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Operator: Welcome to the Colliers International Fourth Quarter Year-end Investors Conference Call. Today's call is being recorded. Legal counsel requires us to advise that the discussion scheduled to take place today may contain forward-looking statements that involve known and unknown risks and uncertainties. Actual results may be materially different from any future results, performance or achievements contemplated in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements in the company's annual information form as filed in the Canadian Securities Administrators and the company's annual report on Form 40-F as filed with the U.S. Securities and Exchange Commission. As a reminder, today's call is being recorded. Today is February 13, 2026. And at this time, for opening remarks and introductions, I would like to turn the call over to the Global Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, sir. Jay Hennick: Thank you, operator, and good morning. I'm Jay Hennick, Chairman and Chief Executive Officer of Colliers. Joining me today is CFO, Christian Mayer. Our call is webcast and a call deck is available in the Investor Relations section of our website. 2025 is an exceptional year for Colliers, repeat, an exceptional year for Colliers, reflecting the strength of our diversified platform and our successful expansion into other high-quality recurring professional services. Today, more than 70% of our earnings come from these resilient businesses, approaching 75% once recent acquisitions are included. Our fourth quarter results were in line with expectation and were up nicely over last year, which itself was a very strong year-over-year performance. Last week, we achieved another milestone, agreeing to acquire Ayesa Engineering, a world-class business and a rare opportunity at this scale. This acquisition meaningfully expands our avenues for growth, strengthens our ability to scale organically, pursue further acquisitions and cross-sell engineering capabilities across our global client base. Once closed, Colliers Engineering will rank among the top 30 global engineering firms with expanded presence in Europe, Latin America and the Middle East. Operationally, in commercial real estate, we had another solid quarter. Capital markets continued its rebound, especially in the U.S. and leasing activity held steady with strength in both office and industrial. Demand for outsourcing solutions, including property management, valuation and other advisory also grew nicely as clients continue to look for trusted and experienced partners with global execution capabilities. Engineering delivered another strong year of growth with internal performance and meaningful contribution from acquisitions. Growth will accelerate even further once Ayesa joins the platform. Investment Management ended the year with over $108 billion in assets under management, reflecting deep investor confidence in our investment strategies across the entire Harrison Street Asset Management platform. Throughout the year, we continued investing in leadership, talent and innovation across the board, reinforcing the entrepreneurial culture that defines Colliers. Our partnership model remains a key competitive advantage with meaningful inside ownership across the board, keeping leaders fully aligned with our clients, our investors and our shareholders. We enter 2026 with strong momentum once again and a healthy pipeline. We expect another year of solid internal growth, ongoing contributions from recent acquisitions and a meaningful uplift once Ayesa closes. Over the past 5 years, despite challenging and often unpredictable conditions, Colliers doubled its size, delivering compound annual growth rates of more than 15%. And based on what we see today, we expect similar performance again in 2026. Our strategy is working. Our teams are performing, and we're extremely well positioned for future growth and value creation. Before I turn things over to Christian, a brief comment on AI, which is all the rage. At Colliers, we see AI as a productivity and growth enabler. It is helping us automate routine work, improve efficiency, expand margins, allowing our professionals to focus on higher-value advisory services that are complex and rely on judgment, expertise and trusted relationships. AI also strengthens our data advantage, combining our proprietary information with advanced capabilities through our partnership with Google Cloud and other third-party providers to deliver better insights and better execution for clients. Importantly, AI enhances rather than replaces our business across all 3 segments. judgment, accountability, qualifications and licensure as well as important client relationships remain central to how we operate. Put simply, it makes our professionals even better at what they do for our clients. While recent share price movements suggest AI near-term impact may be overhyped, we believe its long-term value is as an enabler and is truthfully meaningfully underappreciated as future potential for Colliers and its future. Let me now turn things over to Christian. Christian? Christian Mayer: Thank you, Jay, and good morning. Please note that the non-GAAP measures discussed on this call are defined in our press release and quarterly presentation. All revenue growth figures are presented in local currency terms. For the fourth quarter, we generated revenues of $1.6 billion, up 5% year-over-year with growth across all segments. Overall internal growth for the quarter was essentially flat and was impacted by a strong prior year comparison. On a full year basis, internal revenue growth was up a solid 5%. Adjusted EBITDA was $245 million for the quarter, up 6% over last year, in line with revenue growth. Fourth quarter Commercial Real Estate segment net revenue was up 7%. Capital Markets revenues increased 13%, led by strong activity and market share gains in the U.S., where we saw our investments in recruiting and multi-market connectivity driving continued market share growth in a recovering market, albeit slower than we all would like. Growth in EMEA and Asia Pacific was modest against a strong prior year comparative. Leasing revenues were up 3%, also led by the U.S. in the office and industrial asset classes, again versus a strong prior year comparative. Outsourcing grew 8% in the fourth quarter with our valuation practice driving the growth. Segment net margin was 15.8%, up 50 basis points year-over-year on operating leverage from higher transactional revenues. Our Engineering segment net revenue was up 8%, led by recent acquisitions. End market demand continues to be strong, especially in infrastructure, transportation and environmental consulting, offset by a temporary slowdown in certain project management operations in the quarter. The net margin was 12.4%, slightly lower than last year on lower overall productivity. Our revenue backlog is strong across the segment and provides excellent visibility for the year ahead. Investment Management net revenues increased 6%, driven by a recent acquisition. The net margin declined slightly to 42.5% as we continue to integrate our operations under the Harrison Street Asset Management brand. These strategic investments are crucial for strengthening our capital formation capabilities and unifying nonclient-facing functions. We expect these costs will continue to impact our margins through the first half of 2026. Our IM segment raised $2.1 billion in new capital commitments during the fourth quarter and $5.3 billion for the full year, in line with our expectations. Fundraising momentum was solid as we enter 2026 with several funds currently in the market, including our latest flagship infrastructure fund, which launched in December. Our fundraising target for 2026 is $6 billion to $9 billion as we accelerate the pace of attracting institutional and private wealth investors looking for differentiated alternative investment solutions. Year-end AUM, as Jay mentioned, was $108 billion, flat relative to September 30, with new capital raised offset by asset sales in older vintage funds and accompanying returns of capital to our LPs. As in the past, we anticipate our LPs will reinvest a significant portion of the returned capital into our new funds. Now turning to our balance sheet. Our leverage declined to 2x as of December 31, with the benefit of strong seasonal cash flows. The recently announced Ayesa acquisition will add approximately 0.7 turns of leverage on a pro forma basis. The USD 700 million equivalent purchase price will be funded from our revolving credit facility, which currently has over $1.1 billion of available capacity and will be euro-denominated, bearing interest at a very attractive rate of approximately 4%. As Jay noted, we are entering 2026 with strong momentum. Across our company, there's a tangible sense of optimism about our strategy, the investments we are making, the increasingly resilient profile of our revenues and the avenues for growth in each of our diversified segments. In that spirit, we are introducing our outlook for 2026 as follows: in commercial real estate, we are expecting low teens top line growth and a modest increase in net margin, predicated on a continuing recovery in Capital Markets. It's important to note that even with this growth, our capital markets activity will remain well below prior peaks. Our Engineering segment is expecting mid-single-digit internal growth and the impact of acquisitions, including Ayesa, resulting in total top line growth of over 25%. This growth is supported by a strong backlog and favorable trends in infrastructure, urbanization and energy transition, along with increasing data center demand. Investment Management net revenue growth is expected to be in the low teens, with growth led by higher management fees as fundraising continues to accelerate. Putting it all together, we're expecting mid-teens growth in all 3 of our key operating metrics. That concludes my prepared remarks. Operator, can you please open the line for questions? Operator: [Operator Instructions] Your first question comes from the line of Tony Paolone from JPMorgan. Anthony Paolone: I would like to start with engineering and just a bit on the organic growth there. As you roll that up, if I think about that business, I think about it being like an hourly rate, number of professionals and the number of hours worked. Can you talk about just like what's happening with some of those trends organically and where you're finding success or not and sort of those revenue synergies as you roll this up? Christian Mayer: Yes, Tony, I'll take that. As we mentioned, demand for our services is strong across all the end markets. In terms of the questions you're asking pricing and hours and things like that, we're seeing opportunities to increase pricing. There is strong demand for our services. We're getting nice increases from institutional, public sector and private sector clients. In terms of professionals, we're hiring. The market is still tight for qualified engineers, but we are growing our workforce to meet the demand. Our backlogs are strong, as I mentioned in my prepared remarks, and that is driving our utilization. We have business in infrastructure, power, transportation, property and building work with programmatic clients and distribution and retail. These activities are all going strong and will drive our hourly work and our ability to increase the utilization of our staff and our margins. Jay Hennick: Let me add, Tony, a couple of things that just maybe simplify some thoughts. Probably 60% of the Engineering business is what I would categorize as design which is design of all types of solutions, which is not hourly based, although we do manage our labor on an hourly basis, but it is not priced to clients on the basis of an hourly rate. The balance of the business is more, I would say, closer akin to project management. Once the design is complete and needs to be executed upon, it's closer to an hourly rate kind of structure. So we love that business because the design aspect allows us to generate higher margins, yet the hourly rate portion or the project management portion is something that is certain. It is long term. For example, we have some clients where the execution of the project may be 10 or 12 years where we're allocating x number of people for a long period of time to oversee the completion of the work. So it's a very interesting business opportunity for us. It's a very good business. And as Christian said, there's a shortage of engineers virtually everywhere in the world, which is driving up pricing. We'd like it to drive it up a little bit more, but it is driving up overall pricing because it's hard to get qualified engineers. So I thought I'd add that a little editorial. Anthony Paolone: No, that's really helpful because it kind of ties to the follow-up where I was going to go with just some of these concerns around AI and thinking about if the -- if everything gets more efficient and they could do more work quicker, does that have any implications on sort of the billable hours or just the TAM of revenue? Or are there just other ways to charge? I mean, just trying to think about how that could be disrupted by. Jay Hennick: Well, for sure, on the design piece of the business, automation of all kinds, including AI helps drive our margins up because our professionals can do the mundane, the menial tasks faster and get to the real value-add stuff. So we see some real advantages from that aspect of our business. Operator: Your next question comes from the line of Daryl Young from Stifel. Daryl Young: I wanted to start with a question just on capital allocation and specifically where the share price is today and your thoughts on buybacks or an SIB? Jay Hennick: I'd love to buy back stock right now. But we have lots in the pipe, including Ayesa, as you know. And we believe more behind that. So we're watching our capital carefully. It's very easy to do an equity offering and dilute shareholders, but that's never been our MO. We're in the business of creating long-term shareholder value. So buying back stock is not really in the -- as a corporate matter is not really in the plan. But on a personal level, it might be in the plan. Daryl Young: Okay. And then switching to Investment Management. Some of the integration cost pressures have gone on a little longer than I think I originally had expected. Is the scope of what you're doing there changing and evolving? Or maybe just a little bit more color on the continuation of those pressures. Jay Hennick: Well, we don't really see them as pressures, but it will continue again in '26. Christian will add a few little tidbits in a minute. But we're actually getting a little more ambitious on some of the initiatives as we bring everything together. And we're liking where we're coming out. So we're going to continue to do what we think is right in terms of creating a spectacular platform under a unified brand. Christian, do you want to add? Christian Mayer: Daryl, I'd just add that we have been messaging for some time that we're going to be incurring additional costs to integrate and bring together this business. And as I mentioned in my prepared remarks, which is consistent with what I've been saying previously, we do expect this to continue through the first half of 2026 until we sort of complete the work and realize some of the benefits of the work we've been doing. Operator: Your next question comes from the line of Erin Kyle from CIBC. Erin Kyle: I wanted to start maybe on the macro here. And if you can just give us some more detail on what you're seeing from a macro perspective as it relates to the capital markets pipeline here? And then maybe just elaborate a little bit on what's baked into that 2026 guide and whether it depends on some additional rate cuts here. Christian Mayer: Yes. Erin, we're not counting on rate cuts in terms of our outlook for capital markets. Capital markets is benefiting from a pent-up supply or pent-up demand and pent-up supply of transactions. As you know, transaction activity has been slow for a number of years, and there's a lot of people in the market that want and need to transact, and that's starting to turn into revenues for Colliers. So that's really what we're seeing. We had strength in 2025 in capital markets, and we expect that to continue in 2026 with more transactions happening at all price points across all markets. '25 was led by the U.S. I think the U.S. will continue to be very strong. And hopefully, volumes will pick up in EMEA and Asia Pac, which have been a little bit slower. Erin Kyle: Could you just remind us what the U.S. exposure is specifically in Capital Markets as maybe a percentage of that business? Christian Mayer: About 50%. Erin Kyle: Okay. That's helpful. And then I just wanted to clarify on the Engineering segment. What was the internal growth in the quarter and for the year? I don't think I saw it in the slides this quarter. Christian Mayer: Yes. Engineering internal growth was roughly flat on the quarter and 5% on a full year basis. Operator: Your next question comes from the line of Stephen MacLeod from BMO Capital Markets. Stephen MacLeod: Lots of great color so far. I just wanted to ask just a little bit about the sort of AI trade we're seeing going on in the marketplace right now, the stock marketplace that is. Jay, you referenced some of it in your prepared remarks, but I was just curious if you could give maybe a few examples of how you intend to leverage AI in the future. Maybe you gave a little bit of color there. And then I guess, separately from that, where you might see some potential risks to the business, if any? Jay Hennick: So let me just sort of start with -- we don't buy and sell commodity real estate or lease commodity real estate. I heard somebody musing yesterday about selling condos. That's very different than what we do. Our professionals are handling high-value complex transactions, multiple variables. They need their judgment, they need experience, they need relationships. So AI is not going to impact their business other than to make them better at what they do. And as I said, we have -- there's sort of 3 buckets there that are interesting and valuable to our professionals. One is our own data sets, and we have significant data sets that we've accumulated over many, many years, market by market, category by category, real estate asset type by real estate asset type. And all of that is including valuation information, including real estate, property management data sets. All of those are valuable in our computer systems, et cetera. We've also entered into this partnership with Google Cloud, who have the biggest real estate, it's an exclusive partnership. We're the only ones in the industry. And they have unique and probably the most real estate -- commercial real estate data out there. And so we're leveraging that as well as their capability at doing what they do, which I think is sort of top drawer. And our existing software suppliers are also moving in the way of AI in a rapid format. So when you bring all of those things together and you integrate that -- and by the way, this is going to be a long-term process. This is not going to be turned on this year and you're in business. This is going to be a 2-, 3-year process to maximize the value. We -- we're trying to be very pragmatic about it. We're focusing on higher-value output first. But there's all of that data that we will be able to arm our professionals with that we will be able to allow them to advise clients better as they make decisions. The second piece, as I talked about, is how do we get rid of the redundancy, increase the efficiency. There's so much that has over the past. And this is not this year, and it's not because of the fancy phrase called AI. We've been automating processes for years now and in areas like valuation and other areas where there's just a lot of mundane tasks. What AI is allowing us to do is accelerate that process. And we think that we'll become way more efficient. We'll be able to reduce our costs, not just our IT costs, but also labor across the world, and that's going to only drive increased margins. So we're quite excited about both of them. Our CapEx this year around IT is bigger than it's ever been before in terms of our history by a meaningful amount. Our teams are centralized and excited about the possibilities. And what we have to do as good stewards of capital is make sure that they're staying focused on the biggest opportunities for us rather than shotgun approach. So we're quite excited about all of this. But let's just put it into the -- this is just what we do for a living. This is what we do to enhance our business. And there are so many other areas we're going to continue to grow our business. This is just going to make us better. It's going to increase our moat even more. It's going to create more value for our professionals. And all of that just leads to a better, stronger long-term business called Colliers. Stephen MacLeod: Yes. That's great color, Jay. And it sounds like it's going to be a net benefit, absolutely. I just appreciate the color just given the backdrop. So that's why I asked. Just maybe one more question, more surgical, I suppose. But just on the Investment Management business, just as you work through the investments you're making this year and coming at the other end, better positioned to capital formation and things like that. Christian, could you just talk a little bit about sort of where you see margins going once the investment into the unified platform has been made? Christian Mayer: Yes. You're going to see margins decline in 2026 to the high 30s net margin area. And then in 2027, we're expecting to return to our historical average margin in the mid-40s. So that's essentially with fundraising, as we outlined, starting to accelerate and with these integration efforts behind us. Operator: Your next question comes from the line of Julien Blouin from Goldman Sachs. Julien Blouin: So Jay, it sounds like we should be thinking of the Ayesa acquisition kind of similarly to Englobe and that it sort of gives you this foothold in Europe and elsewhere from which you can grow and sort of roll up other businesses. I guess as you think about identifying those next sort of tuck-in targets, is it primarily on the basis of the geographies you want to be in? Or is it the additional capabilities that you're most interested in adding to the platform? Jay Hennick: Well, the simple answer is both, obviously. But we have capability across the platforms everywhere, stronger in some places and weaker in others. But let me zero in on Ayesa for a second. The beauty of that deal for us, when you cut through it all is they were founded in '64 by the same family. The management team there is absolutely spectacular. They have spent since 1964, building sizable platforms in Spain, Mexico, Europe, the Middle East, markets where we did not have a presence in. And so yes, looking at it like Englobe is a great example, except in the case of Englobe, as we consolidate the industry, we're doing it only in Canada. Now we have the opportunity to do the same thing in multiple markets. And so our M&A teams here and at Ayesa are very excited about what they can do with their existing platforms, which themselves are extremely profitable with strong management teams already in place. So we see lots of future growth coming there. And as we look -- as we continue to look at that business, we see other areas where we can do similar things. And again, I want to emphasize, which didn't come out in my initial comments. Our partnership philosophy is making a huge difference. We're a permanent capital source. We're partners with the operators that run these businesses every day. Yes, we have significant equity stakes in the business. Yes, we have -- we drive all of their growth initiatives, but they finally have a partner that can help them execute on plans, help them integrate acquisitions, sort of follow some of the things that we've done for the past 30 years. And there are other potential targets out there that could continue to accelerate our growth in engineering. So it's not over now, but it's an area that we alluded to on previous conference calls over the past 12 or 18 months, but I think there's more opportunity to be pursued. And there's similar opportunities in our other segments as well. So our philosophy of 3 segments, each of them high-value, recurring professional services, high cash flow generation is working and has worked for 30 years. So we have a way of operating, which we think is unique. We think our -- we differentiate ourselves in the marketplace when it comes to being an ideal partner for some of these great businesses. And our job, I think, in many ways is to just find that great business with the great management teams that are hungry to take the business to the next level. And that's what we focus on so much when it comes to M&A. Julien Blouin: That's really helpful, really helpful context. And then, Christian, I think you referenced a temporary slowdown in certain project management operations in the quarter and lower overall productivity is, I think, how you stated it. Can you maybe elaborate on what drove that? And sort of what gives you confidence that these pressures won't recur as we move into 2026? Christian Mayer: Yes. We had lower activity levels in project management operations in our legacy local project management business in EMEA and Asia Pac, and we think that was a temporary onetime thing. So comfortable that is going to be behind us. And then as it relates to margin, the Engineering business does have a lot of hourly labor attached to it. Utilization is extremely important. And when you're in the holiday season, that sort of thing, it does impact the utilization and productivity of staff. So it's -- I mean, it's really a very minor change in margin, not something to be concerned about as we look ahead. Operator: Your next question comes from the line of Himanshu Gupta from Scotiabank. Himanshu Gupta: So on Commercial Real Estate, I mean, you have low teens growth expectation in 2026. Can you break it down between Capital Markets and Leasing businesses? Christian Mayer: Sure. So the segment, as you said, is low teens revenue expectation for growth. In terms of Capital Markets, we would be looking at high teens, which is a slight acceleration from what we had in 2025, but we have a lot of visibility and confidence in the sort of return of transaction velocity there. Leasing would be something in the mid- to high single-digit area in terms of growth year-over-year. So really, the growth you're seeing in Commercial Real Estate is focused around Capital Markets. Himanshu Gupta: Got it. And then on leasing specifically, can you comment on industrial and office leasing expectation? I mean, is there any outlier within like regional breakdown or within asset class for leasing? Christian Mayer: You hit the nail on the head there, Himanshu. Office and industrial were strong in the fourth quarter in the U.S. in particular. I think those classes are going to continue to be relevant in terms of they are our largest asset class that we provide service in. So those 2 asset classes will continue to drive growth as well as others like data center, in particular, would stand out there. So it's going to be based on those areas. Himanshu Gupta: Got it. And then switching gears, fundraising target of, I think, $6 billion to $9 billion this year. What platforms are you expecting this level of fundraising? I mean, can you unpack this? Like how big is the infrastructure fund? What other funds will contribute to that level of fundraising? Christian Mayer: Well, as I mentioned, we had the first close on our new vintage infrastructure fund in December of 2025. So that is a big driver of fundraising. The alternative fund at Harrison Street Fund X had its first close last year. earlier in the year. So additional activity on that fundraise. And then we've got a number of products in the market, existing open-ended vehicles and as well as new products that we're introducing to the market. So a lot of different areas of focus and credit as well is another vertical. So it's going to be broad-based. Himanshu Gupta: Got it. Very helpful. And my last question is, can you speak to the performance of funds within your IM segment here last year? Was the performance of these funds in line with your expectations and how they are helping you to do more fundraising? Christian Mayer: Fund performance has been strong, Himanshu. So we continuously rank in the top quartile for fund performance across the alts, credit and infrastructure space. In fact, our flagship open-ended vehicle, the Harris Street Core Fund exceeded the ODCE Index by 100 basis points in 2025, which the team is very proud of. So doing well. Operator: Your next question comes from the line of Jimmy Shan from RBC Capital Markets. Khing Shan: So Christian, just on the leverage, you're going to be on a pro forma basis at 2.7x. Is it your plan to get back to the 2x leverage where you've historically been? And how do you plan to do so? Christian Mayer: Yes. Jimmy, that's the plan. That's always the plan when we lever up for a larger acquisition. We've done so in the past with Harrison Street, with Englobe and now with Ayesa. So the plan is to generate strong operating cash flow again in '26 like we did in 2025 to grow our EBITDA organically. The combination of organic EBITDA growth and cash flow generation is a powerful delevering effect, and that's what we expect to happen here as we progress toward the end of the year. Khing Shan: And then my second question, I'm sorry to go back to this AI, Jay, but it seems, I guess, that your view is that not only do you not think AI will be a disruptor and it's actually going to be a margin enhancer. Is that a fair interpretation? Or am I going too far, is number one? And then do you see at all any possibility across the various services that you provide that you can actually see some fee pressure as a result of AI? Jay Hennick: So I don't see any fee pressure at all. I see the exact opposite than that. I think it's a disruptor, not to our business, but to our mindset. It is -- the great thing about this is it has opened up everybody's eyes to accelerate automation and integration across the organization faster than we otherwise would have, I think. The -- internally, and we're a very low CapEx business. We generate huge cash flows in our business. We're allocating a lot more capital to IT because of all this all this new focus on AI. And as we get deeper and deeper into this, we realize more potential opportunities for the way we do business and the information we can provide to our professionals. So I'd say we're quite excited about it. But I think it's only additive to our business long term. I can't see any area where it's not. If you were selling commodities, cookies, something like that, yes, okay, great, you can use AI. But these are complex transactions. They need licenses in many cases across the board. You need personal relationships. You need all the things I've talked about. And if we can make our professionals better and have more information at their fingertips, they're going to be able to execute transactions faster with more information to the buyers and sellers and leasing, which is a big component of our business is even more complicated in many respects given the types of leasing that we're now doing, data centers and other very complex transactions. So I see it as a benefit, an enabler is probably the best word I could use. Khing Shan: I have one more quick one on Ayesa. The EBITDA for 2026 is around $63 million, $64 million. Is that what's embedded in your '26 guidance? Jay Hennick: 7 months of that, yes. Khing Shan: 7 months of the 2026 EBITDA. Jay Hennick: Yes. Operator: Your next question comes from the line of Stephen Sheldon from William Blair. Matthew Filek: You have Matt Filek on for Stephen Sheldon. I wanted to start with one on Ayesa. It looks like that business has historically grown faster and operated at higher margins than your broader engineering platform. So I was just wondering if you can give us a rough sense of your growth expectations for that looking ahead and talk about what drives that stronger margin profile. Christian Mayer: Well, the growth in that business, we referenced a 13% CAGR over the last 10 years. Obviously, the business now is at a scale where it becomes more difficult to grow organically at those kinds of rates. Certainly, we expect that high single digits are achievable organically going forward. And that's what we're focused on. In terms of its margin profile, it provides high-value services, design, site supervision, project management consulting on very sophisticated products and projects in high-demand end markets. And these are public sector, public transit, water, energy, energy transition end markets that can command higher margins. The team at Ayesa have said, for example, they're big in desalinization in the Middle East. And obviously, that's a very profitable component of their business. They've got expertise in water, in Spain, in Mexico, and they've capitalized on it in the Middle East. And I think the team has extremely disciplined pricing and disciplined execution on their projects. And they've demonstrated that over the last decade as well and being able to consistently deliver superior margins on their business. Matthew Filek: Got it. I appreciate that additional detail. And then I just had one on producer headcount in capital markets and leasing. In the event transactional volumes were to have a more meaningful recovery in 2026 than you've assumed in your guidance, do you feel appropriately staffed to capture that upside? Or should we expect some incremental hiring? Jay Hennick: Well, we're very active in recruiting across the board and have been over the past number of years. So we feel like we have what we need, but we're quite active in specific areas or specific specialties, white space where we can capitalize even more. Christian Mayer: And I think the productivity of our existing producers is not at peak levels today. So they have capacity to generate more revenues with the same professional headcount. Operator: Your next question comes from the line of Frederic Bastien from Raymond James. Frederic Bastien: Just want to go back to Ayesa. I hope I said it correctly. But obviously, limited very, I guess, no overlap whatsoever from a geographical standpoint with the business and it sounds like they have niche expertise that you can probably leverage to your other operations, specifically in water. Was that kind of behind the underwriting assumptions like that over -- beyond the 12 months of the first -- the acquisition period, you're going to be able to cross-sell a lot of the Ayesa services to your other regions? Christian Mayer: Yes. Frederic, the transferability of skills is something that we do look at whenever we make an acquisition. And in the case of Englobe, they happen to have water expertise in terms of irrigation, drinking water, sanitation in Canada. And those skills are transferable and being transferred to our U.S. business to help grow that part of their operations. So certainly, with Ayesa's capabilities in desalinization and other areas in the water space, that will be something we'll look at. Frederic Bastien: Okay. Cool. That's great to hear. And then I don't know if you mentioned it, Christian, but did you mention how much you ended up fundraising in 2025? Christian Mayer: Yes, it was in my prepared remarks, let me turn back $5.3 billion on the full year, I believe. Operator: Our last question comes from the line of Maxim Sytchev from National Bank Financial. Maxim Sytchev: Christian, I was wondering if it's possible to get a clarification on organic growth for engineering. Was it a gross or net basis, number one? And then I guess if you can provide any color in terms of how the year started to trend, I presume we should be anticipating a recovery there. Christian Mayer: The first part of your question, the internal growth was on a net basis, net revenue basis. And I think your second part of your question was about growth trajectory into '26. Maxim Sytchev: Yes. Christian Mayer: Yes. I mean, as I said in my prepared remarks, we have strong backlogs supporting our revenue outlook for the year. And we have mid-single-digit internal growth as a result as our expectation. We also have the impact of 3 tuck-in acquisitions that we did just in the last couple of months as well as the annualization of a few acquisitions last year. So that, together with the Ayesa transaction, which we expect will close in Q2, brings us to the overall revenue growth outlook of 25-plus percent. Maxim Sytchev: Okay. Makes sense. And then just one quick clarification around Harrison Street. So the dip in the margin to kind of high 30s. So what's driving that exactly? Is it sort of system integration, personnel? Can you maybe just explain a little bit from an operational perspective and how that will -- that trajectory will rebound on a prospective basis? Christian Mayer: Yes. We're conducting a lot of work on our IT systems integration, bringing the platform together. So a number of different systems projects underway to make that happen, a number of headcount additions, which have occurred over the last 6 months and will occur going forward and then also some planned efficiencies that we are working through today, which will yield cost savings -- run rate cost savings once we hit the latter part of the year. Operator: There are no further questions at this time. I will now turn the call over back to Mr. Jay Hennick. Please continue. Jay Hennick: Thank you, everyone, for participating in our fourth quarter and full year conference call, and we look forward to the next one. Thank you. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and have a nice day.
