger, which sounds great, and then you have Klöckner being, you know, announced that they are going to be acquired. Can you talk about how you think about it longer term—more consolidation impact on Ryerson-Olympic and like that? Edward J. Lehner: Sure. Richard Marabito: Sure. You know, Alan, I think, you know, members of the team here have certainly socialized the reality that for a long, long time M&A activity was lacking in our sector. And it really is just a mathematical fact. If you look at consolidation on the mill side, you know what—consolidation on the customer side—we in the middle would just continue to really get squeezed given that there are, like, 7,500 firms that identify themselves as metal distributors, 2006 up to the present time. This was really a fantastic opportunity and move by both of our companies to do this, both when we look at the DNA of both organizations, but really in the larger industry as a whole. So answer is yes. I am really, really thrilled that we did it. I think our prospects are fantastic. And I think that the Worthington-Klöckner announcement, I think, is overall—it is a positive. It is healthy for the industry. Rick? Edward J. Lehner: I think you nailed it. I really have nothing to add to that. Richard Marabito: Consolidation is good for our industry, period. James J. Claussen: And Alan, it is—and it also is the customer experience. Richard Marabito: Like, we want to get closer to the customer. We have more touch points. We can get closer. You know, Andrew Greif has started out leading the supply chain integration council, the commercial integration council. And Andrew can give you some color too on just how attractive the opportunities look, you know, with the combined companies. Andrew? Edward J. Lehner: Well, think, Eddie, you said it right. The Richard Marabito: opportunity to take two great storied companies, and as customers today, the industrial OEM is really looking for help. And one of the first things they look at is the balance sheet of the companies that can help support them. I think you take this combination—it really sends a very strong message to our large customers that not only are we there financially to be able to support them, but if you look at the investments that the two companies have made over the last three to five years, really taking everything downstream as the customer today is looking for, you know, not just the rectangle of what was, you know, once upon a time important in our business, but, you know, finished welded product that is going directly into their assembly—there are not a lot of people that can do that to the scale that our large customers are looking. So I think the consolidation in this one is going to be fantastic for our customers. We have already gotten a number of calls as to what can we do collectively to try to help them grow their business, and we are excited to get in front of the customer. Edward J. Lehner: Yeah. And, I mean, I think, look, the better Richard Marabito: the better solution we offer, the more repeat business and growth we are going to see. We just have to really make sure that the experience we offer is, you know, to the highest level and meets our aspirations for what we want to deliver post-merger. Alan W. Weber: Great. Thank you, and good luck. Edward J. Lehner: Hey, Alan. Thanks a lot. Operator: As we have no further questions, I would like to turn the conference back to Edward J. Lehner for any additional or closing remarks. Edward J. Lehner: No. Really, thanks so much for your support. We really look forward to being with you next quarter to report out on how we are doing with our synergies, how the business is operating, and I look forward to the next call. Thank you. Everybody stay well. Operator: This concludes today’s call. Thank you for your participation. You may now disconnect.
Operator: Good morning, and welcome to the Cogent Communications Holdings, Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. As a reminder, this conference call is being recorded, and it will be available for replay at www.cogent.com. A transcript of this conference call will be posted on Cogent’s website when it becomes available. Cogent’s summary of financial and operational results attached to its press release can be downloaded from the Cogent website. I would now like to turn the call over to Dave Schaeffer, Chairman and Chief Executive Officer of Cogent Communications Holdings, Inc. Please go ahead. Hey. Thank you, and good morning to everyone. Welcome to our fourth quarter 2025, full year 2025 conference call. Dave Schaeffer: I am Dave Schaeffer, Cogent’s CEO. And with me on today’s call is Thaddeus G. Weed, our Chief Financial Officer. I would like to highlight a few key events and significant matters in the quarter. I would like to be able to go through these metrics to help you understand better our business. We are continuing to increase our margins. Our increase in gross margin and EBITDA margins have been driven by cost reductions and a rotation to more profitable on-net products. In 2023, the first full quarter Cogent was combined with Sprint wireline revenues or combined revenues by connection type for the third quarter versus this quarter have changed materially. Our on-net revenues were 47% of our revenues in 2023. Our total on-net revenues as a percentage of revenues has increased from 47% of revenues in 2023 to 61% of revenues this quarter. Our off-net revenues were 48% of our total revenues in 2023 immediately after the combination of Sprint and Cogent. Our off-net revenues as a percentage of our total revenues have decreased from 48% of revenues down to 39% of total revenues this quarter. And our non-core revenues were 5% of total revenues in 2023, our non-core revenues as a percentage of our total revenues have decreased to less than 1% of our revenues this quarter. I would like to take a moment and outline our progress in our Wavelength sales. At year end, we are offering wavelength services in 1,068 locations, all capable of 10 gigabit, 100 gigabit, and 400 gigabit services with provisioning intervals of approximately 30 days. As of today, we have actually increased our service footprint to 1,096 locations. Our Wavelength revenue for the quarter was $12,100,000, a 74% year-over-year increase compared to the comparable quarter in 2024. Our sequential Wavelength revenue growth accelerated and increased by 19%. That is better than the 12% sequential increase in Q3 over Q2. Our wavelength customers increased by 18% sequentially to 2,064 connections at the end of the quarter. Our Wavelength revenue for the full year 2025, which was the first full year we were selling Wavelength services across our footprint, was $38,500,000, an increase of 100% from the 2024 number. Our wavelength customers during that period increased by 85%. As of the end of the quarter, we had sold wavelengths in 518 locations compared to 454 locations at the ’3. We continue to anticipate capturing 25% of the highly concentrated wavelength market in North America. Now for a few comments on margins. Our EBITDA as adjusted for the quarter increased by $3,000,000 to $76,700,000. Our EBITDA as adjusted margins for the quarter increased sequentially by 140 basis points to 31.9%. Our increased margins continue to come from our cost reductions as well as our product optimization. Our EBITDA as adjusted for the full year 2025 was $55,600,000. Our EBITDA as adjusted then adding back the payments under the T-Mobile transit agreement. Our decrease in EBITDA as adjusted was as a result of the $104,200,000 reduction in our IP transit payments from T-Mobile and a reduction of $21,400,000 for other reimbursable Sprint acquisition costs that we incurred in 2024. There were no Sprint acquisition costs in full year 2025. The $104,200,000 reduction in scheduled payments and $21,400,000 reduction in these acquisition costs more than offset the organic growth of $70,000,000 in Cogent’s EBITDA or EBITDA Classic for full year 2025. Our EBITDA Classic for 2025 was $192,000,000.8. For the full year of 2024, it was $122,800,000. Our EBITDA as adjusted margins were 30% for the full year 2025, down from 33.6 for the full year 2024 because of the reductions that I just previously mentioned. Our EBITDA Classic margins, however, for full year 2025 were 19.8%, up from 11.9% for full year 2024, or an improvement of approximately 840 basis points on a year-over-year basis. Under our IP transit agreement with T-Mobile, we will continue to receive an additional 23 monthly payments of $8,300,000 per month until November 2027. There are further cash payments related to lease obligations we assumed at closing of at minimum $28,000,000. This $28,000,000 payment is to be made by T-Mobile in four equal monthly payments from December 2027 through March 2028. Now for a comment on our improvement in leverage. We have refined our capital allocation priorities and strengthened our financial flexibility and accelerated our delevering strategy. Leverage ratios have improved. Our gross debt leverage as adjusted for amounts due from T-Mobile for the last twelve months EBITDA as adjusted ratio was 7.35 as compared to 7.45 in the previous quarter. Our net debt ratio was 6.64 in Q4 compared to 6.65 in 2025. We believe that the amounts due from T-Mobile under our transit and purchase agreement should be considered in calculating our leverage ratios. We believe that these amounts essentially represent both long-term and short-term cash on our balance sheet and are discounted appropriately. And due to T-Mobile’s credit rating and payment history, we are confident that these payments will continue to be made in a timely manner. T-Mobile pays us $25,000,000 a quarter through 2027 under this IP services agreement. The monthly payments from T-Mobile under the IP transit agreement reduce from the balances that are due each month as they are received. Now for a couple of comments on our improved IPv4 leasing activity. Our IPv4 leasing revenue increased 44% year over year to $64,500,000 for full year 2025. We are currently leasing 15,300,000 addresses at year end. This is an increase of 2,200,000 incremental addresses or 17% on a year-over-year basis. We have title to 37,800,000 IPv4 addresses. Our capital expenditures for 2025 once our data center modernization program had been completed was $73,300,000, as compared to $114,300,000 for 2025. This $41,000,000 decrease was due to the completion of a significant amount of reconfiguration work in our Sprint-acquired facilities. We have converted these facilities into data centers in the first six months of 2025 as well as the last six months of 2024. We have converted a total of 125 facilities. At year end, we are providing services in 1,715 carrier-neutral data centers as well as the 187 Cogent data centers. The Cogent data centers have an aggregate capacity of 213 megawatts of installed and available power. Now as many of you know, we have intended to monetize and sell 24 of these facilities that we view as surplus. We acquired these facilities through the acquisition of Sprint. And we intend to monetize them through either outright sale or leasing on a wholesale basis. The nonbinding letter of intent we mentioned on our last call was not finalized due to a change in the original terms, not in price, but a requirement by the purchaser for Cogent to provide a portion of the purchase price in terms of owner financing, which we found unacceptable. We reverted to some of our backup agreements and are in active discussions with multiple parties for multiple offers across a broad set of these data centers. We do expect several of these to result in multisite acquisition offers. Now for a moment about our leverage and balance sheet strategy. Our 2027 June unsecured notes of $750,000,000 are still roughly eighteen months from maturity, but we have begun receiving proposals to refinance these notes. We intend to complete a refinancing transaction for new secured notes of $750,000,000 as soon as the make-whole period expires in June. Now for our long-term goals. We anticipate our revenue growth to continue to improve and be in the 6% to 8% range, we expect our rate of EBITDA margin to actually moderate to roughly 200 basis points a year that we will be able to deliver over a multiyear period. The nearly 800 basis points that we delivered this year was due to some extraordinary cost savings. And while we will continue to deliver these results, we do expect the rate of margin expansion to moderate. Our revenue and EBITDA guidance are meant to be multiyear goals and not intended to either be quarterly or even annual guidance. Now I would like to turn the call over to Thaddeus G. Weed to provide some further detail and provide our safe harbor language. Ted will also give a further breakout of the trends and the revenues acquired from the Sprint base versus the Cogent Classic base since our acquisition in 2023. I know this has been an area of focus of investors and we have been able to disaggregate those revenues and now present them with clear trends and metrics. With that, we will then open the call up for questions and answers. Task. Operator: Thank you, Dave, and good morning to everyone. Thaddeus G. Weed: This earnings conference call includes forward-looking statements. These forward-looking statements are based upon our current intent, belief, and expectations. These forward-looking statements and all other statements that may be made on this call that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. Please refer to our SEC filings for more information on the factors that could cause actual results to differ. Cogent undertakes no obligation to update or revise our forward-looking statements. If we use non-GAAP financial measures during this call, you will find these reconciled to the corresponding GAAP measurement in our earnings releases that are posted on our website at cogentco.com. Some overall comments on results and revenues. So our total revenue for the quarter was $200,140,500, and $975,800,000 for the year. Our total revenue for the quarter declined sequentially by $1,400,000 or by 0.6%. This was an improvement from the $4,300,000 or 1.7% sequential quarterly revenue decline that we experienced last quarter. While our sequential revenue declined within our fourth quarter, our total revenue increased each month in the quarter. Our total monthly revenue increased from September to October, increased from October to November, and excluding a change in USF revenues, increased from November to December. This month-to-month total revenue increase continued from December 2025 to January 2026. There was a negative FX impact on our quarter sequentially revenues of $200,000. So for the quarter, we experienced a $2,200,000 sequential decline in off-net revenues. Our on-net revenues, including on-net wave revenues, increased by $900,000 or 0.6% and our non-core revenues decreased by $200,000 and now those revenues have declined to only $1,200,000. Sequential wavelength revenue growth, which is on-net, accelerated to 18.8% from 12.4% last quarter, and increased sequentially by $1,900,000. Gross margin. Our gross margin for the quarter increased sequentially by $1,600,000 to $112,500,000. Our gross margin increased sequentially by 100 basis points to 46.8% from continued cost reduction and product optimization, including our focus on our on-net products. Our gross margin for full year 2025 increased by $46,700,000 to $442,700,000. And our gross margin for full year 2025 increased by 720 basis points from 38.2% last year to 45.4% for full year 2025. EBITDA. Our EBITDA, not including payments under the IP transit agreement for the quarter, increased sequentially by $3,000,000 to $51,700,000, and our EBITDA margin increased by 130 basis points to 21.5%. Our EBITDA for the full year, not including the IP transit agreement or Sprint acquisition cost, increased by $70,000,000 to $192,800,000 from $122,800,000 for full year 2024. And the EBITDA margin for this year increased by 790 basis points from 11.9% to 19.8% for full year 2025. We analyze and classify our revenues into four network connection types, and three customer types. Our four network connection types are on-net, off-net, wavelength, and non-core. And our three customer types are NetCentric customers, corporate customers, and enterprise customers. Dave mentioned we will provide some information on Sprint wireline acquired revenue and Cogent Classic revenue. We have been hesitant to separately disclose our revenue performance related to our acquired Sprint wireline business and our Cogent Classic business once the operations have been fully integrated. However, we believe that the following analysis will be beneficial and explain some of the changes in our total combined revenues. The substantial changes in the acquired Sprint wireline revenue base have masked the underlying performance of our legacy Cogent Classic business. So in May 2023, when we closed the transaction, the Sprint wireline revenue base had a run rate of $39,400,000 per month or $118,000,000 per quarter. This acquired revenue base has decreased from that $118,000,000 per quarter at the acquisition date down to $43,000,000 for this quarter. That is a $75,000,000 quarterly revenue decline related to the Sprint wireline revenue base or 64% decline since the deal closed. At deal closing, our Cogent Classic revenue run rate was $155,000,000 per quarter. This quarterly revenue base has increased by 27% or by $42,000,000 from that $155,000,000 prior to close to $197,000,000 for this quarter, the 2025. Additionally, our Cogent Classic revenues increased sequentially by 1.5% from the third quarter of this year, increased year over year by 3.1% from 2024, and increased by 2.3% for full year 2025 over full year 2024. Our consolidated revenue declines have been largely attributed to the reduction in the acquired corporate and enterprise revenues from Sprint. At closing, the Sprint wireline revenues represented a total of 42% of our total revenues and that percentage has materially dropped from 42% down to only 18% of our total revenues at year end. Our total corporate business was 42.7% of our revenues this quarter and 43.9% for the year. Our quarterly corporate revenues decreased by 9.1% year over year and sequentially by 2.3%. For the year, our total corporate revenues declined by 9.7%. At the closing of our acquisition of Sprint wireline in May 2023, the Sprint wireline corporate revenues were 30% of our total revenues. Those Sprint wireline acquired corporate customers now represent only 10% of our total corporate revenues. The Sprint wireline acquired corporate revenue base has decreased from a run rate of $13,000,000 per month or $39,000,000 per quarter at closing to a run rate of $2,700,000 per month or $8,100,000 per quarter at year end 2025. Same analysis for NetCentric. Our total NetCentric business continues to increase and benefit from the growth in video traffic, activity related to artificial intelligence, streaming, IPv4 leasing, and wavelength sales. Our NetCentric business was 43% of our revenues this quarter and 40.3% for the year. Our quarterly NetCentric revenues increased by 10.4% year over year and sequentially by 3.1%. For the year, our total NetCentric revenues increased by 6.8%. At the closing of our acquisition of Sprint wireline, the Sprint wireline NetCentric customers represented 20% of our total NetCentric revenues. Those Sprint wireline acquired NetCentric customers now are representing only 7% of our total NetCentric revenues this quarter. The Sprint wireline acquired NetCentric customer revenue base has decreased from a run rate of $6,000,000 per month or $18,000,000 per quarter at closing to a current run rate of $2,900,000 per month or $8,700,000 per quarter at year end 2025. Lastly, the enterprise business. Our total enterprise business was 14.3% of our revenues this quarter and 15.8% of our revenues for the year. Our quarterly enterprise revenue decreased by 24.7% year over year and sequentially by 5.8% primarily due to reduction in the acquired non-core and off-net low-margin enterprise revenues. For the year, total enterprise revenues declined by 20.3%. At the closing of our acquisition, the Sprint wireline enterprise customers represented virtually 100% of our enterprise revenues as this was a new line of customer for Cogent. The Sprint wireline acquired enterprise revenue base has decreased from a run rate of $20,000,000 per month or $60,000,000 per quarter at closing to a current run rate of $8,800,000 per month or $26,400,000 per quarter at year end 2025. These substantial changes in the acquired wireline revenue base have masked the underlying performance of our legacy Cogent Classic business. Analysis on revenue by customer connection network type. On-net revenue. We serve our on-net customers in 3,579 total on-net buildings. For the year, we increased our on-net buildings by a total of 126 on-net buildings, similar to prior years. Our total on-net revenue, including on-net wave revenues, was $146,400,000 for the quarter, a year-over-year increase of 7.8% and a sequential increase of 0.6%. Our total on-net revenues, including on-net wavelength revenues, increased as a percentage of our total revenue by 400 basis points to 58.4% for this year from 54.4% for full year 2024. Off-net revenue. Our low-margin off-net revenue was $92,900,000 for the quarter, that was a year-over-year decrease of 17.9% and a sequential decrease of 2.3%. Our off-net revenue results are impacted by the migration of certain off-net customers to on-net, and the continued grooming and termination of acquired low-margin off-net contracts. Our total off-net revenues decreased to 40.7% of our revenues for this year from 43.8% for full year 2024. Some comments on pricing. Our average price per megabit for our installed base decreased sequentially by 12% to $0.14 and by 34% year over year, essentially in line with historical trends. Our average price per megabit for our new customer contracts were $0.06, a sequential decline of 18% and 46% year over year. ARPUs for the quarter. Our on-net IP ARPU was $509. Our off-net IP ARPU was $1,234. Our wavelength ARPU was $2,114. Our IPv4 ARPU was $0.30 per address. Churn rates. Our churn rates improved sequentially. Our on-net and off-net churn rates improved from last quarter. Our on-net unit monthly churn rate this quarter was 1.2% compared to 1.3% last quarter. Our off-net unit monthly churn rate was 1.9%, compared to 2.1% last quarter, and our wavelength monthly churn rate has been less than 0.5%, so relatively insignificant. Traffic. Our year-over-year IP network traffic growth accelerated for the quarter. Our IP network traffic for the quarter increased sequentially by 4% and by 10% year over year, and for the total year, our traffic increased by 9%. Sales rep productivity. Our sales rep productivity was 4.1 units this quarter compared to 4.6 last quarter and 3.5 in 2024, as compared to our long-term sales rep productivity average of 4.8. Foreign currency. Our revenue earned outside of the United States was about 20% of our revenues this quarter, similar to prior quarters. Based upon the average euro and Canadian conversion rates so far this quarter, so 2026, we estimate that the FX conversion impact on sequential revenues would be positive about $400,000 and year over year, more significant, about $3,500,000. Customer concentration. Our revenue and customer base is not highly concentrated. Our top 25 customers were 17% of our revenues this quarter, similar to prior quarters. CapEx. Our CapEx was $37,000,000 this quarter and $187,600,000 for the year. And principal payments on capital leases were $8,500,000 for the quarter and $33,800,000 for the year. Combined, those amounts have declined year over year. Comments on debt and debt ratios. Our total gross debt at par, $123,400,000 of finance lease obligations under long-term IRUs, was $2,400,000,000 at year end. Our net debt, total net debt of our cash and our $203,100,000 due from T-Mobile at year end, was $1,900,000,000. Our leverage ratio as calculated under our more restrictive covenants under our unsecured $750,000,000 2027 notes indenture was 6.13. The secured leverage ratio was 3.8. And the fixed coverage ratio was 2.38. The definition of consolidated cash flow, similar to EBITDA, under our $600,000,000 secured 2032 notes indenture includes cash payments under our IP transit services agreement with T-Mobile in the definition and determination of consolidated cash flow. Payments under our IP transit agreement were $100,000,000 for the last twelve months, so that is added to the calculation. Our leverage ratio as calculated under the $600,000,000 secured 2032 notes indenture was 4.67. Our secured leverage ratio was 2.9, and lastly, fixed coverage was 3.12. Bad debt and days sales. Our days sales outstanding was 30 days at year end, the same as last quarter. And our bad debt expense was less than 1% of our revenues for the quarter and for the year. And with that, I will turn the call back over to Dave. Dave Schaeffer: Hey. Thanks, Tad. I would like to highlight a few of the strengths of our network, our customer base, and our sales force. Now for some details around our NetCentric performance. We continue to be a direct beneficiary of a number of trends in the industry, whether it be artificial intelligence or streaming activity. At year end, we are able to sell wavelength services in 1,068 data centers across North America with a provisioning interval of approximately 30 days. At year end, we are selling IP services globally in 57 countries and 1,902 data centers. At year end, we were directly connected to 7,659 networks, that is the largest number of directly connected networks of any service provider on the Internet. 