Marlon Samuel: Good morning, and welcome to the Enbridge Fourth Quarter 2025 Financial Results Conference Call. My name is Marlon Samuel, and I am the Vice President of Investor Relations and Insurance. Joining me this morning are Greg Ebel, President and CEO; Pat Murray, EVP and Chief Financial Officer and the heads of each of our business units. Colin Gruending, Liquid Pipelines; Matthew Akman, Gas Transmission; Michele Harradence, Gas Distribution and Storage; and Allen Capps, Renewable Power. [Operator Instructions] Please note, this conference call is being recorded. As per usual, this call is being webcast, and I encourage those listening to follow along with the supporting slides. We will try to keep the call to roughly 1 hour. And in order to answer as many questions as possible, we will be limiting questions to one plus a single follow-up if necessary. We will be prioritizing questions from the investment community. So if you are a member of the media, please direct your inquiries to our communications team, who will be happy to respond. As always, our Investor Relations team will be available following the call for any follow-up questions. On to Slide 2, where I will remind you that we will be referring to forward-looking information on today's presentation and Q&A. By its nature, this information contains forecast assumptions and expectations about future outcomes, which are subject to the risks and uncertainties outlined here and discussed more fully in our public disclosure filings. We will also be referring to non-GAAP measures summarized below. With that, I will turn it over to Greg Ebel. Gregory Ebel: Thank you, Marlon, and good morning, everyone, and thanks for joining for our Q4 call. First off, let me welcome Matthew Akman in his new role as EVP and President of Gas Transmission and Allen Capps to his new role as Head of Corporate Strategy and President of Power and introduce Marlon Samuel as the new VP of Investor Relations. Their backgrounds and experience have positioned them exceptionally well for success in these roles, and I know they look forward to working with you. Today, we'll recap another successful year, followed by an update on our opportunity set through the end of the decade before providing updates on our 4 businesses since our last quarterly earnings call. Pat will then walk through our record financial results, capital allocation priorities and give a refreshed view of our annual investment capacity. Lastly, I'll end the presentation with a few reminders on Enbridge's first choice value proposition before we open the line for any questions from the investment community. We had another great year of record financial results, exceeding the midpoint of our 2025 guidance for both EBITDA and DCF per share, marking the 20th year of achieving or exceeding our annual financial guidance. As we announced in December, we have now increased our dividend for 31 consecutive years, extending our status as one of the few dividend aristocrats in our sector. Our debt-to-EBITDA remains within our leverage range of 4.5 to 5x, maintaining our strong investment-grade credit profile while growing our investment capacity. From a growth and execution standpoint, we sanctioned $14 billion of capital across all businesses and placed $5 billion of assets into service during the past year. Our growth backlog has grown 35% since our Investor Day last March, underlying the ongoing and extended business and earnings growth opportunity we have before us. We continue to develop our relationship with our Whistler JV partners, acquiring a 10% interest in the operating Matterhorn Express pipeline. We also announced a historic investment in our West Coast pipeline system by 38 First Nations groups, allowing Enbridge to create alignment with indigenous communities and helping to advance economic reconciliation while actively recycling capital. Operationally, our assets remain highly utilized during the quarter with the mainline transporting approximately 3.1 million barrels per day on average. Our gas systems were also highly utilized in the quarter. And in recent weeks, we saw a number of all-time peak demand days for both our Gas Transmission and Gas Distribution and storage assets. To provide a couple of impressive stats, Texas Eastern recently hit new peak records, transporting over 15 Bcf per day in January. And in our utilities, Enbridge Gas Ohio hit its third highest throughput day in the company's 128-year history. And in the severely energy infrastructure short in New England, our Algonquin pipeline saw 9 of its top 25 all-time volume days this winter, underlying the need for energy affordability creating expansions of natural gas infrastructure in that region. At the utilities, we reached constructive settlements at both Enbridge Gas, North Carolina and Enbridge Gas, Utah and filed a new rate case at Enbridge Gas, Ohio. Lastly, we successfully extended contracts on a number of LP assets. And once again, our gas transmission assets had another 100% contract renewal rate with customers on our major pipelines. So now let's dive into exactly where we allocated our growth capital in 2025. Taking a look at the map, you can see we won more than our fair share of opportunities this past year, sanctioning over $14 billion of capital in 2025, putting us ahead of where we forecasted during last year's Investor Day. In Liquids, we FID-ed over $4 billion of projects, locking in the majority of opportunities we laid out for the Western Canadian Sedimentary Basin growth within the year. In Gas Transmission, we sanctioned projects supported by natural gas fundamentals, including industrial and data center demand, the LNG build-out, our customers' storage needs and deepwater offshore opportunities. Total capital secured in Gas Transmission during the year was approximately $4 billion, making significant progress on the $3 billion to $5 billion of opportunities we expected to sanction within 6 to 18 months of our Investor Day. In the utilities, we continue to invest approximately $3 billion of foundational capital per year to expand our systems and keep them safe and reliable. And finally, in Renewable Power, we've added $3 billion of capital to support technology and data center operations for companies like Meta. This places us well ahead of the timing we outlined at the Investor Day, where we showed $3 billion of late-stage opportunities with potential FIDs between 2026 and 2027. In total, our power and natural gas projects currently under construction are now completed, support over 7 gigawatts of power generation across multiple businesses. I think it's safe to say that just under a year since Enbridge Day, we have made tremendous progress on the commitments we laid out and continue to work hard to advance additional accretive projects. Continuing the momentum from 2025, our teams are busy advancing opportunities from our unsanctioned backlog. With fundamentals supporting expansion in each of our 4 businesses, we expect to reach FID on another $10 billion to $20 billion of growth projects over the next 24 months that will enhance energy security and affordability in North America and beyond. Gas Transmission has the largest opportunity set of our core franchises, driven by industrial and power demand, along with growing LNG exports and storage. Potential projects include expansions on Vector, Valley Crossing, Texas Eastern, Algonquin, opportunities in the U.S. Southeast and the Homer City redevelopment as well as additional storage expansions at Tres Palacios. In Liquids, supported by the WCSB production growth and overall global demand, we continue to advance opportunities, including MLO 2 and 3 and expansions to our regional oil sand assets. We'll continue to invest about $3 billion a year in our gas utilities to support new customer connections as well as opportunities driven by new power demand, including data centers. And in renewable power, we will remain opportunistic advancing projects to support demand driven by hyperscalers and other large tech companies and/or those seeking power from lower carbon sources. Now let's jump into the BU updates, starting with the Liquids segment. In light of recent geopolitical events, let's take a step back and remind everyone of our irreplaceable Liquids footprint. Our mainline is a vital connection between the growing production in the Western Canadian Sedimentary Basin and the refiners in PADD 2 and PADD 3, which are consistently drawing higher volumes of Canadian heavy crude. We saw strong demand throughout the year on the mainline, which was apportioned for all but 3 of the last 12 months, delivering on average 3.1 million barrels per day. In fact, the mainline was also in double-digit apportionment in January and February of 2026. Given Enbridge's unique asset footprint and our expectation that the low-cost established WCSB production and demand continues to grow, we do not expect any material impact from the recent geopolitical events involving Venezuela. In Q4, supported by growing production, we sanctioned the first phase of mainline optimization, which will add 150,000 barrels per day of additional egress out of the basin. The project also includes a 100,000 barrel per day expansion on Flanagan South and is expected to cost USD 1.4 billion and enter service by the end of 2027. As part of MLO1, the majority of our customers elected to extend their Flanagan South take-or-pay contracts beyond 2040. We're also commercializing mainline optimization Phase 2, which could add another 250,000 barrels per day of incremental egress in the 2028 time frame. Customers remain very interested in moving this project ahead, and it showcases the benefit of existing assets in the ground as this project leverages underutilized capacity on assets such as Line 26, Dakota Access and Chicap. MLO3 is also making progress. And although we're not in a position to provide much detail right now, the project will create further significant egress opportunities to support our customers well into the future. A quick update on Line 5. The U.S. District Court recently ruled in our favor, preventing the State of Michigan from taking further action to shut down Line 5. And the U.S. Army Corps of Engineers issued their final EIS, another step in the right direction for the Line 5 tunnel project. In our Gulf Coast and Permian franchise, the 80,000 barrel per day expansion of Gray Oak pipeline entered service in 2025 and the remaining 40,000 barrel per day expansion is on track to enter service in the first half of 2026. Lastly, we continue to expand our storage footprint at the Enbridge Ingleside facility as well as explore additional service offerings off the docks at Corpus Christi. Now let's turn to our Gas Transmission business. Our Gas Transmission franchise is well positioned to serve growing energy demand across the continent, and the team is currently working on a number of exciting projects. These opportunities will address a range of demand drivers, including electric and gas utilities, LNG exports and emerging data center powered needs. Currently, we're advancing over 50 potential data center opportunities that could require up to 10 Bcf per day of natural gas, and we expect to begin sanctioning these additional projects throughout 2026 and more in 2027. In the Permian, our JV investments in natural gas infrastructure are set to offer over 11 Bcf per day of long-haul capacity and are supported by over 2 Bcf of storage capacity at Waha. We're announcing today that along with our partners, the sanctioning of Bay Runner, an extension of the Whistler pipeline, which will supply gas to Rio Grande LNG facility in combination with previously announced Rio Bravo Pipeline for total capacity of up to 5.3 Bcf per day. We have also upsized the Eiger Express pipeline from 2.5 Bcf per day to 3.7 Bcf per day, driven by growing demand for natural gas transportation out of the Permian and supported by long-term customer contracts. Lastly, we're extending our U.S. gas transmission modernization program another year into 2029 and to highlight that the Appalachia to Market II project is now in service. 2025 represented a milestone year for gas distribution and storage as it was the first full year of operations for the U.S. gas utilities as Enbridge Gas. In Ontario, we continue to efficiently run Canada's largest natural gas distribution company with new rates in effect at the beginning of 2025. In Ohio, we received a somewhat disappointing rate case decision in the middle of the year, but maintained Enbridge Gas Ohio's allowed ROE at 9.8% on a slightly higher equity component. Since some time had passed since the original filing, we filed a new rate case at the end of 2025, updated with refreshed operating and financing costs. In Utah, we reached a supportive rate case settlement with rates in effect on January 1, 2026. And in North Carolina, we received a supportive outcome as well with rates in effect in November 2025 and welcome the addition of new major capital project riders to allow us to meet our customers' growing needs and realize a quicker return of capital for our investors. Finally, with growing power demand in all jurisdictions, we are finding increased need for access to low-cost gas feedstock for up to 5 Bcf per day of power generation and associated demand growth. This will further grow our utilities well into the next decade. Now I'll move on to the Renewables segment. Building on the Clear Fork Solar project, which reached FID in mid-2025, we are excited to extend our partnership with leading technology companies like Meta Inc., sanctioning Cowboy Phase 1 and Easter Wind, supplying over 500 megawatts of renewable power to support data center operations. Cowboy Phase 1 is a 365-megawatt solar and 135-megawatt battery energy storage project in Wyoming with the output secured by a fixed offtake agreement and the battery component of the project secured by a fixed toll agreement. The full output has been secured by a MAG 7 technology company. The battery system will be supplied and operated by Tesla, the leading supplier in North America and can be expanded up to 200 megawatts after the approval from the utility, which is expected in the first half of 2026. This project's CapEx is USD 1.2 billion and is expected to enter service in 2027. Easter is an onshore wind project being built near Amarillo, Texas, with a capacity of 152 megawatts. This USD 400 million project is secured by a renewable power purchase agreement with Meta. In total, our power partnership with MAG 7 companies is set to provide over 1 gigawatt of renewable generation to support operations and add new generation to the local grids. Looking ahead, we still have over 1 gigawatt of projects in the queue that we're advancing, remaining opportunistic while continuing to ensure these projects will realize mid-teen returns. Providing an update on 2 of our projects under construction, I'm happy to announce that the first phase of Sequoia Solar entered service in December, and our Courseulles Wind project in Europe remains on track to enter service in 2027. With that, I'll now pass it over to Pat to go over our financial performance. Patrick Murray: Good morning, everyone, and thank you, Greg. I'm pleased to report again record fourth quarter and full year EBITDA, DCF and earnings per share. Compared to the fourth quarter of 2024, adjusted EBITDA is up $83 million. DCF is up $0.06 and EPS increased $0.13. In Liquids, strong mainline volumes, annual escalators and lower power costs led to year-over-year increase in the segment, net of earnings sharing. We experienced a strong fourth quarter in our Gas Transmission business with incremental contributions from the acquisition of an interest in Matterhorn and placed the Venice Extension into service. As well, we saw favorable spreads at Aitken Creek and had exciting recontracting on our U.S. Gas Transmission assets. The gas distribution segment is up relative to last year, driven by rate escalation, customer growth in addition to colder weather and strong storage results in Ontario, higher rates in North Carolina and recovery of capital investments in Ohio also increased the EBITDA. In Renewables, results were lower compared to last year due to the absence of investment tax credits relating to the Fox Squirrel Solar project, which we put in service in Q4 of '24. Lower maintenance costs due to increased buying power at our gas utilities and lower current income tax driven by investment tax credits and benefits from U.S. tax legislation changes further increased DCF per share year-over-year. I'm also pleased to reaffirm the 2026 guidance that we put out in early December. We continue to be confident that we'll achieve our full year EBITDA expectations between $20.2 billion and $20.8 billion and DCF of between $5.70 and $6.10 per share. Our growth is driven by $8 billion of new assets expected to enter service throughout the year and across enterprise cost savings initiatives. So far, in '26, the mainline has been apportioned in January and February, as Greg noted, and we've experienced colder-than-normal weather in most of the eastern parts of North America, providing a strong start going into the year. As a reminder, Q1 and Q4 are typically our strongest quarters, primarily driven by the higher earnings attributable to our gas utility franchises during winter periods, the absence of heat restrictions on our liquids assets as well as more peak days in gas transmission. Now let's discuss our capital allocation priorities, which also remain unchanged in '26. We're committed to continued equity self-funding and benefit from the natural stability of our regulated assets and predictable cash flow streams. On the leverage front, our balance sheet remains strong. Our debt to adjusted EBITDA sits up 4.8 and our 4.5 to 5x range remains unchanged. Core to our value proposition, we will continue to sustainably return capital to shareholders through dividends with $40 billion to $45 billion of distributions expected to be paid out over the next 5 years, all underpinned by growing regulated and contracted cash flows. And our 60% to 70% DCF payout target range remains unchanged as well, with us sitting right around the middle of the range today. To fuel long-term growth, we'll continue to target accretive brownfield projects supported by strong energy fundamentals. With the project additions this quarter, our current backlog now sits at $39 billion and extends through 2033, highlighting our ability to execute on the opportunity set we laid out in front of investors back in last March. With that, let's look at our annual investment capacity and how that also continues to grow. As our cash flows grow, so does our annual investment capacity, which now sits between $10 billion to $11 billion annually, supporting investments in growth projects across all 4 of our core business units. Our balance sheet strength gives us the ability to pursue $6 billion to $7 billion of organic growth projects annually, in addition to the $4 billion of foundational capital that will support our utility growth programs, gas transmission modernization and liquids mainline capital investment. We continue to realize improving returns, showcasing our efficient use and deployment of capital. That's evident in our improving return on capital employed, which has consistently tracked upward these past number of years via optimizations of our business, annual cost savings from scale and technology advances and accretive M&A. These returns are further compounded by the project slate we sanctioned in 2025. On average, the growth projects have strong return on capital employed with an average of approximately 11% across all organic projects. Securing strong return projects, combined with cost and revenue optimizations on existing assets creates a compounding effect, which will continue to grow our investment capacity into the future. With that, I'll turn it back over to Greg to close out the presentation. Gregory Ebel: Well, thanks very much, Pat. And as you've just heard, it was a busy quarter, capping off an incredible year, and I'm proud of the rapid progress our teams have made since our last Enbridge Investor Day. In an ever-evolving North American energy landscape, Enbridge continues to be very well positioned to realize ongoing growth. Our disciplined capital allocation approach and our low-risk business profile continues to drive consistent long-term shareholder value and a first choice investor proposition. Supported by long-term agreements and regulatory frameworks, Enbridge generates predictable cash flows, which have enabled 31 consecutive years of dividend increases. And going forward, we expect to achieve 5% growth through the end of the decade, supported by our now $39 billion of secured growth capital. Our scale and diversity provides us with capital optionality that few in our industry possess, and we will continue to evaluate accretive investments across our entire footprint. With that, I'll open the call to questions. Operator: [Operator Instructions] Your first question comes from the line of Sam Burwell from Jefferies. George Burwell: Noticed that the investment capacity increased by $1 billion, which makes sense. But the longer-term post '26 growth trajectory still looks around 5%. So just curious how those 2 reconcile. And also curious if there might be maybe some underappreciated upside in '27, '28 EBITDA growth given that 2026 was a little bit of a softer year, but you've got a lot more capital entering service in 2027. Gregory Ebel: Yes, I think it's fair. I think TheStreet consensus still is probably like 3%. So as we've said, we're very confident in getting to the 5% number. obviously, that capacity grows with EBITDA growth. And as we bring in more projects, I think it reconciles with that, right? So as we spend more capital, you need more capacity. We've got the more capacity with the EBITDA growth. So I'm not sure, Pat, I don't know if there's anything to add on that front. Patrick Murray: Yes. I mean I think that we've always assumed that if we put projects in on time, on budget with good returns that, that capacity would continue to grow. And so that was baked in or acknowledged as we thought about our growth rate through the end of the decade. And we just get more and more confident, as Greg said, with the backlog of strong returning low-risk projects that we'll be able to meet that. So I don't think it just helps TheStreet to understand that we've got a fair amount of capacity here as we move forward. Gregory Ebel: As I said, we're comfortable with the 5% growth. I guess if -- what other dynamics out there are we looking at? Obviously, from where we were a year ago, the Western Canadian Sedimentary Basin situation looks positive, more production there, better attitude from governments about the competitiveness of Canada and seeing production grow there. So I guess that could create some opportunities. And you're already seeing that in MLO1 and MLO2. And as we said, the possibility of an MLO3. Gas transmission, I think you just heard us talk today about you'll see more FIDs here in the next year and into 2027 as well. Gas Distribution, you make a good point there. I think we bought those gas distribution assets in the U.S., we were looking at 8% type rate base growth through the end of the decade, and now it's closer to 10% rate base growth. And then I wouldn't be surprised if we exceed our power CapEx estimate that we laid out at the last Investor Day, and you see that already as we -- as customers are looking for electrons. I don't really care what color the electron is. They're looking for electrons, and you've seen us cut deals here announced today with Meta and MAG 7 players. So all that plays into it. We're moving a big ship here, of course, at $20 billion and a couple of hundred billion dollars enterprise value. But I think you're on the right track and actually pleased to see TheStreet looking for more on top of the 5% as to wondering how we're going to get to the 5%. George Burwell: Okay. Yes, that's a big ship indeed. And I appreciate your comments earlier on Venezuela, but I just wanted to drill down a little bit more on that. I mean, is it fair to characterize the framework being all right, there's growth in the WCSB. That growth will, in all likelihood, fill up TMX. And then after that, any growth that materializes and there should be growth that's already baked into the cake as projects going to be sanctioned, that needs to clear via your full path to the Gulf Coast, and that's what gives you confidence in advancing MLO2 and then mentioning MLO3 today. Gregory Ebel: Well, I think I'll let Colin chime in, but I think there are several aspects to it. A, there continues to be a need on the Gulf Coast for heavy crude even, and we don't underestimate it, even if you see Venezuela barrels come in, and I think the smart consensus is called that maybe 400,000 or 500,000 barrels. There continues to see Canadian crude export it. But we're continuing to see an increase of the utilization of the mainline. As you heard us say, all but 3 of the last 12 months, we saw apportionment and big start of apportionment, I think, going back to even before TMX started up in January and February. So I think producers want to go south first, Colin. Colin Gruending: Yes. I think so. Sam, I think your framework is roughly right. And maybe there's a West Coast solution in there in a bigger way someday. But in the meanwhile, and in this uncertain environment, I think our historic playbook of iteratively expanding the mainline is a winning formula and kind of fits the pistol of customers on both the supply push and demand pull end of things for -- to try to find certainty. And MLO2 solves that 2028 egress bottleneck that's going to emerge. So its advantages that it's in service in '28. But I think you got your framework roughly right. And just watch that Canadian supply growth and disposition Gantt chart that we're filling in. Operator: Your next question comes from the line of Rob Hope from Scotiabank. Robert Hope: Given the project backlog, which could include $10 billion to $20 billion of projects sanctioned here over the next 2 years, how do you think about the potential to exceed the $10 billion to $11 billion of annual investment capacity and relying on other sources of funding to capture what is an increasingly growth-rich environment? Gregory Ebel: Yes. I mean Pat can add in here, but I think we feel very good about it. Rob, even added those projects, they don't all happen instantly, right? Even our $39 billion current backlog runs through 2033 kind of time frame. So fits very much in that. And remember, that capacity will also grow as EBITDA grows, right? So to put it in rough terms, every dollar we raise in EBITDA is going to create capacity of $4 to $5 in debt capacity. So I think we feel very good about that. Now that being said, we're always looking at recycling capital. You saw us do that last year in a very smart way and one that I think helps our overall business, such as Dawn project where we sold 12.5% of the West Coast pipeline to some 35, 40 indigenous nations. So there's opportunities like that, that we look at. So I feel very good with where we are from a balance sheet perspective. But yes, I always look at recycling capital to help create that buffer and allow us to continue to add more to the backlog. Robert Hope: That's great. I want to go back to Venezuela. So it doesn't appear that Venezuela slowed down MLO2 at all. However, when we think about MLO3 and the timing for that project, could we need to see increased clarity on either increased exports out off to the Gulf Coast, what the Venezuela situation looks like? Or do you think in any case, Canadian crude will find a home in the Gulf Coast and that MLO3 has a good chance of moving forward? Gregory Ebel: Well, I think it's a bit of the all above. The only other addition I would add there with MLO3, what we really need to see is actually the change in policy in Canada that meets the desires that the Prime Minister has articulated by increasing oil and gas production. So those changes are spoken about pretty openly. And that's what has to come first, right? Production growth first, pipeline second. So I think that's a big element of it. But Colin, I know we haven't got a lot of details out there on Line 3 yet -- or MLO3, but do you want to speak to that? Colin Gruending: Yes. So let's call it MLO3, but you could probably call it MLO126 because we've expanded the mainline a lot of times. And we just simplified the numbering to keep it simple for current vintage of participants. But -- and there's -- we're developing multiple options for MLO3, small, medium, large, depending on what industry needs. I think on Venezuela, listen, it's early days and certainly, the longer-term outcome there is uncertain. But we'll see how quickly Venezuela grows its production, then we'll also need to evaluate what portion of that increased supply growth comes to the U.S. Gulf Coast. It's on VLCCs for the most part, and some of it may well stay on the water and feed the global refineries it has historically, but perhaps at a higher price for that country. I think that's one of the objectives. Also remember, Rob, that there is probably another 400,000 barrels a day of U.S. Gulf Coast heavy refining capability on top of what's being utilized today. And also don't forget about the inevitability of re-exports of Canadian crude off the U.S. Gulf Coast in meaningful scale over time. So listen, the U.S. Gulf Coast is the world's best heavy refining market and Canadian crude is a meat and potato part of the diet there. So I think it's still going to work pretty well all around. Gregory Ebel: Yes. Rob, I'd say there's multiple ways for us to win. So it's a good question. I think Colin's laid out some great ones here. And the Venezuela piece is a supplement to Canadian heavies, not a replacement. The other thing I think you should think about is if there is more of that kit on the Gulf Coast used with Canadian heavies, maybe that means less light Permian needed on the Gulf Coast, which would mean more of those light barrels would actually probably get exported. Guess where those get exported? From Ingleside. So I think it really underlines the Swiss Army knife as Colin likes to call it, of the super system we've created down there really to find ways for Enbridge liquids system to win in all scenarios. Operator: Your next question comes from the line of Theresa Chen from Barclays. Theresa Chen: Greg, on your last point about potential expansion capability or pushing further WTI volumes out of Ingleside should the Gulf Coast refining heavy up their crude feedstocks. Curious to hear what kind of expansion capability do you have there beyond what you sanctioned thus far? And to what extent would that necessitate expansion of your own pipeline feeding that facility versus barrels potentially going on competitor's pipelines in that area? Gregory Ebel: Yes. Remember, we have pieces of Cactus and Gray Oak. So those lines are seeing some expansion. In fact, some Gray Oak expansion continues to come on next year. Remember, we've added some storage capacity at Ingleside. And then, of course, last year, picked up some more dock space. So I think we're in good shape. And in fact, optimizing the utilization of the VLCCs, Aframax, Suezmax on the right dock, if you will, so that you fully utilize via the bigger dock, the VLCC docks as well as the smaller docks. So Colin, any other pieces to add there? Colin Gruending: Yes. No, astute question, Theresa. We have lots of headroom at Ingleside, right? We acquired neighboring docks from Flint Hills. We've got lots of permitted headroom on the docks. We've got lots of land. We're still constructing right now tanks. We could do more of that, and we're 3/4 of the way through the Gray Oak expansion and can do more there, too. So that's a big long-term opportunity that we'll continue to realize for many years as the Permian grows again. Theresa Chen: Understood. And on the heels of so many questions about the geopolitical backdrop, understanding that the situation is still evolving. And with your commercialization efforts on MLO2 and 3, how should we think about how the discussion of the marginal all-in rates are coming to terms is -- as the projects come to fruition late decade and beyond? And how do those economics compare versus the current committed and spot rates on mainline as we think about the upcoming renegotiation for the system, the ROE color over the next couple of years? Colin Gruending: Are you asking about the competitiveness of our tariffs on the expansions basically? Theresa Chen: I'm asking about like how the tariffs -- the discussion of where those tariffs are on the expansions under development changed since we've had incremental rerouting or expected rerouting of Venezuelan barrels to the Gulf Coast. I imagine no from MLO2 because that is into the PADD II market. I mean, those refineries are not going to see a drop of Venezuelan crude. But from MLO3, if that is a Gulf Coast oriented pathway, how does that change your economic thinking on terms? Colin Gruending: Yes, I got you now. So yes, no, I don't think there's much to talk about here. Our tolls are competitive. They need to be competitive. They're often cost informed, right, especially as we socialize some of those tariffs to all mainline shippers. And remember that our expansions are optimizations. And so therefore, they're inherently efficient. So those tariffs should be in the money and very competitive. Gregory Ebel: And color, Theresa, just for clarity, like MLO2 is a full path. You're getting all the way to the Gulf too. So yes, you're getting demand pull and supply push into PADD II, but also all the way down to the Gulf too. And I think that's some of the great thing about the MLOs, they're modest incremental builds that allow producers to kind of witness the market as it develops and have that insurance egress, but also keep a keen eye on the geopolitical side of things. And that's one of the great things about it as opposed to, say, committing to a big greenfield that's probably post 2028. Operator: Your next question comes from the line of Aaron MacNeil from TD Cowen. Aaron MacNeil: I don't want to understate the Venezuela risks, but maybe for fun, I'll just take the other side of it. Not only have we seen apportionment on the mainline, but the level of apportionment has increased pretty meaningfully over the last few months. Has mainline demand surprised you to the upside? And have you observed sort of an increased sense of urgency from your customers given the high apportionment in February? And to the extent that you have a view, how are you thinking about Alberta storage levels going forward? Colin Gruending: Aaron, I mean this has been going on for 30 or 40 years, right? My whole career, I think we've seen strong demand for the mainline for a whole bunch