22 of these were peers, and the remaining 7,637 networks were, in fact, Cogent transit customers. Now for some details around our sales force. We remain focused on sales force productivity and are disciplined about managing out underperformers. Our sales force turnover rate was 5.4% a month in the quarter, down from a peak turnover rate of 8.7% during the height of the pandemic, and also below our historical average turnover rate of 5.7% of the sales force per month. At year end, we had a total of 590 quota-bearing reps. Our sales force included 289 sales professionals focused entirely on the NetCentric market, 289 sales professionals focused on the corporate market, and finally, 12 sales professionals focused on the enterprise market. In summary, we have made significant progress in a number of areas. We have improved our revenue trajectory and performance and have returned to sequential revenue growth, which we expect to continue. We are improving our margins and growing our EBITDA due to our diligence in cost reduction and our focus in selling profitable on-net services. Over 80% of our sales in 2025 were for on-net services. We have a clear plan to refinance our 2027 $750,000,000 unsecured notes with a new longer-duration $750,000,000 secured note offering. We are actively working to monetize some of the acquired Sprint facilities, which will further accelerate our delevering and allow us to resume a more aggressive return of capital program to our equity holders. We have effectively now completed the integration of Sprint and Cogent’s network into a unified network and business. We have converted all of the intended Sprint switch sites that we intend to convert into data centers. This program is materially complete and will result in a continued reduction in our capital intensity. We are enthusiastic and optimistic about our wavelength business to add to our product portfolio. Our wavelength services are differentiated due to the uniqueness of the routes, the breadth of our footprint, our efficient provisioning, and aggressive pricing. The reliability that we deliver is unparalleled. We have since inception offered superior services, a broad footprint of revenue-rich locations, expedited provisioning, and market-leading disruptive pricing. That is why Cogent continues to be a market leader in the products that we sell. With that, I would like to open the floor up for questions. Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. At this time, I would like to give an instruction. In order to ask a question, please press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, simply press star one again. Our first question comes from the line of Christopher Joseph Schoell with UBS. Please go ahead. Great. Thank you. Dave, you had previously talked about returning to Christopher Joseph Schoell: sequential revenue growth while sustaining sequential EBITDA growth each quarter. Can you just update us how you are thinking about total company revenues and EBITDA for 2026 as that Sprint mix continues to fall? And as we think about the Waves business scaling in 2026, any guardrails you can share on the number of or revenues you believe are achievable based on what you are seeing in the business right now? Thank you. Dave Schaeffer: Yeah. Hey. Thanks for the questions, Chris. So as we mentioned, we are not in the habit of giving specific quarterly or annual guidance. But I do believe that after the significant runoff in the Sprint-acquired revenues, as Tad pointed out, 64% of the revenues that we acquired two and a half years ago have attrited. And during that period, the Cogent revenues, which represented 57% of the combined company, had grown at 27%. As a result of that, we have had now about 10 sequential quarters of revenue growth. We will be back to positive revenue growth on a quarterly basis from this point forward, and we anticipate that the annual rate of growth on average over a multiyear period will be in that 6% to 8% range. We also have a small amount of further cost reductions that will contribute to margin expansion. But the primary driver of margin expansion going forward will continue to be the revenue mix shift and the focus on on-net services. You know, 80% of our sales in the quarter were on-net. We have improved the base from 47% on-net immediately after closing to 61%. We think that percentage will continue to improve and allow us to achieve that, at minimum, 200 basis point rate of margin expansion. The reality is we did nearly 800 basis points last year. That is probably not sustainable over a multiyear period. But we do have some tailwinds there. And then for your question around Wave, you know, we have the largest North American Wave footprint. We are beginning to gain credibility with customers. We saw an acceleration in our revenue recognition and installations. We expect those trends to continue. And because our wavelength products are virtually all on-net, they are significant contributors to our margin expansion. Another way to kind of look at the markets that we operate in, in our on-net multi-tenant footprint, we today have about a 35% market share. That means we can continue to grow there but, you know, it is harder because we already have over a third of the Cogent customers. In the NetCentric market for IP services, we are the largest provider globally and have 25% market share. We will continue to gain share and grow that business, but, again, you know, with 25% share, it becomes incrementally more difficult. What is encouraging to us about wavelength is the fact that we have less than 2% market share in North America. We are now establishing our credibility with 518 sites now having actual reference customers in them. And nearly 1,100 sites wave-enabled, we think that our rate of wavelength growth will accelerate and help us try okay. Thanks, Chris. That kind of 80/20 mix and incremental business. Christopher Joseph Schoell: Great. Thank you, Dave. Operator: Our next question comes from the line of Gregory Bradford Williams with TD Cowen. Please go ahead. Gregory Bradford Williams: Hey. Good morning. Sam on for Greg Williams. Thanks for taking our questions. Two, if I may. First, the Waves business, you mentioned before that the goal is to get the funnel to Waves funnel to about 10,000. Is the idea to get the funnel to 10,000, it kind of stays in that range because you install the backlog as it comes in? Or do you expect the funnel to grow from there? And, second, on data centers. You mentioned the contract changes that pushed out the LOI for the two data center assets mentioned on the 3Q call. Is the expectation this transaction will still close? And if so, is the $44,000,000 a taxable event, or is there some sort of tax shield from the Sprint deal? Thanks. Dave Schaeffer: Yeah. Let me take those in reverse order. On the LOI that we announced last quarter, the counterparty came back to us and looked for us to provide more than 50% of the agreed-to purchase price in owner financing. Since we had a number of other interested parties who had submitted backup offers on those two facilities as well as a broader set of facilities, we decided to terminate that agreement at our choice, you know, and then reengage with some of those parties. We are far along in those negotiations and hope to be able to announce something soon. And that announcement may be for a broader set of assets. Now to the tax consequences, I will let Tad touch on that. Thaddeus G. Weed: Sure. So as a reminder, we paid only $1 for the Sprint business. So the tax basis is essentially the assumed liabilities, which is minimal in both the buildings and the network that was acquired. However, we have material NOLs this year from the tax bill, from 2025, and given the bonus depreciation deduction, we expect to continue to incur tax losses to offset any gain on the buildings going forward. So while it is a taxable event creating taxable income, I do not think on a net basis that will result in income taxes being paid. Dave Schaeffer: And now, Sam, I will touch on your Wave question. You know, while we were in the process of enabling the footprint, we felt it was critical to give funnel KPIs to show expressions of interest by customers. We have tried to be clear with investors that we do not give funnel data, you know, routinely for our other products, and we are treating wavelengths now as any other product. Now we do, in our investor presentation, typically show both our on-net and off-net conversion rates for the previous quarter. We intend to continue to do that. Our funnel is continuing to grow. But we will not be reporting specific numbers. But we do anticipate with the footprint that we now have and the credibility that we are earning with existing customers, we are starting to see a larger percentage of their wave opportunities being shown to us for bid, and as a result of that, we will close more and see further acceleration in the Waves business. Gregory Bradford Williams: Great. Thank you both. Operator: Our next question comes from the line of Sebastiano Petty with JPMorgan. Please go ahead. Sebastiano Petty: Thanks for taking the question. Dave, just a quick follow-up on the Waves business there. Could you update us on the level of the installed but not yet billed balance in the quarter, did that grow off of the third quarter? Because I think last earnings you probably talked about maybe a few hundred waves that have been installed but not yet billed. And so what is the progress there? And then I have a follow-up. Dave Schaeffer: Yeah. Hey, Sebastiano. So two points. First of all, in the quarter, we actually saw the unit number of waves improve, which is an indication that we were eating into that backlog, but we also have been building an additional backlog. And I would say that the installed but not yet billed base is comparable this quarter to where it was at the end of third quarter. Sebastiano Petty: Got it. That is helpful. And then, I guess, maybe just help us think about, back to the data centers to some extent. I mean, I think you did mention that there were some other data centers that had been in active discussions last quarter. And so while the LOI that you just spoke of, I think from third quarter, that is kind of now been terminated, what was the progress on some of the other, I guess, remaining data centers that were in active discussions? Did those progress? And I guess maybe help us think about, as you look at your debt refinancing and the stack later this year, I mean, yes, you talked about trying to perhaps refinance with $750,000,000 of secured, I mean, is there some level of assumed cash proceeds from asset sales anticipated in the intervening period as well? Which probably helps, you know, maybe reduce the prevailing interest rate you might get at that time. Thank you. Dave Schaeffer: Yeah. So, really, three different questions. The first one is, some of the backup offers on the two facilities that we had mentioned previously cover those facilities and others. So some parties were not particularly interested in moving forward without those facilities potentially being included. So it was not a one-for-one, meaning that there was a backup just for the two facilities that were under LOI. And our view was that while there was no difference of opinion on price, we felt that we would be better served with an all-cash purchase rather than one that had us taking more than 50% of the purchase price in the form of a secured note against the assets. In our refinancing, we are not assuming that there will be proceeds from the data center sales. Although, I do think there will be some proceeds. They are not baked into the point that I made around the timing of the refinancing. You know, our plan is to refinance the unsecured notes with secured notes dollar-for-dollar, no increase or decrease in aggregate face value, and do that in a way that allows us to avoid paying the make-whole, which would be due in June of, anytime between now and mid-June, of about $13,000,000. The final point I will make on that is that the proceeds for the data center sale would be reflected as cash on our entire balance sheet. But the proceeds do not go into Cogent Group, which is the borrower group of both the secured and unsecured debt. We may elect to contribute some of that cash to Group, but we are well within the coverage ratios both in terms of secured total indebtedness, and also in debt service coverage. So there is no requirement for us to contribute that capital, but it would be available at an unrestricted sister entity, Cogent Infrastructure. And therefore, could be used to either inject that capital into Cogent Group, the borrower, or dividend back to Cogent Holdings, which can then be used for the benefit of shareholders. Sebastiano Petty: Thank you, Dave. Thaddeus G. Weed: Thanks. Operator: Our next question comes from the line of Frank Garrett Louthan with Raymond James. Please go ahead. Frank Garrett Louthan: Great. Thank you. So on the data center, I think you had originally kind of focused on $9,000,000 or $10,000,000 per megawatt. I mean, what do you think the market is for that now? And why not maybe try and lease those out and then get a multiple on that value? And then what additional room do you have on pricing and maybe leasing additional IPv4 licenses? Thank you. Dave Schaeffer: Hey. Hey, Frank. Let me take those again in reverse order. In terms of IPv4 leasing, we saw a material acceleration in our leasing but a lower price as we did two wholesale transactions of large blocks. We are continuing both on a retail and wholesale strategy. Today, about 46% of our addresses are leased and approximately 4% of our addresses are allocated to customers at no cost. This is nothing new. It has been part of our strategy to win business since, you know, Cogent’s inception. But we do still have half of our address space that is sitting fallow. We have greatly improved the marketability of that address space by being able to deploy RPKI or additional security features across those addresses, which have made them more desirable to counterparties. And we anticipate continuing to see growth in our IPv4 leasing business. The 44% year-over-year growth in that business, again, was extraordinary. I am not sure we can repeat that. But we will continue to see further growth. Out to the data centers, you know, I think when we established a go-to-market strategy, in 2024 and announced that we were going to begin the capital investment to convert these facilities, we looked at both public trading comps as well as transactions in the private market. If anything, over the past year, data center space has become more scarce and valuations have improved. Now we are fully conscious of the fact that our data centers are repurposed switch sites and not purpose-built campuses, which are different and attract a different customer base. We had done a minimal amount of leasing and have been focused mostly on the sales process. I think we feel that based on the number of sites that are in active discussion and a number of counterparties, that we will absolutely be monetizing through sale a significant portion of the footprint. And in terms of exact price per megawatt, we are not going to disclose that because that would impact our ability to maximize value through these negotiations. But as Tad pointed out, other than the capital that we have invested, we have no real basis in these assets. And, in fact, because the assets sit at Cogent Infrastructure, they represent a negative EBITDA cost that is not burdening the borrower Cogent Group, but is a drag on the entire complex. And by selling these data centers, we both get the cash proceeds as well as a reduction in operating expenses. Frank Garrett Louthan: Great. Thank you very much. Dave Schaeffer: Thanks. Operator: Our next question comes from the line of Brandon Nispel with KeyBanc Capital Markets. Please go ahead. Brandon Nispel: Hi. Thanks for taking the question, and, you know, I appreciate the analysis on the Sprint revenue versus Cogent Classic. Wanted to understand and ask a few questions there. First, maybe just can you help us understand how you came up with that? Because I think in the past, you have said it is sort of difficult or impossible to delineate between the two businesses once you integrated. Second, you know, what changed versus your expectations? I think, Dave, when you closed that acquisition, you said you would probably, you know, be more of a run rate of $350,000,000 versus a $190,000,000 annualized run rate that you gave us today. And then do you think the bottom is? What do you think that business does in terms of revenue in 2026? Thanks. Dave Schaeffer: I will take those again in reverse order. One, I think that business is continuing to deteriorate, both based on the nature of the customers and the discipline that we have applied to ensuring that the services we sell have an adequate margin. While we realized that the off-net enterprise customer base is inherently less profitable, in fact, even after a diligent effort of trying to bring enterprise business on-net, we have only been able to get to an 88% off-net and 12% on-net mix, because many of these enterprises operate globally across a footprint that is just not economic to bring on-net. And therefore, we are going to be saddled with that lower-margin portion of our revenue stream, but we do intend to make sure that the margins are adequate. We have virtually completed the burn-off of the non-core products and the vast majority of the undesirable revenue. But with that said, we are still experiencing significant monthly and quarterly sequential degradation in that business. You know, I, you know, had projected the 10.9% rate of decline that we were seeing from Sprint. We thought that we could maintain that rate of decline and migrate customers to more profitable products. What we, in fact, found was that many of those customers actually intended to go away independent of our acquisition at an accelerating rate, and then that was further compounded by the discipline that we apply. You know? I think it will continue to decline. We will continue to report on it. Now in terms of why we did this and how, it was a very arduous and manual task. We had to go into the nearly 1,300 acquired customers and look at every individual order on an order-by-order basis. It was a very manual process. But I do believe based on concerns I was hearing from investors that this was an extremely important metric that they cared about, and we then basically invested what was effectively a full-time person to do this analysis. We will be able to do this going forward, and I think it gives an investor a better lens on how Cogent’s business is performing versus the acquired business, as well as the mix shift that we are focused on and being more on-net. You know? The way to improve our cash flow going forward is growth in top line, but growth in top line of more profitable business. And, you know, the 80% on-net that we sold in Q4 is actually better than we did the quarter before we acquired Sprint. So in 2023, we actually only were 76% on and 24% off. So this focus on on-net is going to be a significant driver of margin expansion. Thaddeus G. Weed: I will just add one thing to the complexity. So when we acquired the business under the TSA, T-Mobile was billing the customers on our behalf through their billing system. We worked an incredible effort to bring all of those customers into our billing systems. We had one billing system for November 2023. But for that period from close, so May 2023 through October ’23, we were relying on the information that we got from T-Mobile billing on our behalf. So bifurcating that and post billing on our system was complicated. I will just leave it at that. Brandon Nispel: Understood. And if I could just follow up with one quick one, where would you estimate the EBITDA contribution of the Sprint business is today? Dave Schaeffer: I think it is close to zero, but slightly positive, but still far below our aggregate margins. It is probably in the zero to 5% range. But we are working on improving that. That does include, in some cases, price increases. Operator: Sorry. The next question comes from the line of Nicholas Del Deo with MoffettNathanson. Please go ahead. Nicholas Del Deo: Oh, hey. Morning, guys. A couple questions on the data center front. Dave, you were explicit that the LOI fell apart because of the demand to help you finance it? I recall that one of the due diligence items that the counterparty needed to complete was confirming power availability from the utilities. Was that availability confirmed? Dave Schaeffer: It was confirmed by that party, and we have now made the data available to the backup providers to go through the same confirmation process. But the reason why we did not move forward with the previous LOI was not a negotiation on price. They got comfortable with both the power availability and title to the actual land, which were their two big concerns. And they just came back and tried to have us provide them financing even though when we executed the LOI, they had assured us that they had proof of funds and the wherewithal to pay all cash. They were just trying to magnify their returns through owner financing. Nicholas Del Deo: Got it. Are you able to share when the LOI fell apart? And if you do have, you know, new deals in hand soon as you suggested, should we expect the press release to announce those? Or would you disclose those on your next earnings call, some other conference presentation or something? Dave Schaeffer: You know, I think we would probably announce it in a stand-alone announcement. And I do think we anticipate something, you know, in the next couple of months. That is probably as specific as I can be. But, you know, unless it was, you know, a day or two before the earnings call, I think we would probably announce it separately. And then to when the LOI fell apart, it was fairly recent. There was a negotiation. They had made the request. We went back and, you know, were trying to keep them moving forward under the original terms. But, eventually, earlier this year, we became convinced that they were not going to move forward unless we provided financing. Nicholas Del Deo: Okay. Okay. And then can I ask a couple about the legacy Cogent versus legacy Sprint revenue splits? So it looks like, you know, you are talking about a $42,000,000 growth in quarterly legacy Cogent revenue from the time of the deal closing to today. Looks like over that time, your quarterly IPv4 revenue is up about $9,000,000. Waves are now at about $12,000,000. So that would imply that about half the revenue growth was from those two line items and about half came from, call it, the core products that you focused on pre-deal. Is that a fair way to think about it? And is it correct to assume that the, okay. Yeah. Okay. Good. And the T-Mobile CSA revenue, is that in the Sprint bucket? Dave Schaeffer: No. It is not. That was revenue that did not exist previously and was a drag to our revenue. You know, I guess it was about $400,000 for the quarter last quarter, and I think at peak, it was almost $6,000,000. So that was the services we were providing to T-Mobile that we had previously never provided, and it was not to a Sprint customer. It was to T-Mobile, but they have been able to reduce their reliance on our paid services by about 93%, 94%. But that remaining $400,000 is in there. So, in fact, the underlying Cogent revenue growth probably would have been a little better if we had excluded the CSA both initially and today. Nicholas Del Deo: Okay. Got it. That is helpful. And if I can squeeze in one more quick one about the IPv4 leasing revenue. So the revenue was down a little bit quarter over quarter despite the addresses leased being up noticeably. Can you just talk about the dynamics there? Dave Schaeffer: It was actually pretty simple. One of the parties that took the large wholesale block had a small retail block with us. It was the timing of when we terminated that retail agreement and converted it to wholesale in conjunction with a much larger purchase. Nicholas Del Deo: Okay. Got it. Great. Thanks, Dave. Dave Schaeffer: Hey. Thanks, Dan. Our next question comes from the line of Michael Ian Rollins with Citi. Michael Ian Rollins: Thanks. Good morning. Dave, I was curious if you could be more specific on the cost base. I think in the past, you described that there are some duplicative costs that the company is incurring during this integration. How much of those are left and the timing of those savings? And then can you also share with us what the burn rate is for the data center portfolio that you are looking to monetize? Thanks. Dave Schaeffer: Yes. Two very different questions. So first of all, we have achieved the vast majority of the increased cost savings that we had targeted. So if you remember, the initial number was $220,000,000. We then increased that number to $240,000,000. And we probably have achieved over $230,000,000 of that $240,000,000 in cost savings. So there is a small tail, but it is not material. Secondly, we have incurred incremental expenses associated with integration activities. Those will continue throughout this year. They peaked at about an annual run rate of $60,000,000 or about $5,000,000 a month. Today, they are down to probably closer to $3,000,000 a month. But there is still monies being spent on various, you know, integration optimization programs, but we do anticipate those ending by the end of the year. And then to the final question, which is the burn associated with the infrastructure that we acquired from T-Mobile. So the infrastructure business, which includes the data centers and the physical fiber network, has a negative EBITDA of about $140,000,000. We have partially offset that because the IPv4 securitization sits under infrastructure and generates about $60,000,000 of EBITDA. So the infrastructure silo of Cogent’s balance sheet is about negative $80,000,000 of EBITDA. Roughly 20% of that is associated with the data centers, and we are looking to sell a significant portion of that footprint, probably at least 50% of it. Michael Ian Rollins: I am sorry. That 20% associated with data centers, is that 20%? Twenty percent of the— Dave Schaeffer: of the $140,000,000 of negative costs associated with the Sprint assets. You know, these are primarily in three buckets. They are real estate taxes, personal property tax, and right-of-way fees. You know, we got the actual for a dollar, with no revenue. We now are completing the repurposing of that. And as we add high margin, the margins accrue to Group, but we can fund those losses over at Infrastructure through our ability to move money out of the borrower group through Holdings and back down to Infrastructure. In fact, that is how we have been funding those to date, using our restricted payments capacity. And we do have about $350,000,000 of accumulated unused restricted payments capacity at the borrower. Michael Ian Rollins: Thanks. And if I could just follow up real quick with two other items. You know, first, if you look at the corporate business of the heritage Cogent side of the equation, can you share with us a little bit more detail about what is driving the heritage revenue change over the last couple of years and if there is any inflection in trend there? And the same, you know, for NetCentric where it might be a little bit easier to unpack the, you know, IPv4 and the Waves, you know, impact just given the concentration of those products in NetCentric? Dave Schaeffer: Yep. Yeah. So on the NetCentric side, it is easier because we do break out the IPv4 revenue, of which 85% of it is NetCentric. We break out the WAVE revenue, which is virtually all NetCentric, and then the incremental difference is the growth in the core transit product. In the corporate business, there was a mix of DIA and VPN services at Cogent, and then a mix at Sprint. At Sprint, the mix was much heavier VPN than it was DIA. At Cogent, it was much more DIA. We have converted some of the Sprint customers from MPLS to VPLS VPNs, improving the profitability, but we are continuing to support the MPLS product long term. We are trying to move as much on-net as possible. But the underlying growth in the corporate business at Cogent has come mostly from DIA. Operator: The next question comes from the line of David Barden with New Street Research. Please go ahead. David Barden: Hey, guys. Thanks so much for taking the questions. Hey, Dave. How are you doing? Dave Schaeffer: Hey. Good. David Barden: Okay. So thank you for squeezing me in. I have got a few questions. The first one, Dave, and I apologize for asking this, is about your new contract that you have signed in January with the board, and how we, as investors, from the outside, look at maybe how your incentives have changed. You know, you always took stock in compensation. Now you are getting cash compensation. Does that change how you think about the business, how you think about dividends? It would be really helpful to get some insight there. I think the second question, maybe for Tad, is when you talk about secured financing, what specifically are you planning on securing? How much are you planning to secure, and what rates are you expecting? Thank you, guys. Dave Schaeffer: Alright. Great. So first of all, with regard to my contract, you know, I am still in negotiations with the comp committee for some additional equity going forward. The vast majority of my compensation, you know, roughly 80% of it, remains in equity. And that equity does not vest, begin to vest, until 2029. So there is both a long-term cliff and a significant portion that needs to vest. Now, so I do not have to pledge shares going forward, which created a cascade of bad events, you know, I now have cash compensation that will allow me to pay both taxes and, you know, to be able to live, but it is a fraction of my total compensation. In terms of being able to go forward and how I think about dividends, you know, I am as committed to shareholder returns as I have ever been. You know, we have shifted our priorities to get our leverage down. And I think we will be in a position where we will see our leverage rapidly fall and be able to return to either buybacks, dividends at a higher rate, or a combination thereof. I will let Tad touch on the refi, and I may jump in as well. Thaddeus G. Weed: Well, I mean, we are in negotiation with multiple parties. We have essentially only kind of come to terms on the amount, but not with respect to rates and the rest of the terms that we are in the process of negotiating. Dave Schaeffer: Yeah. I think we have a very clear structure that will allow us to do this as secured debt. I do not think this call is the correct forum to, you know, roll that out, but we will in short order. And we also will anticipate that the current secured debt is a pretty good indication of about where our new debt will price. David Barden: Got it. And is there anything about the 2032s that is relevant to kind of rolling the 2027s? Dave Schaeffer: Not really. I mean, you know, the same tests will be in place, we will be governed by the most restrictive covenants, which will probably be the existing ’32s, and that will be, you know, four times secured leverage and a 2x debt service test. David Barden: Got it. And if I could just squeeze in one more, really it, guys. Thank you much. Dave, you have kind of mentioned that the two kind of things that were going to be advantages for you in the Wave market were price and time to provision. I think you said you are down to 30 days. I think you targeted two weeks. Could you elaborate a little bit on the kind of process to get to even better provision timing and where are you do you believe on a price perspective relative to, quote, unquote, market? Dave Schaeffer: Yeah. I will take the price one first. I think we are probably at a 20% to 30% discount. I also believe our advantages are more than you outlined. I think the breadth of the footprint as well as the diversity of the routes and reliability, route diversity, are all really important criteria. And I think the acceleration you are seeing in our Waves business is as a result of that. And then in terms of getting the provisioning window even shorter, I think it will be three things. It will be, one, just continued process refinement as we do more, but 30 days is still generally three to four times quicker than industry averages. A third party actually, just last month, released a report benchmarking us. And in terms of Wavelength Services, out of all of the providers, you know, where several dozen providers, both regional and national, were evaluated, we were actually number two in terms of provisioning already, and I think we will end up being number one just like we are in IP. I think the other thing that is a constraint today is actually pluggable optics lead times have become more challenging just because of, yeah, the pressures that some of the massive data center builds have put on the entire ecosystem for telecom and networking equipment. David Barden: Thank you, Dave. Operator: Thanks. Our next question comes from the line of Michael J. Funk with Bank of America. Please go ahead. Michael J. Funk: Hey. Great, Mike. Yeah. I just had one question, Dave. Going back to the to the sequential revenue growth, you know, I am looking at the street forecast, and consensus is for about $3,500,000 sequential revenue growth in 2026. And this is not why it is the twenty-ish. I think, historically, street forecast revenue growth faster than actual, probably in a combination of constructive commentary from the company, the longer-term revenue growth guidance provided, and relative opaqueness of your business. I do not think it is helpful to have revenue growth so much higher than actual. So you know, maybe help us think about the correct rate of sequential revenue growth in 2026 to reduce some of the volatility that we see in your stock on earnings? Dave Schaeffer: Yeah. And, you know, it is a delicate balancing act because while I want to give clarity and guidance, I am not comfortable in giving quarterly or even annual guidance. You know, I do think that over a multiyear period, that 6% to 8% growth rate is what is absolutely appropriate to model. You know, I am going to have to leave it to every analyst to do their own diligence and channel checks, and we are just not going to give a number that says, $3.5 is too high or too low on a sequential increase in revenue. What we said is from this point forward, we are comfortable that our quarterly reported revenues are going to grow. We think that is going to continue to improve. We think that that growth is going to be driven by high-margin products. And you know, just as you said maybe street numbers were too high on top line, they have consistently underestimated our ability to expand margins. Michael J. Funk: Maybe one more if I could, Dave, sneak it in here. Rep productivity, wanted to touch on that. They have been coming down. What are you doing internally, processes, people, to improve rep productivity? Dave Schaeffer: So the productivity is measured on a units basis. If you have actually noticed, our ARPUs have actually gone up somewhat. We are focused more on on-net services. So there is a higher payout for on-net versus off-net to help get to that 80/20 mix that I referenced. And then third, we continue to train, to promote internally, and try to incent our sales force to grow. But, you know, we do still have 5.4% per month of turnover. That is below the long-term average of 5.7%. The peak of 8.7%. But, you know, our productivity at 4.1 for the fourth quarter was actually about 18% better than our rep productivity in 2024. There is some seasonality to rep productivity. And while, you know, the 4.8 that we average is good, we actually think we can do better than that. And I think you will see that number trend up as, you know, this focus is on on-net and as we kind of roll through the seasonality that I am then— Operator: Great. Thank you, Dave. And, Dave, thanks for taking all the questions today. I really appreciate it. Dave Schaeffer: Yeah. Thanks, Michael. Operator: Our last question comes from the line of Anna with Bank of America. Hi. Thanks very much, Dave. So just on the plan to refi the ’27s sort of dollar-for-dollar with new secured, so, and the prior question on the planned use of proceeds of any data center sale, clearly did not commit to using it to repay debt. So I think you said you have options. But when you reduced your dividend about a, in the last earnings announcement, the rationale that was provided for reducing the dividend was that you wanted to focus on deleveraging. And I think implicit in that was the idea that cash on the balance sheet, potential cash from asset sale proceeds, and potential cash from free cash flow would be used to repay debt. So I just wanted to revisit that concept and, you know, what the plan is to get leverage down. And I believe you cited a target of four times. Dave Schaeffer: Yes. That is absolutely correct, Anna. And we are absolutely committed to not materially changing our return of capital either through buybacks or dividends until we reach four times net leverage. We each quarter have less monies due to us from T-Mobile, which we are counting in our leverage. So that is a bit of a hill that we have to climb. We also are, again, delevering both on a gross and net basis. And I think we will continue to do that. And, you know, holding cash on the balance sheet has the exact same impact on net debt. We have not been specific around a gross debt target. And we may opportunistically even buy back some of our debt if it sometimes trades at a discount, as our current secured debt has. That could also be an effective mechanism to use excess cash to reduce leverage. But we are absolutely committed. I want to leave no ambiguity that we intend to get, for the entire complex, not just the borrower group, down to four times net leverage before we materially change our return of capital strategy. Anna: Okay. And then thanks for that. And then secondly, I know you do not provide specific guidance, but in terms of your ability to generate free cash flow, particularly this year, what is your level of confidence? And, you know, maybe some order of magnitude if you expect it to be positive? Dave Schaeffer: So we absolutely, a growth in EBITDA will produce. You know, you can extrapolate what we have done, and then layer on the contribution margins with the mix shift that I described, and then layer in some of the aggregate savings. Two, we absolutely expect our capital expenditures to go down. Those two things will allow us to generate unlevered free cash flow growth, and it is likely that when we refinance the unsecureds, our coupon will be slightly higher probably than it is today for the current unsecureds, even though we will be converting them to secured. That is highly dependent on how the current bonds trade. But, you know, we do think that even on a levered basis, we will be generating free cash. That is as close to guidance as you are going to get me. Anna: Okay. Okay. Well, thank you, Dave. Dave Schaeffer: Hey. Thanks, Anna. Operator: And that concludes our question and answer session. I will now turn the call back over to Mr. Dave Schaeffer for closing remarks. Dave Schaeffer: Well, first of all, I want to thank everyone. I know it was an hour and a half. We have actually gone longer. I thought this was somewhat unique in that we added a lot more granularity to our disclosures around the trajectory of the Sprint-acquired business and also the relative mix of products. You know, I think in summary, there are three really important objectives for Cogent to build value. One is to grow top line. Two, to continue to expand margins. And then three, eliminate any overhang of a debt maturity that is, you know, seventeen months away. And I think on all three of those vectors, we are and will continue to demonstrate meaningful progress. Thanks, everyone, and we will talk soon. Take care. Bye-bye. Operator: This concludes today’s conference call. You may now disconnect.