of reasons. I'm not going to list them out here. But I think in the last couple of years, I think Canadian supply has probably surprised the consensus view to the upside a little bit. There's been a number of optimizations like we're doing upstream by our customers, really high return, quick cycle, attractive economics just to get more out of their existing -- they're basically re-rating their kit. And so I think that has probably surprised the consensus view, maybe us a little bit, but I think we've had a lot of conviction in the thesis the whole time. And it's in part why we designed the mainline tolling deal the way we did so that we could hustle for customers and participate in some of that upside. But as this continues and as Greg said, hopefully, the Canadian political deal continues and accelerates in light of the potential of Venezuelan competitive threat, and we can see more of this. Gregory Ebel: I think the other thing, Aaron, there's a good lesson in here, and you made the strong point about Western Canada. We've always had strong conviction, as Colin says, but I think the other aspect out there on the macro side that the market seems to underestimate is the power of consolidation and those major producers coming together and their ability, therefore, to wring out better economics and actually production at an economic rate. And that lesson needs to be considered as we think about the Permian, where, as you know, we've seen big consolidation there by really the best players on the planet in terms of oil production. And I fully expect they're going to find ways to grow that production at economic rates, which, again, I think is positive for Enbridge Systems, both north and south. So yes, good point. Aaron MacNeil: Maybe switching gears to Gas Transmission. You mentioned the $10 billion of projects in the near-term opportunity bucket. Can you just speak to the growth rate of the segment currently. Obviously, it significantly exceeds the corporate average. And how sustainable do you see that sort of outsized growth rate for the segment specifically. Gregory Ebel: Well, Matthew is here and he's looking at his chop. So I'll let him go at it. Matthew Akman: Yes. Thanks for the question. I think the big picture is everyone is starting to come on to the same page that the most important issues in energy these days for average people, which are affordability and reliability are going to be solved by natural gas. And so we see a long runway. There's, I think, a huge pent-up undersupply of pipeline capacity across the country. And that's the starting point. And then you layer on top of that the power demand and data centers that everyone is talking about. And of course, the export trends and looking to double exports out of the Gulf Coast. So we're extremely well positioned on all of those fronts. We talked this morning about some of the expansions out of the Permian and the Eiger upsize and the Bay Runner extension. But I think you can expect us also, as Greg alluded to, to be adding to our growth table in GTM on a few fronts in the near term. I don't know if you saw, but we just finished an open season on Vector into Wisconsin, a lot more demand there for power and natural gas for utility distribution. Texas LNG1, which we're very close to, has made great progress lately on both offtake and financing. You might have read about that. And storage demand appetite is voracious in the Gulf Coast. We have some more expansion opportunities there in the near term. So those are just some of the things I think you could expect us to be talking about pretty soon and adding to that near-term growth table. Longer term, when you look at all of our regions up and down the entire nation from the Northeast to the Southeast and pretty much all points in between, we see tons of opportunity in the Northeast, we have a relatively small expansion going on in Algonquin, but there's appetite for large expansion there. And you're starting to see things thaw in terms of permitting and the realization that it just doesn't make sense to have 40% of power generation come from oil -- burning oil in a cold snap or $150 gas, and we're the solution to that. And in the Southeast, just population growth and obviously, economic growth, and we have a couple of pipelines into there. We've been expanding SESH and we have Sabal Trail. So yes, we're just seeing fantastic opportunities all the way up and down the country. And I think you can expect to see growth out of us there in the near term and for many years going forward. Gregory Ebel: I think from a capital allocation perspective, it also allows Pat and I to make sure we get to pick the projects that actually provide the best returns and be very picky about the regions. And if they don't meet the returns that are going to get our growth rate or accelerate our growth rate, we don't have to allocate capital there. So it's a pretty nice setup from an investor perspective, but also from a capital allocation perspective. Operator: Your next question comes from the line of Maurice Choy from RBC Capital Markets. Maurice Choy: Just want to pick up on that last question about returns. Slide 14, you've discussed the enhancing of asset returns with 2025 organic projects about 11% and 2026 just under 10%. When you think about your $10 billion to $20 billion of projects over the next 24 months, are we expecting these projects to have similar 10% to 11% levels? Or are the project mix so vastly different that might be outside of this range on a portfolio basis? Patrick Murray: Yes, thanks for the question, Maurice. I think our view would be that given the amount of opportunities we have in front of us that they're probably going to average up that as we go through time here, whether it's our renewable projects that we've talked about being in those mid-teens, high-quality projects, strong returning in GTM. We haven't had as many liquids projects entering service as we will over the next 3 or 4 years, and those are some of our strongest projects as we go through things and then balanced out, of course, by the utility. So I think we're very confident that we can continue to improve returns and not only from the projects we're sanctioning, but from optimizing the base assets that we have as an organization, whether that's through things we've done on the mainline volumes, whether that's through cost, technology. So I think it's kind of a two-pronged approach, not just returns on new projects, but also on the base assets. Gregory Ebel: I think the other thing we think about is risk-adjusted returns as well because obviously, the utility doesn't earn those similar returns. But even there, we've seen in some recent rate cases to get slightly thicker equity and ROEs on that equity. So I think we try to balance both of those, which is one of the reasons why you can increase the dividend 30 years solid without being concerned about being whipsawed back and forth by whether geopolitical or economic cycles or politics. Maurice Choy: That makes sense. If I could take one step further in all our discussions about Canadian politics, given the Davos speech, geopolitical events, even the upcoming USMCA negotiations, have there been any signs in your regular engagement with the Canadian or Alberta governments on how they may support major energy infra projects, including perhaps backstopping cost overruns or financing? Gregory Ebel: Well, I have not heard that on the latter. But obviously, there's been lots of signs and signals. I think what we're looking for is actually concrete actions. So the MOU between the Government of Alberta and the Government of Canada was very encouraging. That's several months ago now, and the world keeps changing, right? So I think it's not so much about the signals and the speeches. It's more about the actions and the results that I think is what our customers are looking for, what our investors are looking for and what we're looking for. So yes, very positive on the signals very positive on the Prime Minister's comments about growing oil and natural gas. In terms of backstopping, that's an interesting one. I guess you could say there's things like loan guarantees that happen for certain stakeholders. I don't see that happening for the -- for private sector players. But some of these projects that are really big, you're going to need some type of commitment of stable policy and maybe backstopping until it's built, if you will. But we do that in the Northeast, too. Our Northeast utility customers, Northeast United States, given some of the starts and stops we've seen there on the policy-wise, we're not going to take the financial risk on development of projects. We're quite happy once we get the go-ahead to take the risk on building them. But we're not going to take the risk of them being stopped before they go into service or frankly, even FID because some of these projects, you're spending hundreds of millions of dollars before you even get regulatory approval. Maurice Choy: Understood. Just to clarify there, you're comfortable with the project development and your ability to deliver, but the policy protection and durability there that's the biggest crux of this. Gregory Ebel: Yes, that's exactly right. So many projects and the larger the project you want to go, you're talking many years, right, which you can get changes in policy and politics. I don't think investors or the infrastructure companies should be taking on all that risk of the development in jurisdictions that have historically created a challenge. Like again, I look at the Northeast United States, we've had projects where we would have spent several hundred million dollars and with the stroke of a pen project doesn't move forward. You saw that in Northern Gateway. We spent $600 million, combo of shareholder money and customer money and the rug was pulled out from underneath. So that's not the type of risk that we're looking to take on at this time. We don't need to with all the other opportunities. Operator: Your next question comes from the line of Jeremy Tonet from JPMorgan. Elias Jossen: This is Eli on for Jeremy. Just wanted to dive a bit deeper on the power demand opportunity set. Obviously, you've talked about the focus is on best returns. But we've seen some of your peers go for chunkier power solutions, including some behind-the-meter opportunities. Just in the context of this growing investment capacity, how should we think about whether you'd consider these larger power-focused projects and then what those returns might look like? Gregory Ebel: Yes. I think we're quite comfortable with finding the opportunities associated with power at GTM and GDS. I think as you look at GTM, sometimes I think it gets overlooked. But whether it's Line 31 in Louisiana or this AGT built or SESH or the TVA project, those are all chunky ways to play the power game. GDS, as you saw this morning, we're talking about 5 Bcf of gas infrastructure potential for power demand growth. And that's on top of the things like over 1 gigawatt of power infrastructure we put in place for Duke. You've seen us do things like that in Ohio, Novva Data Center in Utah. So I think there's ways to play there. And then importantly, of course, the renewable side. And I'll go back to -- I don't think most of our customers are that focused on the color of the electron these days. I think they're focused on the electron and some 3 gigawatts in the last couple of years that we've signed up for. We've been thinking about this a long time. In 2022, we bought Tri Global with a great background of large renewable projects that you can see us bringing into service. And you can't ask for better customers than Meta, than Amazon and Google, all of which we're playing. So don't see us going into the IPP, the gas IPP business. I mean maybe there's some bespoke opportunities here and there, but we like the long-term contracts that we're able to get with renewables, 15-, 20-year contracts, which are different than contracts often that you see in the IPP world of say, a decade or so. So the risk profile fits us better in the way we're going at this. And Allen is here, he may want to add to it as well. Allen Capps: I'll just mention one thing, too, that with the tax credit situation in the U.S., we've got over 2 gigs of safe harbored opportunities in the renewable space that should keep us busy for the next 3 years. So we have a really strong opportunity set on the solar, the wind and also the battery side as well. So we're excited about that, and I think we'll focus on that from a power perspective. Elias Jossen: Awesome. Appreciate the color. And then maybe pivoting to the kind of B.C. storage opportunity landscape. Can you just talk a little bit about some of the storage economics out there and what you're hearing from customers? I think sometimes the storage opportunity gets overlooked, but I imagine it could be pretty sizable for you guys. So just any messaging there. Matthew Akman: Sure. It's Matthew. So I think storage not just in BC, but across our entire footprint is a major theme. And the demand growth continues from obviously, LNG and then the power side. So we have in storage a significant expansion going on up in B.C. right now at Aitken, 40 Bcf. The market there is very attractive. And in Canada, a lot of that is going to be based on the factors that have driven storage in B.C., which is the appetite for LNG that's picked up the market there. And we're looking for, obviously, strong stakeholder and government support for further LNG exports out of Canada. There's been talk of expansion of LNG Canada, maybe a second phase and other projects. So we see strong organic growth on the rates we're getting and then obviously, just the expansion. And when you combine those, we're expanding by 20% to 30% across our storage footprint. And then when you combine that with just steadily increasing storage rates from these fundamental trends that you asked about, we're seeing great organic growth out of our storage business for the next few years. Gregory Ebel: The other thing, Eli, and Matthew, I think you'd agree is that we're seeing really interesting contracting where we still -- look, contracts for storage tend to be in the kind of 2- to 5-year range typically, but we're seeing big chunks of our storage being contracted for the long term as well, in some cases, up to a decade. So it's fitting the risk profile, sort of fitting the return profile. And as you point out, I think Aitken Creek does get overlooked. I mean it's the only major gas storage play that you've got in British Columbia at a time when, as you've seen on the Gulf Coast, as LNG projects come in, it's a pretty exciting opportunity for us. So I appreciate the question. Operator: Your next question comes from the line of Robert Catellier from CIBC. Robert Catellier: I just wanted to see if you could follow up on your answers to Maurice's question and provide some updated views on the progress that you're seeing in the Alberta, Canada MOU and setting the right investment conditions for a pipeline to the West Coast? Gregory Ebel: Yes, Rob, thanks for your question. I think what we're looking for, there's 2 important milestones that have been out there for a while that are coming up close. The April time frame where the Government of Alberta and Canada, I think, are trying to come to a solution on industrial carbon charge, stringency, et cetera, on those matters. That's going to be super important for our customers, producers to get a feel for whether or not Canada is competitive enough for them to continue to see the kind of growth that we've been seeing. So that's the key one. We continue to provide them advice along with others in the industry, SOBO, TMX, et cetera, on pipeline opportunity in the -- to the West Coast. But again, that's just on an advisory perspective. So I think there's -- I think there's a fair number of things still to come. But April is what I would look at to see if there's actually a solution, a competitive solution to the carbon issue for Canadian producers. Robert Catellier: I agree with that. Colin Gruending: Robert, sorry, I was just going to layer in. I think there's a lot of kind of media headlines around the West Coast pipe being kind of one of the Ps and then pathways being a second P. But grossly undercovered is the third P, which is, I think Greg -- getting production up to fill a West Coast pipe. And I think those are the signals that are dear to the equation that we should all be watching for. Gregory Ebel: And again, Rob, the nice thing is I think in the meantime, while we wait, I think we've got great solutions for our customers in MLO1 and 2. And if they get this right, obviously, 3, and we know somewhere down the road, perhaps additional pipelines in other directions. But again, I think the insurance egress we're offering there is an important one for our customers until the skies are a little clearer, if you will, on that P for production that Colin mentioned. Robert Catellier: Okay. That's helpful. I guess we'll have to wait and see how it evolves. My second question was, I wondered if we could have a progress update on wood fiber and how costs are tracking there versus expectations. Matthew Akman: Sure. Rob, it's Matthew. No major updates there. We remain on track for late '27 in service. We've made good progress on construction recently. We're about 60% complete on the project. 12 of the 14 modules are now on site. So we just have a couple left there, put in a new flotel in December. So everything tracking to plan and no updates on cost or in service. Operator: Your next question comes from the line of Manav Gupta from UBS. Manav Gupta: Congrats on the dividend hike. Investors always appreciate it. My question here is there's a lot of focus on Canadian heavy sour volume growth, but what is also growing out of Canada is light sweet crude, particularly if you look at some of the projections that CNQ is making. And one project which I find very interesting, which you kind of have been working on is trying to get like 250,000 barrels more to DAPL. I think you probably have to reverse the line that is going over there and then you probably work with it [ Ity ] to get more crude to DAPL. Can you talk a little bit about this particular project that gets more probably sweet crude from Canada into the U.S. refining system. Colin Gruending: Sure, Manav. And good observation, right? A lot of talk on heavy and less on light. So MLO2 is kind of a 2 for that way. It deals with the light, right, as you've talked about the path and then heavy on the mainline. And you're exactly right. That is the path we would move lights down the mainline and then reverse a cross-border pipeline that currently flows south to north to be north to south and connect it with Dakota Access Pipeline, which has some headroom and then that this Canadian crude would not displace Bakken producer headroom. So it fits nicely into that DAPL underutilized asset, of which we own a portion of and then moves that light crude down into Patoka and then back up to Chicago and to feed those PADD II refining markets and probably more markets than it does today. So there's a few embedded win-wins here, Manav. Manav Gupta: Perfect. My quick follow-up is and just -- you talked a little bit about it, but generally, what we are seeing is a lot of these behind-the-meter solutions come up and pipes are being -- laterals are being built, but we do believe not enough storage in terms of gas storage is being built, particularly around data -- where the data centers are coming up. So can you talk a little bit about gas storage opportunities in key target markets around the data centers. So if you could talk a little bit about that and how Enbridge could benefit from it? Matthew Akman: It's Matthew. I think you're on point there. If you look at how peaky some of the power prices have been in certain of the regions pretty much across the country. That's just going to continue to get worse unless we have more storage, obviously, and pipeline capacity. So those are some of the big opportunities. I think the storage itself is going to kind of be where the geology is. And we're really bullish on that, and that's why we're expanding. We're going to be up to 120 Bcf of storage in both the Gulf Coast and in B.C. over the next 2 years. Those are great positions and further expansion potential, as I alluded to. We're seeing storage rates that are very supportive of strong economics and returns. I think the contract duration is also extending, which is nice. And also the customer base is further diversifying. And so that is coming right further and further into our wheelhouse in the way we like to do things at Enbridge, longer contracts, strong double-digit returns and low or no commodity exposure. So we got a good position where we are, and you'll look forward to more expansions on those. Gregory Ebel: I think Michele, you might want to add. Sometimes it's forgotten, we have a nice unregulated storage position in our Gas Distribution business in the Great Lakes as well. And obviously, that's an area where you see both industrial growth, data center growth as well, too. Michele Harradence: Yes, that's right. I mean we have about 300 Bcf of storage in the Great Lakes region just in Ontario, and we have another 50 or so. So I think it's 290 of which we have about 110 unregulated at Dawn and 180 that's regulated. Then we have another 60 Bcf in Ontario. And of course, we have Wexpro, which is an important asset in Utah, all of which is really helping on the affordability front to Matthew's point about volatility, I mean, Dawn saw very stable prices in the last few weeks when we saw things escalating elsewhere. But in terms of expansion capability, we're looking across all of the GDS systems for more storage. We think it's incredibly important for our customers. And then on the unregulated side, we just keep chipping away. We added a BCF last year. We've got 4 Bcf we're adding to Dawn this year. We've got a number of projects in the pipeline. We see a lot of potential to keep adding to that and the same sort of dynamics that Matthew discussed about longer-term contracts, good contracts, exactly what we like. Operator: Your next question comes from the line of Ben Pham from BMO. Benjamin Pham: I had a couple of follow-up questions on the renewal power sleeve of your business. You mentioned the 1 gig you're working on the 2 gig safe harbor. Can you add context on the total development portfolio that you have in gigawatts? And what are your plans in terms of do you want to replenish it or not going forward? Allen Capps: Yes. Thanks, Ben. So right now, I mean, the total gross generation that we have when you include the growth is about 7.4 gigawatts. That's on a gross basis. I say that just because we do have some JVs that would dilute that a bit. But I think on a net basis, we're like 4.3 gigs if you include all of the growth that we have in the portfolio right now in the existing and what we have actually in service and up and running. But the point I was trying to make is that in a time where tax credits are a bit challenged with some of the -- with what's facing us probably in July 4, we've got a portfolio of diversified projects that meet well over 2 gigs of opportunity that we think all of which are -- have a lot of veracity and we think have a good shot at going into FID and ultimately into service, and that will keep us full for the next 3 years. Gregory Ebel: Ben, if your question is around would we pick up additional assets. I mean, I guess we could look, but that's not something we're looking at right now. We've got a nice backlog of stuff, as Allen said. And then post '28, we'll see where we are on whether power prices move up and/or there's change in policy and stuff, but a good setup right now for the coming years and through the decade. Benjamin Pham: Yes. I just want to clarify some of those numbers. So that 4.3 gigawatts, that's in service at this operation? Allen Capps: Yes. If you take what's in service, that's our net basis. So basically, some of our stuff is in JV. So on a net basis, our interest. If you take what's in service today plus what we've FID-ed and what we have under construction, you get to 4.3 gigs. Benjamin Pham: Okay. And then -- so then beyond that, you don't have lease agreements and land that -- some of these renewable companies have 10, 20, 30 gigawatts of sites that they're developing. I was more curious about that number. Allen Capps: Yes. Ours is more like about a little over 2. And if you think about it, when you think about the $1 billion to $1.5 billion of capital that we're targeting to spend on an annual basis, that's right in the sweet spot for us, like I said, over the next 3 or 4 years. Benjamin Pham: I got you. Maybe there's a left question on this on Ontario. You've -- in the past, you've all electric transmission, you got out, looks like the promise may be looking at competitive bidding projects. Is that something Enbridge will be potentially interested in going back in? Allen Capps: Well, you know we have the Gichi-gami project that we're looking at right now and which is a wind project. And we're bidding into the -- we bid into the ISO. They're waiting to hear back whether or not our bid was successful. That's something we're focused on in Ontario. Again, I'll just say this, one of the things on the Canadian side is it's a very competitive market and that sometimes people are willing to take returns that are lower than what we would. So we always have to focus on capital allocation. Our business unit competes against the other business units here on a healthy basis. So we have to make sure that we have good return projects. And sometimes it can be a bit challenged, but we think the Gichi-gami project could be a real good one if it does land. Gregory Ebel: But specific to electric transmission, I don't see us getting back into -- we were only there for a brief period of time, worked out okay on the sale. But electric transmission is a very different risk profile, and I would not hunt currently in Enbridge's opportunities. Benjamin Pham: Okay. Got you. I was specifically referring to that subsea transmission project that the government is looking at. Operator: And we have reached the end of our question-and-answer session. I will now turn the call back over to Marlon Samuel for closing remarks. Marlon Samuel: Great. Thank you, and we appreciate your ongoing interest in Enbridge. As always, our Investor Relations team is available following the call for any additional questions that you may have. Once again, thank you, and have a great day. Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and welcome to the Galiano Gold Full Year 2025 Results Release Conference Call. [Operator Instructions]. This call is being recorded on Friday, February 13, 2026. I would now like to turn the conference over to Matt Badylak, President and CEO of Galiano Gold. Please go ahead. Matt Badylak: Thank you, operator, and good morning, everyone. We appreciate you taking time to join us on the call today to review Galiano Gold's Fourth Quarter 2025 results that we released yesterday after market close. We will be making forward-looking statements and referring to non-IFRS measures during the call. Please refer to the cautionary notes and risk disclosures in our most recent MD&A as well as this slide of the webcast presentation. Yesterday's release details our fourth quarter 2025 financial operating results. They should be read in conjunction with our fourth quarter financial statements and MD&A available on our website and filed on SEDAR+ and EDGAR. Please also bear in mind that all dollar amounts mentioned on the conference call today are in U.S. dollars unless otherwise noted. With me on the call today, I have Michael Cardinaels, our Chief Operating Officer; Matt Freeman, our Chief Financial Officer; and Chris Pettman, our Vice President of Exploration. This presentation, I'll initially provide a brief overview of the quarter. Mike will discuss operations and touch on our updated mineral reserve and resource statement, Matt will discuss the financials, and then Chris will review the recent exploration success his team has had at the AGM. I'll then provide some closing remarks and open the call for Q&A. Here on Slide 5, we can see the team continue to build momentum during the fourth quarter towards an improved operational outlook in 2026. Let me walk you through some highlights on this slide. Safety remains our top priority, and I'm proud to report that, again, no lost time injuries were reported for Q4, maintaining a strong safety record and demonstrating our unwavering commitment to our workforce. Turning to production. We produced 37,500 ounces of gold in Q4, up 15% from the 32,000 ounces produced in Q3. As you can see from the chart, this marks the fourth consecutive quarter of improved gold production at the AGM with Q4 production 80% higher than Q1 and full year production totaling 121,000 ounces, in line with our revised production guidance. Importantly, mill feed growth improved quarter-over-quarter and throughput in December exceeded the targeted 5.8 million tonne per annum run rate. From a financial perspective, cost control remains robust on site with all-in sustaining cash costs reducing quarter-on-quarter to $2,033 per ounce and ending the year in line with the guidance range. Revenue came in at a record $160 million, up 40% quarter-over-quarter from $114 million. This was driven by higher production and improved gold prices. Our balance sheet remains solid with cash balance remaining stable despite increasing our rate of spend on stripping at Nkran and making a $25 million deferred payment Gold Fields. During the quarter, we also established a $75 million revolving credit facility providing us with further financial flexibility to continue to invest in our operations, particularly as we advise stripping at Nkran and invest heavily in exploration activities in 2026. The inclusion of a Maiden Underground mineral resource reshapes the future potential resource growth at the asset. We have planned an aggressive exploration program for 2026, targeting the expansion of these underground resources and reserve growth at Esaase through conversion drilling of inferred ounces. The momentum we have built throughout the year positions us strongly to meet our production guidance target of between 140,000 to 160,000 ounces this year, which is a 25% increase from 2025 levels. Mick will provide more color on this later. And with that, I'll hand it back -- I'll hand it over to Mick to discuss operations in more detail. Michael Cardinaels: Thank you, Matt, and good morning, everyone. Turning with safety. The previous quarter's improvement continued without any lost time or recordable injuries in Q4. We finished the year with a lost time injury frequency rate of 0.24 and a total recordable injury frequency rate from 0.48, both per million hours worked. In terms of mining and production, Esaase mining restarted in the early November and is currently ramping back up production in Q1 2026. Late wet season rains had a slight impact on mining movement but the necessary switch to concentrate on production from Abore in 2025, provided positive movements in terms of mined ore tonnes and the average grade of ore mine increased 9% compared with the previous quarter. Nkran pre-stripping continued ahead of buying with 23% more material moves compared with Q3 including some small quantities of oxide ore, which are being identified during the mining process and opportunistically blended with Abore fresh ore to supplement the plant feed. An additional excavated fleet is expected to be operational before the end of Q1 2026 to continue the expansion of Cut 3. We plan to mine in excess of 30 million tonnes this year, which is 3x the movement of 2025 for an approximate spend of between $100 million and $120 million of development capital. This maintains a Nkran Cut 3 is scheduled to deliver steady state ore production from early 2021. On Slide 8, we can see the processing performance. Ongoing modifications in the circuit to fully optimize the performance after the commissioning of the secondary crusher continued in Q4 and yielded further positive results. Milling rates increased approximately 7% compared to Q3 with December production achieving an annualized rate at the target 5.8 million tonnes per annum. Mill feed grade also improved approximately 9% compared to Q3, with an average of 1 gram per tonne for the quarter. The increased grade and feed plant also had a positive impact on plant recovery with Q4 achieving an average of just about 91%. The increased grade, throughput and recovery all culminated in an increase in gold production for Q4, up 15% versus Q3's production of 32,500 ounces to 37,500 ounces. We finished the year producing just over 121,000 ounces, which was in line with our revised forecast. Overall, you can see a production increase for each of the last 4 quarters, showing a strong positive trend of performance across all of our metrics. On Slide 9, we are providing information on the guidance. Looking forward to 2026, we once again expect the majority of all supplier to come from the Abore pit, where we have made modifications to our reserve pit design to take advantage of higher gold prices. This will result in a slightly slower ramp up of gold production in 2026, but enables us to further increase the recovery of our resource. Ratings will continue to increase with depth in Abore as we've seen in the last quarter of 2025. Production will be somewhat weighted towards the latter half of the year and continue into 2027 as we recover the higher-grade material at depth. We expect a range of between 60,000 to 70,000 ounces in the first half of the year and 80,000 to 90,000 ounces in the second half of the year. We are providing production guidance for the full year in the range of 140,000 to 160,000 ounces at an all-in sustained cost of between $2,000 and $2,300 per ounce. I will now hand over to Matt Freeman to discuss Q4 financial results. Matthew Freeman: Thanks, Michael. Good morning, everyone. As Michael has outlined in the fourth quarter was the strongest operation in 2025 and assisted by the very strong price of gold, we generated record revenues of $160 million and generated cash flows from operations of $56 million. Our headline earnings numbers continue to be impacted by the losses on hedges, but we now have only 60,000 ounces left to settle, which represents a lower percentage production in '26, therefore, allows us to more fully participate in the price of gold going forward. Adjusting the unrealized losses on hedges to be settled in 2026, we recognized adjusted net income of $0.15 per share. From a treasury perspective, the balance sheet remains very healthy with over $100 million in cash even after paying the first deferred payment to Gold Fields. Additionally, we're pleased to close a $75 million credit facility, which remains undrawn but will provide us with additional liquidity should the need arise. This Slide 11 illustrates that our operating costs remain consistent period-on-period and has generally been well controlled by the site. In particular, you can see processing costs have consistently fallen in a unit basis through 2025 as the throughput has improved. CapEx remains focused on critical projects such as the tailings dam raise. AISC, as expected, fell significantly compared to the previous preceding quarters in 2025. This is primarily due to the higher production levels that demonstrate to leverage our margins up to high production. We've guided AISC for 2026 to between $2,000 and $2,300 per ounce that period, much of the elevation compared with Q4 2025 due to the growing royalty burden with the consistently high gold prices being forecast in '26. Ultimately, this is good for the business, but it does increase AISC in a manner which is beyond our control. The chart demonstrate the increasing royalty burden we've seen through 2025 as a result of a significant increase in gold prices, but it also demonstrates the unit cost we can control and continue to fall as production improves. As many of you know, a new royalty regime has been proposed by the Ghanian government. So we'll assess that impact on AISC if it finally becomes enacted. As noted in my opening remarks, we have been able to maintain a strong cash position at around $100 million. We're very happy with this given -- we've now settled the first deferred payment to Gold Fields, continue to ramp up stripping activity at Nkran having invested approximately $35 million in 2025 and have made our first annual income tax payments in Ghana. As we look forward, we do expect 2026 to be another year of investment in the mine with further acceleration of stripping at Nkran and the final deferred payment to Gold Fields. From this year, it's a real inflection point because the 2027, we'll be past the fixed payment of Gold Fields and fully exposed to the gold price. This means even assuming the new royalty regime comes into play as proposed where there's a significant reversion in gold prices, the company will be well positioned to generate significant cash flows for shareholders. And with that, I'll turn the call back over to Mick to run through our updated mineral reserve and resource statements. Michael Cardinaels: Slide 14. The key highlights for this year is the declaration of our Maiden Underground resource. Resources for Nkran and Abore have been limited to the current reserve pit shells to allow us to target higher-value underground ounces in our underground maiden resource definition. As we look to the future for both pits transitioning to underground operations. Chris will outline the potential for reserve expansion that we see at Esaase over the next 12 months. In the table shown is a summary of our MRMR as at December 31, 2025. For detailed tables, please refer to the appendices and the recent news releases. Here on Slide 15. This section through the Nkran deposit shows the current reserve shell and the newly defined underground resource stopes. As you can see, we have a strong correlation between drilling density and stope generation, which gives us a great deal of confidence that this resource will likely expand with additional drilling. On Slide 16, we show a comparable long-section view for the Abore deposit. And again, it shows a similar story that stopes are able to be generated where we have drilling data. And because like Nkran, these mineralized systems are open in multiple directions. There is a likelihood that additional drilling will also yield additional underground resources here at Abore. And with that, I will turn the call over to Chris to outline the recent exploration successes at the mine and future exploration finance. Chris Pettman: Thanks, Michael. Q4 was another busy quarter in exploration as we ended the year making a concerted effort to maximize the amount of infill and step-out drilling at Abore completed by the end of December in order for results to be included in the Maiden Underground resource outlined by Michael. I'm very pleased with the team's ability to safely and cost effectively deliver an additional 10,950 meters of Abore in partnership with our drilling contractors in Q4. As we've discussed in prior quarters, drilling results in Abore were excellent in 2025, leading to the expansion of the program to include a total of over 33,000 meters by the end of the year. Q4 drilling continues to deliver excellent results, including expanding the high-grade zones at Abore Main, Abore North, further proven continuity of high-grade mineralization of Abore South and expanding the footprint of mineralization up to 200 meters below previous drilling as outlined in our January 22 press release. Some of the highlights of intercepts of this drilling are shown here on Slide 17. Slide 18 shows a gram-meter long section of Abore with Q4 drilling locations and intercepts along with areas where high-grade mineralization has been expanded and continuity improved at Abore South, Main and North pits. This image also shows the location of 4 step-out holes drilled between 100 and 200 meters below existing drilling. These holes were designed to test for continuations of the Abore granite and further high-grade mineralization. All 4 successfully intercepted mineralized Abore granite showing once again that the Abore system has significant growth potential. Particularly encouraging is Hole 448, which intercepted 87 meters of granite containing 3 zones of mineralization at grades of 2.5, 3 and 3.4 grams a tonne over 27, 11 and 15 meters, respectively, in an area that is 200 meters below Esaase drilling and open in all directions. That Hole 448 is shown in cross-section here on Slide 19, along with Hole 444 which intercepted a wide high-grade zone consisting of 30 meters at 4.4 grams a tonne and 18 meters of 2 grams a tonne immediately below the previous open-pit resource. This is a really good example of the room we have to grow the mineral resource in 2026, while we have confidence in Abore of the driver of future value at the AGM. Exploration work in 2026 will focus on continuing to build on momentum generated by the success of the 2025 program. With an initial budget of $17 million, work will focus on the 3 primary growth objectives as we look to support a potentially transformational life of mine update in 2027. We see significant opportunities to grow the underground resources and reserves at Abore where we're planning for a minimum of 30,000 meters of drilling in 2026. At Esaase, we will be focused on growing the open-pit reserves and higher gold prices with up to 35,000 meters of conversion drilling. We will also continue to advance our portfolio of greenfield targets where our focus will remain on early-stage work and drill testing of targets in the Nsoroma area located approximately 6 kilometers southwest of Nkran. First pass drilling in 2025 confirmed the extension of the Nkran shear through this area, along with favorable host rocks, quartz veining and alteration patterns, and we remain enthusiastic with the potential discovery of new open pit resource in this area. At Abore, we will continue to aggressively test for continuations of mineralization through step-out and infill drilling designed to increase the underground mineral resource while also conducting targeted conversion drilling to increase the indicated resource available for inclusion in a potential Maiden Underground reserves in 2027. Slide 21 here shows a long section through Abore with the locations of Q4 drilling and the new underground resource showing all grades greater than 2 grams a tonne. High priority targets for '26 are shown by these yellow stars. As part of our short to medium-term exploration strategy, we will also be working in conjunction with the mining team to advance the necessary studies and workflows for potential development of an underground portal and exploration drilling at it, that will be used to conduct future underground delineation drilling and deeper exploration target testing. Due to the density of existing drilling below the current mineral reserve for Esaase, we are uniquely positioned to realize immediate reserve growth at higher gold prices without additional drilling, allowing us to add value to the AGM quickly in the current gold price environment. In order to maximize that value, exploration will be returning to Esaase in 2026 with a campaign of conversion drilling designed to convert additional inferred resources to indicated category at a gold price of $2,500 ahead of the 2027 of MRMR and LOM. Here on Slide 22, we're showing the cross-section through Esaase with an example of a target area for conversion drilling in 2026 and is indicative of our targets across the entire deposit where drill density limits the extent of the indicated resource. Our 2026 program is well underway with rigs active at both Abore and Esaase, and we anticipate 2026 will be even busier than 2025 for our exploration team. But we are well resourced and well positioned to deliver significant value to the AGM to resource reserve growth this year. Back to you, Matt. Matthew Freeman: Thank you, Chris. In closing, I'd like to reiterate that -- I would like to reiterate that the positive momentum built through 2025 places us in good steps to realize meaningful production growth in 2026 and to execute our medium- and long-term organic growth plans. Our steadily growing production profile, execution of the final deferred payment to Gold Fields and expiry of hedges late this year, resulting in a near-term inflection point in cash flow generation, which should subsequently drive shareholder value. Beyond this, we have developed a robust exploration strategy and clearly understand where further expansion of mineral reserves and resources will come from. I'm excited about the potential for mine life extension beyond the 8 years as we look to include underground mining and target expansion of open pit reserves. Our strong cash balance access to the revolving credit facility allows us to aggressively invest in exploration while comfortably funding waste stripping activities at Nkran. Also, a reminder that Galiano has highly leveraged the gold price and remains Ghana's largest single-asset gold producer, with production increasing by approximately 25% in 2026, line of sight to reserve expansion and high gold and record gold prices, the potential for value creation for our shareholders remains high. With that, I'd like to turn it back to the operator, and open up for questions. Operator: [Operator Instructions]. Your first question comes from Vitaly Kononov with Freedom Brokers. Vitaly Kononov: Yes. I have several questions for the production heavily weighted towards the second half of 2026, whether the key execution risk we should monitor and how confident are you achieving the ramp up profile? Matt Badylak: Well, I think the key risks that we see obviously is we're aware of the fact that throughput has an important role to play here. And we're really pleased in terms of the way that the crusher has ramped up over the second half of 2025 and are comfortable that crushing circuit will help deliver nameplate production in the range of 5.8 million tonnes per annum. The other thing, I think that we -- Mick touched on here is the fact that we are expecting grades to increase steadily as we continue to mine through lower elevations of Abore. And those 2 factors will be driving that production higher in 2026, and as we said, slightly weighted to the tail end of the year as well. Vitaly Kononov: Thank you. Well, given the downward revision to the guidance that was provided earlier in 2025, it was lower down. How does that impact your 5-year outlook from now on? Michael Cardinaels: Well, we expect to, as I said, have a slightly lower production profile than 2026, but we expect to ramp up further in 2027, more in line with previous guidance in terms of production levels. Vitaly Kononov: Just the last one. Following the Maiden Underground resources at Abore and Nkran, what should we expect initial -- when should we expect the initial economic studies published for those mines? Michael Cardinaels: We'll be working on, as Chris mentioned, additional drilling to supplement the underground resource that was just released, and we will be working through the studies this year with the aim of having something available in 2027. Vitaly Kononov: So that will be early -- well, released with the annual results of the next year, right? Michael Cardinaels: That's correct. That's the plan this point in time, depending on the... Operator: [Operator Instructions]. There are no further questions at this time. I will now turn the call over to management for closing remarks. Matt Badylak: Thank you, operator, and thank you for everyone who dialed in and took questions or asked questions. Thank you for your time today. I wish you a happy Friday and a good weekend. Thank you very much. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating in ask that you please disconnect your lines.
Operator: Thank you for standing by. This is the conference operator. Welcome to the IGM Financial Fourth Quarter 2025 Analyst Call and Webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions]. I would now like to turn the conference over to Kyle Martens, Senior Vice President, Corporate Development and Investor Relations. Please go ahead. Kyle Martens: Thank you, Rocco. Good morning, everyone, and thank you for joining us. On the call today, we have James O'Sullivan, President and CEO of IGM Financial; Damon Murchison, President and CEO of IG Wealth Management; Luke Gould, President and CEO of Mackenzie Investments; and Keith Potter, Executive Vice President and CFO of IGM Financial. Before we get started, I would like to draw your attention to our cautions concerning forward-looking statements on Slide 3 of the presentation. Slides 4 and 5 summarize non-IFRS financial measures and other financial measures used in this presentation. On Slide 6, we provide a list of documents that are available on our website related to IGM Financial's fourth quarter and fiscal 2025 results. And with that, we'll take us to Slide 9, where I'll turn it over to James. James O'Sullivan: All right. Thank you, Kyle, and good morning, everyone. 2025 was clearly a strong year for IGM Financial. Growth in client assets across our compelling lineup of wealth and asset management businesses, including in our core businesses of IG Wealth and Mackenzie demonstrated strength and momentum during the year. This broad-based success drove IGM's adjusted earnings per share up 17% year-over-year to a record high of $4.61. 2025 was also a year where we had the opportunity to showcase the embedded growth within our strategic investments with the announcement of 2 important transactions later in the year. The Rockefeller transaction, which Keith will speak to in greater detail was an important business milestone and with the value of our equity interest nearly doubling in 2.5 years, our investment decision of 2023 has clearly been validated. Our participation in the transaction was guided by the key principles of supporting the positive evolution of Rockefeller's ownership structure, while maintaining IGM's significant influence and privileged position as the second largest and only wealth manager in the company's cap table. Our support of the transaction demonstrates our long-term strategic perspective on Rockefeller. The Wealthsimple transaction, another long-term strategic investment reflected its explosive growth and significant shareholder value creation. Our strategic investments continue to elevate IGM's diversified growth profile, complementing the strength and momentum in our core businesses. Turning to Slide 10. With clear momentum across our businesses, 2026 will be a year of capitalizing on accelerating growth and our financial strength. At IG Wealth, the focus remains on extending our success in the high net worth and mass affluent client segments, leveraging our segmented advice model and increasingly embracing AI-powered tools to further elevate the adviser and client experience. At Mackenzie, we will maintain our focus on product innovation, expanding distribution reach and investing in our client and adviser experience as we continue to build on our strengths in advanced data analytics and artificial intelligence to further elevate investment excellence. And across the 6 wealth and asset management businesses, we continue to pursue opportunities to work collaboratively across businesses to elevate our capabilities and create collective value. We refer to this as the benefit of horizontal connectivity. Shifting now to capital allocation, with strong business momentum and fundamentals, combined with clear financial strength we enter 2026 positioned to meaningfully increase capital return to shareholders. During December, we launched a normal course issuer bid for up to 5% of our shares outstanding. And over the past 2 months, we've been quite active. Our intention is to repurchase the full 5% over the remainder of the year. And yesterday, our Board approved a 10% increase in our quarterly common dividend. The increase demonstrates the management team and the Board's confidence in our financial position and growth trajectory. Before passing the call over to Damon and Luke to discuss more details on their businesses, I'll shift briefly to the fourth quarter, starting on Slide 11. Q4 adjusted earnings per share of $1.27 was another record high. During the quarter, IGM was once again recognized for our efforts as one of Canada's top 100 employers and among Corporate Knights Global 100 most sustainable companies. Turning to Slide 12 on the operating environment. After a 15% year in 2024, IG and Mackenzie's average client return was nearly 12% during 2025. Notwithstanding the evolving global economic environment, the strong market returns, along with easing inflation during the year are supporting a constructive backdrop for our businesses as we start 2026. Slide 13 demonstrates the earnings growth across our Wealth and Asset Management segments, with consolidated 2025 adjusted net earnings, up 16% year-over-year, including a 21% increase in the fourth quarter. Slide 14 highlights our asset growth on a look-through basis, which in aggregate grew by 17% at the IGM level with contributions from each of the 6 businesses. I'll turn it now over to Damon to speak to the Wealth Management segment next. Damon Murchison: Thank you, James, and good morning, everyone. Turning to Slide 16 and Wealth Management's fourth quarter highlights, including IG Wealth, Rockefeller and Wealthsimple. I've been speaking about the momentum at IG Wealth more than a year now. And in the fourth quarter, that momentum accelerated. Our quarter end AUM&A of $159 billion was a record, up 13% from Q4 of last year. Our gross flows of $4.8 billion and sales of $4.5 billion were both Q4 records and demonstrated strong year-over-year growth. New client growth inflows of $1.6 billion grew almost 19% versus Q4 2024 with 81% of those flows coming from mass affluent and high net worth clients. The quarter also delivered strong total net inflows of $694 million and net sales in the IGM product or IGM product of $347 million, representing the 6 consecutive quarters of positive net flows in sales. Our momentum continued in January with adjusted net inflows of $102 million and strong net sales into IGM product of $704 million. Of note, our total net inflows during January of $3.4 billion included $3.3 billion inflows from our institutional clients related to our strategic investment in Rockefeller. We view these flows as further evidence that our investment is truly strategic and as James just spoke about, an example of horizontal connectivity. One of the drivers of our success has been our ability to share our views with both current and prospective clients across leading financial planning and investment topics. For the third consecutive year, we ranked #1 and earned media share of voice among both national banks and independent firms continue to confirm that our voice is being heard. Lastly, both Rockefeller and Wealthsimple continue to deliver growth. I'll speak to more of this on upcoming slides. Moving to Slide 17. On the left-hand side, you can see solid growth in our adjusted flows with record gross inflows across all periods, which are supporting our strong net inflows. The graph on the right demonstrates the strength of our business and ability for our advisers to work with their clients as a dollar average cost into the market. This slide also represents a visualization of the returns that our business is reaping from investments that we've made in the past. These investments have elevated our competitiveness in the marketplace in both client and adviser experience. This business is built to gain market share, and we fully expect that our advisers will continue to gain both share of wallet and market share in their respective communities. Turning to Slide 18. This provides our view into our operating results, which continue to provide great insight into the strength of this business. Moving to Slide 19. Our gross inflows from new acquired clients demonstrates the new client acquisition force that IG Wealth has become. During 2025, gross inflows from newly acquired clients of $5.3 billion represented 17% growth over the prior year, with almost 79% of these inflows coming from mass affluent and high net worth claims. Turning to Slide 20. This showcases the growth that we've delivered in both our mortgage and insurance businesses with mortgage funding up 23% year-over-year and new annualized insurance premiums up 16% versus 2024. We continue to see strong growth prospects in both of these businesses. Now let's turn to Slide 21 and talk about Rockefeller's progress. Client assets grew by 31% year-over-year, driven by organic growth, inorganic growth as well as the markets. Over the last 12 months, organic growth has driven $10.2 billion in client assets, while the addition of 76 advisers during 2025 has supported inorganic growth of $15 billion in client assets over the same period. We are as confident as ever in Rockefeller's ability to continue to execute on their growth-oriented business model. Now let's move to Slide 22 and talk about Wealthsimple as they continue to deliver. Over the last year, Wealthsimple has grown their AUA by 74%, with fourth quarter delivering sequential growth of 10%. At the same time, Wealthsimple has increased their clients served by 24% year-over-year, ending the year with 3.2 million clients. Wealthsimple continues to demonstrate an ability to attract new clients and grow client share of wallet at the same time. So with this, I'll turn the call over to Luke Gould. Luke Gould: Great. Thanks, Damon. Good morning, everyone. Turning to Page 24, you'll see highlights from Mackenzie and the Asset Management segment for the quarter. During the fourth quarter, we continued our momentum across a number of dimensions. We ended the quarter with record high assets of $244 billion, up 2% in the quarter, driven by investment returns for our clients and net sales of $1.5 billion. Our net sales were once again up meaningfully from last year with momentum across channels and overall sales were $1.5 billion. Importantly, in the top right, we have highlighted the continued momentum in retail, where we continue to have positive flows and meaningful year-over-year improvement. I'll give a bit more color on the coming slides. We've also highlighted another $2 billion in institutional awards during the quarter that are expected to fund during early 2026. Also earlier this month, we reported our January sales results, this was our second best January investment fund net sales in the last 25 years with significant momentum in retail, where gross purchases were up close to 100% and net sales of $134 million were up meaningfully from 2025. We've been very busy bringing innovative and compelling products to market with 23 new products launched in 2025. And in the bottom right, we're pleased with a lot of our sales momentum coming from products launched during the last 36 months. You can see we've highlighted 4 new products launched in Q4, which extend our privates, our quant and our value offerings. And at the very bottom, you can see both ChinaAMC and Northleaf continue to generate good growth. ChinaAMC's investment funds are up 28% from last year, while Northleaf continued to have strong fundraising of $5.8 billion during '25 and $1.5 billion during the quarter. Turning to Page 25, you can see the trend in the history of Mackenzie's investment fund net sales. At the bottom left, we've introduced Mackenzie's overall annual net sales results of this slide to provide an opportunity to showcase the breadth across client segments. This $6.7 billion in full year 2025 is an all-time high for us with several awards from institutional investors and financial service partners across several geographies. And on the top left, you can see January 2026 was our second best net sales in the last decade, and Q4 in the middle was our third best in the last decade. And these improvements in 2025 were driven by retail. On the right-hand side, you can see the last 12-month trailing trend with good momentum in retail and overall. And we believe that we have winning conditions entering 2026. And as our sales organization leans in opportunities, we're confident in the continuation of the strong upward momentum. Turning to Page 26 at the top left, you can see our net sales segmented between retail and institutional and by delivery vehicle. We've once again circled the improvement within our retail investment funds, which accounted for a large majority of our improvement from Q4 -- relative to Q4 '24. Now on the right-hand side, we provide a snapshot of our top 5 net selling actively managed investment funds, including both mutual funds and ETFs. We wanted to highlight that increasingly active equity ETFs are among our top net sellers with the launch of a full suite of active equity ETFs over the last 2 years. And here you can see that [ MIQE ], our Mackenzie GQE International Equity ETF was our second best-selling fund. We want to highlight that we have a pricing philosophy of being clear, consistent and competitive everywhere, and our management fees are the same on our active ETFs as on the traditional mutual funds. In the bottom left, you can see that we've been gaining ground and we are poised to break through the overall industry last 12-month trailing net sales rate. Now turning to Page 27. you can see performance and our net sales for our retail investment funds by boutique. Across the slide, looking near the top, you can see compelling performance relative to peers across multiple boutiques. If you look towards the middle, you'll see continued exceptional relative performance at our global fund equity boutique as well looking through the boutiques you'll see strong performance across time frames for our Greenchip, Cundill and multi-asset boutiques. I do want to highlight at the bottom looking at investment fund flows in the quarter. Our global Quant equity boutique put up strong net sales in Q4, but we believe we're just getting started as we trailblaze with quant in retail. Their holistic quant all-weather approach that marries AI with HI has delivered performance track records that are leading and impressive, not just in terms of the returns, but also in terms of the consistency of alpha across different environments. Turning to Page 28. A few comments on the Chinese investment fund industry. On the left, you can see the industry grew by 14% over the last year and 3% in the quarter, driven by the strong market rebound in Q3 as well as continued industry net flows. On the right, we're pleased with the continued strong performance of ChinaAMC relative to peers, with a second-ranked market share on long-term funds of 6.7% of the industry, up from 6.2% last year. Turning to Page 29, you can see the strong growth in ChinaAMC's AUM. Overall AUM remained just over RMB 3 trillion and is up 22% from last year. The investment funds increased by 1% in the quarter and net outflows on money market fund partially offset the net sales into long-term funds. Last, on Page 30, you can see another very strong quarter of fundraising at Northleaf, with $1.5 billion of raising in the quarter. Over 2025, fundraising was strong across private equity, private credit and infrastructure resulting in $5.8 billion of fundraising. This was the best year Northleaf has had in fundraising since we commenced our partnership in 2020. I'll now turn the call over to Keith Potter. Keith Potter: Thank you, Luke, and good morning, everyone. On Slide 32, you can see key highlights for Q4. Adjusted EPS was $1.27, up 21% year-over-year and excludes Lifeco's other items and gains on partial sales of investments in associates. We returned $263 million to shareholders in the quarter, including $130 million in share repurchases. As James commented, we expect to return more capital to shareholders in 2026 and 2025 through higher level of share repurchases, including the use of proceeds from the Rockefeller transaction, which contributed to unallocated capital of approximately $1 billion. In December, we filed an NCIB for 11.8 million shares which is 5% of the outstanding and our intent is to repurchase the maximum permitted under the bid. We also increased the dividend in the quarter from $0.5625 to $0.62, and prior to the increase, the last 12 months trailing cash dividend payout rate was 57% and 50% on a run rate basis. And as we go forward, we will review the dividend if the payout is below 60%, while giving consideration to our overall capital allocation priorities and general market environment. We also closed on our incremental $100 million investment in Wealthsimple and finalized the Rockefeller transaction, I'll speak to in a few moments. And finally, in 2025, expense growth came in at 4.2%, in line with guidance, and we expect growth of 4% in 2026. Turning to Slide 33. You can see our AUM&A and flows trend, we achieved solid asset growth during the fourth quarter with ending AUM&A up 2.5%, while average balances increased 5.4% relative to Q3 and 14% year-over-year. On Slide 34, you see how higher assets drove solid revenue growth and a 21% year-over-year increase in adjusted EPS at the IGM level. Drilling down to the operating company level, Slide 35 presents key profitability drivers for IG Wealth Management. And on the left, you can see that average AUM&A was up 4.8% from last quarter. And related to the strong asset growth, our advisory fee rate declined 0.7 basis points during the quarter, primarily driven by clients moving up well and fast. On Slide 36, IG's overall earnings of $166.9 million in Q4, up 23.4% year-over-year on revenue growth of 12.5%, demonstrating strong growth and positive operating leverage in the business. On point 2, other financial planning revenue continues to demonstrate growth, supported by momentum in the mortgage and insurance business. And on point 3, IG operations support and business development expenses were $165 million in the quarter, up 0.7% year-over-year and up 1.6% for the full year, which is lower than guidance. Moving to Slide 37. We have Mackenzie's AUM by client and product type as well as net revenue rates. And on the left, you can see average AUM was up 5.4% versus Q3, and on the right, the third-party rate excluding Canada Life decreased primarily due to the onboarding of $2.6 billion in institutional SMA and ETFs during Q3 and Q4. And as we look forward to Q1, we expect this rate to drop approximately 2 basis points for mix shift driven by institutional onboarding, the strength of our wealth management partnerships and having 2 less days in Q1. And the changes in the Canada Life rate was driven by a few items, including a rebalancing mix shift, a onetime annual fee true-up and admin fees that remain stable as AUM increases. Turning to Slide 38. Mackenzie earnings of $60.4 million are down slightly year-over-year. One of the main drivers is net investment income and other, that was $8.5 million last year versus $2 million this quarter, primarily from seed capital gains and excluding this earnings would have been up 6%. Operations support and business development expense growth of 9.5% was primarily driven by higher wholesale compensation from improving net sales that Luke commented on as well as other variable items. And as a reminder, wholesale compensation is expenses paid and it is not capitalized and amortized. Turning to Slide 39. On operations and support and business development expense guidance. Overall, we expect expense growth of 4% in 2026. I will note that starting Q1 2026 certain investment management advisory expenses at Mackenzie that are primarily variable with AUM and revenue will be reclassified to sub-advisory expenses from operations and support. These expenses were $7 million in 2025. And beginning in Q1, it will be retrospectively reclassified from operations and support to sub-advisory expenses. So pro forma these reclassifications, we expect our operations and support and business development expenses to grow by 4%, continuing to balance prudent expense management while growing our businesses. Slide 40 has ChinaAMC results. On the right, you can see ChinaAMC's earnings of $22 million. It was impacted by seed capital losses in the quarter and onetime items. Adjusting for this Q4 it would have been in the range of Q4 2024 through Q2 2025 and in line with our expectations. Slide 41 has earnings contribution from companies in each segment. I'll make a few comments here. First, Rockefeller had strong earnings of $12.2 million, with growth coming from their core family office business as well as significant contributions from their strategic advisory M&A practice and other transactional activities, which can vary from quarter-to-quarter. Excluding the contribution from the variable revenue, earnings would have been closer to $6 million to $7 million, which builds from last quarter earnings of $2.9 million. For Northleaf lease, Q4 earnings of $8.8 million benefited from a year-end tax true-up and a couple of onetime items. Looking forward, $4.5 million to $5 million net of NCI is a reasonable expectation for average quarterly earnings in 2026 with expected quarterly variability. And I would remind Q1 could be somewhat higher due to annual incentive fees. Turning to Slide 42 for further details on the Rockefeller transaction. As we announced in October, we participated in Rockefeller's recapitalization transaction which saw our investment nearly double in value as compared to the value at the time of the initial investment in April of 2023. The transaction had a few components, including the recapitalization, which included equity, debt and adjustments to the management incentive programs as well as a cash distribution to existing investors. A meaningful outcome of the transaction is IGM receiving pretax proceeds of $394 million from the sale of a small portion of our investment and the receipt of a distribution to existing investors, combining the sale of a portion of our interest and impact of the long-term equity incentive program. IGM now holds 17.2% interest in Rockefeller valued at CAD 1.16 billion. We supported the goals of the transaction by selling a small portion of the investment, while remaining the second largest shareholder and only wealth manager in the capital stack with this investment remaining long term and strategic to IGM. As we look forward to 2026, we expect Rockefeller and the overall transaction to contribute to IGM's adjusted EPS growth. First, we expect proceeds from the transaction to support our NCIB share repurchases and the amount would represent a notional annualized earnings contribution of approximately $27 million or $0.12 per share. Second, we expect Rockefellers contribution to IGM's reported 2026 earnings to be approximately breakeven and excluding the potential impact from certain equity incentive programs to be positive and in line with 2025. And for context earnings will include incremental interest expense and certain expenses related to equity incentive programs have made great period-to-period variability given the expected accounting treatment under IFRS. And we will provide updates in future quarters on this. I would note that in Q1, it could be slightly negative due to seasonally higher expenses and then move to breakeven and positive for the remainder of the year. Overall, we expect the combined performance of Rockefeller and the impact of the transaction to contribute to EPS growth in 2026 and accelerate into 2027. On Slide 43, we demonstrate significant progress on execution against our capital allocation priorities we returned $263 million in capital to shareholders in Q4 while increasing unallocated capital of $1 billion, including the proceeds from the Rockefeller transaction. Also, our leverage ended the year lower at 1.37x. As mentioned, the Board approved a 10% quarterly dividend increase of $0.62 per share, reflecting IGM's strength on strong strategic positioning of our underlying businesses, and we currently expect to maximize our share buybacks under the new NCIB. Slide 44 presents a framework for how management views the buildup of IGM's indicative value. The methodology behind us is consistent with the sum of the parts disclosure we've used in the past, that builds up an indicative NAV per share of over $82. We've introduced this view to provide a perspective on the value of our collective businesses given the strong momentum at IGM. I just note that we derive the indicative value of our core operating companies using an average PE multiple from a diversified group of wealth managers for IG and asset managers for Mackenzie as of market close on Wednesday. The indicative value of our strategic investments is based