Operator: Thank you for holding, and welcome to Alliant Energy Corporation’s Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, all lines are in a listen-only mode. Today’s conference is being recorded. I would like to turn the call over to your host, Susan Gille, Investor Relations Manager at Alliant Energy Corporation. Please go ahead. Good morning. I would like to thank all of you for joining us today for Alliant Energy Corporation’s Fourth Quarter and Full Year 2025 Financial Results Conference Call. We appreciate your participation. With me here today are Lisa M. Barton, President and CEO, and Robert J. Durian, Executive Vice President and CFO. Following prepared remarks by Lisa and Robert, we will have time to take questions from the investment community. We issued a news release last night announcing our fourth quarter and full year 2025 financial results and affirmed 2026 earnings and dividend guidance. This release, as well as an earnings presentation, will be referenced during today’s call and are available on the investor page of our website at www.alliantenergy.com. Before we begin, I need to remind you the remarks we make on this call and our answers to your questions include forward-looking statements. These forward-looking statements are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters discussed in Alliant Energy Corporation’s news release issued last night and in our filings with the Securities and Exchange Commission. We disclaim any obligation to update these forward-looking statements. In addition, this presentation contains references to ongoing earnings per share, which is a non-GAAP financial measure. References to ongoing earnings exclude material charges or income that are not normally associated with ongoing operations. The reconciliation between ongoing and GAAP measures is provided in the earnings release, which is available on our website. At this point, I will turn the call over to Lisa. Thank you, Sue. Good morning, everyone, and thank you for joining us. 2025 was defined by major shifts in public policy, global trade, tax legislation, and the acceleration of electric demand. We delivered another year of strong financial and operational performance while making significant progress across our strategic priorities. From a financial perspective, we continued our consistent track record of performance, with ten-year compound annual EPS growth of 6.3%. Our ongoing 2025 EPS growth of 6% exceeded the midpoint of our guidance and aligns with our long-term earnings growth target of 5% to seven plus percent. We also increased our dividend, marking the twenty-second consecutive year of dividend increases, and delivered a total shareowner return of over 13% for the year. Regulatory execution was another area of strength. In Wisconsin, we achieved a highly constructive outcome in our 2026–2027 rate review, a unanimous settlement approved by the Public Service Commission of Wisconsin. We executed well against our customer-focused investment plan. During the year, we completed 275 megawatts of energy storage investments. We completed the Neenah and Sheboygan Falls turbine upgrades. And we proactively protected future customer investments by safe harboring planned renewable and energy storage projects amid evolving tax legislation, preserving flexibility and enabling cost-effective future energy solutions. Strategically, unlocking the potential of our customers and communities remains central to our approach. Data centers represent significant capital investments in local communities that strengthen local tax base and support schools, infrastructure, and public services. Lisa M. Barton: Combined with our commitment to keep Iowa retail electric base rates flat for existing customers through the end of the decade, this approach demonstrates our ability to deliver win-win solutions, capturing growth that helps absorb fixed costs and reduces rate pressure for existing customers. We are utilizing individual customer rates in both Iowa and Wisconsin to ensure all customers benefit from economic development. A relentless focus on customers and building stronger communities is at the heart of everything we do. The Alliant Energy Advantage is our ability to move at the speed of our customers, aligning capital, infrastructure, and regulatory solutions to enable growth, while advancing outcomes that meet customers’, communities’, and shareowners’ expectations. Swiftly pivoting when our customers pivot is part of that advantage and a key differentiator for Alliant Energy. We aim to be a partner of choice with the goal of continuing to attract these customers to our service area. In furtherance of that goal, we closed the year with four executed ESAs totaling three gigawatts of peak load, translating to a 50% future growth in demand. We have a solid execution plan and a backlog of opportunities to drive future waves of growth for our shareowners, customers, and communities. Navigating this environment requires agility, disciplined decision making, and a steadfast focus on long-term value. As we previously shared, QTS, one of the data centers we serve, made the decision to relocate its Greater Madison, Wisconsin, data center project. After assessing multiple sites within our service area, QTS has selected a new location within our Iowa service territory. I am pleased to share that we have signed a new electric service agreement for this relocated QTS project, and our four-year consolidated capital expenditure program and investment growth expectations remain on track. Robert will provide additional details on these updates. The speed and effectiveness of our response to the QTS data center relocation highlights the strength of our partnerships, the flexibility of our planning, and our disciplined focus on near-term execution. Looking towards 2026, we are focused on pursuing industry-leading demand growth and successful project execution against those opportunities. We are actively engaged with customers and continue to pursue between two to four gigawatts of additional large load growth opportunities beyond what is already reflected in our current capital and financial outlook. Importantly, these growth opportunities are in addition to the four previously announced contracted projects. We expect to provide updates as we make further progress with new electric service agreements. Driving affordable energy solutions is foundational to our strategy, and we have built a strong foundation that positions us well for sustainable growth and delivering meaningful value to customers. This is supported by maximizing existing resources, extending asset life, investing in natural gas resources, and strategically integrating renewables and energy storage facilities. These remain the most cost-effective ways to maintain reliability. Proactive safe harboring of renewable and storage investments, prioritizing plug-in-ready sites which minimizes transmission investments and accelerates our ability to serve new customers. In addition, we continue to unlock ancillary value through the optimization and monetization of our fiber network, creating unique financial benefits for existing customers. As I reflect on my second year as CEO, I am incredibly proud of what our team accomplished and I am excited about the opportunities ahead. The commitment of our employees enhances our ability to serve customers and communities, contributing to sustainable long-term value generation for shareowners. As we prepare to celebrate National Engineers Week, I want to recognize the exceptional contributions of our engineers, whose innovation and expertise continue to propel our industry forward. I sincerely thank our generation teams, line crews, gas techs, and extended workforce for their dedication, especially in maintaining safe and reliable systems during extreme winter weather events. Your efforts are the foundation of our success. There is tremendous opportunity ahead and Alliant Energy Corporation is well positioned to help build a stronger, more resilient energy future—one that benefits customers, communities, employees, and shareowners alike. I will now turn the call over to Robert to provide our financial update and an update on regulatory matters. Robert J. Durian: Thank you, Lisa. Good morning, everyone. Yesterday, we announced 2025 GAAP and ongoing earnings. For the full year 2025, Alliant Energy Corporation delivered ongoing earnings per share growth of $0.18 compared to 2024. This year-over-year improvement was driven primarily by increased revenue requirements from rate base increases, reflecting continued investment in generation and energy storage, as well as favorable temperature impacts on electric and gas sales. These positive drivers were partially offset by higher operating and maintenance expenses, primarily related to planned generation maintenance activities and the addition of new generation resources, as well as higher generation development costs to support long-term growth. Increased depreciation and financing associated with expanding capital investments also offset a portion of the earnings improvement. Temperatures in 2025 contributed approximately $0.03 per share to electric and gas margins. For comparison, 2024 temperatures reduced margins by approximately $0.15 per share. Excluding the impact of temperatures, electric sales increased by nearly 1% in 2025 compared to 2024, driven by higher commercial and industrial sales across both IPL and WPL. Our ongoing earnings for 2025 exclude two non-recurring items, including a $0.05 charge related to the suspension of production at Travero’s wind turbine blade recycling operations, based on a review of strategic options for the business, and a $0.03 charge associated with remeasurement of deferred tax assets. This tax item reflects updated state income tax apportionment assumptions driven by higher projected electric utility revenues from commercial and industrial customers, including new data center agreements. With these results, we continue to deliver the consistent financial performance investors expect from Alliant Energy Corporation. We have now achieved annual ongoing earnings growth of over 6% for more than a decade, while maintaining our focus on customer affordability. Turning to our capital plan. As Lisa mentioned earlier, our consolidated four-year capital plan remains on track, as shown on slide six. Following the relocation of the QTS load from Wisconsin to Iowa, we reallocated certain gas, wind, and energy storage investments between our state utilities. This update represents a repositioning of resources within our consolidated portfolio. With flexible and proactive resource planning, we have strong confidence in our ability to execute the projects within our updated capital expenditure plan. We have secured gas turbine reservation agreements and project locations for all planned self-developed gas resources. Our plan includes simple-cycle gas resources to address increasing capacity needs, while retaining flexibility to expand these gas resources to combined-cycle facilities in the future. The additional Iowa wind investments will be part of our advanced rate-making proposal, for which a settlement has been filed and a final IUC decision is pending. And we have taken action that protects tax credits for our planned renewable and energy storage projects through proactive safe harboring and development activity. This ability to pivot while maintaining execution certainty reflects the strength of the Alliant Energy Corporation Advantage. As a result of the new electric service agreement for QTS’s relocation, and with our capital plan remaining materially consistent, we are affirming our 2026 earnings guidance. As shown on slide seven, our 2026 earnings guidance reflects several key assumptions. These include higher earnings from growing capital investments, including allowance for funds used during construction; expected retail sales growth of approximately 1%, inclusive of sales to new data centers during construction; higher O&M, depreciation, and financing costs, consistent with increasing capital investments; and the ability to utilize investment tax credits from energy storage placed in service in 2025 and 2026 to support earning our authorized Iowa Electric ROE while maintaining stable base rates for our electric customers in Iowa. With respect to our longer-term outlook, and incorporating QTS’s new load expectations, we expect our compound annual earnings growth rate across 2027 to 2029 to be consistent with what we shared in November 2025: 7% plus. This growth rate is based on current projections for the timing and execution of capital expenditure plans and data center load. We will continue to assess our long-term earnings growth potential as we execute on our data center expansion and capital expenditure plans. Turning to financing. As shown on slide eight, our 2026 debt financing plans include up to $1,200,000,000 of long-term issuances, consisting of up to $400,000,000 at the parent, Alliant Energy Finance; up to $300,000,000 at WPL; and up to $500,000,000 at IPL. With our strong liquidity position, we are well positioned to address upcoming parent-level maturities in March 2026. And we have already retired our $300,000,000 term loan, with a new term loan expected in the first quarter. As a reminder, our four-year capital plan is funded through a balanced mix of cash from operations, including proceeds from ongoing tax credit monetization, and new financings, including debt, hybrid instruments, and common equity. Of the approximately $2,400,000,000 of expected common equity needs over the four-year period, we have already raised approximately $1,000,000,000 through forward equity agreements. This leaves approximately $1,300,000,000 of remaining equity to be raised through 2029, excluding equity expected to be raised under our share purchase plan. Overall, our financing plan provides flexibility to support efficient execution of our strategy. Turning to our regulatory matters, we achieved several constructive regulatory decisions throughout the year, as listed on slide 10. Our 2026 regulatory agenda remains closely aligned with our capital investment plans, as we have no active rate reviews planned in 2026, reducing regulatory uncertainty. In Iowa, the Iowa Utilities Commission recently approved certificates of public convenience and necessity for two generation facilities: a 720-megawatt natural gas facility using simple-cycle combustion turbines in Marshall County, Iowa, referred to as the Bobcat Energy Center, and a 94-megawatt natural gas RICE unit in Burlington, Iowa. We are also awaiting an IUC decision on the settlement for advanced rate-making principles for up to one gigawatt of new wind generation, which we expect to allow customers to avoid significant fuel costs and generate tax credits, while supporting investment in cost-effective, responsible energy resources. We anticipate a decision in this proceeding during 2026. In Wisconsin, we currently have five active dockets, including three requests for preapproval of customer-focused investments. These include our first-ever liquefied natural gas storage facility to add physical gas capacity and enhance winter reliability, and a request to add approximately 430 megawatts of new wind generation to deliver zero-fuel-cost energy and tax credits for our customers. We expect decisions on these matters over the next twelve months. We are also awaiting a decision from the Public Service Commission of Wisconsin on the individual customer rate filing associated with the metadata center in Beaver Dam, Wisconsin. Earlier this month, intervenors submitted testimony that was generally supportive, while offering proposals for additional company and existing customer protections. We are expecting a decision on this docket in the second quarter. Looking ahead, we expect to make additional filings throughout the year to support planned customer investments. In addition, we anticipate filing a new individual rate application with the Iowa Utilities Commission related to the relocated QTS data center in 2026. I will now turn the call back over to Lisa to provide closing remarks. Lisa M. Barton: Thank you, Robert. Delivering consistency in financial performance year after year, growing at the pace of the people and places we serve, is the Alliant Energy Corporation Advantage that sets us apart. Our proactive approach and commitment to economic development is a strength as we continue to serve the needs of our communities. By pursuing win-win solutions, we are driving affordability, fueling growth, and creating lasting shareowner value. In closing, thank you for your continued support and engagement with Alliant Energy Corporation. We look forward to connecting with many of you at upcoming investor conferences. I will now turn the call back to the operator to open the line for questions. Operator: Thank you, Ms. Barton. At this time, the company will open the call to questions from members of the investment community. Should you have any questions at this time, please press 1 on your telephone. And if you would like to withdraw from the polling process, please press 2. And if you are using your speakerphone, you will need to lift the handset first before pressing any keys. Please go ahead and press 1 now if you do have any questions. Thank you. First, we will hear from Shahriar Pourreza at Wells Fargo. Please go ahead. Shahriar Pourreza: Hey, guys. Good morning. Lisa M. Barton: Good morning, Shah. Shahriar Pourreza: Morning, Lisa. So just firstly, on the three gigawatts of data centers you have in plan, can you just remind us what is the minimum take agreements? And is that minimum what is assumed in your current plan? So if we could look at it this way, if these hyperscalers were to ramp faster and take on more power over time, that would be accretive to your current planning assumptions? Robert J. Durian: Yeah. That would absolutely be accretive to our planning assumptions. Shahriar Pourreza: Got it. Okay. Perfect. And then obviously, you know, we are seeing a lot of noise in Wisconsin around data center developments and moratoriums, etcetera. Just can you talk about how your conversations are going with the hyperscalers? And are you kind of now implementing somewhat stricter safeguards so a situation like QTS does not happen again? Or has the conversation really shifted to more deals being done in Iowa versus Wisconsin? I mean, between active and incremental deals, you guys have, like, four to eight gigawatts out there. Thanks. Lisa M. Barton: Yeah. No. Great question. I mean, we have always talked about the fact that the differences between Iowa and Wisconsin with respect to growth—that Iowa does have some strategic advantages. As you may recall, we serve 75% of the communities in Iowa, 40% of the communities in Wisconsin. There is a little bit more of an advantage in terms of access to transmission there, and a bit of a broader access to gas. So Iowa does have some strategic advantages. You know, as it relates to Wisconsin data center growth, we are committed to making sure that Wisconsin is open for all business, including data centers. And I will remind folks about some of the uniqueness associated with the QTS DeForest opportunity. That required not only annexation but rezoning as well. So it was a higher bar there than we would traditionally have with other sites. Shahriar Pourreza: Got it. So just maybe, follow-up to that. If more of the deals strategically are going to be shifted towards Iowa, is there anything, you know, Robert wants to call out fundamentally that could be advantageous for us— Robert J. Durian: Yeah. When I think about it, both jurisdictions have very strong regulatory environments, so I do not see a lot of difference between the two. We are fortunate that we have got a construct in Iowa right now that is very receptive to growth. When you think about what we agreed to in the last rate case, we really have structured ourselves to be able to grow at the pace of our customers while achieving our authorized returns and maintaining base rates that are stable through the end of the decade at least, and we are trying to extend that over a longer period of time. Shahriar Pourreza: Got it. Super helpful, guys. Thank you so much. Appreciate it. Operator: Thank you. Next question will be from Nicholas Joseph Campanella at Barclays. Please go ahead. Nicholas Joseph Campanella: Hey. Good morning. Thanks for taking my question. Morning. I wanted to ask on the QTS, too. And it is good to see that this was shifted to a new site. Can you maybe just kind of talk about what is required there from a, you know, permitting, zoning, approval process—anything that you really kind of move forward with construction—think you said in the prepared you are going to be making a pair of filing for that in the state soon, but just what is the path to construction? Thanks. Lisa M. Barton: Yeah. Just as a point of clarity, it would be an ICR. We have the individual customer rate constructs that we use in both Wisconsin and Iowa. So we have been super pleased with our ability to pivot and, quite frankly, pivot on a dime with respect to this. I think this shows the strength of our team as well as the robustness of the opportunities that we have across our service territory. So, we offered them, you know, basically in both states. If you think about it, it has got a similar demand, similar timing, similar ramp rate, and they have land control, and it is zoned industrial. Nicholas Joseph Campanella: Okay. Thank you. And then just on the two to four gigs, is there anything else that you can kind of give us around your goals for timing when you could bring in another deal to the plan? I know you said that you will announce them as they come, but something that you think you could see by the first half of this year, or what would you say in terms of timing? Lisa M. Barton: Yeah. No, great question. And it is always very fluid. As we have—we have got two to four gigawatts in terms of active discussions. I will give it to you in maybe a little bit of a breakdown which might be helpful. We, in essence, have three buckets. We have got expansion opportunities at existing sites. We have existing customers in new locations, and we have new customers in new locations. And I will remind folks that we have set ourselves up with a pretty high bar with respect to making sure that we have got high-quality ESAs. And then with those ESAs, there is a very high degree of success off of it. First and foremost, we make sure that we have got a very clean understanding of the timing of the project, the peak load, the load ramp. In doing so, we are also identifying the generation investments that would be needed. We make sure we have got comprehensive transmission studies so that they can understand what the cost of the interconnection is, as well as land control, and we do think that that land control element is particularly important in these situations. As you all know, we have been talking about growing at the pace of our customers and communities and really, in our strategy, trying to make sure that we are first movers. We feel that that combination gives very high-quality ESAs for our investors to count on for growth. Nicholas Joseph Campanella: Okay. Thank you. Operator: Next question will be from Paul Zimbardo at Jefferies. Please go ahead. Paul Zimbardo: Hi. Good morning, team. Lisa M. Barton: Good morning. Paul Zimbardo: Thank you. And just to continue the comment theme a little bit, you mentioned the land control, the two to four gigawatts. Does that include kind of industrial and the appropriate zoning and annexation? Just any color you could provide there would be helpful. Lisa M. Barton: Yeah. So we can certainly provide color to all of the folks who are out there and all of the land. But what we can say is that certainly for land that we own—and we own a considerable amount of land—has been part of our economic development strategy for the past couple of years. And in doing so, all of that land is zoned industrial. If that is helpful. Robert J. Durian: That is helpful. Paul Zimbardo: Thank you. And then just turning to 2026, I see you are assuming about 1% retail sales growth, which sounds like it is consistent with what you experienced in 2025. I do not know if