on our historical approach to disclosures. This valuation framework demonstrates the embedded value at IGM Financial. That will end our prepared remarks and we'll open it up for questions. Operator: [Operator Instructions] And today's first question comes from Scott Fletcher at CIBC World Markets. Scott Fletcher: The market narrative over the last few days has really been around AI disruption and the wealth managers were sort of -- we're not immune to that. Just wanted to get your thoughts on AI and wealth management and how you see the rapid development impacting both on the wealth and the asset management sides of the house? James O'Sullivan: Sure. Scott, it's James. I'll start and then I'll have Damon and Luke make a comment. Maybe the most important thing for me to say at the outset is that the last couple of days to serve as a reminder that every move in the market does not represent a change in value, but it does represent a change in price. We're going to integrate AI tools, we are integrating AI tools. And we're doing it to build and deliver an even better adviser experience and an even better client experience. We have a substantial project underway as we speak on AI. And I expect, Scott, we're going to have meaningfully more to say on this topic during the first half of this year. With that, a few comments from Damon and from Luke on each of wealth management and asset management. Damon Murchison: So Scott, for IG, we really truly see this as an opportunity for us that we are a little bit unique in the industry. We believe we have a world-class tech stack. And we have global partners that we partner with that are all investing heavily in AI, and our tech stack is integrated. So it's really the trifactor. We've got a clean data. We've got integrated across all systems and tools and they're AI-enabled. So what really that's going to allow us to do is significantly improve our adviser and client experience, and we're looking at it, leveraging our segmented model. So both the corporate channel and the entrepreneurial channel. We're focusing on many different things. One example would be pre-during and post meetings with clients, how can we leverage AI to make sure that the meetings are sharper. Our adviser more prepared. What we're talking about is more relevant personalized for the client. At the end of the day, it's going to be -- it's going to mean for us, we're going to be able to do more meetings and better quality meetings driving better client outcomes. So that's what we're focused on from an IG perspective. Luke Gould: Yes. Look, I'll just follow up with a few comments related to asset management. First, I'd say people pay us for Intellect, for process and for investment edge. So technology and any tools that can harness that are critical to us. I'd say when you look at Mackenzie. First, we've got our quant team and we've also had quant capabilities embedded into our multi-asset team. And we view this as giving us a competitive advantage. We believe we are a world-leading and do have something really special here. Beyond that, I'd say when it comes to AI, we've been integrating these tools into our investment processes everywhere, fundamental equity, fixed income, et cetera. And this is just a natural evolution in how investment management is delivered. But I'd say this is fundamental to what we do to actually incorporate technology and where we stood up to capitalize on. Scott Fletcher: Great. Really appreciate the commentary there. And then I just had a second question on the Rockefeller transaction and taking some of the chips off the table there. Certainly realized a nice return. So wondering if there's any desire to sort of take a similar approach with any of the other investments or if this is really just unique to the transaction here? James O'Sullivan: Yes. It's James. I'll share a few thoughts on Rockefeller and then more -- perhaps more broadly. I think Rockefeller, Scott, emerges from this transaction with really a remarkable shareholder base that it now includes a number of families globally that I can tell you are committed to its long-term success. And I think very importantly, and I've said this before, what I love about Rockefeller is they do not need to reinvent the wheel every year. They need to continue to do what they've been doing now for 8 years. They need to do it with focus, with determination, with excellence. So for us to almost double our investment in 2.5 years, repatriate kind of pretax, almost $400 million to Canada for share buybacks. It represented a great opportunity. And of course, we sit here today, still as the #2 shareholder, the only strategic in the capital stack, and I can assure you our interest remains strategic and long term. I will use the opportunity to share with you that any further purchase would have to be both what I would call risk smart, we claimed that phrase in 2023, and it would have to be earnings aware, that is mindful of how we trade. But I think we've now completed 2 transactions with Rockefeller very consistent with these principles. And subject to those principles, we'd be pleased to own more in the future. To your broader question on whether we take chips off the table or sell more of anything else. I think the short answer is no. I think our ownership position in ChinaAMC is long term stable. Wealthsimple, if anything, I would see us potentially deploying some capital depending on how it evolves strategically. And similarly, with Northleaf, we've restructured the 2020 deal to ensure that the founders and the key employees are long-term owners of the exact same instruments as us being common shares, and we will be purchasing a little bit more of Northleaf both this year and in the coming years. So no, I'm not looking to -- I think we've got -- I really think, Scott, we're sitting here with the businesses we want. We don't need to look further afield if we want to deploy further capital kind of strategically in businesses. We've got a lineup of 6 great businesses, and that's where we'll be looking. Operator: And our next question today comes from Tom MacKinnon with BMO Capital Markets. Tom MacKinnon: Yes. Just further clarification as to how we should be looking at the Rockefeller going forward. Should we just assume that your earnings that you've got out of Rockefeller, net of NCI in 2025 are going to be the same as 2026? Or are they going to be 0 and you're just going to make up for that loss of earnings through share buybacks? Just a little bit, if you can clarify? Keith Potter: Sure, Tom. It's Keith here. Yes, what I'd say is, there is an equity incentive program that can create variability. We'd say the earnings we'd expect, excluding the variability would be in line with 2025. So you can think about that being approximately $10 million. It makes that variability, may have a negative impact, and we'd say it would be closer to breakeven for the entire year. And to your other point, I would comment that, yes, we will be repurchasing shares of the proceeds, and you can think about that being worth about $0.12 per share, close to $30 million in notional earnings coming from Rockefeller and the overall transaction. Tom MacKinnon: Okay. So it seems $10 million outlook for Rockefeller for 2026? Keith Potter: Yes, I think, Tom, that would be a good number to use. Tom MacKinnon: Okay. And then -- okay. Now just further digging into the AI disruption that we're kind of seeing, especially with wealth managers. You mentioned here, AI tools really helping your advisers serve their clients better. But AI tools are clearly increasing clients capabilities as well. So -- when we look at that, what does that mean for the general model? I mean does that mean we would potentially get more do it yourself? What does that mean for fees when someone can do some of the stuff on their own? And do they not necessarily need to be paying an adviser to do all the other stuff that they can sort of ChatGPT with. So just comments with respect to that because we've really seen the wealth managers hurt more on this. And I take your point that the market does overreact, but comments with respect to what I just said would be great. Damon Murchison: Yes, Tom, it's Damon. So I guess you're asking will AI replace advisers. And you could look at it as AI could replace certain types of advisers, particularly those that just focus on investing people's money. You're just focusing on investment people's money and market commentary, chances are AI is going to be able to do it cheaper, faster and at scale. So that's how we look at things. And just a reminder, at AI -- at IG, that's not what we do at all. What we focus on is multigenerational family dynamics and planning. We focus on complex tax optimization, estate structuring, legacy planning, business succession planning. We work with our clients. We were on our fifth generation of clients. We build trust. We build relationships. A lot of what we do is emotional coaching in life situations. That cannot be replaced by AI at all... Tom MacKinnon: Well, I would argue that estate planning could be replaced by AI? Damon Murchison: Certain type of estate planning, not complex estate. Tom MacKinnon: So some of your -- some of the services that you provide could be AI replaced? Damon Murchison: Well, once again, we're talking about complex situation. So a simple situation, some of it yes, for sure. But complex, we do not believe so. And in totality, well, we believe this is going to just allow us to better demonstrate what good advice means to the marketplace. I mean, if you were to ask me, why are we growing so fast now, how are we getting so many clients? This is how we're doing it. There is a significant need out there in this industry to make the complex simple and help us plan our lives because our lives are far more complicated than they have been in the past. And that's what IG delivers. James O'Sullivan: And Tom, it's James. I'd just add that, I mean, the way I think about this is I think you've got a look kind of wealth management model by wealth management model and ask the question, how do advisers add value in that model? And kind of how wide or not is the moat that they create as a result of how they add value? And so in models where advisers across the country are just picking stocks. I don't view that as -- I really don't view that as adding sufficient value to create much of a moat. But what I've always loved about IG including before I was here, is that this is a model that's really been thoughtful about the division of labor. What should the house do? What should the adviser do? Where should we leverage third parties. And I think it's evolved to the point where compared to some other models, the IG model, led by planning. I really do think creates a bigger moat than some other models where the value add, I just view as significantly narrower. I take your point on fees, Tom. I mean -- but I'd also say that this industry has been dealing with the headwind of pressure on fees now. Well, certainly, the entirety of my career. But I'd say that has been -- as headwinds go, that has been a moderate headwind, and I think the trilogy of kind of rising markets, net sales opportunity and the opportunity for positive operating leverage over time have allowed us to continue to grow the business. And I expect that to continue. But I think this is definitely going to sharpen the focus on the wealth management model and just how much value add is each adviser contributed to the client and that relationship. And I think relatively, we are well positioned. And as I said earlier, we're going to be coming back to you and your peers in a few months with a lot more to say on this topic because it's an important topic. Operator: Our next question is from Bart Dziarski with RBC Capital Markets. Bart Dziarski: Congrats on the strong quarter. Just following up on the wealth management topic and AI. So I hear your comments and color, but you did increase your expense growth guidance in that segment. So last year, you were calling for 2.5% growth, this year looks like 4% growth. Is that a defensive posture? Or is that an offensive posture in terms of the spend in that business? James O'Sullivan: That's an interesting point. I don't know, Bart, that I'd read too much into it. I mean I was sharing with the Board yesterday that what I love about Damon and his leadership team is they don't play in quarters or years. They've actually got a multiyear plan for this business. And when expenses are running a bit hot, he can tap on the brakes when we see a little bit of runway, he can kind of press on the gas. And so I really wouldn't read too much into the 4% other than -- it's just -- we really did want to establish our credentials, if you will, as an organization that was serious about respecting the shareholders' money. And I think we've done that. But in the current environment including the current level of inflation as it relates to services that we consume in this business, 4% kind of felt about right for now, subject to, as I say, some ongoing work, some very important ongoing work that we're doing to see how we can, if anything, accelerate our deployment of the AI tools. Damon? Damon Murchison: Yes. I would agree with James. And I would just say that there are major projects go that extend beyond AI with total cost reporting and a number of regulatory things that we have to get accomplished this year that everyone has to get accomplished in the industry this year as well as it's our 100th anniversary. So we've got a lot of things on the go at IG that we're very excited about. Bart Dziarski: Great. That's very helpful. And then just on the market volatility, so you also agreed price and value can be quite disconnected sometimes. But we have seen Robinhood had come down 50%, that's a pretty meaningful move. And so just as a read-through to Wealthsimple, how are you thinking about the kind of stability of the mark there in light of that move? James O'Sullivan: Yes. It's James. I'll start and then Keith will add. I mean let me start by just saying, Bart, that with each kind of passing Board meeting, my confidence is growing that Wealthsimple is really establishing themselves as a prominent part of Canada's financial sector. And so from an operational perspective, the beat goes on. I can't promise a straight line here, but I can tell you the direction of travel for that asset is up. And I'll also share with you that the -- it's a very highly integrated and expansive platform. And when I think of the Wealthsimple platform, I start with the trade platform. I then think about the Invest platform. It also has kind of outstanding save crypto and work platforms, but it's a remarkably integrated, expansive and nimble platform. The Wealthsimple transaction closed, I believe, Keith, in December. And in some respects, Bart, this is the difference between public markets and private markets, right? I mean in private equity or private markets, generally, if there was a large trade in December, you would -- no one would even think of trading -- changing the mark kind of 6 weeks later. And I think it's back to the point that you just reaffirmed that we do from time to not time need to remind ourselves that there is a difference between price and value. Keith? Keith Potter: Yes. No, I agree with everything James said. And to James' point, we marked this in December. It is quite a diversified platform. You think about where growth is coming from for Wealthsimple. It's coming from a broad group -- a broad diversified growth. It's as James said, it's the trade platform. It's the Invest platform, it's the Banking and Safe platform and reading the media that Wealthsimple is not nearly reliant on crypto like some other players in the industry. So it's a Canadian company built for Canadian clients, and they're growing quite well, and we're looking that forward to what they're going to do in the future here. Operator: And our next question today comes from Graham Ryding with TD Securities. Graham Ryding: Just to follow up on that. Is there any color you can give us on -- it seems like is the piece that's sort of weighing on some of those U.S.-based comps that might be a read-through for Wealthsimple. Can you give us some context for how significant crypto is in terms of that sort of AUA mix within Wealthsimple or how diversified that AUA is? Just trying to get some comfort that the overhang on crypto is not overly material for Wealthsimple? Keith Potter: Yes, it's Keith. I'll -- I can say that crypto is a very small component of their AUA, but we're not going to get into details of the mix. They're private company, but I can give you that comfort. Graham Ryding: Okay. And then most of my questions have already been asked. But just on the Rockefeller piece, if I missed it, I apologize. But can you give us some context on why you decided to sell down a piece of Rockefeller? Was it opportunistic perhaps just to generate some proceeds to fund buybacks going forward? And how should we think about your longer-term positioning in Rockefeller? Would you be open to selling down again? Or are you committed at this level? James O'Sullivan: Yes. We were at 20% and change, and we're now at 17% and change. A chunk of that, frankly, is the settlement of a management incentive plan. The result of which is management very, very happily or meaningful shareholders in this company. And the delta small portion of that move from 20% to 17% or a portion of it does represent a sale. We could have sold more. We chose not to. We actually chose to reinvest some of what we could have taken to kind of bag in the business, to be clear. But the bit that we did sell, I would really say it was an accommodation, by that, I mean, there are some high-profile global families that wanted into this capital stack, and we wanted them in the capital stack. So this is kind of how it shook out. To be clear, over time, I would like to own some more of Rockefeller. But as I said earlier, there's 2 principles that any transaction is going to have to be faithful to, any transaction will have to be both kind of risk smart as we coined it in 2023, and it's going to have to be earnings aware, which means that it's going to have to be mindful of how we trade. We have a very limited ability to do things that our shareholders don't see value in or cannot reflect within a reasonable period of time in our share price. But I actually think the opportunity to do something that's both risk-smart and earnings-aware with Rockefeller in the coming years will be real. And on that basis, we would desire to own more. Operator: [Operator Instructions] Our next question today comes from James Gloyn National Bank Financial. Jaeme Gloyn: First question just on the dividend. As you -- I believe commented that you will look to review it with payout ratios below 60%. Is that -- I just want to clarify or understand the time line. Is that an annual review? Or is it something you'll review more regularly quarter-to-quarter? Keith Potter: Yes, Jaeme, it's Keith here. I think you can expect more of an annual view. We expect and we've guided to growing earnings at 9% per year. And on an annual basis, we'll -- you can expect that to be the moment in time that we do review. We all know that we -- in the industry we're in, our business can be cyclical, but that would be a reasonable expectation on an annual basis. Jaeme Gloyn: Okay. Great. Maybe a question for Luke in the Mackenzie business. Obviously, quant and multi-strategy doing very well, but a couple of other platforms, not so much. Can you talk about perhaps some of the strategies or what you're doing in Mackenzie to get it a stronger turnaround of Bluewater or Ivy or something -- a couple that are maybe less robust on the net flows perspective. Luke Gould: Yes. Great question, James. So on Page 27, we've got a boutique approach. What it means is we seek to stuff that's relevant and compelling in every market environment and for every client need. Some of the boutiques invariably find themselves in environments that don't favor their approach and favor their style. They remain disciplined to it. And we obviously coach to make sure that they're leading in their investment edge. Right now, for Bluewater for growth, there's a few of them that have had soft performance and we remain behind these teams, coaching them and making sure that they're doing what they told clients they're going to do and making sure we're raising the bar and investment excellence everywhere that we've got quality across all of our boutiques. And that when the market environment comes, it suits their particular approach that they're delivering on it and have a clear client expectations everywhere and all the time. But yes, we are very pleased with this particular approach that we've got a lot of stuff right now that where we've seen some net redemptions in Bluewater based upon the performance over the last 24 months. We actually have a lot of stuff that's being leaned in on, and right now, there's more people selecting Mackenzie than in the history of the company when you look at the gross purchase activity. Jaeme Gloyn: And then last, just to maybe come back to the AI team one more time. How much of a friction point do you think the regulatory environment would present in terms of either advisers or IPS construction, things of that nature? Like how much would regulatory environment create a friction for that type of disruption? Damon Murchison: Jaeme, it's Damon. I think from a regulatory standpoint, the regulators would be open to working with wealth managers to integrate AI as long as you'd have the technology and the infrastructure and the internal controls to back it up and make sure that you have quality control. I think they would be all for it, because it would improve client outcomes, and that's what the regulators are focused on. And quite frankly, we've had discussions with them on a number of topics, including AI. So we're excited about the future here. Jaeme Gloyn: Yes. I think I meant more around would there be any hurdles for potential AI disruptors from a regulatory standpoint, but if they're supportive for you, I'm sure they're supportive of all that as well. Operator: And our next question is a follow-up from Bart Dziarski with RBC Capital Markets. Bart Dziarski: Just a follow-up on the dividend. So the growth rate of 10% is above your EPS 9% plus target. So I just want to check, is that a signal in terms of confidence in your EPS growth outlook? Or am I reading into that too much? James O'Sullivan: Well, I mean, -- we're very committed to our 9% medium-term target to be sure. But I think what it really reflects is that this company's financial condition has never been stronger. And we took our board through it in some detail yesterday. If you look at the client assets, look at revenue, look at earnings, look at unallocated capital and look at what's becoming objectively a very low leverage ratio. The financial condition has never been stronger. And so I think we -- the 10% became a number that was well justified. I'm also -- we're also mindful that it's been a while since we increased our dividend. And if you have this kind of financial strength and that level of confidence in your medium-term EPS the difference between 9% and 10%, particularly in a year where you plan to buy back as much stock as we do. The run rate kind of delta or carry is pretty small, and it's very manageable. Operator: And that concludes our question-and-answer session. I'd like to turn the conference back over to the management team for any closing remarks. James O'Sullivan: Great. Thank you, Rocco. And we'd once again like to thank everyone for joining us on the call this morning. And Rocco, with that, we can end this morning's call. Operator: Yes, sir. Thank you. That brings a close to today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Good morning, and welcome to Grupo Rotoplas' Results Conference Call. Please note that today's call is being recorded. [Operator Instructions] Today's discussion contains forward-looking statements. These statements are based on the environment as we currently see it, and as such, there may be certain risks and uncertainty associated with such statements. Please refer to our press release for more information on the specific risk factors that could cause actual results to differ materially. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, further events or otherwise. Please allow me to remind you that the company issued its earnings press release yesterday after market close. It can be found in the Investors section of its website. Also, the presentation for the call and the webcast link are in the Investors section. Today's call will be hosted by Mr. Carlos Rojas Aboumrad, Chief Executive Officer; and Mr. Andres Pliego, Chief Financial Officer. I will now turn the call over to the speakers. Carlos Rojas Aboumrad: Good morning, everyone. Thank you for joining us today. During 2025, we remained committed to what has always defined Rotoplas. Creating solutions that solve real water challenges and make a meaningful difference in people's lives. At the same time, this was a year where we stayed focused on efficiency, discipline, and execution across the business. During the year, we navigated a challenging operating environment, particularly in Argentina and in Mexico. In Argentina, market conditions remained depressed, while in Mexico, we faced strong rainfall and softer construction activity, alongside continued regional volatility. Yet, the fourth quarter showed resilient sales, improved profitability, and a stronger performance overall. Revenue stabilized, margins expanded, and we exited the year with better momentum than we had entering it. That discretionary improvement is important because it did not depend on a macro recovery. It came from structural changes in how we run the business. Throughout the year, we made a deliberate choice to focus on what we control, strengthening our operating model, improving efficiency, and allocating capital toward businesses that generate higher quality and more predictable returns. I'll walk you through the progress -- through that progress using the evolution of our four strategic pillars that we presented in December, because this framework explains how we are reshaping the company and why we are confident about the trajectory we're seeing. The first pillar is profitable growth and core expansion. Here, the focus was straightforward: reinforce the foundation of the business and make it structurally more efficient. For example, during the quarter across Mexico and Central America, we focused on gaining share through more targeted commercial strategies and region-specific pricing, while strengthening execution and maintaining strict cost control. We simplified processes, reduced operational complexity, and aligned our organizational structure with current demand and dynamics. The objective was not to do more, but to do better. At the same time, we continued developing better solutions centered on the end user, always prioritizing quality of life and ensuring that our products directly improve the daily experience of people. A good example of this approach is Peru, where we advanced our blow moulding capabilities. By modernizing production technology and improving plant efficiency, we lowered unit costs and enhanced our ability to differentiate in the market. Over time, this has created a leaner and more productive organization. The business today operates with greater focus on consistency, and that is showing in stronger commercial execution and better performance in our core markets, particularly as we moved through the second half of the year. The core is healthier, more agile, and generates the cash flow that supports the rest of the portfolio. That operating discipline gives us flexibility regardless of market conditions. The second pillar, water innovation and market disruption, is where a great transformation is taking place. We are steadily evolving from being primarily product manufacturing -- manufacturer into a solutions and services company, with recurring relationships and greater revenue visibility. This shift is strategic because services, while improving customer experience, they reduce cyclicality and improve the quality of our earnings. More importantly, these solutions are designed around the customer journey, helping us understand adoption, retention, and long-term needs, so we can create better businesses by staying closer to the customer. During the year, our services platform continued to gain scale and operational maturity. bebbia closed the year with more than 168,000 subscribers, strengthening its position in the residential segment. Through bebbia, we're not only providing purified water, but also improving the overall customer experience by simplifying access, eliminating the need for single-use plastic and uncomfortable water jugs, and making safe water more convenient and reliable for families. Also, the business improved in its economy, reflecting better efficiency and operating leverage as the platform scales. This confirms that the model is not only growing, but doing so in a disciplined way. At the same time, RSA continued to build momentum in water treatment and recycling. The business delivered strong growth in the quarter and is increasingly supported by recurring maintenance and long-term service contracts. That creates deeper customer relationships and much better visibility compared to one-off project work. These solutions also help our customers reduce their environmental impact, comply with regulations, and operate more efficiently while addressing water scarcity through the treatment and reuse. In doing so, not only strengthen our business, but it also create measurable positive impact in the communities we serve. Together, bebbia and RSA are shifting our mix towards recurring revenues and more stable cash flows. That is why we continue directing a growing share of our investment towards these platforms. The third pillar is tech and talent enablement. We view technology as an operational capability, not a support function. Through the year, we embedded digital tools and AI directly into day-to-day workflows across sales, planning, service, and finance. These initiatives are helping us remove friction, automate repetitive tasks, and improve the speed and quality of decisions. In parallel, we invested heavily in our people, training more than 1,500 employees and delivering close to 5,000 hours of targeted upskilling in digital analytics and operational capabilities to ensure our teams can fully leverage these tools in their daily work. We believe our collaborators are our greatest asset, and we are committed to preparing them for the future by continuously developing their skills and creating an environment where they can grow alongside the company. In parallel, we continue evolving our talent base toward more specialized and analytical roles. The objective is to create an organization that can scale without adding complexity or fixed costs. What we see today is a company that is more data-driven, faster in execution, and structurally more productive. These capabilities are becoming a competitive advantage because they allow us to grow efficiently and respond quickly to changing conditions. Our fourth pillar is sustainability and efficiency through capabilities. For us, sustainability is not a separate program or a reporting exercise. It is embedded in how we operate. The same actions that improve efficiency also reduce environmental impact. When we optimize logistics, we lower emissions. When we digitize processes, we reduce waste. When we use resources more intelligently, we improve both cost and footprint. At the core of this approach is our commitment to creating solutions that solve water challenges, help customers operate more sustainably, and ultimately improve lives through better access, treatment, and the use of water. This approach is already translating into measurable outcomes. During the year, we reduced Scope 1 and Scope 2 carbon intensity by 26% and lowered absolute water consumption by 6%, reflecting the operational efficiencies we're building in our plants and our processes. Also, if you join our water, our AGUA Day, you know that we launched our AGUA strategy. This new strategy strengthens standards across our operations and supply chain and deepens engagement with customers and communities. The important point is cultural. Sustainability is part of everyday decision-making. That positions us to remain relevant and trusted over the long term as expectations from regulators, customers, and investors continue to evolve. We can look, especially at the fourth quarter, we see our four pillars coming together. The external environment did not change materially, yet performance improved across several parts of our business. Execution was sharper, services gained traction, and the organization operated with greater discipline. That combination translated into better results and confirms that the improvements we are seeing are structural. As we close the year, Rotoplas is more focused, more efficient, and increasingly service-oriented company. We strengthen the foundation first, and that positions us to convert the future into profitability much more effectively. Thank you for your continued trust. I will now turn it over to Andres to walk you through the financial results. Andres Pliego: Thank you, Charlie. Good morning, everyone. Let me walk you through the P&L for the quarter, and then I will briefly touch on regional and solutions performance before moving to the balance sheet. Starting with revenues, as Charlie mentioned, we returned to positive top-line growth, driven primarily by recovery in product sales in Mexico and a strong momentum in our services platform. This performance helped partially offset the challenging macro environment in Argentina. During the quarter, services revenue grew 83% year-over-year, while product sales declined 3%. It's important to highlight that excluding Argentina, product sales would have grown 13%, reflecting a solid performance in the U.S., Peru, and Central America, even in the context of a stronger peso, as well as a gradual recovery in Mexico during the fourth quarter. Given the uncertainty and volatility across the region, our focus has remained firmly on variables we can control, particularly cost discipline, expense management, and cash flow generation. Our operating mindset continues to be centered on operational discipline and doing more with less. On costs and expenses during 2025, we executed a strategic workforce restructuring aimed at increasing productivity per employee. This process was supported by training initiatives and the integration of AI-enabled tools, allowing us to evolve our operating model towards more specialized and higher-value profiles. At the gross margin level, the fourth quarter margin does not yet reflect the full benefits of these initiatives. This is mainly due to the impact of MXN 101 million from hyperinflation accounting in Argentina, which resulted in a non-cash increase in cost of sales, driven by the measurement of beginning inventory. Where the impact of our efficiency initiatives is most evident is in SG&A. Operating expenses declined meaningfully. As a percentage of sales, they went from 38% to 33%, reflecting tighter cost control and stronger execution. The main efficiency drivers included: marketing optimizations with improved segmentations and higher return on investment across campaigns, the implementation of a formal budget control framework, requirement structured review, and approval for incremental spending, strict control of travel expenses, prioritizing only business-critical travel, optimization of digital software-related expenses, including better contract management and allocations of IT costs. Overall, operating expenses remain under strict control, resulting in a leaner and more sustainable cost structure that positions us well to expand margins as market conditions improve. At the same time, we continue to strengthen our operational base while selectively building new capabilities to support long-term growth. As a result of this discipline, we achieved a significant year-over-year increase in quarterly EBITDA. More importantly, we closed the full year with a 1% increase EBITDA, despite a 1% decline in sales, underscoring the resilience of our operating model. Finally, at the net income level, financial