you think that is a fairly conservative assumption just as the data centers start to ramp, or there are other dynamics at play there. Robert J. Durian: No. Yeah. I think it is fairly consistent. We are expecting to see some level of data center load start in 2026. But, really, think about most of the load coming in from the data centers in 2027 and beyond, and that is when you will see the much higher growth rates that we are expecting in our plan. Lisa M. Barton: Okay. Paul Zimbardo: Great. Thank you, team. Next question. Operator: Will be from Paul Fremont at Ladenburg. Please go ahead. Paul Fremont: Thanks, and congratulations on the shift in QTS. Does the shift in renewables in your CapEx from the gas generation supply—is that being driven by the expected supply for QTS? Or is there something else that is driving that shift? Robert J. Durian: Yeah. Paul, when you think about our investment plan, it is pretty consistent overall when you think about the four years of 2026 through 2029—still at roughly that $13,400,000,000 with what we shared with investors back in November. Most of the recent shift, as you indicated, was just a shift between what we call gas generation to renewables. There is also some shift between our Wisconsin utility to our Iowa utilities that coincide with the relocated load. When I think about the renewables, you may be familiar—we do have an RPU filing in front of the commission right now in Iowa, and as the team continues to identify further renewable development opportunities that are cost-effective for our customers, we are going to continue to add those to the plan. And so we saw an opportunity to do that with this recent update. And then on the gas side, we had previously had a gas combined-cycle plant within the planned time horizon, but we have shifted that out beyond the planned horizon, really in favor of trying to get to simple-cycle facilities quicker because we know the capacity is important for our customers to be able to get them online quicker. So I would still say that combined-cycle is an opportunity for us and really upside opportunity to us when you think of beyond the planning horizon of 2026 through 2029. Lisa M. Barton: One thing that I would add is just a reminder of the fact that we do not have an IRP process, a litigated IRP process, so that allows us to be flexible in terms of our resource planning and to be able to pivot as we identify other projects that we can get into service fairly quickly to grow at that pace of our customers. It is speed to market, which is what we are acutely focused on, and one of the advantages I think that we have with respect to attracting these large loads. Paul Fremont: Great. And when I guess, when I look at some of your peers, in terms of where your rate base growth is, you are at 12%. Many of those peers that are at very high levels of rate base growth have somewhat more robust EPS growth rates. Is there something we should think of that is sort of holding you at lower levels? Robert J. Durian: Yeah. Paul, I would say we are probably pretty consistent with most others when it comes to the level of dilution we are going to see from the equity that we need to be able to finance this rate base growth. Maybe something that is a little bit different for us is we do have some current level debt that we are going to need to refinance, and the current debt is at pretty low interest rates. And so we have built in some, I will say, conservative assumptions as to what the new interest rates will be in the plan, and that is probably maybe a differentiating factor and hopefully, we will be able to beat that when we execute those transactions. But prefer to be a little more conservative at the outset here. Paul Fremont: Great. Thank you very much. Operator: Thank you. Next question will be from Andrew Marc Weisel at Scotiabank. Please go ahead. Andrew Marc Weisel: Hey. Good morning, everyone. Wanna echo the kudos on the change there. Like you said, nice to see you pivot on a dime, as you called it. First question is on turbine reservations for gas and safe harbor credits for renewables and storage. I know you have got that all covered for what is in the plan. Please remind me or help me understand, what do you mean by what is in the plan? Specifically, does that cover everything related to the three gigawatts for the four projects that have ESAs? Would that cover some of the two to four gigawatts of upside? Just how are you thinking about serving all of those needs or potential needs from a generation perspective? I know you alluded to that a little bit in the last question, but maybe you could get a little more specific, please. Lisa M. Barton: No. That is fine. With respect to the three gigawatts, you know, that is all in the plan. And as we look towards the two to four gigawatts that we are in active negotiations on, we are all working on the generation side, and I will just point folks to a recent RFP that we had issued here in 2025. So we are actively continuing to pair the load growth with generation. Andrew Marc Weisel: Okay. So the comments refer to the three gig but not the two to four. Is that right? Lisa M. Barton: Correct. Andrew Marc Weisel: Okay. Got it. Thank you. And then in terms of, excuse me, moving the CapEx around, I know you talked about moving generation from Wisconsin to Iowa related to the QTS relocating. Looks like some of the timing changed as well, some spending moved up from 2027 to 2026, and then a little bit got pushed back from 2028 to 2029. Is that just fine-tuning, or was that related to QTS? Or maybe you could just detail some of those changes. Robert J. Durian: Yeah. Most of those are pretty modest. I do not think any one year is probably moving around more than about $100,000,000. And so think of that as just refinements to the process as we continue to work through completing all of the contracts and stuff for the capital expenditure planning. So I would not read anything more than just more refinement than anything. Andrew Marc Weisel: Okay. Very good. And then maybe this is just kind of a nitpicky one, but just to clarify, the 50% increase in projected demand—that stat is not a change, but it looks like the base did change. Now you are saying off of 2025 base of five and a half gigs, previously, it showed off of a 2024 base of six gigs. So it looks like, and now you are saying by 2031 versus by 2030 previously. Just trying to understand. Are you now saying it is going to be a little later and a little smaller? Is that meant to be a change in the messaging of future demand? Or how should we think about that? Robert J. Durian: I would think that most of those numbers are refinements and rounding issues more than anything. There is some, as we think about this relocation of QTS from Wisconsin to Iowa, there is a little bit of a delay in the ramp, as you can imagine, because starting out a little bit later with the development activities, but it is less than a year. And so again, we are just probably getting a little more fine-tuned on the numbers and the dates. I would not read anything more into that than that. Andrew Marc Weisel: Okay. Very true. Transparency. We appreciate the specificity. Thank you so much. Operator: Thank you. A reminder, ladies and gentlemen, please press 1. Next will be Renny at Bank of America. Please go ahead. Renny: Morning, guys. Just quick question on, you know, the gubernatorial races. So, you know, with heading into those races in Iowa and Wisconsin and with the incumbents not running, I guess, are you thinking about, like, regulatory continuity and potential policy shift? Policy shifts, like, basically around generation planning and large loads. Lisa M. Barton: Yeah. Great question. And, you know, this is fundamental to our philosophy of making sure that—you have heard us talk about a Rubik’s cube. We are solving for reliability, resiliency, growth, and affordability. That is core to everything that we do. We actually posted, recently this week on our site to ensure that there was clarity in terms of our philosophy, our commitment to our customers, which is they will not be paying for this data center growth. They will be benefiting from this data center growth. So really trying to make sure that that message is clear. Obviously, we have, in both states, governors who have elected not to run for reelection. In Iowa, the primaries are coming up fairly soon in the June 2 time frame. You have got five Republicans running, three Democrats. In Wisconsin, it is very early days. August, I think eleventh it is that the primaries are set for—there are two Republicans and nine Democrats, really, in that race. You know, we expect the races to very much be focused on healthcare, housing costs, potentially energy costs, and so forth. That is why how we are navigating this growth is so critical. And we have certainly had the support of the public utilities commissions as it relates to our approach. And, again, as a reminder, with this individual customer rate contract that we submit to the commissions, it really gives the commissions an opportunity to truly understand the details of it, to make sure that all customers are benefiting, to make sure that they have got that opportunity for oversight on an individual basis. We think that that is a strength as well. Renny: That makes sense. And then just secondly, you know, keeping on theme with the data centers. Do you, like in Wisconsin, do you kind of view it as—is it kind of more broadly the challenge as being tied to local or township concerns, or based in Wisconsin? I know Iowa has a strategic, you know, advantages. But do you think, like, for example, with the MITT ICR there is more need to provide more disclosures in Wisconsin, or is this kind of township level— Lisa M. Barton: It is really township level is how we are viewing it. And, again, just as a reminder, that DeForest community is just outside of Madison, very close to Madison, and it did require annexation and rezoning. It certainly was a lift for the community. Governor Evers, in his State of the State address, was extremely supportive of data centers and highlighted the importance of data centers for the growth of the state, making sure that we continue to be a bit of a tech hub and so forth. That is very much in line with how we are seeing it. So this is just a local issue in our minds. Renny: Great. Thanks so much. Operator: Ms. Gille, there are no further questions at this time. Susan Gille: With no more questions, this concludes our call. A replay will be available on our investor website. We thank you for your continued support of Alliant Energy Corporation and feel free to contact me with any follow-up questions. Operator: Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Have a good weekend.
Operator: Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press 0, and a member of our team will be happy to help you. Please standby. Your meeting is about to begin. Hello, and welcome everyone joining today's Q4 2025 Transocean Ltd. Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. To register to ask a question at any time, please press 1 on your telephone keypad. Please note this call is being recorded. We are standing by if you should need any assistance. It is now my pleasure to turn the meeting over to David Kiddington, Vice President and Treasurer. Please go ahead. David Kiddington: Thank you, Nikki, and good morning, everyone. Welcome to Transocean Ltd.'s fourth quarter earnings call. Leading today's call will be Transocean Ltd. President and CEO, Keelan I. Adamson. Keelan will be joined by other members of Transocean Ltd.'s executive management team, Chief Financial Officer R. Vayda, and Chief Commercial Officer Roderick J. Mackenzie. In addition to the comments that will be shared on today's call, we would like to refer you to our earnings release and fleet status report filed yesterday that contain additional information, all of which is available on Transocean Ltd.'s website www.deepwater.com. Following our prepared comments, we will open the conference line for questions. Please limit your inquiries to one question and one follow-up as this will allow us to hear from more participants. Before we begin, I would like to remind everyone that today's call will include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially. With that, I will hand the call over to Transocean Ltd. CEO, Keelan I. Adamson. Keelan I. Adamson: Thanks, David, and welcome, everyone, to our fourth quarter and year-end 2025 conference call. We appreciate your interest in Transocean Ltd. I will cover several topics today. First, I will recap our key accomplishments over the last year. Next, I will cover our 2026 priorities. Third, I will quickly recap the highlights of our recently announced definitive agreement to acquire Valaris and why we are excited about this transformational combination. And lastly, I will close out with some market updates from around the world. Let us get started. 2025 was an important year for Transocean Ltd. The company executed very well both operationally and financially. Yesterday, we reported our fourth quarter results including solid adjusted EBITDA of $385,000,000 and free cash flow of $321,000,000. Year on year, our results improved significantly, with adjusted EBITDA of $1,370,000,000 up nearly 20% and a significant increase in free cash flow to $626,000,000. During the year, we materially strengthened the balance sheet, retiring about $1,300,000,000 in debt. We executed two key capital market transactions to delever and improve both our liquidity and the timing of our debt maturities. These actions and the additional debt payments made in 2025 reduced our annual interest expense by nearly $90,000,000, enhanced our financial flexibility, and increased the value of our equity, ultimately enabling the recently announced transaction with Valaris. We sustainably improved our cost structure by removing $100,000,000 in costs and are on track to decrease our costs by an additional $150,000,000 in 2026. We took the difficult but necessary steps to rationalize shore-based support around the world, reduce G&A costs, and restructure the organization to drive efficiencies without adversely impacting our operational performance. Today, we are leaner, more efficient, and more profitable. The operational performance of our rigs and, more importantly, our people were superb. Once again, we demonstrated why Transocean Ltd. is an industry leader. We achieved record uptime performance just shy of 98%. We had zero operational integrity events and zero lost time incidents across our entire fleet. Our process and occupational safety performance was exceptional. We completed five major planned out-of-service projects on time and on budget, and we continued to rightsize and high-grade the technical capability of our fleet. We recycled six rigs in 2025, with one more completed earlier this year. We entered 2026, Transocean Ltd.'s one hundredth anniversary year, with strong momentum across the business. Now let us review Transocean Ltd.'s key objectives. Our first priority is to optimize the value of our differentiated assets. Transocean Ltd., through our people and fleet, has unparalleled capabilities. We strive every day to deliver best-in-class performance, with the most experienced and proven team of professionals, maximizing the capabilities of our high-specification fleet. We have an exceptionally capable drillship fleet and a high-spec fleet of semisubmersibles capable of executing in the harshest environment. As the technology leader in the offshore rig business, we continually innovate to improve the safety, reliability, and efficiency of our operation. Second, we are focused on generating industry-leading free cash flow. We have roughly $6,000,000,000 in backlog that will efficiently convert into cash, the key measure of value in our business. The more we generate, the faster we can reduce our leverage, which will materially benefit our shareholders. And third, as we continue to reduce our total debt, we will establish a stronger, more simplified capital structure that provides financial resilience and the ability to weather the cycles of this business. Moving now to our recently announced definitive agreement to acquire Valaris. We are incredibly excited about the capabilities of our combined business. As we head into what we anticipate will be a very constructive period for the offshore drilling business, we believe that this transaction is well timed and know it is perfectly aligned with all of our strategic priorities. It positions us to be a leader, combining the best fleet with the best team, working diligently every day to provide our customers with the best, most disciplined execution in the industry. Our geographic footprint and customer base will expand. Wherever our customers go offshore to find and develop reserves, we will be able to provide a rig solution to fit their requirements from a broader, high-quality asset base. We have identified more than GBP 200,000,000 in cost synergies, on top of our ongoing cost reduction initiatives. Our pro forma combined backlog of nearly $11,000,000,000 and cash flow generating capability are expected to accelerate debt reduction, resulting in leverage of around 1.5x within twenty four months of closing. We strongly believe that this combination will enhance returns to shareholders and create an exceptional opportunity for investors desiring exposure to the offshore rig business. We expect to close the transaction in 2026, and we look forward to sharing more information on our progress in the coming months. I will now provide a brief market update. While we had seen some near-term moderation in tendering activity, the underlying outlook for deepwater offshore drilling is strengthening. In fact, tendering activity is growing, with opportunities developing in most major basins. In this market environment, we expect deepwater utilization to move meaningfully higher, and to greater than 90% through 2027, setting the stage for an increasingly constructive business environment. Looking regionally, in the U.S. Gulf, long-term demand remains robust driven by the Paleogene plays and the new lease awards with improved fiscal terms. Any apparent short-term softness will likely result in preferred assets repositioning to other increasingly active markets elsewhere. In Brazil, we expect rig activity to remain stable. Any reduction in Petrobras' projected fleet count will be small and temporary, offset by increased demand from international operators. We anticipate that Petrobras will conclude its blend-and-extend renegotiations by the end of the quarter, which will add multiple years of backlog. Africa continues to exhibit considerable growth potential. We expect the region's rig count to increase from roughly 15 today to at least 20 over the next year or two. In Mozambique, we anticipate three multiyear program awards from each of ENI, Exxon, and Total, all scheduled to start in 2027 and 2028. In Nigeria, Shell has already awarded its two-year program, with additional awards expected shortly from Exxon and Chevron. In addition, Total is preparing to tender this quarter. Collectively, this implies four rig lines from 2027 onward. In Angola, activity remains solid, supported by anticipated and announced extensions for rigs currently operating with Azule, Total, and Exxon. We also understand Shell will reenter the basin for a material exploration program in 2027. In Namibia, we are now seeing the first results from recent exploration success, with Total launching a major tender for the Venus development: two rigs, three years each, beginning in early 2028. We also expect further development activity as operators assess their recent discoveries for commercial viability. And in the Ivory Coast, we understand ENI is preparing to issue a one-rig tender for three years of work beginning in early 2027. In the Mediterranean, activity has returned to pre-COVID levels, driven by strong regional gas demand in Egypt, Israel, and Cyprus. Rig count is expected to increase to around eight units. In Israel, we expect two rig fixtures to support the recently sanctioned Chevron and Energean developments. In Egypt, Shell and BP will add new programs starting this year. And in Cyprus, ENI's Kronos development is expected to begin drilling in early 2027. Moving now to Southeast Asia and primarily Indonesia, we anticipate incremental demand of three to four rigs between ENI, Harbour Energy, Mubadala, and INPEX. In India, momentum is building with the government's objective to drill 50 deepwater wells per year going forward. In addition to the recently awarded one incremental fixture in the region, ONGC have just issued a new tender for three drillships and two semisubmersibles with contract durations of four years each, beginning in 2027. In Australia, the deepwater Skiros will commence a minimum one-year development program in early 2027. We see stable activity from all our semisubmersible customers with programs currently out for tender by Woodside, Santos, and INPEX. In Norway, utilization of the high-specification harsh environment semisubmersible fleet will remain robust through 2028, supported by recent awards from Equinor and Aker BP. Other operators are also seeking high-spec harsh environment units for 2027 starts, which is expected to drive utilization of these units to nearly 100%. In closing, tendering activity is increasing. Multiyear opportunities are now in the market, and visibility into 2027 and beyond continues to improve. As operators move ahead with new developments and meaningful exploration programs, we are well positioned to capitalize on improving demand. I will now hand the call over to Thad for some brief comments on the quarter and our guidance. Thad? R. Vayda: Thank you, Keelan. And good day to everyone. Our performance during the fourth quarter and for the full year 2026 was very much in line with our expectations and the guidance ranges that we provided to you in November. In the fourth quarter, we generated contract drilling revenues of $1,040,000,000 at an average daily revenue of approximately $461,000, which is generally consistent with the average daily revenue achieved in the last several quarters. Operating and maintenance expense and G&A expense was $605,000,000 and $50,000,000 respectively. Adjusted EBITDA was $385,000,000, implying a very healthy margin of 37%. And cash flow from operations was approximately $349,000,000, a sequential increase of 42%. Free cash flow of $321,000,000 reflects $349,000,000 of operating cash flow net of $28,000,000 of capital expenditures. Our free cash flow margin was notable at 31%. I highlight that this is the best quarterly free cash flow we have generated in several years. It is a direct result of excellent operational performance, execution on our cost savings initiative, lower cash interest expense, and effective management of our working capital. We ended the fourth quarter with total liquidity of approximately $1,500,000,000. This includes unrestricted cash and cash equivalents of $620,000,000, about $377,000,000 of restricted cash, and $510,000,000 of capacity from our undrawn credit facility. In addition to now issuing our fleet status report concurrently with our quarterly results, we have slightly changed the presentation and content of our press release. Going forward, in addition to some format and tabular modifications, the release will include our guidance ranges. This report provides guidance for the first quarter and full year 2026 for Transocean Ltd. on a stand-alone basis, as will be the case until the Valaris transaction closes, expected later this year. The guidance ranges provided include the effects of our cost reduction initiatives and reflect slightly lower levels of activity versus 2025, specifically assuming some idle time on several rigs, including the KG2, the Deepwater Proteus, and the Deepwater Skiros. I note that the potential to achieve the upper regions of the revenue guidance range relates mostly to these rigs being extended beyond their contract end dates or commencing new contracts earlier than anticipated. Even with the assumed idle time on these rigs, we expect free cash flow to be in line with or better than that achieved in 2025 as we continue to reduce cost and interest expense and make additional improvements in the management of our working capital. We also intend to continue to utilize our free cash flow to opportunistically reduce debt in excess of our remaining 2026 scheduled obligation of approximately $380,000,000, which includes capital lease payments. This reflects about $130,000,000 in payments we have already made in 2026. Additionally, our stronger credit profile and improved cash flow generation may enable us to refinance some debt instruments at lower interest rates. Finally, we expect to end 2026 with liquidity of between $1,600,000,000 and $1,700,000,000, which excludes the effect of any incremental opportunistic deleveraging. That concludes my prepared remarks. Operator, we are ready to take questions. Operator: Thank you. And if you would like to ask a question, please press 1 on your keypad. To leave the queue at any time, press 2. We ask that you please limit yourself to one question and one follow-up. Once again, that is star and 1 to ask a question. Our first question from Gregory Robert Lewis with BTIG. Please go ahead. Your line is open. Gregory Robert Lewis: Yes. Hi. Thank you, and good morning. You know, Keelan, I guess at this point, the market has definitely had some time to digest the acquisition of Valaris, and congrats on that again. And while it was definitely transformational to the balance sheet, you know, Transocean Ltd. was already the second largest owner of high-spec ultra-deepwater rigs prior to acquiring Valaris. Yeah. I guess I would be curious, post the acquisition, does this change the chartering strategy at all? And really, what advantages could the company benefit from just simply from these new potential economies of scale? Keelan I. Adamson: Greg, and thanks for the question. As we think about consolidation and what it means for our industry and the upstream industry in general, and our customers have been consolidating, as you know, over the last few years, it is really driven around driving efficiencies into our business. It is about taking cost out of the chain and looking to provide a better service to our customers and to the consumers. So from our perspective, this combination allows us to address unnecessary cost across the combination. It allows us to ensure that our overlap of cost structure is minimized. We drive efficiencies into that structure. But, more importantly, we are starting to look at how do we improve our service provision as a combination across the world, to all of our customers. And, ultimately, when I talk to our customers, they always are focused on project execution. In a capital-disciplined world where they only have a certain amount of CapEx to spend across their opportunities, they want to ensure they are working with partners that can deliver and can deliver in a reliable and predictable fashion. We are very proud of our operation on the deepwater fleet that we own right now, and we have strived to ensure that we can deliver that level of performance no matter where we are working for whoever around the world. And I see this as a huge opportunity for us to combine two excellent operating companies and continue to deliver that sort of level of service, improve our reliability, and improve our predictability to our customers, that ensures that their projects are delivered on time, on or better than budget, and ultimately reducing the cost of these projects around the world. It will enable more work in the future, and it will obviously help the consumer at the end of the day. So I think the other aspect of this transaction that helps is the drilling industry has gone through, as you know, a pretty rough time over the last ten to fifteen years. Many companies have had to restructure. We have been carrying a lot of debt through the down cycle, and it does not help where companies do not have a sustainable business structure. And I think for the benefit of the upstream as a whole and the benefit for our customers, having drilling contractors that are sustainable, robust, can be resilient against the inevitable cycles in this business, I think, is a huge plus, and I think this combination delivers against those. Gregory Robert Lewis: Okay. Super helpful. And then just I did want to talk a little bit about, you know, kind of how you are thinking about the jackup markets. Definitely on a lot of investors' minds. You know, it is, I mean, drilling is drilling, but, you know, if you think about the jackup market, it is more of an NOC-heavy market where, you know, hey, Petrobras and Equinor side, but the deepwater market is more of an IOC market. Just kind of curious how we are thinking about how does that change? Does management have to change a little bit of its view or its kind of structure in dealing with, you know, these NOCs in the Middle East and Asia versus, say, you know, the traditional opportunities that you are seeing with IOCs? Keelan I. Adamson: Yeah, Greg. Another great question. You know, we have been a jackup player in our history. Right? We have, we understand the highly competitive nature of that arena. And as we enter back into the jackup business post close, we are looking forward to embracing the lessons we have learned over time as an operator ourselves, and, of course, Valaris have done a great job with running their jackup fleet in a competitive environment with NOCs and international operators around the world. Clearly, it is a business that needs to be run very efficiently to generate good cash from that business, and it is important that companies who run those businesses understand the subtleties of how to manage that cost structure and ensure that they can get the efficiencies and the performance from that jackup market. So it is not strange to us. We certainly learned from the past, and I see a great opportunity for us to learn from the Valaris team that runs that jackup fleet to continue to deliver exceptional performance and incremental cash to the combined entity going forward. Gregory Robert Lewis: Super helpful. Thank you very much. Keelan I. Adamson: Thank you, Greg. Operator: Thank you. Our next question comes from Eddie Kim with Barclays. Please go ahead. Your line is open. Eddie Kim: Hi. Good morning. So this group as a whole often gets a bad rap because the offshore inflection always seems to be about twelve to eighteen months away. You and your peers have been consistently saying for several quarters now that this inflection will happen in late 2026 and into 2027. We do not necessarily disagree with that. But just curious, what gives you the confidence that this is going to happen on time this time around? And outside of some sort of oil price collapse, do you see much risk of this getting pushed out? Keelan I. Adamson: Yeah. Morning, Eddie. No. I think it really stems from twofold. It stems from our conversations that we have all the time with our customers, and it also stems from the data that comes through from the number of tenders that release, the number of prospects that are going through their field development programs. And some of the public commentary from the oil and gas company executives that are starting to talk a little bit about reserve replacement, declining production, and the need to build exploration budgets to ensure that they are able to do that. So we triangulate around lots of pieces of information, some subjective, some very objective. And that is all triangulating now to I think what we have said all along is we felt like 2026 and early 2027, we were certainly going to bridge into over 90% utilization across our drillship fleet and that is continuing to play out. And there has been some recent news that I highlighted in my commentary that, you know, was kind of hidden from view at that point in time. Roddie, do you want to add anything to that? Yeah. For sure. So just to pick up the what gives us the confidence. So as we look at, you know, last year, the number of rig years that were awarded just progressively got better and better, quarter over quarter. We went from, like, 12 rig years to 14 to 18 and then 22 rig years in the fourth quarter, which was actually disappointing for us because we were expecting probably double that to be awarded. There were several awards that slipped into 2026. But you will see that from, you know, not only ourselves, but a lot of our competitors have booked multiyear programs. So we see a lot of multiyear programs, whereas we only saw a few last year. We see a lot more now. We are actually tracking, I think, at 32 open tenders that are expected to be awarded over the next few months. So those open tenders, the average length is well beyond a year. So there is just a lot of work being awarded now. I think you saw that period in 2025 where a lot of the customers were basically kind of, you know, protecting their own balance sheets and, you know, not putting on excessive amount of commitment. But, as we work through that capital discipline, what we are seeing now is a transition now clearly towards it is time to develop a lot of these assets that they discovered over the last couple of years. And a marked increase in exploration budget because the pressure is now on to find replacement reserves. So we are very confident in terms of the number of awards that have been made. So I would say that is not a forward projection. That is data that is in the market already. We are definitely through the trough of contracting and now we are kind of on the other side of things beginning to really pick up. So again, just lots of opportunities. And they are all much longer in term than they were before. Eddie Kim: Got it. Very helpful color and great to hear. Thank you. Just wanted to ask about the Petrobras blend-and-extends. Those negotiations have taken a little bit longer than we had, but you said you expect those to conclude by the end of the quarter. Just curious if your full-year guidance already baked in some potential earnings risk related to those blend and extends, if the results of those negotiations should be seen as an incremental impact to the guidance you have laid out? R. Vayda: Yeah. So thanks for the question. The guidance that we provide is representative of our best guess based upon the conversations that we have had. So I would not consider it to be significant incremental upside with respect to the blend-and-extends. Eddie Kim: Got it. Understood. Keelan I. Adamson: Great. Thanks for the call. I will turn it back. Thank you. Operator: Our next question comes from Fredrik Stene with Clarksons Securities. Please go ahead. Your line is open. Fredrik Stene: Thank you, Fredrik. Hope all is well. And thank you for the detailed market commentary in your prepared remarks. I wanted to touch a bit on, I guess, fleet placement in general. I think the way I interpreted your commentary was that, you know, the U.S. might, while it is your best long term, might face, you know, some softness in the near term, but then you have, you know, good activity levels in West Africa, which is a great example. I think the ONGC tender, which came out yesterday, kind of in the new format, was incremental to what most of us have expected, at least if you asked me a couple of months back. So just wondering, do you have any color on how you see your fleet positioned, let us say, a year out in time? Do you expect many rigs to move regions, or do you think some of that will, call it, be solved by the acquisition of Valaris? Just thinking about, you know, you having rigs available to actually compete in most of these long-term tenders. Thank you. Keelan I. Adamson: Fredrik, and thanks for the question. Yes. Look, I think what we definitely see is opportunities developing as discussed in the Africa and Asia regions. We operate in, as you know, a global worldwide market that is highly competitive. We are able to move our units anywhere around the world that meets that demand. I would say because we have a very high-spec fleet, our customers are always going to want, all else being equal, the higher-spec rig that they can find. As we experience, you know, the Gulf has been a strong market. It will continue to be a strong demand. If there is any near-term softness in that area, we will move those rigs to the other opportunities that exist around the world. Brazil continues to be a high utilization area for drillships. And the Med has been, it is great to see the Med back. It is great to see a lot of activity building in the Mediterranean. Obviously, the gas and energy security conversation is playing a role there. But, yeah, that is the way we see the movement. And I will just pass it over to Roddie. He will have a couple more comments to add. Roderick J. Mackenzie: Yeah. No. Exactly right, Keelan. And great that you noted the ONGC tender that came out. I mean, that is twenty to twenty five rig years in one go that was on nobody's radar. So I think that stuff is extremely interesting. You know, the stuff that is coming out of Mozambique, interesting. The stuff that is coming out of Indonesia, very interesting. And, of course, we are engaged in discussions that, you know, not at liberty to divulge, but, you know, there is plenty of other activity going on. And as Keelan pointed out, for these hot rigs that are doing a great job performance-wise, the customers are very interested. I just think there is no shortage of opportunities. And if there is any near-term softness in the Gulf of Mexico, I mean, at the moment, we are fully utilized. But if that does transpire, then I do not think there is any problems in moving those rigs onto other programs. There is certainly enough work around the world for the rigs over the next couple of years. It is just a question of timing and when we move things. But yeah, we are super pumped about the opportunities that have just recently been announced that nobody has got in their models. So I think that is really going to push utilization up. Fredrik Stene: Yeah. No. I agree. I think that is both of us. We are going to see kind of probably do something with everybody's mindset about how tight this market can become. Just one follow-up, which relates to one of the U.S. Gulf rigs. I think you mentioned that the guidance included some idle time on KG2, Proteus, and Skiros. You know, the Asgard, that is running off in June this year. Should I, you know, by adding these two things together, assume that the Asgard might have some new work coming up for it shortly? R. Vayda: Yeah. I do not really have anything I can comment on at this time, but if anything does happen, of course, we will announce it in due course. Fredrik Stene: Alright. Thank you so much. Have a good day. Keelan I. Adamson: Thanks, Fredrik. Operator: Thank you. We will move next with Doug Becker with Capital One. Please go ahead. Your line is open. Doug Becker: Thank you. Q1 investors are always voting with their pocketbooks, and it looks like they like the Valaris acquisition. Just curious on the early response from customers. Keelan I. Adamson: Yeah. Doug, good morning. Thanks for the question. You know, the feedback I have had from our customers, and I know speaking with my counterpart, Anton, at Valaris, has been overwhelmingly positive. They understand the situation in the market. They understand the need to drive costs out of the business. They understand that the opportunity, you know, as they have, they have had to look at consolidation from their business perspective, they understand that it should not, it does not surprise them that consolidation would happen in the drilling contractor offshore rig business as well. And I think they are very supportive of the potential of the combination. They are very supportive of both companies' operations. You know, there are things to learn from each of us, and we will look to grab those and where we can improve our service to our customers around the world and on a bigger scale basis, we will be doing that. And so overwhelmingly positive comments, directly from the customers that we deal with on an operational basis. I have been very pleased with that. And they can see where the synergies of these companies will come to benefit them and their project delivery. Doug Becker: Well, it is very encouraging. Also wanted to circle back on the blend-and-extend negotiations with Petrobras. Just trying to think through what would you consider a win-win for Petrobras, where maybe they get some rate relief in the near term, but to make it a successful negotiation for Transocean Ltd. as well. R. Vayda: Yeah. I will take that one. Yeah. So Petrobras is all about basically cost reductions and optimization. So the concept is not just about day rates and what have you, but also a lot around terms and conditions and doing things in the contract that kind of, for want of a better word, reduce mutual waste. So we are feeling pretty good about that in terms of, you know, the opportunity to be more efficient with revenue. So we will get a couple of points up on revenue efficiency, that kind of stuff. But also, this is kind of like the workhorse of the fleet. Right? So you have got the sixth-gen rigs down there that provide a great service. They do a fantastic job. And we love the idea about, you know, putting significant extensions on those because we are talking about quite a lot of rig years. So that kind of checks everybody's boxes. If we can be a bit more efficient cost-wise for them and at the same time extend our kind of core sixth-gen fleet and keep them busy for the foreseeable future, that is a real win. So we are excited about that. We hope that does come to fruition. And, yeah, as we say, we will definitely update when we have definitive developments there. Keelan I. Adamson: Maybe one add on that. I think every drilling contractor understands that continuity is really important for delivering performance over time, and Petrobras, you know, they have the ability to scale their operations, drive those efficiencies, and they understand the value of continuity with their fleet as well. And so from our perspective, it addresses utilization for our sixth-gen and low seventh-gen fleet. It allows us to work with our customer to drive their cost down. And to improve our Ts and Cs and reclaim some of that benefit to the company in that way. And we are able then to provide a service for longer on a high-continuity basis, which can only be good for our cash flow generation. Doug Becker: That makes sense. Noel Augustus Parks: Thank you. Operator: We will move next with Keith Beckman with Pickering Energy Partners. Please go ahead. Your line is open. Keith Beckman: Hey. Thanks for taking my question. Had a question around, you know, in a market that is much further along and everything is more positive, capacity is a little bit tighter, do you have any feel on which of your three seventh-gen rigs could potentially come back to market first? And does that change at all with Valaris' three seventh-gen stacked rigs as well? Keelan I. Adamson: Yeah. It is, look. We are going to be really excited when the utilization gets to that point, right? But right now, obviously, we have got an active fleet that needs to roll over. We are very encouraged by the market signs that are there right now to continue to find opportunities for the active fleet. We are very happy with the three seventh-gen units that we have kept on the sideline, and the Valaris units obviously are high spec as well. So we take the same standpoint. We will not bring one of these units back speculatively. And the market would need to be in a position where we could recover the investment of those reactivations inside that contract. We believe that the longer-term outlook is very strong, and the opportunities will present themselves, but we do not see that in the very near term. Keith Beckman: Awesome. That is helpful. And then my second question kind of comes back around to the Gulf market again in the back half of the year. Whenever I look at kind of what is in the fleet and could potentially be rolling off, I look at the Conqueror, Proteus, and Asgard, late this year potentially needing some work. I just wanted to know if all of those were to win work, I am assuming there is a little bit of upside to your guidance. Just wanted to get a feel for what is baked into 2026 guidance in regards to those three rigs. R. Vayda: Yeah. So we called out the three rigs that we, you know, we think it makes sense to assume some idle time, with upside associated with those under the conditions that I suggested. The other asset that you mentioned, I think, are all probable to go back to work. It is sort of what we have thought about. So there is some probability-weighted assumption in the guidance range, but it would definitely move it towards the higher end. Keelan I. Adamson: Yes. And just some color around those rigs. Obviously, as you know, they are our highest-spec drillships in the world. There are