expense declined 60% year-over-year in the quarter, mainly due to the positive effect of hyperinflation accounting in Argentina. As a result, we reported a net income of MXN 91 million for the quarter, compared to a loss in the fourth quarter of 2024. Let me provide more color by region. Mexico, which represents 59% of group sales, delivered a recovery in product volumes during the quarter. This was supported by a more competitive regional commercial strategy designed to strengthen our market positioning in a challenging demand environment. The strategy focused on gaining greater regional competitiveness, complemented by seasonal promotional campaigns, including Ofertas Azules in November, which helped accelerate volumes. Importantly, this pricing and promotional strategy was executed without sacrificing margins. Moving to Argentina, the country represents 17% of total revenues, and demand remains very weak, with inflation dynamics continuing to pressure margins as price pass-through remains limited. In this context, the company prioritized cash discipline over growth, ensuring sustainability of operation through internal generated cash. Throughout the year, we implemented productivity improvements, zero-based budgeting, and workforce restructuring. However, persistently weak demand limited recovery, resulting in a negative EBITDA for the year. Additionally, in accordance with IFRS 29, we recorded a non-cash hyperinflation accounting adjustment in the fourth quarter that reduced EBITDA by MXN 75 million, driven mainly by inventory remeasurement. This adjustment has no impact on cash flow or operational cash generation. In the United States, which represents 10% of sales, quarterly revenues were almost flat in Mexican pesos, but increased 9% year-over-year in U.S. dollars, driven by stronger performance in the municipal and chemical verticals. EBITDA was positive for the third consecutive quarter, supported by SG&A productivity initiatives and continued gross margin expansion. On a full year basis, EBITDA was positive, reflecting a sustained turnaround driven by operational productivity and improved inventory management across branches. In our other markets, Peru, Central America, and Brazil, which together represent 13% of group revenues, we delivered a double-digit growth and margins improvement, underscoring the strengthening of our diverse portfolio. We continue advancing these markets with steady, disciplined, and profitable execution. Turning to segment performance, we have already covered products, so I will focus on services. The services segment represented 15% of quarterly sales and continued to deliver double-digit growth, with a clear acceleration in the fourth quarter, mainly driven by water treatment and recycling projects in Mexico. This acceleration was largely supported by year-end budget executions across corporate customers. Within services, bebbia continued to scale, adding 9,000 net subscribers during the quarter, reflecting a sustained demand and improving unit economics. During the year, we completed the migration of our full technology platform, including e-commerce, field services, and CRM systems. We also rolled out new functionalities to enhance the customer experience, such as online appointment scheduling and real-time technician tracking, strengthening service levels and operational efficiency. In Brazil, our water treatment operations maintained solid momentum. Quarterly services EBITDA was positive, with a 5% margin, reflecting continued improvements in unit economics, mainly across bebbia and wastewater treatment plants. As a result, the full-year EBITDA margin improved from negative 38% in 2024 to negative 8% in 2025. Still negative, but we're clearly on the path toward profitability. Overall, the segment made tangible progress, supported by scale and improved operational efficiency. Moving to the balance sheet, financial discipline and cash flow generation remained key priorities for the company. Ongoing cost control and working capital discipline strengthened our balance sheet during the year, resulting in a 9% reduction in net financial debt and a 23-day improvement in cash conversion cycle. As a result, net financial debt to EBITDA improved from 3x to 2.7x year-over-year. This performance was supported by a reduction in debt, tight cash management, more efficient working capital practices, and a selective approach to strategic CapEx. Operating cash flow increased 81% year-over-year, reflecting stronger execution and disciplined expense management. From a liquidity perspective, our cash position increased 18%, reinforcing our focus on maintaining a sound and flexible financial profile. Total financial debt closed the year at MXN 4.5 billion, a 5% decrease versus December 2024. This includes MXN 463 million in short-term debt, mainly related to working capital needs, and approximately MXN 4 billion in long-term debt corresponding to our fixed-rate sustainable bond. Finally, the blended cost of debt remained stable at 8.6%. Capital expenditures represented 4% of annual sales, reflecting a 25% year-over-year reduction consistent with our focus on capital discipline. Investment during the year was highly selective and primarily allocated to services platform in Mexico, mainly supporting the development of water treatment plants and the acquisition of bebbia systems. Our capital allocation approach remains anchored in strengthening the businesses while preserving flexibility. Within services, most investments are tied to secure contracts or committed customers, which allow us to redeploy capital with clear visibility and disciplined return thresholds. Let me briefly review how we closed our 2025 ESG targets. Overall, we met or exceeded two targets, two closely broadly in line, and two finished below our original ambition. We achieved or surpassed our goals on people with access to sanitation and CO2 intensity, Scope 1 and Scope 2 per tonne of processed resin. We're particularly proud of our emissions performance, driven by renewable energy sourcing, manufacturing efficiency initiatives, and the transition to new storage production technologies, which resulted in a 26% reduction year-over-year and a 32% reduction versus our 2021 intensity baseline. Our customer experience, we closed the year with an NPS of 81 in products and 60 in services, resulting in a weighted average of 79, while 98% of Tier 1 suppliers were assessed on sustainability criteria. We fell short on female representation in the workforce and cubic meters of purified water, which remain focus areas as we move into the next strategic cycle. Looking ahead, as Charlie mentioned, the AGUA strategy marks the next phase of our sustainability agenda, building on past progress and providing the framework to define priorities, set targets, and report progress going forward. To highlight a few milestones in the fourth quarter. In fourth quarter 2025, Rotoplas achieved an A rating in CDP Climate Change, placing us among a very small group of companies in Mexico and globally. We also expanded sustainability training for distributors in Peru, strengthening community access to water in Mexico through our Rotogotas de Ayuda program, and closed the year with more than 1,000 IoT-enabled rainwater harvesting systems installed in schools through Escuelas con Agua. This program, a partnership with the Coca-Cola Foundation and other organizations, now benefits more than 330,000 students. Before moving to Q&A, I would like to reiterate that we remain focused on what is within our control, guided by a clear, do more with less operating mindset. Despite the challenging external environment, fourth quarter performance showed sequential improvement, allowing us to close the year with higher EBITDA, alongside with a stronger leverage ratio and an improved cash position. Looking ahead, we continue to operate with the same level of financial discipline, reinforcing a solid foundation that supports sustainable growth and margin improvement over time, while maintaining a prudent leverage profile. Thanks once again for your time and interest. We're now happy to take your questions. Mariana Fernandez: Thank you, Andres, and thank you, Charlie. We have a couple of questions already. The first one from Orlando Alcantara, who also has a couple more, but I'll read the first one first. He says, Hi, Rotoplas team. Congrats on the results. My first question goes on the side of Mexico. We could observe substantial acceleration in the product segment on this quarter, breaking the negative growth we observed through the year. I imagine some strategies have been implemented to achieve this milestone. Can you elaborate more on this? Carlos Rojas Aboumrad: Hi, Orlando. Hey, thanks for joining. Yes, there -- definitely some strategies have been implemented. We've evolved both the attractiveness of our offer and we've also evolved our pricing strategies. We're able to do pricing in a more specific way regionally. And so we did see both improvement because of pricing and because of volume, but volume not necessarily because market growing. And it was more generated by us. Anything else, Andres? Andres Pliego: No. Mariana Fernandez: Okay, so I'll move to the second question from Orlando. My second question goes on the surprisingly breakeven of the service segment, observing the first positive EBITDA margin since 4Q '20. Should we consider this milestone in our model as a structural shift for the following quarters and years? What was done exactly to structurally shift OpEx and COGS this quarter? Carlos Rojas Aboumrad: Yes. So thanks also for that question, Orlando. As you know, we've been working for a long time on the services segment. It's a segment that we started from the ground up. It required a lot of investment, and it's gotten to that point where it's breakeven now. I think the trend was fairly clear. We will continue to prioritize, to some extent, growth of the services business. So, we expect for the services segment to stay very close to breakeven going forward. And as we grow this segment as much as we can, the opportunities are for us to take, and so we will make our best effort to take as much of it as possible. Anything else, Andres? Andres Pliego: Sure. Just probably add that, the strict cost and SG&A control that we have implemented has definitely benefit these two, well, wastewater treatment and bebbia, mainly. So that was a significant push for them to reach profitability, and that will stay, right? So, those economies of scale start to be noticeable as we continue to grow. So that's structurally for sure. Thank you, Orlando, for your question. Mariana Fernandez: I'll move to the third and final question from Orlando. He asks, I observed some efficiency at the working capital level, especially on inventories for Argentina. Is something internally being done to soften macro uncertainty? Andres Pliego: So thank you, Orlando. Inventories in Argentina were pretty high starting in 2025, so we did make a push to -- well, let me go back a second. So the main purpose for Argentina last year was for them to be cash flow neutral in for the year, right? So we prioritized the cash that they generated with their own resources. So they had a tough year because they had to basically be cash flow neutral with their own operations. And that had to be done mostly with working capital. So they made a lot of efficiencies in inventories. So they tried to reduce inventory significantly, reduce accounts receivable, and improve the accounts payable. So, there were significant changes in those three lines of the balance sheet. That also happened in Mexico and other regions. In Mexico, we also were very efficient with inventories and very efficient with accounts receivable. So it was an additional effort this year to be very well or very lean in terms of working capital. I don't know, Charlie, if you want to add anything. Carlos Rojas Aboumrad: No. Mariana Fernandez: Very good. So we'll move to the next one. Regina Carrillo from GBM. She has two questions, so I'll read the first one. 4Q showed positive EBITDA in services. Can we expect full year 2026 services EBITDA to return to positive? Carlos Rojas Aboumrad: Yes. Hi, Regina. Thanks for joining, and thanks for your question. As I mentioned, we do expect services to continue to be at the breakeven level, as we will grow as much as we can, but we will do so while having the EBITDA of services as close as possible to breakeven. Mariana Fernandez: And I'll read the second one. So after three consecutive positive quarters on EBITDA in the U.S., what do you think would be the long-term EBITDA margin target for this business? Carlos Rojas Aboumrad: The long-term EBITDA margin is very different from what we will have this year. This year, we expect it to be at similar levels we have today. So very, very slightly above breakeven. But we are developing a business for you know, generating closer to 15% EBITDA margins in the long-term future. We're identifying other opportunities that can drive that margin even further up. But the expected margin that, at least for this business, is 15%, going forward, long term, right? At the moment, we're focusing similar to other new businesses, which is mainly services. We're focusing on growth. Andres, anything else that you'd like to share? Andres Pliego: No, thank you, Regina, for your questions. Mariana Fernandez: I'm sorry. We'll move to the next one from Felix Garcia, from Apalache Research. Hi, thank you very much for taking my questions. Just two from my side. First, looking ahead to 2026, what would you say are your top priorities? Growth, margins or cash generation? Carlos Rojas Aboumrad: Hey, thanks for your participation and question, Felix. You asked a really tough one. It's a bit of a balancing act. I think we need to have always our purpose in mind of, you know, having the biggest impact we can with providing more and better water for people. This requires growth, but the macroeconomic situation also requires us to focus very much on strengthening our balance sheet. So cash is incredibly important at the moment. We are focusing on bringing net debt to EBITDA to levels below 2x net debt to EBITDA ratio. As long as we can do that, the priority is always growth and the highest possible impact we can have. Andres, what's your.... Andres Pliego: Well, I completely agree. Probably just to add that different businesses are in different stages, you know? So, as Charlie has mentioned, for services and bebbia in particular, the idea is more on growth and, as opposed to the products businesses, which will be more on margins, for example. But overall, I agree with Charlie. I guess the short-term objective is cash generation, reduce leverage, and so we will work towards a balancing act, as Charlie mentioned. Mariana Fernandez: Thank you. We'll move to Felix's second question, and he asked, regarding bebbia, how are you balancing commercial expansion with user quality and profitability per subscriber? Carlos Rojas Aboumrad: Yes, so regarding bebbia, the time is much larger than what we're currently serving, so the opportunity is still very large. We are not in a position where we need to sacrifice subscriber quality. What's very important is that we focus on the promise that we make to our customers, for them to have a great experience and to have the best quality of water. And so as long as we can focus on being able to deliver on that with an increasing amount of subscribers, the amount of subscribers we can get is still very, very high, and this is only the Mexican market. So we're not yet concerned with any challenges in growing bebbia in terms of having to sacrifice on the quality of the business for growth. Andres? Mariana Fernandez: Perfect. So we'll move to the next one from David Seaman from Alpha Cygni. Hi, can you elaborate on your plans to take bebbia to additional markets? Carlos Rojas Aboumrad: Hey, David. Thanks for joining. Yes, so again, the market size in Mexico is still very large, the total addressable market, and so we're still focusing on Mexico. We are looking at other markets, to start planting seeds, but the focus really has to be on developing the platform. The platform, there's more and more tools available to make sure that we can have, offer a great experience to customers in a much bigger amount of customers and geographical locations. So the focus still is on developing the platform. Andres, anything else? Andres Pliego: Thank you, David. Mariana Fernandez: So we'll move to Rodrigo Salazar's question from AM Advisory. His question is related to services. You already mentioned that growth was driven by water treatment plants, but could you help us understand what specifically changed in the quarter? Was it a significantly higher number of units added, the signing of a few unusually large contracts or something more structural in the business? And should we view this level of sales and EBITDA as a sustainable going forward or was there any one-time effect that boosted performance in the quarter? Carlos Rojas Aboumrad: Thank you, Rodrigo, for joining. Regarding the stability, water treatment plants is a fairly stable business. It has recurring revenues. There are sometimes projects that may bring some variability from quarter-to-quarter, but not from year-to-year. Then water treatment plants that supported this number were many different water treatment plants. So it wasn't one big one, and that it's a one-off. We are increasing our revenues by servicing new segments. And that will continue as we continue to understand better this business, we're identifying better opportunities. Now, we did mention that a big impact was from growth in water plants -- water treatment plants, but we did see also growth, significant growth in bebbia, no? Andres, is there anything else that you'd like to share? Andres Pliego: Yes, probably just adding that, no, no particular one-offs, no. So it's, it takes more time to close contracts, so I guess the push towards the end of the year was significant. But we do see these levels to continue, no? I mean, adding to what Charlie is saying, so nothing in particular. Carlos Rojas Aboumrad: Also, just taking on what Andres had mentioned earlier, there were significant improvements in our expenses in this business, which is structured. Mariana Fernandez: Thank you both. The next question comes from Martin Lara from Miranda Global Research. Good morning. Thank you for the call, and congratulations on these results. Could you please provide the CapEx guidance for 2026 as a percentage of sales? Andres Pliego: So thank you, Martin. So the CapEx guideline will be very similar to what we did in 2025. We will continue to be very strict, very return-oriented -- cash-on-cash return-oriented. And also focusing on the sort of, how we call it, the pay-as-you-grow CapEx, which is mostly services, right? Which is mostly bebbia and water treatment plants. So in terms of guidance as percentage of sales, it should be fairly similar, I would say. No non-material changes for this year. So we will continue to invest in the business, to do our maintenance CapEx, and to do the growth CapEx for the services business. So nothing in particular for the change as percentage of revenues. Mariana Fernandez: Perfect. So we'll wait a couple of seconds to see if we have another question. So, this is a comment about the Rotogotas de Ayuda. I congratulate you on continuing to implement the program and all those involved who make it possible. bebbia, the increase in users is good news, and now the challenge is not only to increase it, but to keep them with a quality service, which we will evidently be doing so. RSA, I've noticed you continue to grow in your goals. I congratulate you. So I don't know if you want to make a comment on the Rotogotas de Ayuda or something else. Carlos Rojas Aboumrad: Thanks for recognizing that. It's a tremendous initiative. We're very proud of it because what we're developing, and it's becoming more clear that it's feasible, is that as we help more our communities, that generates demand. Customers show commitment to Rotoplas because of, obviously, the quality of our offer, but also because of our commitment to our communities. And so it's a value-generating group where we support communities, and customers support us, and that continues happening. So thanks for the recognition. Mariana Fernandez: Yes. Thank you very much for your comments and your questions. Andres and Charlie, I don't know if you want to say something else before we close the call, we finish the call? Andres Pliego: Thanks for your support. Thanks for joining. I'll see you guys in a couple of months. Mariana Fernandez: Thank you. See you soon, and you may now disconnect.
Operator: Good morning. Welcome to Alithya's Third Quarter of Fiscal 2026 Results Conference Call. I would now like to turn the meeting over to Alithya's management team. Please go ahead. Unknown Executive: Thank you, Sylvie. Good morning, everyone, and thank you for joining us today for Alithya's Third Quarter of Fiscal 2026 Results Conference Call. The press release, along with the MD&A containing condensed financial statements and related note was published this morning and is now accessible on our website. The webcast presentation can also be found on our website in the Investors section. Please be advised that this call will contain forward-looking statements, which are subject to various risks and uncertainties that may cause actual results to differ materially from those anticipated. These statements include our estimates, plans, expectations and statements regarding future growth, operational results, performance and business prospects that do not solely relate to historical facts. These statements may also refer to future events, including expectations around client demand, business opportunities, leveraging our services, IP, AI and expertise to meet clients' needs, exceeding in a competitive market, achieving our 3-year strategic plan and deploying our smart shoring capabilities. For more information, please refer to the cautionary note included in our presentation and the forward-looking statements in Risks and Uncertainties section of our MD&A, which are accessible on our website. All figures discussed on today's call are in Canadian dollars, unless stated otherwise, and we may refer to certain indicators that are non-IFRS measures. Please refer to the cautionary note included in our presentation and to the non-IFRS and other financial measures section of our MD&A for more details. Presenting this morning are Paul Raymond, Alithya's President and Chief Executive Officer; Bernard Dockrill, Chief Operating Officer; and Pierre Blanchette, Chief Financial Officer. I'll now turn the call over to Paul Raymond. Paul? Paul Raymond: Thank you, Dominique. Good morning, everyone, and thank you for joining us today. Before diving into the results, I want to begin by thanking our team for their continued discipline and commitment to our clients' success. Their focus and resilience are core to our ability to deliver mission-critical projects for our clients as we advance our long-term strategy. We remain fully committed to our transformation towards higher-value services, and this shift is underway and continues to be in demand by our clients. While our third quarter faced some headwinds, the team has stayed focused on our long-term goals of enhancing key areas of the business, improving execution and building the foundation for sustained profitable growth. So here are my 3 key takeaways from the quarter. First, the bookings. An important leading indicator, our bookings were over $130 million in Q3 with several key renewals as well as new engagements in strategic areas that include our AI-driven capabilities. This was accomplished while maintaining a healthy pipeline of opportunities and growing our U.S. business. Second, financial discipline. We generated positive net earnings and strong cash flow and maintain a trailing 12-month adjusted EBITDA of $52.6 million. Our adjusted EBITDA to debt ratio now sits at 1.9 as we continue to reduce our debt. Our capital allocation priorities remain focused on long-term value creation for our shareholders, and we continue to execute in alignment with that mindset. And third, our spin-off. We're announcing the signature of an agreement to spin off our equity interest related to the Datum Consulting Group in consideration for a minority stake in a venture, which will be led by Amar Bukkasagaram, Senior Vice President, Data Solutions of Alithya. This strategic partnership will be focused on bringing specialized AI-based solutions to the health care industry. This initiative reflects our assessment that these assets will reach their full potential with a dedicated structure and greater operational focus, enabling them to scale more rapidly and generate stronger returns. We see this as the best path to unlock value while staying aligned with our strategic road map. And with that, I'll now turn it over to Pierre for financial highlights of the quarter, followed by Bernard with an update on operations. Pierre? Pierre Blanchette: Good morning, everyone. I will now address our financial results for the third quarter of fiscal 2026. Consolidated revenue came in at $115.2 million, down $0.6 million or 0.5% on a year-over-year basis. Gross margin as a percentage of revenue reached 31.7% in the quarter, down from 32.3% last year. Let's look at our performance by segment, starting with Canada. Revenues in Canada reached $54 million in the third quarter, down $7.7 million or 12.5% on a year-over-year basis. The decrease in revenues was due primarily to reduced revenues from public sector contracts, certain clients projects reaching maturity, partially offset by revenues from the acquisition of XRM Vision. Our gross margin in Canada as a percentage of revenues increased compared to the same quarter last year, mainly due to a proportionately larger decrease in the use of subcontractor compared to permanent employees, a positive margin contribution from XRM Vision and a reduction in revenues from lower gross margin clients in favor of value offerings, partially offset by a slight decrease in utilization rates. In the U.S., revenues increased by $6.2 million or 12.7% to $55 million. This increase is due to revenues from the acquisition of eVerge and organic growth in Enterprise Transformation Services, partially offset by an unfavorable U.S. dollar exchange rate. Gross margin as a percentage of revenue for our U.S. operations decreased compared to the same quarter last year, primarily due to lower utilization rates, partially offset by the increase of use of smart shoring capabilities and a proportionately larger decrease in the use of subcontractor compared to permanent employees. Last year, it is important to note that our utilization rate was higher due to a larger number of projects reaching their go-live phase. In our International segment, revenues increased by $1 million or 19.2% to $6.2 million. This was primarily due to organic growth in Enterprise Transformation Services and a favorable foreign exchange rate. The gross margin as a percentage of revenue decreased year-over-year, mainly due to one client project coming to maturity, which historically had a higher gross margin. Now looking at SG&A expenses. We are continuing to focus on optimizing our cost structure to ensure greater efficiency and long-term performance. In the third quarter, SG&A totaled $28.5 million, a decrease of $0.3 million or 1% year-over-year. This sets our SG&A as a percentage of revenue at 24.7% for the quarter compared to 24.9% last year. On a sequential basis, SG&A expenses decreased by $2.8 million from $31.3 million, mainly stemming from variable compensation. Looking at our adjusted EBITDA, we are reporting $10 million or 8.7% of revenues in Q3 compared to $10.3 million or 8.9% of revenues last year. This slight drop is due primarily to a decreased gross margin driven by lower revenues, partially offset by decreased SG&A. Net earnings for the third quarter was $0.7 million, an increase of $4.4 million compared to the same period last year. This variance was primarily due to the decreased impairment of goodwill recorded in Q3 last year. To conclude on our profit and loss, our adjusted net earnings came in at $5.1 million or $0.05 per share compared to $5.7 million or $0.06 per share for the same quarter last year. Finally, turning to our cash flow and financial position. Net cash from operating activities was $25.5 million, a year-over-year increase of $13.8 million. This resulted primarily from $17.4 million in favorable changes in noncash working capital items and $7.4 million of other noncash adjustments and net financial expenses. As part of our capital allocation strategy, we pursue our normal course issuer bid, which allows us to purchase our shares under certain conditions set by the TSX. As at December 31, 2025, 347,000 shares were repurchased for cancellation. In connection with the Datum transaction that Paul alluded to earlier, we will be repurchasing close to 2.5 million Class A shares from Amar. The proceeds from this repurchase will be used to fund the working capital needs of Dayton. As at December 31, net debt was $101.9 million compared to $94 million as of March 31, 2025. This is primarily due to an increase in long-term debt related to the acquisition of eVerge, offset by the repayment of $21 million in the third quarter. Our leverage ratio stands at 1.9x net debt over our trailing 12-month adjusted EBITDA compared to 2.3x for the second quarter. We are comfortable with this leverage position. Even with the acquisition of eVerge in June 2025, we were able to reduce our leverage ratio, demonstrating our ability to generate positive cash flow and deleverage following an acquisition. I will now turn things to Bernard for our operational highlights. Bernard Dockrill: Thank you, Pierre, and good morning to everyone with us today. I would like to begin by thanking the Alithya team for their continued commitment to executing on our 3-year strategic priorities. As Peter just shared, the results of these efforts has generated improvements in many of our key metrics in most segments of our operations. Bookings for the quarter were $130.9 million. This translates into a book-to-bill ratio of 1.14 for the quarter and 0.9 on a trailing 12-month basis. The book-to-bill ratio for the quarter is 1.26 when revenues from the 2 long-term contracts signed as part of an acquisition in the first quarter of fiscal year 2022 are excluded and 1.0 on a trailing 12-month basis. Bookings in the Canadian operating segment were $62.1 million, $56.6 million in the U.S. operating segment and $12.2 million in the International segment. New bookings include a $9 million U.S. engagement with University Hospital in Newark, New Jersey, under which Alithya will implement Oracle Cloud, inclusive of ERP, HCM payroll, supply chain and EPM. UHNJ is a public academic health center, which is a first for Alithya in the U.S. public health care space. We also secured additional Oracle Cloud work with a large international organization. Our teams are delivering advisory and project services to drive a global HCM implementation across a highly complex multi-country, multicurrency environment as part of a transformation with multiple integration partners. This win underscores the depth of our expertise and our ability to execute in some of the most challenging settings. Bookings also included over $52 million in renewals as we continue to extend our work within our key long-term accounts, specifically in Canada and international. These renewals span industries in which we have a strong footprint and a proven track record, including financial services and energy. From a pipeline perspective, the volume of new opportunities remains healthy as we continue to drive cross-selling activities focusing on our core industries. We are witnessing positive momentum in commercial and business services from our increased focus in this sector and our recent acquisition of eVerge, which added relevant capabilities, including Salesforce. I'd now like to take you through our performance for the quarter within our 2 key operating segments. Starting with our U.S. segment, where we continue to grow our revenues, achieving 12.7% year-over-year growth as a result of our acquisition of eVerge. Our integration continues to go well, and we delivered our most significant Salesforce project since announcing the acquisition, implementing manufacturing cloud for more than 600 sales users in North America for a global manufacturer. We're also seeing our industry-first model generate positive momentum. Alithya is being called upon as a trusted adviser for complex engagements, where our deep industry expertise, our collaboration with market-leading partners and our proprietary accelerators enable us to create value for our clients. For instance, for a global manufacturer of wax-based products, we successfully migrated their finance and supply chain operations to the cloud, leveraging our proprietary Food Express accelerator from Microsoft D365. The project included the introduction of Copilot and AI agents as well as enhanced business intelligence capabilities. We began with the U.S. deployment and Alithya is now kicking off the implementation in Belgium. Additionally, we continue to see new revenue streams as companies recognize that unlocking the full value of generative AI and agentic AI starts with modernizing and connecting their core systems. One example is our work with Gorilla Glue, where we have led the modernization of their contact center by combining the latest Microsoft technologies with our customer experience capabilities, creating a flexible platform that helps them to adopt Agentic AI and elevate the customer experience. In summary, our U.S. segment now accounts for 48% of our total revenue, up from 39% when we began our current 3-year strategic cycle as we take advantage of the opportunities available in this larger market. Turning to Canada and more specifically the Quebec market. We continue to shift our activities, stepping away from lower-margin contracts that compete primarily on price and redirecting our efforts toward more specialized transformational services where we provide greater value to our clients and differentiate based on our expertise, partnerships, accelerators and leverage our Smart Shore delivery network. During the third quarter, we deepened our collaboration with AWS as we see opportunities to support organizations transitioning to cloud-based solutions. Our successful cloud migration project with Beneva that I've discussed on prior calls is one example of this shift and serves as a launch pad to unlock new opportunities for Alithya. This project is also a great example of how we use Gen AI to increase our productivity and elevate our output quality. Our migration factory offering harnesses AWS AI-powered tools to speed up problem resolution, ensure consistent application structures and accelerate our delivery time lines. Leveraging AI increases our efficiency, differentiates our services and delivers greater value to our clients. As with many transformations, we are experiencing an adjustment period with a shift to more profitable services that is impacting revenue in Canada. This is being partially offset by steady performance outside of Quebec in the nuclear and financial services sectors. We have a strong presence and continue to expand our work with key clients. Although revenue growth in Canada is taking time to materialize, we are seeing positive signs as gross margin as a percentage of revenue improved compared to the same quarter last year. Turning to our Smart Shore operations. We now have 13.9% of our professionals located in our Smart Shore centers, where we have access to top talent with an attractive cost structure. The acquisition of eVerge not only added critical mass in these geographies, it also brought a strong leadership team in India, further strengthening our global execution capabilities. Before turning things to Paul for closing remarks, I would like to highlight our recent recognition from Microsoft Copilot Specialization, validating our expertise across Microsoft 365 Copilot. This achievement reflects our ongoing investment in key partnerships that enable us to deliver complex solutions for our clients and how our teams are driving effective AI adoption across our portfolio. We are encouraged