opportunities for these rigs to pick up additional work. We are fairly confident that the market will develop nicely for those units to grab some utilization. I think, you know, it is important to remember that we want to keep these rigs working. We want to keep our utilization up. And at the same time, we understand the value of those assets. So we will be looking to fill it with short-term work recognizing that the longer term is a little bit more constructive and ensuring that we are keeping our powder dry. Keith Beckman: That is very helpful. I will turn it back. Thanks for taking my questions. Keelan I. Adamson: Thank you. Operator: Thank you. We will move next with Noel Parks with Tuohy Brothers. Please go ahead. Your line is open. Noel Augustus Parks: Hi. Good morning. One thing I was wondering is, as you had mentioned that there has been more public commentary about reserve replacement among producers, and the need for exploration. I am just wondering among the players out there who might have been the latest to the party in terms of, you know, deciding that, yeah, we have to address the return to the offshore. I am just wondering, maybe you could kind of characterize what some of the more recent companies approaching you have been thinking. I am just wondering, have they been sort of sitting back and deciding that, you know, they are happy to be fast followers? Or are they, you know, now feeling like, oh, we have hung on the sidelines too long. We need to be more aggressive given the tightness in supply. I was wondering about, like, as I said, the latecomers. Roderick J. Mackenzie: I think this is really a story about many of the companies pivoting back towards oil and gas, particularly offshore and deepwater. So it is really a story about, you know, there is less commentary or there is a pivot away from spending a tremendous amount of money in renewables and alternatives. And definitely much more of a focus and an acknowledgment, if you would, that, you know, the most economic, the most reliable sources of energy are coming from traditional hydrocarbon sources. So I think that is the key shift that we are seeing is that there is a pivot back towards the business that we are directly engaged in. And within that, we do offer the most cost-effective and the lowest carbon barrels. So there is a lot of wins there for that, and I think it is really a case of reality governs everything and eventually, all kind of head towards that path. So that is definitely what we are seeing from our customers is that they are perhaps not spending more money overall in the name of capital discipline, but they are pivoting back towards stuff that makes the most sense, which is the business that we are focused on. Noel Augustus Parks: Right. Thanks. And related question, does producer M&A and A&D activity, do you see anything particular either announced or on the horizon that you see as, you know, potentially exciting opportunity. It seems we are kind of in a mode of basins rationalization, but perhaps that is weighted more toward the independents. But even among those, there are quite a few of them that maybe went entirely onshore for a decade or so but have a legacy of international and offshore operations. Is there anything in anything you have seen in the sort of state of deals we have seen recently has been quite interesting to you. R. Vayda: Yeah. I mean, obviously, we have seen several consolidations there. Over the past couple of years. Do not see a tremendous number more on the table, but, you know, I am sure whatever makes sense, that is going to happen, you know, for the same reasons that we are going through our consolidation. It is all about bringing those costs down and making ourselves more efficient. So it is actually not necessarily a bad thing, because the industry overall, with the nature of these consolidations, just becomes more efficient. We become more cost effective. And therefore, we attract more dollars towards our type of exploration, our type of development. That is very important for us. So I think the consolidation at various sectors in the industry, it just makes sense from that point of view. Noel Augustus Parks: Great. Thanks a lot. Roderick J. Mackenzie: Thanks, Noel. Thank you. Operator: At this time, there are no further questions in queue. I will now turn the meeting back to David. David Kiddington: Alright. We would like to thank everyone who participated in our earnings conference today and invite you to follow up with us for any additional inquiries. And with that, we will close the call. Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.
Operator: At this time, I would like to welcome everyone to the Barings BDC, Inc. conference call for the quarter and year ended December 31, 2025. All participants are in a listen-only mode. A question-and-answer session will follow. Today’s call is being recorded, and a replay will be available approximately two hours after the conclusion of the call on the company's website at www.baringsbdc.com under the Investor Relations section. I will now turn the call over to Joseph Mazzoli, Head of Investor Relations for Barings BDC, Inc. Please note that this call may contain forward-looking statements, including statements regarding the company's goals, beliefs, strategies, future operating results, and cash flows. Although the company believes these statements Joseph Mazzoli: Are reasonable, actual results could differ materially from those projected in forward-looking statements. Statements are based on various underlying assumptions that are subject to numerous uncertainties and risks, including those disclosed under the sections titled “Risk Factors” and “Forward-Looking Statements” in the company's annual report on Form 10-K for the fiscal year ended December 31, 2025, as filed with the Securities and Exchange Commission. Barings BDC, Inc. undertakes no obligation to update or revise any forward-looking statements unless required by law. I will now turn the call over to Tom McDonald, Chief Executive Officer of Barings BDC, Inc. Thanks, Joe, and good morning, everyone. On the call today, I am joined by Barings BDC, Inc.’s President, Matthew Freund, Chief Financial Officer, Elizabeth A. Murray, Barings Head of Global Private Finance and BBDC Portfolio Manager, Bryan D. High. Before I discuss our quarterly and annual results, I would like to take a moment to speak about the leadership transition that we recently implemented and my involvement with the BDC franchise going forward. As many of you know, I assumed the role of CEO of Barings BDC, Inc. effective January 1. Prior to stepping into this position, I spent most of my career deeply rooted in fundamental credit research and underwriting, portfolio management, and investor alignment across multiple strategies within Barings. Having navigated multiple credit cycles and managed leveraged credit businesses for decades, I bring a perspective that reinforces my conviction in the strength and durability of our investment process, and importantly, in our continued ability to deliver value for our shareholders. What has been immediately clear in my early months is what I long believed to be true. Barings BDC, Inc. benefits from a best-in-class direct origination platform focused on the core middle market. This differentiated sourcing capability, paired with our disciplined underwriting and strong alignment with shareholders, represents a powerful combination—one that positions us well to drive attractive long-term risk-adjusted returns. While I bring a fresh perspective, the strategy, process, and philosophy that define BBDC remain firmly intact. Our approach is working, and my focus is on enhancing the processes that already operate effectively and complementing the strengths of an exceptional existing team. It is my intention to accelerate existing initiatives and implement additional initiatives, all with a clear focus on ultimately improving ROE. Tom McDonald: I have had the privilege of connecting with many of our stakeholders following the leadership transition, and I look forward to continuing that dialogue in the weeks and months ahead. In the fourth quarter, BBDC delivered strong net investment income accompanied by excellent credit performance within the Barings-originated portion of the portfolio. Origination activity across the platform during the fourth quarter reflected continued success in our core strategies. Net deployment was influenced by fund-level leverage, and the fourth quarter reflected a period of net repayments consistent with our prior guidance. A strong and highly diversified portfolio, combined with a benign credit environment and our focus on top-of-the-capital-structure investments in middle market issuers, has continued to serve our investors well. We focus on the core middle market given its lower leverage and stronger risk-adjusted returns, making it the most compelling segment for BBDC and our shareholders. In addition, our emphasis on sectors that perform resiliently across economic environments provides an additional level of stability to our portfolio. This combination of senior secured financing solutions, core middle market focus, defensive non-cyclical sectors, and a global footprint offers our investors strong relative value and a meaningful differentiation within the broader BDC landscape. BBDC’s portfolio has performed largely as designed. Our defensive diversified issuer base is built as an all-weather portfolio. We believe this approach serves investors well regardless of the broader macroeconomic conditions, which, as Matt will touch on momentarily, we feel are broadly favorable. At the same time, we are beginning to see increased dispersion across managers in the space. Our experience suggests that underwriting rigor often reveals itself over multi-year periods rather than quarters. As investors in private credit know, it can take three, four, or even five years for the portfolios to season and for credit performance to materialize. Importantly, we have avoided ARR loans, deeply cyclical issuers, and creative financing structures that appear to be presenting headwinds to the sector. As we continue through 2026 and into 2027, we are confident that BBDC will continue to demonstrate the merits of rigorous credit underwriting, fundamental credit analysis, and a long track record within the asset class. Turning to our results, net asset value per share was $11.09 per share, substantially unchanged from the prior quarter. Net investment income for the quarter was $0.27 per share compared to $0.32 per share in the prior quarter. These results reflect continued strength in Barings-originated investments, ongoing credit stability, and disciplined capital allocation. Now digging a bit deeper into the portfolio, we continue to actively maximize the value in legacy holdings acquired from MVC Capital and Sierra. During the fourth quarter, we accelerated the rotation of the Sierra portfolio, exiting approximately $50,000,000 of legacy positions on a combined basis between directly owned assets and assets held in the Sierra JV, as Elizabeth will comment on shortly. As of quarter end, Barings-originated positions now make up 96% of the BBDC portfolio at fair value, up from 76% at the beginning of 2022. Turning to the earnings power of the portfolio, the weighted average yield at fair value was 9.6%, reflecting a slight reduction from the prior quarter due to a reduction in base rates. Our Board declared a first quarter dividend of $0.26 per share, consistent with the prior quarter. On an annualized basis, the dividend level equates to a 9.4% yield on our net asset value of $11.09. As Matt will cover momentarily, BBDC is well positioned to navigate the current market volatility and deliver consistent risk-adjusted returns in the quarters ahead. I will now turn the call over to Matt. Matthew Freund: Thanks, Tom. I would first like to comment on my excitement to have you as part of our team. Barings manages nearly $0.5 trillion of capital, primarily in credit and credit-related investments. Tom McDonald: Point five. We recognize the increasing convergence between various markets, Matthew Freund: And know that your significant experience in high yield, stressed, and distressed markets augments the capabilities of our team that will benefit our investors in the quarters to come. Turning to the topic on many investors’ minds: software and the prospects of AI impacting underlying credit portfolios. Software accounts for approximately 14% of the fair market value of the BBDC portfolio. For those that follow our public filings, you will notice that we have long used the Moody’s industry hierarchy for our industry classifications, which does not separate software as a distinct industry. Nevertheless, after reviewing our information, 14% of the portfolio is invested in issuers primarily providing software to their underlying customers. Our portfolio is under-indexed relative to other private credit portfolios, as we have historically avoided both annual recurring revenue loans as well as highly leveraged software issuers. We rarely provided the most aggressive leverage packages. As a consequence, we are often not perceived to be competitive in the eyes of the issuers and sponsors for these software assets. We stuck to our historical knitting, and the resulting software exposure reflects this approach. With that said, we believe the rhetoric related to an existential crisis within the software vertical is overblown. The current market tone is reminiscent of a few other periods in recent memory. During 2018, the U.S. initiated a trade war with China, with justified concerns that industrial and manufacturing businesses would experience headwinds, causing bankruptcies across the country. At the onset of the COVID pandemic during 2020, logical arguments were made that healthcare companies would be forever transformed, and loans to 2022, interest rates began a historical rise, ultimately leveling off at more than 500 basis points by mid-2023. The rapid rise in interest rates caused many investors to express concern about indebted companies and the confidence and sustainability of various industries. Within the context of Barings-managed portfolios, we did not experience a wave of industrial defaults, healthcare defaults, or general industry defaults due to any of these events. What we did witness, however, was that during these periods of rapid industry change, businesses of weak management, poor business models, and questionable value propositions did experience stress. And some companies did fail. But it was not the macroeconomic events that drove losses; it was the fact that macroeconomic events exacerbated weaknesses that already existed. We believe we stand on the precipice of another period of rapid industry evolution, and in this case, within the software ecosystem. Business models will be tested, and some may ultimately fade away, but well-run businesses managed by smart and capable people are expected to continue exhibiting success. Poorly run businesses will experience the same business cycle that all poorly run businesses ultimately experience. Products will become obsolete, customers will leave, and the relevance will be diminished. One area we are most interested to follow in the months to come is the performance of ARR-related loans. As both Tom and I have commented on, and in particular, those that were expected to transition to cash flow or EBITDA-based covenants but have not. We do not have exposure to issuers such as these, and would encourage investors to try and stratify the risk to these kinds of financings, as we anticipate headwinds will be over-indexed in this segment of the software ecosystem in the quarters to come. Turning now to the state of originations. We ended 2025 with sequential improvement in deployment as compared to the prior three quarters. Our outlook into 2026 takes a more measured tone. As the new year is upon us, we are again hearing early indications that 2026 will represent a banner year for M&A opportunities in the coming twelve months. Given our strategy to focus on the core of the middle market, large market transactions, which we define as financings for issuers with more than $100,000,000 of EBITDA, are less relevant to our business. And while financings of this size may materialize, it will have a muted impact on our overall deployment at Barings. Our continued commitment to the core of the middle market will benefit from our incumbent positions, which is likely to provide compelling deployment opportunities regardless of what the future may hold. We are highly focused on the trends in both base rates and interest rate spreads. Base rates continue to gradually migrate lower from post-COVID highs. Narrowing spreads have begun to show some level of support. The benefits of the active portfolio rotation we have previously discussed are coming into sharper focus. BBDC shareholders benefit from a largely invested portfolio that can selectively redeploy capital into the most attractive middle market opportunities across the Barings franchise. Given the size of the portfolio and the illiquid nature of the underlying positions, our ability to rotate the portfolio takes quarters, not months, but we are continuing to see the benefits of this effort. Turning to an overview of our current portfolio, constituting first-lien securities. 75% consists of secured investments, with approximately 70% of investments. Interest coverage within the portfolio remains strong, with weighted average interest coverage this quarter of 2.4x, above industry averages and consistent with the prior quarter. We believe strong interest coverage demonstrates the merits of our approach of focusing on leading companies in defensive sectors and thoroughly underwriting their ability to weather a range of economic conditions. The portfolio remains highly diversified. The top two positions within the portfolio, Eclipse Business Capital and Rocade Holdings, being strategic platform investments. These investments provide BBDC shareholders with access to differentiated, compelling opportunities to invest in asset-backed loans and litigation funding—two specialized areas we believe provide attractive total returns and diversification benefits. Turning to the portfolio quality, risk ratings exhibited stability during the quarter, as our issuers exhibiting the most stress, classified as risk rating 4 and 5, were 7% on a combined basis and unchanged from the immediately preceding quarter. Non-accruals, excluding the assets that are covered by the Sierra CSA, accounted for 0.2% of assets on a fair value basis versus 0.4% of assets on a fair value basis in the immediately preceding quarter. During the quarter, we exited one non-accrual investment, removed one asset from non-accrual status that was restructured, and moved one additional asset onto non-accrual. We remain confident in the credit quality of the underlying portfolio. We expect BBDC’s differentiated reach and scale, coupled with its core focus on middle market credit and unmatched alignment with shareholders, to continue driving positive outcomes in the quarters and years to come. As previously noted, BBDC is a through-the-cycle portfolio designed to withstand a variety of macroeconomic conditions. With that, I would now like to turn the call over to Elizabeth. Elizabeth A. Murray: Thanks, Matt. As both Tom and Matt said, BBDC continues to deliver strong, consistent earnings, maintain exceptional credit quality, and provide attractive risk-adjusted returns for our fellow shareholders. Turning to our results for the fourth quarter, NAV per share ended the year at $11.09, which was essentially flat compared to the third quarter at $11.10, representing less than a 0.1% decrease quarter over quarter. The slight quarter-over-quarter movement reflects a combination of modest realized losses of $0.05 per share, offset by $0.02 per share of unrealized appreciation, $0.01 per share from share repurchases, and continued stable earnings generation from the portfolio, over-earning the dividend for the fourth quarter by $0.01 per share. The net realized loss on the portfolio was driven primarily by the loss on the exit of our investments in Ruffalo and Avanti and the restructuring of our investments in Eurofence, partially offset by the sale of our equity investments in Jones Fish and CJS Global. These exits and restructures were predominantly reclassed from net unrealized depreciation. The valuation of the Sierra credit support agreement increased by approximately $7,700,000 from $52,800,000 in the third quarter to $60,500,000 as of December 31. This increase was primarily driven by the sales, repayment, and return of capital within the underlying portfolio of the remaining Sierra investments, as well as updated assumptions around the maturity profile. During the fourth quarter, the Sierra portfolio generated approximately $24,300,000 of sales and repayments, along with a $21,900,000 return of capital distribution from the Sierra JV. At year-end, we had 12 positions remaining in the portfolio with a value $70,000,000 of repayments of approximately $32,000,000, down from 16 positions and $79,000,000 as of September 30. On a year-over-year basis, we reduced the Sierra portfolio by roughly 75%, including sales and return of capital. In addition, during the year, we completed the early termination of the MVC credit support agreement, resulting in a one-time $23,000,000 payment from Barings to BBDC. This strategic action reduced structural complexity within the BDC and further concentrated our portfolio with income-producing assets. We reported net investment income of $0.27 per share for the quarter versus NII of $0.32 per share in the prior quarter and $0.28 per share for 2024. For the year, net investment income was $1.12 per share compared to $1.24 per share for 2024. Net investment income was primarily driven by recurring interest income across our diversified senior secured portfolio, complemented by contributions from our joint ventures and our platform investments in Eclipse and Rocade. The decrease in net investment income year over year was primarily due to sales and repayments on the portfolio and declining base rates. It is important to note that net investment income exceeded our regular dividend of $1.04 per share. Our net leverage ratio, which is defined as regulatory net leverage, net of unrestricted cash and net unsettled transactions, was 1.15x at quarter end, down from 1.26x as of September 30, well within our long-term leverage target of 0.90x to 1.25x. This reflects our intentional positioning to support origination activity and planned asset transfers to our Jocassee joint venture. Our capital structure continued to strengthen in 2025 as we repaid $112,500,000 of private placement unsecured notes, completed the annual extension of our corporate revolver in November, and further diversified our funding sources with the issuance of $300,000,000 senior unsecured notes in September. More broadly, our funding profile remains strong and thoughtfully aligned with our disciplined approach to asset-liability management. Our liabilities are well diversified by duration, seniority, and structure, with an industry-leading share of unsecured debt in our capital structure at roughly 84% of our outstanding debt balances. Liquidity remains robust and well diversified, supported by undrawn capacity on our revolving credit facility and incremental flexibility from our joint venture with Jocassee. Near-term maturities remain limited, and our continued access to a broad set of funding positions us to proactively navigate refinancing needs while maintaining balance sheet strength. Subsequent to quarter end, on February 26, we will fully repay $50,000,000 of private placement notes at par, including accrued and unpaid interest. Now on to capital allocation. Our net investment income for the quarter of $0.27 per share covered our regular dividend of $0.26 per share. As previously mentioned, the Board continued its strong focus on returning capital to shareholders and declared a first quarter dividend of $0.26 per share, representing a 9.4% distribution yield on NAV. Looking ahead to 2026, we expect the declining base rates reflected in the trajectory of the forward SOFR curve will likely put downward pressure on net investment income, and as a result, our regular dividend may decrease from current levels. While our earnings profile remains resilient and benefits from our industry-leading 8.25% hurdle rate, low base rates naturally reduce the income generated on our floating rate portfolio. Even so, our diversified portfolio of senior secured investments, well-laddered capital structure, and disciplined underwriting continue to provide meaningful support to earnings. In addition, we currently hold spillover income of approximately $0.80 per share, representing about three quarters of our regular dividend and offering flexibility as rates normalize. Taken together, although a lower regular dividend in 2026 is possible given the rate backdrop, the durability of our earnings and the strength of our balance sheet positions us well to navigate this transition and continue delivering attractive risk-adjusted returns. Share repurchase activity continued during the year and contributed $0.02 per share to NAV. We repurchased over 450,000 shares in the fourth quarter for a total of over 700,000 shares for 2025. In addition, the Board authorized a new $30,000,000 share repurchase plan for 2026, underscoring our commitment to enhancing shareholder value. Stepping back, 2025 was a year of steady earnings, strong liquidity, and active portfolio rotation. Despite lower base rates, we continue to produce durable NII, maintain solid credit performance, and execute on our balanced approach to capital allocation, including consistent dividends and meaningful share repurchases. As we look ahead to 2026, we remain confident in the resilience of the portfolio and the strength of our platform. We are well positioned to continue delivering attractive risk-adjusted returns for our shareholders. With that, I will turn the call back to the operator for questions. Operator: Thank you. We will now be conducting a question-and-answer session. Our first question today is coming from Finian O’Shea from Wells Fargo Securities. Your line is now live. Finian Patrick O’Shea: Hey, everyone. Good morning. I will start with, I guess, Tom, some interesting opening remarks on initiatives—anything you are—you find yourself working on in terms of the accelerating existing initiatives part? And then also on the new ones, to improve ROE as you outlined—any sort of heavy lifting or big changes we might anticipate there? Tom McDonald: Yes. Thanks, Fin. So yes, a number of initiatives that we have undertaken here. I think in part, really, they are a continuation of what the team has already done. So as you know, we have got many assets on the balance sheet, legacy assets that have come over from some of the integration of the other companies we have acquired. So my focus has been really on trying to accelerate exits of those. Many of those, as you know, do not earn interest. So as we can redeploy some of those proceeds into interest-earning assets and accelerate our exit from those, obviously, that is an immediate enhancement for ROE. So that has been a big focus of mine. I think within the CSA, another area where we have tried to make an effort to wind down the assets there to the extent that we can. We know that the CSA has clearly been a story for us for quite some time. I think it has been very beneficial for shareholders in protecting them from losses, but that thing is beginning to grow in size. And so as you know, earlier this year, we did terminate one of those. And so while we cannot guarantee anything, it is our effort—going to be a strong effort of ours as a team—to make sure we address that in a timely manner and again to try to have some sort of an event around that where we could potentially realize proceeds there and again redeploy those into interest-earning assets. Along the same lines, we continue to wind down some of the JVs that—some of them have been problematic for us. We are focused on Jocassee, obviously, as a JV that has worked to our benefit. We continue to believe that is actually a great partnership and look to continue to potentially expand that one as well. So those are a couple of the initiatives. I would say initiatives we do not have to take, but exist, that I think are going to be very shareholder-friendly, ROE-friendly, are going to be the hurdle rate, as you know, is quite high relative to our peers. And I think as base rates come down, that is going to be an immediate benefit to our earnings and ROE. So those are a couple of the initial ones. I would also like to point out, as you all know, I have been here at Barings for twenty-plus years. There are just many other parts of Barings, other private asset things that we can consider. Clearly, our core is always going to be GPF in this strategy, but there are a number of things I think that we can explore that we have expertise in across the platform at Barings. And so I think that we will bring some of those to bear as potential investment opportunities as we continue to look to enhance ROE and to shareholders. Finian Patrick O’Shea: Okay. A lot there. Yes. Interesting on expanding Jocassee. Would that look any different? Because we have had some discussions with investors, and there is a view that you sort of do not get enough of the pie there. You are—is it something like 9% of the equity, and the partner also gets the equity-like return. It is not a preferred return. And it looks like something that could be better. That is not to say it is bad. It is doing what it is supposed to do at mid-teens, but it looks like the person you want to be is the account that gets that for free. So is there a way that this might tilt more return toward BDC shareholders? Tom McDonald: Yes. No, I think that—I do not know that we increase the percentage ownership, but I certainly think we can increase our investment there in direct activity down there. So—and therefore, increase absolute dollars back in—in sort of form of the dividend. So as we consolidate the other JVs and wind those down, and they are virtually at this point wound down, I think we redirect investment into that entity. And again, we share all the same risk at the BDC level as we do down at Jocassee, and you will get the benefit of the leverage down there and the enhanced return to shareholders. So I think that will be a focus as we move forward. And I think it has been very successful for us over time. And we continue to believe it will be. Finian Patrick O’Shea: Appreciate that. Thanks. I will do one final sort of market question. I am not sure if the esteemed Joseph Mazzoli is microphone-eligible, but a lot of news in the non-traded BDC market. It feels like the ground is shaking again this week. Anything you all are seeing or feeling on the ground of private retail investor sort of reluctance or hesitation or jitters on that sort of product format? Tom McDonald: Yes. So Joe is not mic’d up, but I will certainly take that. We are working hand in hand on that as a team as well. And so—so obviously, the headlines have not been our friends really for four months now, and clearly news this week is not helping on that front at all. So for us, it is up to us to really reach out to investors and be a little more front-footed as we address some of the issues in the market. And I think we have done a good job with that. Our flows there have been good. We have not seen any material degradation in the pace of flows relative to what we saw last year. So we continue to believe that that is the case moving forward in the first couple of months of this year. I guess everybody will see it at the end of the first quarter here on what redemptions might look like. But as of now, we are just sort of fighting the battle of the headlines, and we do believe that that is what it is. And so, you know, I think everybody here is knowledgeable about the space and truly understands private credit, understands that it is a very viable—and I think we are in a good position there, but it is on us really to get that message out and to make sure that we alleviate investor concerns on that front. Elizabeth A. Murray: Thanks, Tom. Tom McDonald: Welcome. Operator: Thank you. Our next question today is coming from Casey Alexander from Compass Point. Your line is now live. Casey Alexander: Yes, morning. And Matt, I appreciate your comments trying to bring some relative perspective to the software market. I do have a follow-up question to that that I am actually going to direct to Tom because, Tom, you have a long history in the liquid credit markets. And an issue that you know investors continue to raise and would like to hear some commentary on is that in the liquid credit markets, the average price for a software loan is actually trading, in recent reports, around 90. And so I would like to hear how much you think that matters and how much you think that influences Barings and the third-party independent valuation firms when they go to mark the books at the end of the first quarter. Is that a relevant comp? Does it come into it? How much does it influence it? And what should investors expect? Tom McDonald: Yes, that is a great question. So I believe that in the broadly syndicated loan space, the predominant player there are CLOs. And CLOs are very ratings-sensitive. They are also somewhat price-sensitive. But the reality is there has just been so much noise around it that I think people are just sort of hitting the sell button where they can. In a $2,000,000–$3,000,000 position, you have four or five people doing that—immediately you are going to see a two- to three-point backup in that loan. It will be a perfectly good credit. There will be no issues with it. Reasonable leverage, good cash flow. The businesses, in our opinion, are good. We have got a great analyst that covers that up there. So I think that a lot of that has to do with, not necessarily forced selling, but repositioning ahead of potential downgrades. I do not even see that really as something that is coming in the near term. We are going to have to see multiple quarters of results to see if some of the negative headlines come to fruition. Our personal belief is that it does not happen. The way that we across the Barings platform underwrite software is the recurring nature. It has got to be sort of vertically integrated enterprise value stuff. It is sort of really integral to companies’ core operations. And so where we are invested is in companies like that. So unfortunately, the headlines just force people into that sort of sell mode—sell first and sort of ask questions later—especially if it is only a $2,000,000 to $3,000,000 position, as many CLOs sort of have. And then so that then leads to who is going to buy that. And so with all the headlines, folks do not necessarily want to back up the truck on names like that, that are trading at a two- or three- or four-point discount. It just does not really make sense from a three-year DM perspective that they would look at on buying. And then also just increasing software exposure becomes more of a story that managers have to tell their investor base. So with that, you get the price gap when you see sellers move in like that. And again, not based on fundamentals, in my opinion, because it just does not warrant that. So how does that translate into our space? I do not know necessarily that it does, because these are broadly syndicated loans—again, they are liquid, but only to a certain point and to a certain depth. And then you begin to see prints that do not make sense. So I do not know how that is going to translate into valuation. You know, again, with our platform and the way that we look at it, you know, we do not see any need at all and do not view there to be any reason for us on our software exposure to be making any marks down associated with that. So we feel pretty good about our exposure. There will clearly be a knock-on effect from that. It is the topic of the hour, if you will, and what is going on in the space. But again, we believe that it is overblown, and people are just reacting to headlines, and it is our job to get in front of that with our investors and make sure that they understand the stability of the underlying credits in our portfolio, particularly as it relates to software. Casey Alexander: Well, that is a great answer. Thank you for that. My follow-on would be, in the past, when the liquid credit markets have offered a better risk-adjusted rate of return than the directly originated markets have, Barings has been willing to step into that market and try to take advantage of it to create, you know, some positive NAV accretion as some of those opportunities present themselves. Is that something that you are watching, thinking about? Is that a possibility at some point down the road if the mismatch between the liquid credit markets and the directly originated private credit markets gets too wide? Tom McDonald: Yes. Yes. Absolutely. We would consider that. We do a lot of work with the high yield team. I obviously came from that group, and so a lot of respect for the team up there. And so they do a lot of work around this, and we will step into it where we think there is opportunity there. And so that is something that is clearly on our screen. And, you know, the way we approach BSLs, we will be very tactical about it. And so I do think there is an opportunity there as we need to see some of this air pocket in some of the names or if there is a general sell-off in BSLs. You know, we do know what sort of the top picks up there are. And so you can move in there, take very little credit risk, and just take advantage of the volatility. And so considering those names. And so you could see us potentially do that. It is a strategy that we are considering as we see that spacing or, you know, see the market evolve in terms of pricing there. Thank you for taking my questions. Casey Alexander: All right. Thank you. Operator: Thank you. Our next question today is coming from Robert Dodd from Raymond James. Your line is now live. Hi, good morning, everyone. Congrats on the quarter. You are one of the few green names on my screen today. On the two kind of like strategic initiatives. I mean, you talked about ideally liking to crystallize the Sierra CSA as well. But I mean, where would you like—if that—if you did, right, in the not too distant future, what are the areas that you would like to put that cap—I mean, obviously, you are talking about, you know, putting more into Jocassee. That is an equity—strategic equity—effectively, you know, Eclipse and Rocade have been great, but they do up as equity. They are income producing. Very different thing from what normal equity is. I mean, how would you like to allocate incremental capital across the different types of strategies you have done between straight lending, some strategic equity? I mean, what is kind of the vision for the mix over the next, you know, couple of years, so to speak? Tom McDonald: Yes. So I mean, again, across the platform at Barings, you know, we have got great origination everywhere. I think we have leaned into sort of our capital—the complexity piece of private credit—and got excellent returns there. You referenced Rocade and Eclipse; those are two. We continue to work with the group there. I am actually on that investment committee as well. And so there are some really interesting risk-adjusted return investment opportunities on that platform that we will continue to do. I think that is definitely one area we will look to do that. As you know, I am a big believer in diversification in credit. So as more opportunities come there, I think you could see us diversify holdings in some of those names that have the complexity premium and very interesting opportunities there that come at 200–300 basis points wider on spread than what you can get right now in private credit. So that would be sort of one area of focus. As well, across the platform, sort of the asset-based lending opportunities, I think, that we may have as well could be interesting, as well as being tactical, right, because we see more volatility in the space. Clearly, the BSL piece would be an area where we could see some interesting opportunities. I think BB CLOs is an opportunity for us. So I think what you will see us do is be just a little more tactical in areas like that. And then again, always focused on the core of our GPF assets. But I think looking at a number of the origination platforms here on the private credit side at Barings, there is just a lot of opportunity for us—so we will continually evaluate where those stack up relative to GPF spreads and opportunities there. So there is a lot of choices we can make along that. And so that is part of my focus—one of the strategic initiatives, again, is to utilize the entire Barings origination platform to find the best risk-adjusted return opportunities and put them to work here. Robert Dodd: Got it. Got it. Thank you. And then flipping to software, if I can. I mean, the average liquid bid is 90, but that is not a uniformed number, right? I mean, you know, it is—it is—you know, there is a lot trading higher than that. There are a few trading much lower than that, for example. When you look at your book, you know, the 14% that you said is software. I mean, obviously, you have avoided the types of—or tried to avoid the types of—business that are particularly vulnerable to AI displacement, and those are the ones that are trading with the—the ones that the market is concerned about. The ones in the liquid market—those are the ones that trade in the big discounts. How much exposure, if any, do you have to the same kind of businesses the liquid market has really, you know, taken out behind the woodshed, so to speak? I mean, obviously, I think it is low. You have been avoiding it, but do you have any? Tom McDonald: Yes. No. We do not. We do not have any that are—you are talking about the liquid loans that are trading now in the low 80s. Those are the ones that are more highly levered names that are clearly—the ability for AI to disrupt some of those models is much more evident. And I think those are the ones. So there has been massive dispersion. So good high-quality names in software in syndicated are probably in the mid-90s at this point to 98 and just trading because they are associated with software. And then the ones that actually have real credit concerns, as you mentioned, are in the mid-80s and even lower. And so those are the ones that have been legacy investments for quite some time and have been sitting around four or five years. Many of them have already faced or are facing LME-type events. And so then you will see the trading price really gap down significantly. So we do not have exposure to those on the GPF platform. We have—AI has not come along as something that is a risk that recently we identified. It has been something that has been a core part of the underwriting for the team going back years now. So I think that is always something that has been considered, and we just do not have anything on our radar screens that would indicate that we have issues like that, where AI is an immediate disruptor and therefore will have future impacts on quarterly earnings, EBITDA, etcetera. So we feel pretty good about our investments in that space within the 14% exposure we have there. Robert Dodd: Got it. One more if I can, to make Elizabeth’s life maybe more awful. Any consideration to shift throughout this categorization to GICS? I mean, GICS is increasingly becoming standard. Most BDCs use it. The fact that you do not does make it harder to compare between BBDC and, you know, most of the—universes—the liquid loan markets even disclose in GICS categories now. I mean, so yes, Moody’s has been your industry categorization for a long time, but would there be value in your view to actually switching to what is becoming more the industry standard? Elizabeth A. Murray: Yes, Robert. Thanks for the question. And it is something that we have been talking about internally. Again, especially with the software piece, right? I know Matt kind of alluded to it in his commentary. So it is something that we are constantly looking at and discussing, especially from an SEC reporting perspective. But thank you for your question. Operator: Okay. Thank you. We have reached the end of our question-and-answer session. I would like to turn the floor back over for any further or closing comments. Tom McDonald: Okay. Thank you, operator, and thank you to all who participated today. As I begin my tenure as CEO, I look forward to deepening our engagement with investors and advancing our strategic priorities with the full BDC leadership team. BBDC is strongly positioned for the future, and we remain focused on delivering consistent value for our shareholders. Thank you. Operator: Thank you. That does conclude today’s teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.