by the momentum we're building, and we remain confident in the resilience of our business over time. Paul? Paul Raymond: Thank you, Bernard. So again, a defining theme of our third quarter was financial discipline. The past period was marked by strong bookings, improved cash flow generation, debt reduction and growth in our U.S. operations. All these strengthen our flexibility to pursue strategic growth opportunities. So we remain focused on creating long-term value and actively pursuing a range of opportunities to drive meaningful outcomes. And among those opportunities is the announcement to spin off certain of our AI-based IP assets, along with the associated support professionals into a new strategic partnership. Before heading into question, I'd also like to comment on the impact of Gen AI in our industry as this seems to be an area of concern for some. The early promise of major efficiency gain hasn't fully materialized for many companies as organizations look to maximize return on their technology investment. They're recognizing that strong foundations, particularly around data quality and security are essential to unlocking the value of AI, and that's where we step in. Alithya is increasingly recognized as a trusted partner for complex digital transformations, particularly those leveraging the latest technologies from our market-leading partners. And this recognition is a direct result of the strategic focus that we put in place several years ago and our continued shift towards services that differentiate us in a global market. We're building a stronger, more focused Alithya, one that competes on differentiated values, trusted advisory and the ability to help our clients leverage AI-enabled mission-critical tools across the organizations. So thank you for your attention. And with that, we'll go to questions. Sylvie? Operator: [Operator Instructions] First, we will hear from Kevin Krishnaratne at Scotiabank. Kevin Krishnaratne: A couple of questions on the U.S. So it looks like after a couple of quarters of pretty decent organic growth there, it kind of came in softer this quarter. I know in your press release, you talked about a slower 3Q versus last year. Can you just click into what's going on there? Was there some deals that are getting pushed out? Are you following industry trends? Anything on the competitive front? Just curious because you did have some good momentum heading into this quarter and then it kind of got a little bit softer this quarter. Paul Raymond: Yes, sure. Thank you for the question, Kevin. And very, very simple answer. Last year, if you remember, we had a record number of go-lives in January. Basically, when people roll out ERP systems, very often, the go-live date is January 1 because it's beginning of the calendar year and fiscal year. So we had a record number of go-lives in Q4 last year, January. So basically, leading up to that, that means a lot of work in Q3. So many of our people work through the holidays. And so utilization was significantly higher last year. So without that kind of we're able to come out at about the same level in terms of revenue. So the issue was more timing, right? So just difference in timing on project deliveries impacted utilization in Q3, which meant that revenues are down a bit. But again, we're not concerned. We believe it's a timing issue. Kevin Krishnaratne: Okay. On -- maybe switching to the M&A on your eVerge performance, it looked like relative to Q2, there was a step down there, $7 million this quarter, $8.6 million in the previous quarter. Is that typical of that business? What was happening there? I would have thought that you would have seen a bit of a pickup sequentially. Paul Raymond: I'll let Bernard comment on that one, but we're not seeing -- maybe, Bernard, do you want to add. Bernard Dockrill: Nothing specific to highlight there. The type of work we're doing there with eVerge is projects, it's Oracle implementation, Salesforce implementations. But nothing to highlight that happened in Q3. As I mentioned in my comments, we're really happy with the integration. We're seeing some very strong capabilities. One of our strategies in our 3-year plan was to diversify some of our Oracle capabilities into other industries, and they have done that. I mentioned commercial and business services really and more specifically construction and engineering. Some of the capabilities they had and some investments we've made are generating very positive results. So all in all, the eVerge integration is going -- and delivering to our expectations. Paul Raymond: Maybe just to add on that, one of the reasons why eVerge was very interesting was just to what Bernard was saying. One of the industries that we're seeing as growing significantly that will not be displaced by AI is engineering. The infrastructure replacement globally is drawing a lot of investments as countries are trying to replace aging infrastructure and build new infrastructure. And we're now positioned very well in that industry for these large engineering and construction firms. Kevin Krishnaratne: Got it. Good to hear. So maybe just the last one for me, just on the Datum transaction. I know it's less than 5% of revenue, but can you give us any parameters on that? What was the revenue growth, the gross margin and EBITDA margin profile on that asset? Paul Raymond: Sure. So Datum, we acquired back several years ago, was very good for us from a revenue and margin perspective for several years. What we're seeing is that we were developing many IP assets and underleveraging them. We're a services company first. So we use AI accelerators to help us provide our services better, faster, more efficiently. But some of these assets, we believe, have a lot of potential value in a more of a software-focused structured organization, like many of the start-ups that we're seeing that are focused on AI products. And we think there's more value for us to spin that off in that context and to be part of that. So this is new for us. It's the first. We'll see how it goes, but we think that was the best way that -- we think we were stifling growth of that company within the organization. So we see this as an opportunity for growth. Kevin Krishnaratne: Got it. To be clear, so like very high gross margin -- is it like a software margin? Or what did it kind of look like at least from a gross margin perspective? Paul Raymond: We didn't share that, Kevin. We haven't shared that information. But yes, very good gross margins. Operator: Next question will be from Jerome Dubreuil at Desjardins Capital Markets. Jerome Dubreuil: First, thanks for the update on AI. Good to see that's still on track despite what we're seeing in the public markets. I want to focus a bit on Canada. I want to know where we are in terms of your migration to the focus on higher value. What inning are we in? Are we kind of second inning there? Are we mostly through it? I know there's challenges with some of the government levels as well. If you can just comment on that to help us understand where -- when the tides can turn. Bernard Dockrill: Thanks for the question. And yes, it remains focused as part of our 3-year strategy here is to change the profile of our work, specifically in Quebec. And these are -- some of these especially government contracts were longer-term contracts. So as they come up for renewals, our strategy is to approach them differently and make sure they have a margin profile that's acceptable to us. So it's not an exact science of does it go away? Does it renew on that. So I'd say we're kind of in the middle of the process here. I'm happy with the results we're seeing on the gross margin side as we're really more focused. The other thing is the ramp-up of the -- as we transition and shift to some of the higher-value work, landing these projects and then ramping the skill sets up takes a little bit of time as well. So even as we land the new projects, it's a quarter or 2 before they take impact on the results. But overall, I think we're executing to our strategy. I'd say we're somewhere in the middle of kind of where we started and progressing to what we had set forth in our 3-year plan. Operator: Next question will be from Gavin Fairweather at ATB Cormark. Gavin Fairweather: Maybe just to close the loop on Datum. Can you elaborate on the minority stake that you've retained in that business and talk about the size of that and also talk about how you came up with the -- presumably the cash amount that you're going to receive on the close of that acquisition, how you value that business? Paul Raymond: It's a minority stake, Gavin. It's under 25%. Gavin Fairweather: Okay. And presumably you're receiving cash for that sale? Pierre Blanchette: Can you repeat the question, please? Gavin Fairweather: Presumably, you're receiving cash for this -- I don't think I saw it in the press release. Can you talk about the -- how you value the business and the cash that you're going to receive? Paul Raymond: We're not receiving cash, Gavin. This is -- we're contributing some of our assets to that new company. And in exchange for that, we're getting just under 25% of the equity. Gavin Fairweather: I see. Okay. Maybe for Bernard. Paul Raymond: And sorry, and as part of that, we're also purchasing 2.5-ish million shares from Amar are going to be used to -- as the -- for cash for the company to operate. Gavin Fairweather: And then on that [indiscernible] Holdings, are there other assets in that company? Or is that just to hold that? Paul Raymond: Correct. Yes, there are other assets in that company and other partners as well. Gavin Fairweather: I see. Paul Raymond: And as -- when everything is finalized, that's going to be made public. It's just we're not completely finalized yet. Gavin Fairweather: I see. Okay. That's helpful. And then maybe for Bernard, can you just discuss kind of -- you did talk about U.S. utilization in the quarter and some of the puts and takes there. But maybe just looking forward into your Q4 and Q1, how are you thinking about utilization? Do you see kind of demand and billings coming back given recent bookings? Or are you thinking about doing some work on capacity to improve utilization there? Bernard Dockrill: Gavin, thanks for the question. And as you know, we don't provide guidance looking forward on that. The utilization, as Paul mentioned, in Q3, we had a really hot December last year and January with those go-lives. And it's also a typical vacation period. So if you think in Q3 of fiscal '25, our folks were not on building, they weren't taking a vacation. So that kind of a double whammy that we hit in this quarter with fewer go-lives at this time. We were kind of more in a normalized state for that. But that was really the impact that you saw this quarter. Operator: Next question will be from Vincent Colicchio at Barrington Research. Vincent Colicchio: Yes. Paul, I'm curious, how are bookings trending in early Q4? Paul Raymond: Vince, thanks for the question. Again, we're not providing guidance. All I can say is that we have a strong funnel. We've mentioned in the past that things are taking longer from a cycle. But as you saw from Q3, we had very strong bookings. And a lot of those were annual renewals as well. So we have clients where we know we're going to have work for the next year. So I think there's -- I keep coming back to this, but I think the concern about AI replacing our business are understandable, but I think it's oversimplified. If I look at AI, it's eliminating tasks, not outcomes, right? It automates research, drafting, analysis, some coding. But clients don't hire us for that. They hire us for accountability for owning complex transformations, end-to-end, integrating AI into mission-critical systems, managing risk, security, regulatory stuff change. So that doesn't disappear. That accountability doesn't disappear with AI. It actually becomes more valuable. So we like the bookings that we had in Q3. We like our funnel, the opportunities that we have, and we love the business that we're in. Vincent Colicchio: So -- are you -- on the labor side for AI skill sets, are you seeing any challenges in terms of meeting demand? Paul Raymond: Not so far. Actually, if anything, AI is reducing labor, right? So I think many organizations are still experimenting with AI -- very few are successful at really scaling it in a way that delivers real financial impact. But when you look at what we do, like coding now, a person can do 10x what they used to do. And instead of coding, it's reviewing code and validating that it's okay, doing integration work, analysis work. So all these things, I think our people are becoming more productive, which means we need less people. We just need different folks, but we're spending a lot of time on training and developing our folks to be able to use those tools, like Bernard mentioned, our new certification from Microsoft on Copilot. I mean, we're leading the pack there. So we like the position we're in. Vincent Colicchio: And last question. Could you update us on your acquisition priorities and what your pipeline looks like? Paul Raymond: Pipeline is still very healthy. As you saw from Pierre's presentation, we've shown that we can leverage up, use our cash and leverage down real fast after. So we completed 2 acquisitions last year. They've been paid off. Our debt is below where it was. So we're under 2x EBITDA from our debt ratio. So we're in a great position to execute on that. But no, we like our position. Operator: [Operator Instructions] Next, we will hear from Rob Goff at Ventum. Rob Goff: So I understand where Q3 of '25 was like a blowout quarter like a really, really tough comparison for you. How would you describe Q4 of '25? So in terms of looking forward, should we be considering that Q4 '25 was equally difficult as a benchmark or a bogey? Bernard Dockrill: Yes. So thanks for the question, Rob, it's a good pickup there. As I mentioned, the go-lives, they went live January 1. Of course, these projects go into a hypercare state after they go-live. So some of that effect that you saw in Q3, naturally -- it's a bit of a headwind there as we look at Q4 fiscal '25. Paul Raymond: It's a tough comparison, especially with the go-lives, you always recognize the contingencies because we delivered the projects on time, on budget. So you reverse contingencies, those all hit as a positive hits on the P&L. So yes, it was a good quarter last year. Very good quarter last year. Rob Goff: Very good. In terms of things outside of the backlog, can you talk about the health of your pipeline or any proof of concepts? Bernard Dockrill: Thanks, Robert. As I mentioned in the script there, I think we're seeing new opportunities come into the pipeline that are aligned to the strategic vision that we have of higher-value transformational projects. So we're happy with what we're seeing there. The backlog has stayed at relatively consistent at 14 months there. So we're really -- that is leading us to where we are, but the pipeline of new opportunities is executing as we expected. Operator: Ladies and gentlemen, at this time, we have no other questions registered, which concludes our conference call for today. We would like to thank you for attending and ask that you please disconnect your lines. Have a good weekend.
Operator: Good morning. Welcome to The Wendy's Company Earnings Results Conference Call [Operator Instructions] Thank you. You may begin your conference. Aaron Broholm: Good morning, and thank you for joining our fiscal 2025 fourth quarter earnings conference call. After this brief introduction, Ken Cook, Interim Chief Executive Officer and Chief Financial Officer, will provide a business update; and then Suzie Thuerk, Chief Accounting Officer and Global Head of FP&A, will review our fourth quarter results, share capital allocation priorities and our 2026 outlook. From there, we will open up the line for questions. Today's conference call and webcast includes a presentation, which is available on our Investor Relations website, ir.wendys.com. Before we begin, please take note of the safe harbor statement that appears at the end of today's earnings release. This disclosure reminds investors that certain information we discuss today is forward-looking and reflects our current expectations about future plans and performance. Various factors could affect our results and cause those results to differ materially from the projections set forth in our forward-looking statements. Also, some of today's comments will reference non-GAAP financial measures. Investors should refer to our reconciliations of non-GAAP financial measures to the most directly comparable GAAP measure at the end of this presentation or in today's earnings release. If you have questions following today's conference call, please contact me. I will now hand the call over to Ken. Ken Cook: Thank you, Aaron, and good morning, everyone. I want to begin by recognizing our franchisees, restaurant teams and company employees for their ongoing commitment to the Wendy's brand. Together as One Wendy's, we are strengthening the foundation to deliver long-term profitable growth for the company and our franchisees. This morning, I'll start by discussing our fourth quarter results and full year highlights, then provide an update on Project Fresh. And lastly, I'll share our 2026 outlook before passing it over to Suzie to talk through the financials in more detail. Starting with the fourth quarter. While results were in line with our expectations, we know that we have a lot of work to do to improve performance. With Project Fresh underway, we have the right plan in place to strengthen our U.S. business. As we shared on our last earnings call, we expected fourth quarter system-wide sales to be down significantly, and they were. Global system-wide sales declined 8.3%, driven by our U.S. business, where marketing spend was down significantly as a result of front-end loaded ad spending in 2025 and sales trends throughout the year, in addition to a tough comp with our SpongeBob collaboration in the prior year and our decision to shift the launch of our new chicken sandwiches into 2026 to ensure excellent execution. A bright spot for the U.S. was the rollout of our chicken tenders and new sauce lineup, which delivered strong customer satisfaction scores, demonstrating the power of focused execution. Turning to our international business. Performance remained strong with system-wide sales up 6.2% in the fourth quarter, its 21st consecutive quarter of growth. International expansion remains a key priority, and we continued our momentum, opening 59 new locations in the fourth quarter. New restaurant openings came from key stronghold markets such as Canada and Mexico as well as new markets such as Armenia and Scotland, both of which delivered strong sales following their launch. From a profitability perspective, total company adjusted EBITDA was $113.3 million and adjusted EPS was $0.16. Turning to our full year performance. 2025 was a challenging year, but it was also an important year as we began laying the foundation to rebuild. Global system-wide sales declined 3.5%, driven by U.S. same-restaurant sales, highlighting the need for change across many areas of our business, including heightened focus on both operations and marketing effectiveness. We are encouraged by the operational improvements throughout our U.S. company-operated restaurants, which are making a difference for our customers. These efforts have driven increases in customer satisfaction scores, including improvements in accuracy, friendliness and overall satisfaction. And same-restaurant sales at U.S. company-operated restaurants outperformed the broader U.S. system by 310 basis points. Many franchisees have already begun implementing similar improvements, and we expect adoption to accelerate throughout 2026. We also made significant progress scaling our digital business throughout 2025 with U.S. digital sales growing 12.4% versus the prior year and bringing our full year U.S. digital mix to an all-time high of 20%. We've continued to make improvements to the Wendy's app, including a redesigned home screen and gamification features, which drove higher customer engagement and record conversion rates. Next, our international business continued to be a strong growth engine throughout the year, delivering an 8.1% increase in system-wide sales with growth across all regions and 159 new restaurant openings. Net unit growth was up over 9% with 121 net new restaurants in 2025, marking a new record in the history of our international business, a clear sign that our international strategy is working and that investments in on-the-ground local resources, including regional franchisee recruiting, marketing and the globalized supply chain are delivering benefits. We achieved growth in both existing markets like Canada and Mexico as well as entry into 7 new markets, including Australia and Romania, expanding our total number of international markets from 31 to 38. This is a meaningful proof point that the Wendy's brand resonates across the globe as we execute our globally great locally loved strategy. We also secured new development agreements to build a total of 338 new restaurants that will drive international growth in the years to come. Turning to our cash flow and capital strategy. We generated $345 million of cash flow from operations in the year. We optimized our capital deployment to match our growth strategy by reducing U.S. build-to-suit spend by over $20 million in the year as we shifted our focus to profitable AUV growth. As a result, we delivered $205 million of free cash flow for the full year. Returning cash to shareholders also remains a key priority, and we returned $330 million to shareholders through dividends and share repurchases, up more than $48 million from the prior year. Lastly, we established our One Wendy's approach to the business and are actively working to strengthen the system by focusing on franchisee economics and improving the customer experience. Over the last year, we've learned a great deal. We've invested in deeper data and insights on our customers, and we've improved visibility to restaurant level performance. We now have a clear picture of what needs to improve in our marketing, menu and operations and how to optimize the store footprint within our system. Project Fresh is our turnaround strategy to clearly address these issues, and we are implementing it with urgency. 2026 will be a rebuilding year for Wendy's. We are making the right decisions to strengthen our foundation for the long term. Project Fresh is structured around 4 strategic pillars: brand revitalization, operational excellence, system optimization and capital allocation. Together, these initiatives will strengthen the business and accelerate our progress in the years ahead. Let me take a moment to share some of the specific actions underway. The first pillar of Project Fresh is revitalizing the brand to reestablish Wendy's as the highest quality choice in QSR, which centers around improving how we connect and engage with customers in more relevant and distinctive ways. Our focus this year is restoring relevance and rebuilding trust with customers through disciplined execution and marketing. To understand exactly what our customers are looking for, we completed a comprehensive consumer segmentation study that used a needs-based approach to identify the key drivers that influence when, why and where consumers choose to eat. We've pinpointed where Wendy's quality positioning has the strongest appeal and are focusing our marketing and menu efforts on the consumer segments identified that represent the greatest growth opportunity. Our efforts are targeted towards their specific need states while consistently reinforcing Wendy's leadership in food quality and value. We have translated these insights into a brand essence framework, a North Star that serves as guiding principles for the entire organization. This framework clarifies how we set priorities, elevate our brand, communicate our value and enhance the customer experience. Going forward, it will guide not only our marketing approach, but decision-making around menu and operational priorities throughout the organization, enabling better alignment and execution in everything we do and keeping us focused on being squarely better than anyone else in QSR. Our learnings have already informed a new marketing and menu approach, which has significantly strengthened our marketing calendar for 2026. We're taking a balanced approach across core, innovation and value offerings, supported by improved messaging that connects with customers in socially and culturally relevant ways. In addition, we've established a more disciplined programming structure to ensure a steady stream of new news that keeps the brand top of mind and supports higher customer frequency while providing restaurant teams adequate time to train and execute with excellence. We're taking meaningful action to strengthen our everyday value offerings, centering on a new strategic platform as opposed to short-term promotions. In January, we built on the brand equity of Biggie and launched new Biggie Deals as our everyday value architecture, a tiered structure at $4, $6 and $8 price points, this isn't a limited time offer. It's a permanent value platform to broaden our appeal, give customers more choice and capture incremental eating occasions like snacking at attractive price points. On the premium side of our menu, the segmentation study reaffirmed that Wendy's quality remains a core differentiator compared to competitors, and we're focused on highlighting that for more consumers. Quality leadership starts with our core menu. Our hamburgers are what Wendy's is famous for, and we will bring consumers' focus back to what makes Wendy's different and special. Our brand was built on serving the best-tasting hamburgers in QSR using fresh, never frozen beef, and we will reestablish that position in 2026. This starts with a new Cheesy Bacon Cheeseburger launching next week, and you'll continue to see hamburger innovation as we move throughout the year. Additionally, we were pleased by the strong response to the launch of our chicken tenders, and we are continuing to build on that momentum by leveraging the quality of our product to expand our chicken offerings. Next week, we're bringing new and exciting news to our chicken menu with the launch of a Chicken Tenders Ranch Wrap. In 2026, we will prioritize meaningful innovation across both hamburgers and chicken, focusing on launches that restaurants can execute with excellence while reinforcing our quality positioning. In addition to a new menu approach, we are elevating the effectiveness of our marketing and optimizing our mix by allocating more spend towards digital, social and streaming platforms. We are increasing culturally relevant marketing in these channels, leveraging our consumer segmentation insights and new data and analytics capabilities for more targeted messaging. Maintaining top-of-mind awareness is important for Wendy's. We've significantly increased our always-on social engagement, and that awareness will translate into traffic over time. As we continue to incorporate learnings to enhance the menu, strengthen our marketing calendar and improve messaging and media effectiveness, we expect momentum to build sequentially as we move through 2026. Moving on to our next 2 pillars of Project Fresh, operational excellence and system optimization, both of which are centered on elevating the customer experience and improving franchisee economics. Well-run restaurants drive sales and profitability, and our U.S. company-operated restaurants continue to serve as a powerful proof point that demonstrates the benefits of strong operational execution. Our U.S. company-operated restaurants outperformed the overall system by 310 basis points in 2025, demonstrating that when we execute with excellence, our customers respond. Throughout the year, our operational initiatives drove improvements in customer satisfaction scores, including accuracy, taste and friendliness. Operational excellence starts with what we call people activation, which is about having the right capabilities and experience in our restaurants. We completed this initiative across U.S. company-operated restaurants last year, which strengthened our company-operated restaurant teams, and we have been sharing these learnings with franchisees. We've made progress on rolling out enhanced training and have implemented a new learning management system specifically designed for restaurant employees. We are partnering with franchisees to extend the performance management strategy implemented at U.S. company-operated restaurants more broadly across the system. This ensures accountability to a consistent cycle of planning, managing and evaluating operational performance by restaurant teams to improve the customer experience. Our field operations team is central to scaling people activation and enhanced training across the U.S. system. Based on the benefits we saw last year, we're further expanding our field operations team in 2026, allowing them to spend more time in restaurants, providing greater support, coaching and training in close partnership with franchisees. Our franchisees have responded positively to these operational initiatives, recognizing their direct benefit to customer satisfaction and sales. We expect further adoption of these initiatives to positively impact results as we move through 2026. We're also continuing to add capabilities to our restaurant technology that will make it easier for our restaurant teams to execute with excellence. We're focused on improving order accuracy, a critical driver of customer satisfaction. And this month, we'll begin rolling out software enhancements to our kitchen order screens to streamline the preparation process and make it easier for our restaurant teams to deliver the right order every time. We're also completing an initiative to modernize our restaurant architecture, enabling a substantial increase in product and promotion testing, reducing deployment time lines for new product launches and allowing us to bring innovation to life faster and more efficiently across the system. Turning to system optimization, which is about having the right footprint in each market to improve franchisee economics and enhance the customer experience. By closing consistently underperforming restaurants, we are enabling our franchisee partners to increase focus on locations with the greatest potential for profitable growth. Since we announced this program in November, we have been working with our franchisees to evaluate restaurants on a store-by-store basis and make collaborative decisions to optimize performance across the U.S. system as One Wendy's. Under this program, we expect approximately 5% to 6% of U.S. restaurants to close, including 28 restaurant closures that occurred during the fourth quarter of 2025 with the remaining closures expected during the first half of 2026. We are also working with franchisees to better align operating hours to demand, particularly for the morning daypart. While many restaurants perform well at breakfast, we recognize it may not work in every restaurant as certain markets have customer dynamics that do not support a thriving breakfast business. To strengthen franchisee profitability, we're providing more flexibility around operating hours for the morning daypart, which allows them to reallocate resources towards the greatest potential for growth across daytime, evening and late-night occasions. This positions the morning daypart to perform where it matters most, delivering greater value for customers while supporting franchisee profitability, and we continue to believe that breakfast is an important daypart for the U.S. system. Moving forward, we will provide updates on our progress. The fourth pillar of Project Fresh is disciplined capital allocation, prioritizing investments with the highest return opportunities while sustaining our international expansion momentum. We are redeploying resources from U.S. development initiatives towards driving profitable AUV growth. This includes investments in field team resources to better support operational excellence in our restaurants, restaurant technology to improve workflow and digital infrastructure investments to improve our data capabilities that support marketing effectiveness and digital mix growth. We also remain committed to returning cash to shareholders through our quarterly dividend. This balanced capital allocation strategy ensures we're investing in the growth initiatives that will drive long-term value creation while maintaining our commitment to shareholder returns. We are acting with urgency to execute our Project Fresh turnaround plan. While turnarounds take time, we're making bold decisions together as One Wendy's that will create a better future for all stakeholders. Now turning to our outlook. 2026 is a rebuilding year, centered on the initiatives of our turnaround plan. Our outlook reflects the results of the decisions that we're making to strengthen the system and position the business for long-term success. We expect improvement in our performance as Project Fresh initiatives take hold. Our outlook also reflects the impact of a 53rd week, planned system optimization actions, including restaurant closures and the optimization of operating hours and the impact of challenging weather in the first quarter. As a result, we anticipate global system-wide sales to be approximately flat to the prior year and expect U.S. same-restaurant sales to improve as we move throughout 2026. Moving to international. Our international business remains an important growth engine, and we're building on the strong momentum we achieved in 2025. We expect continued robust net unit growth and anticipate approximately the same number of international net new units in 2026 as in 2025. We anticipate adjusted EBITDA to range from $460 million to $480 million, which reflects the impact of system optimization and higher G&A expense compared to the prior year, driven by a reset of incentive and stock compensation. We expect adjusted EPS in the range of $0.56 to $0.60 per share. Finally, we expect free cash flow of $190 million to $205 million. Before I close, I'll turn it over to Suzie to provide more details on our fourth quarter results and outlook. Suzie, over to you. Suzanne Thuerk: Thank you, Ken, and good morning, everyone. I'll begin with our fourth quarter results, then provide more details on our outlook for 2026 before closing with our capital allocation priorities. In the fourth quarter, global system-wide sales declined 8.3% on a constant currency basis, and U.S. same-restaurant sales declined 11.3%, driven by marketing spend, which was down significantly in addition to a tough comp with our SpongeBob collaboration in the prior year. This was partially offset by continued strength in our international business with system-wide sales growth of 6.2%. The decline in U.S. same-restaurant sales was driven by a decrease in traffic, partially offset by a higher average check. Same-restaurant sales at our U.S. company-operated restaurants outperformed the U.S. system by 410 basis points, driven by improvements in customer experience. Many of our franchisees have already begun implementing operational improvements, and we're making progress scaling these initiatives across the broader system as we execute on our Project Fresh turnaround plan. The outperformance at company-operated restaurants was also supported by strong delivery growth and benefits from the continued rollout of digital menu boards and Fresh AI automated ordering technology. Our U.S. digital sales grew 2% compared to the prior year, driven by continued growth in our loyalty program, bringing U.S. digital mix to an all-time high of 20.6% in the fourth quarter. Shifting to our International segment. The Wendy's brand continued to demonstrate strong momentum globally, delivering system-wide sales growth of 6.2% in the fourth quarter, driven by new restaurant openings across key growth markets. Growth was led by Asia Pacific and Latin America with strong performance in key markets such as the Philippines and Puerto Rico. We continue to see healthy underlying brand strength in Canada, gaining share in the QSR burger category throughout the year despite broader QSR traffic softness and a challenging competitive environment during the fourth quarter. Overall, our international results underscore the strength of our global growth model, enabled by the investments we are making in regional capabilities, which continue to drive a robust development pipeline. Now moving to the P&L for the fourth quarter. Total adjusted revenue was $439.6 million, a decrease of $19.7 million compared to the prior year. This was driven by lower franchise royalty revenue due to the decline in U.S. same-restaurant sales as well as lower franchise fees. Global company-operated restaurant margin was 12.1% for the fourth quarter and U.S. company-operated restaurant margin was 12.7%. U.S. company-operated restaurant margin declined compared to the prior year, primarily due to a decline in traffic, commodity inflation and labor rate inflation. These were partially offset by an increase in average check and labor efficiencies. Adjusted EBITDA was $113.3 million, which was down $24.2 million versus the prior year, primarily driven by lower net franchise fees, lower franchise royalty revenue and the decrease in company-operated restaurant margin. Adjusted earnings per share was $0.16 in the fourth quarter. Moving on to cash flow and our balance sheet. On a full year basis in 2025, we invested $140.3 million across capital expenditures and our build-to-suit development program. Capital expenditures included $52.4 million in technology initiatives such as digital menu boards and continued investments in our app and digital capabilities to enhance the customer experience and enable more targeted effective marketing. We also invested $69.6 million in restaurant development across company-operated new builds and investments in our build-to-suit program. Turning to free cash flow. We generated $205.4 million of free cash flow for the full year. Our free cash flow enables us to fund strategic investments while continuing to return capital to shareholders. Through the end of fiscal year 2025, we repurchased 14.4 million shares for approximately $200 million. In total, we returned $330 million to shareholders through dividends and share repurchases, an increase of over $48 million compared to the prior year. In the fourth quarter, we issued $450 million of whole business securitization notes using the proceeds to repay $50 million of debt, which matured in December of 2025 and refinanced $350 million of securitization notes maturing in September of 2026. The weighted average interest rate for the newly issued notes is 5.4%. We ended the year with $340 million of cash on the balance sheet and a net leverage ratio of 4.8x. Now turning to our financial outlook for 2026, which reflects the 53rd week in the fiscal year as well as the impact of the actions we are taking today to execute against our strategic plan that will drive long-term profitable growth. We expect global system-wide sales to be approximately flat for the full year. This reflects roughly 2% growth from base business improvements and international expansion and a 2% benefit from the 53rd week, offset by a 4% impact from our system optimization initiatives. Turning to the shape of the year. We anticipate U.S. same-restaurant sales for the first quarter to be down year-over-year with sequential improvement throughout the year as initiatives to revitalize the brand and improve operations begin to take hold. We expect U.S. company-operated restaurant margin of 13%, plus or minus 50 basis points. This includes our outlook for labor inflation of approximately 4% and a commodity cost increase of approximately 4%, reflecting the continued inflation in beef prices as well as investments to improve the quality of our products, including upgraded chicken fillets and new buns. We expect G&A to be approximately $295 million. The increase versus the prior year is primarily driven by resetting our incentive compensation plan and higher stock compensation as we lap the favorable impact from the departure of the company's previous CEO in 2025. We expect adjusted EBITDA of $460 million to $480 million, reflecting the resetting of incentive and stock compensation and the impact of lower adjusted revenues related to our system optimization initiative. Below the operating line, we expect approximately $140 million of interest expense, reflecting the impact of debt refinancing in the fourth quarter of 2025 as well as a tax rate of approximately 30%. Taking all of these items into account, we expect adjusted EPS in the range of $0.56 to $0.60 per share. Free cash flow is expected to be between $190 million and $205 million, reflecting disciplined capital allocation, including capital expenditures and build-to-suit investments between $120 million and $130 million. Moving on to capital allocation. Our first priority continues to be investing in the business. As we've outlined in our Project Fresh initiative, this means prioritizing AUV growth in the U.S. and net unit development internationally. As a result, we're reducing capital allocated to our build-to-suit development program by approximately $20 million compared to the prior year. Our second capital allocation priority is paying an attractive dividend. And today, we announced our regular quarterly dividend payment of $0.14 per share, reinforcing the importance of the dividend within our capital allocation approach. Our third priority is maintaining a strong balance sheet. We continue to target a net leverage ratio of 3.5 to 5x adjusted EBITDA. We do anticipate remaining near the top end of our range in 2026 as we implement our Project Fresh initiatives, but expect a natural reduction in our leverage ratio over time as we realize the benefits of our turnaround. Our fourth priority is returning excess cash to shareholders through opportunistic share repurchases. We currently have approximately $35 million remaining on our existing share repurchase authorization that expires in February 2027. In closing, our fourth quarter results aligned with our expectations for a challenging quarter. We will maintain financial discipline to support the company and franchisees as we advance our turnaround efforts. We are taking deliberate actions to strengthen our financial foundation and position the system for improved performance and long-term value creation for our shareholders. With that, I'll now turn it back to Ken. Ken Cook: Thank you, Suzie. 2026 will be a rebuilding year, and I am confident that we will execute on our Project Fresh initiatives to strengthen our foundation and position Wendy's for long-term success while delivering strong growth in our international business. We are focused on controlling what we can control and leaning into what Wendy's can do better than anybody else, delivering the highest quality food in QSR. We have all the ingredients needed to be successful, an iconic brand, a great team, passionate franchisees, improved capabilities and a strategic action plan to deliver results. I'll now hand it over to Aaron to share our upcoming Investor Relations calendar. Aaron Broholm: Thank you, Ken. On March 10, we will participate in the Citibank Global Consumer and Retail Conference in Miami. And on March 11, we will be in New York City for the UBS Global Consumer and Retail Conference. If you are interested in joining us at one of these events, please contact the respective sell-side analyst or equity sales contact at the host firm. We will now transition to the Q&A part of the call. Due to the high number of covering analysts, please limit yourself to one question only. Operator, please queue up the first question. Operator: [Operator Instructions] The first question comes from David Palmer of Evercore ISI. David Palmer: Lots of great detail on this call. I guess when it comes to operations at digital, you have a lot of initiatives there. But I feel like when it comes to turnarounds in this space, it really comes down to that initial jolt around marketing and menu. And you had a pretty good idea towards the end of this last year with the tenders and it felt like a pretty good product. And so I'm just wondering how you're thinking about this year, the approach, the ideas, the execution on the marketing side. Help us imagine how things are going to evolve there in ways that you think might be more effective? Ken Cook: Yes. Great question, David. So I'll start by talking a little bit about what gives us confidence that the turnaround plan will work. The results that we delivered are well below our potential for sure. But we have all the ingredients needed to be successful. We have an iconic brand, determined employees, passionate franchisees, better data visibility and capabilities than we've ever had. We have great food, and we're approaching that all with a One Wendy's mindset. Secondly, we understand the problem. We got away from what made us great. We allowed ops to drift, and we focus too much on sales overnight and discounting versus brand over time. We made some decisions that optimize the short term, but we're changing all that. We now have a clear North Star, which is our brand essence, and that will help us reestablish Wendy's as the highest quality hamburger in QSR. Also, we're executing the right plan, Project Fresh. In terms of revitalizing the brand, we know who drives our business, and we know how to bring them in. We do have a new approach to both menu and messaging that you've already seen take hold in 2026. And we're focused on ops, deploying the playbook that we use to improve operational excellence in our company restaurants to the system. Additionally, we're making the right long-term decisions in terms of system optimization, optimizing our restaurant footprint, which will help improve franchisee economics. So turnarounds take time. We'll see the ops metrics change first, followed by brand metrics and then traffic and sales. In terms of the calendar approach, which you mentioned, what's going to be different, there's going to be a lot of things that are going to be different. We have a new menu calendar framework. We've divided the year into 8 periods to make sure we provide sufficient new news throughout the calendar. We're marrying that up with top-of-mind culture events to make sure we stay socially and culturally relevant to our customers. And we're focused on the target segments. We did a lot of customer segmentation work. We now know who drives our business and we know who to focus on, and we know who not to focus on. So both those pieces are important. One learning from 2025 around value, we swung the pendulum too far towards limited time price promotions instead of everyday value. We had this fantastic Biggie platform that we've now made even better with our Biggie Deals platform around $4, $6 and $8, multiple price points, giving consumers more choice. And we will continue to upgrade the quality on our menu across the board. We have new chicken sandwiches rolling out. We're going to do some things on the hamburger side and a lot more hamburger innovation. If you look back at 2025, we had 0 hamburger innovation in 2025. That is changing in 2026, starting actually next week with the launch of our new Cheesy Bacon Cheeseburger. So a lot of things are different. We're learning a lot and applying those learnings as quickly as possible. Operator: The next question comes from Jake Bartlett of Truist. Jake Bartlett: Yes. I'm hoping you can expand on that a little bit and some of the learnings, your work with Creed UnCo, the segmentation study that you did. What did you learn maybe a little more specifically that you didn't know before in terms of who your target customer is and who you thought it was before and who it actually is and how that's informing the approach going forward? Ken, you mentioned that we've already seen some of the changes to the approach. I just -- maybe just remind us what we've seen so far on that front? Or are you kind of referring to what's going to -- what we're going to see next week with the launch of the new burgers and the wrap? Ken Cook: Yes. Thanks for the question, Jake. In terms of the customer segmentation study, that was the first phase of the Creed UnCo engagement. So first phase and foundational in terms of a proven playbook. We completed that study in December. And the good news is Wendy's does have a very strong brand perception, very strong. But from a customer perspective, this -- the needs-based approach helps us move beyond the what to the why. So segmenting customers based on need, why they are coming to Wendy's. Is it the quality of our food? Is it the price? Is it the abundance, convenience, snacking, what occasion are they coming in for? Is it for a dinner with family? Is it for a frosty to celebrate a kids game, all of those things, better understanding the why. Then that allows us to value the segments and divide them up into who is our primary target, who is our secondary and who should we not focus on at all because they represent very small pieces of our overall customer base. This validated some things we already knew and did provide some new insights. But it helped us put the spotlight on so what? What are we going to do about these things? A couple of learnings and validations from the study where a big segment of our customers come to Wendy's for an everyday quality upgrade, especially hamburgers and our fresh never frozen beef. When we look back at 2025, we had 0 hamburger innovation. We didn't talk about our hamburgers and we didn't innovate on those. So that's changing this year. We're going to have several hamburger -- premium hamburger LTOs starting next week with the launch of our Cheesy Bacon Cheeseburger. So -- that's a learning. That's a big difference. We also will be making quality upgrades across the menu. In a couple of months, we'll launch our new and improved chicken sandwich lineup, so both classic and spicy. Really excited about that, giving customers this everyday upgrade compared to what they can get from the competition. Another learning was a big segment of our population comes to Wendy's for our sides, the sweet and savory aspect, our sides, our Frosty's and this snacking occasion. So again, reflecting backwards, that helps explain why Girl Scout Thin Mints was such a success in 2025. We also have a new and improved collaboration with Girl Scout Thin Mints Frosty launching next week. So really excited about that. And we will incorporate some of the sweet and savory dynamics in our March Madness campaign here next month. And then 468, that snacking behavior did help inform the construct of our new Biggie Deal platform, putting that $4 price point in there. So if you're coming to Wendy's and you don't want a full meal, you want to get a quick snack, you can do that through that $4 price point, but also having a $6 and $8 for people who want more abundance, more value was really important. Another confirmation was really a large percentage of visits to Wendy's are on plant. When somebody leaves the parking lot or their driveway, they don't know where they're going to eat. And so that highlighted the importance to us to keep Wendy's top of mind and make sure we're in the consideration set. So you've seen us significantly increase our social activity to help drive awareness, so we stay in the consideration set when people are coming to Wendy's. As importantly as who we are going to focus on, then we look at where we're not going to focus. So there's a very small portion of our customers are considered what I would call it adventurous heaters. So these people want very unique flavor profiles, kind of extreme innovation. And again, they represent a very, very small percentage of our total. We shouldn't focus on them. When we look backwards at 2025, some of the collaborations we did were focused on this segment of the population and weren't broadly appealing enough to significantly move the needle for us. So we're going to move away from that. So I guess, in summary, what we've learned helps us target the customer segments we want to win with and it helps us be more relevant to them in terms of the menu choices we make, the messaging and the operations and is foundational to the brand essence that we've developed. Operator: The next question comes from Margaret-May Binshtok of Wolfe Research. Margaret-May Binshtok: I just wanted to ask, I remember you guys talked about expecting October to be the trough for the year. Could you give some color on the cadence of comps through November and December? And what do you see exiting the quarter into January? Ken Cook: Yes. Great question, Margaret. So yes, October was the trough for us. November and December were better than October, which is great. In terms of -- as we exited 2025 and entered 2026, we did see some improvements in early January. And then in the middle of January, we launched our new Biggie Deal platform, which we are really excited about and pleased with so far. But then we were met with some significant weather disruption. We ended January down about 8% in terms of U.S. SRS. We do expect the full first quarter to be a little bit better than that. So we're excited about the established value platform and the fact that we're talking about it in terms of Biggie, this distinctively Wendy's asset. Next week, we have the Girl Scout Thin Mint Frosty, which now has both a swirl and a fusion option, which we think is really going to resonate with our customers. We have leveraging the Chicken Tenders launch in the fourth quarter. We're innovating off that. We have a new Chicken Tenders Ranch Wrap that launches next week. And then back to hamburger and premium high-quality hamburgers, we have Cheesy Bacon Cheeseburger that launches. So -- all of these things are what makes us excited about 2026. We will build throughout the year. We've talked about 2026 being a rebuilding year. 4Q of 2025 is the trough, and we expect to improve throughout the year as we execute on our Project Fresh initiatives. Operator: The next question comes from Brian Mullan of Piper Sandler. Brian Mullan: Just a question on the system optimization efforts. With 5% to 6% of the U.S. system closing in the first half of the year, I guess, can you just talk about how exhaustive this process is, how flexible of an approach you're taking with franchisees? Meaning will this really be all the units that the franchisees have any desire to close and you'll be done after this? And then kind of just related to that, could you just comment on how this would impact the rental income line in '26, if you could put some parameters around that in the context of the guidance. Ken Cook: Yes, happy to. So system optimization is really about improving franchisee economics and improving the customer experience. We established a disciplined process with our franchisees to approach this restaurant by restaurant, working with them to make the best decisions that strengthen the system in the long term. Under this program, we closed 28 stores in the fourth quarter. The AUVs were -- had significantly lower than our overall average, which is to be expected. And we do expect to close around 5% to 6% of our U.S. restaurants under this program with the majority happening in the first half of 2026. We started with our list of restaurants. We also went out and had a process where franchisees could submit the restaurants they want. We've done a very robust process evaluating trade area, operational metrics, the profitability, leveraging the new data we have on restaurant level economics. And we expect 5% to 6% of the U.S. system to be impacted by this. In terms of the impact on total sales, in total, system optimization, we expect to have about a 4% impact on global system-wide sales, and we expect this to have about a $15 million to $20 million drag on adjusted EBITDA for the full year, which is inclusive of everything under that program, including the rental income. Suzanne Thuerk: Yes. The rental income for 2026 will be relatively flat. Obviously, it takes time to work with landlords and achieve what will be a win-win for both the franchisees and the Wendy's Company for those sites that we're in. So that will take a little bit longer to see the rental income impact versus the closures. Operator: The next question comes from Jeffrey Bernstein of Barclays. Jeffrey Bernstein: Great. Ken, for a turnaround to work in a franchise model, it's obviously very delicate. It seems like it's kind of a house of cards here, and it's all about the franchisee buy-in. So my guess is over the past 90 days, you've had a fair amount of discussions with those franchisees. I know it's a question that's come up before. But with the challenging fourth quarter and a rebuilding year in '26, I'm just wondering if you can share kind of current sentiment. I'm sure there are positives and negatives, but whether franchisees are aligned in terms of your approach to improving the comp, whether they're keen to push more value, whether there's any change in sentiment on unit growth, just an overarching discussion or perhaps color on just how franchisees are embracing the turnaround strategy. Ken Cook: Yes. Thanks for the question, Jeff. Under the One Wendy's approach, franchisees are appreciative of the flexibility that we've been providing and our willingness to make these decisions to help improve overall franchisee economics. Under the One Wendy's mindset, we know that the success of our company depends on the success of franchisees and vice versa, which is why we elevated franchisee economics as a key priority for us. Sales deleverage puts pressure on franchisee economics, and that is what we're seeing now. There's a wide range of situations in the U.S. We're working with franchisees on a case-by-case basis, partnering and leaning in where we can and then executing on the Project Fresh pillar around system optimization, optimizing the footprint. In terms of one thing I've learned over the last couple of months as we've executed these and begun down that path is the importance of communication. So we have -- obviously, we're making a lot of changes to the system around menu, around marketing, around operations, around system optimization. Communication is critically important in that. So we have significantly increased how frequently we're communicating with the franchisees. I was actually on a call with franchisees yesterday as part of the One Wendy's approach, giving them a preview of the things that they were going to hear on the earnings call today. Pete and I were with franchisees 2 weeks ago, walking through all the details of system optimization, allowing them to ask questions in a very open environment. Lindsay was on a call with franchisees a couple of weeks ago, walking them through the new approach to menu, messaging and how that was going to impact operations at the restaurant level. So that's critically important. Franchisees are appreciating the flexibility that we're giving and us working hand-in-hand with them to help improve overall franchisee economics. Operator: The next question comes from Danilo Gargiulo from Bernstein. Danilo Gargiulo: Can I want to go back on to the segmentation study. And frankly, I'm a little bit surprised to hear that the learnings of the customer segmentations where the relevance of the beef platform, the fresh never frozen. I think you mentioned also snacking, which I think are a core part of the DNA of the brand for a long time. So I'm wondering if you can maybe talk about the -- if there was some institutional knowledge that has been lost within the organization over time. And if you can maybe expand on the internal turnover, employee engagement scores. Conversely, if you think that the real opportunity here is translating the inside or already inside the organization into actionable initiatives, is your current organizational structure and G&A investment sufficient to support that? Ken Cook: Yes. Great question, Danilo. So I think you're right. We had a combination of things that we knew that were validated through the Creed UnCo study and the customer segmentation study. And we did have some new insights, a combination of those things. But the focus is really on what are we doing about it. And I think it highlighted over the past, we had lost our focus a little bit on who the target segments were and how we're approaching menu and messaging. So now with this refocused emphasis on everyday quality upgrades and making the menu better and highlighting the quality of our food relative to the competition, that will inform the menu strategy. It will inform the marketing strategy and how we tell our story to consumers. We have stood up a new -- as a result of this, we have instituted a new marketing framework, a process that provides discipline and consistency. We've divided the year into 8 periods to provide sufficient new news from a product perspective and new news that's relevant to our target segments. Regular cadence for the restaurant teams that enable them to train appropriately and operate and execute these with excellence. And it helps us maintain balance in terms of core innovation and value. Window 1, we launched Biggie Deals. So very -- taking a very distinctive Wendy's asset, expanding that for the customer into this permanent value architecture, so we have everyday value that the customers can depend on and then talking about that. It does inform our decisions in terms of product quality enhancements. Chicken sandwiches, significant improvement in quality on a core menu item that we've had for 30 years. We'll provide our customers an everyday upgrade versus what's on the market today. We're also having a bun upgrade coming soon, which we'll use on all our premium sandwiches. And another learning was making sure that we have this common thread of quality throughout everything that we do. And so you'll see that come to life in the product innovations that we have on the menu as well as how we talk about those throughout. It does take some time to build the foundation properly. The team is making a lot of progress, and we expect the benefit of these to increase throughout the year. Suzanne Thuerk: And Danilo, I might add from an investment standpoint in G&A, we have strong free cash flow and our #1 capital allocation priority is investing in the business and our outlook for 2026 reflects those investments. Ken mentioned on the call, investments in field teams to better support our operational excellence in our restaurants. We saw that work with investments we made in 2025, and we're offering more investments in field resources in 2026 as well as international investments to support net unit development internationally. Operator: The next question comes from Dennis Geiger of UBS. Dennis Geiger: Wondering if you could talk a little bit more about the Project Fresh rollout and maybe thinking about the timing for the franchisees to have a lot of the capabilities that the company stores have currently. I want to make sure maybe that that's the right way to think about it, Ken. And just curious how we think about that, how we think about that timing and ultimately, thinking about that gap in comp performance and kind of narrowing that gap as the franchisees improve their performance as this rolls out. Ken Cook: Yes, Dennis, it's a great question. Let me start by saying I'm very proud of the U.S. operations team. When you look at company restaurant performance versus the system, outperforming by 310 basis points in SRS for full year 2025 is really impressive. When you dive a level below that and see overall satisfaction was up 370 basis points year-over-year for company restaurants in the fourth quarter. When you look at accuracy, friendliness and taste, all of those elements were up over 300 basis points. So a great, great results from them. And how we did that, great operations start with having great teams. People activation is about having the right capabilities and experience in our restaurants. And so it starts there and then enhancing the training, making sure that we're training all our employees on hospitality and how to how to serve the guests with excellence. We mandated that for restaurant teams to make sure we were delivering quality and brand standards across the system. And then we implemented a very methodical approach to performance management and continuous improvement, making sure that each restaurant was focused on the 1 or 3 things that they had the opportunity to make the biggest improvement in, making sure we had disciplined action plans in place, making sure we had an accountability process behind that, where the district manager would come visit and review the progress that they were making. And then that combined with daily operating plans to make sure the entire restaurant team was focused on executing the action plan. So -- we activated that in company restaurants in early 2025 and then started seeing big results in the second half of 2025. If you look at the first quarter, there was about a 20 basis point difference between company restaurant SRS in the system. That grew to a little under 2% next quarter and then 400 basis points plus in the back half of the year. In terms of deploying that to the system, franchisees have been receptive to this. We have 20% of franchisees who have fully adopted the program that we rolled out, and we're working on deploying it with the rest of them right now. So I would expect to see the improvement to really start to take hold in the second half of 2026. But also remember, we keep pushing on our company-operated restaurants to continue to get better, right? There's no finish line here. We want to get a little bit better every single day. So we want to have some healthy competition in the system and see where we end up. Operator: The next question comes from Gregory Francfort of Guggenheim Securities. Gregory Francfort: I just wanted to ask about breakfast. Can you remind us how many stores have it today? And the flexible changes, how would you expect that, I guess, to impact that number over time? And then you talked about redeploying those hours into late night. Just any framing for the expectations for franchisees? Is this -- they're open up to midnight now and they still open until 2:00 a.m. going forward? Just any thoughts on strategy-wise, how that helps. Ken Cook: Yes. So breakfast remains an important daypart for the system. The large majority of the system is going to stay in breakfast. We're not pulling out. We're working with franchisees right now to finalize those exact numbers, and we'll share updates as we go along. This is really a common sense decision, taking learnings from the past 6 years that we've been in breakfast plus taking into consideration the current environment. And ultimately, it was the right thing to do. It helps improve franchisee economics. And when they do make changes on the breakfast side, it enables them to start serving lunch earlier and focus their labor on dayparts with the highest potential, lunch, dinner and late night. Late night was actually our best-performing daypart in 2025, and we think we have an opportunity to build on that. Even if you think about it just from a general manager perspective, if that general manager is getting spread throughout the day, if you take some hours off of that morning daypart, it allows them to focus more on dinner and late night. So that's how that will work. We have a right to win in breakfast. If you look at the food that we serve, the Breakfast Baconator, the Burrito, which is my personal favorite, we upgraded our beverage lineup in 2025, hot brew, cold brew and sparkling energy and continue to focus on executing the local playbooks to help those restaurants succeed. In terms of the system-wide sales impact, the -- our estimated impact for breakfast is included in that 4% system optimization number that we provided. And again, we'll provide updates as we continue to work with franchisees and finalize the plans. Operator: The next question comes from Jim Salera of Stephens Inc. James Salera: Ken, I was hoping you could offer some thoughts maybe at a higher level on how your expectations for QSR as a whole is going to progress this year. We've seen the industry pressured, obviously, around traffic and consumer being still very kind of value conscious kind of continuing the trend from last year. Is the LTO framework that you set up this year more of kind of sharpening your elbows to take more of a piece of a smaller pie? Or is it aimed at really driving consumers that may have lapsed from traditional QSR occasions and pulling them back into the category? Ken Cook: Yes. Thanks for the question, Jim. We expect the consumer to remain challenged throughout 2026. So we don't expect any big changes there, which means it does end up being a share gain primarily. So we're really pleased with the way that we've set up the year. So launching this new Biggie Deals platform was important for us. It provides customers value that they can rely on every single day. The way we're talking about it, giving customers more choice, this $4, $6 and $8 price point, $4 Biggie bites attracts customers who are looking for that lower price point and the customers that we've identified who come to Wendy's for more snacking occasions. And then we've intentionally designed the tiers of this to provide more value as you move up that chain. So $4, $6 and then $8, the $8, you get 2 sandwiches, fries and a drink. So full meal, 2 sandwiches, highest quality beef, highest quality food, fresh never frozen beef. So excited about that and a lot of abundance. And we're talking about it. So this is the first time we've advertised our Biggie platform since 2024. We do expect this to improve our worthwhile pay metrics and don't think we need to go deeper to kind of chase the price point below where we've set it now. The other thing that I would say is really refocusing our efforts on the Wendy's quality difference. We'll see that from the operations perspective. If you look at what we're doing, rolling out the action plans from company restaurants to the system. When you look at system optimization and potentially closing 5% to 6% of the worst-performing restaurants in the U.S. that -- all those things are going to improve the customer experience, combined with a new marketing approach that highlights the value or the quality that Wendy's brings to the table, we think that will help us continue to improve comps as we move throughout 2026. Operator: The next question comes from Andrew Charles of TD Cowen. Andrew Charles: The dividend payout ratio is approaching 100% in 2026, at the high end of your target leverage ratio. So I'm curious what levers do you have in plan to sustain the dividend should the sequential U.S. sales improvement not to materialize the slope you expect or more investments required in the turnaround? Ken Cook: Yes, it's a great question. We're committed to the dividend. We have a very balanced capital allocation policy. Priority #1 is investing in the business. We invested $140 million in CapEx in 2025. We'll invest another $120 million to $130 million of CapEx in 2026. We still have a lot of cash on the balance sheet, $340 million, which provides us the flexibility to potentially acquire restaurants under the system optimization pillar if we decide to. And then we have the $100 million -- approximately $100 million of dividend funds to pay out. Still deliver very strong cash flow, $200 million in 2025, $200 million in 2026, and we still have a $300 million revolving credit facility. So feel good about overall liquidity, feel good about the flexibility that we have, and we are focused on executing the Project Fresh turnaround. Operator: The final question today comes from Lauren Silberman of Deutsche Bank. Lauren Silberman: I wanted to go back to the comp side. I know that January is challenging with weather. I'm just trying to understand like underlying trends and what you're assuming as we move through Q1. And then it seems like the guide implies comps of 1% to 2%. So can you just help us understand like the magnitude of the sequential improvement that you expect as we move through the year? Ken Cook: Yes. Thanks, Laura. So yes, it's -- January was a bumpy month. We did see improvements to start the year. So we saw some incremental improvement from where we exited 2025 into 2026. And then we were faced with significant weather disruption. January was down 8%. We do expect Q1 to come in a little bit better than that as we continue to see the benefits from the new Biggie platform as we continue to see the benefits from the new products that we're launching next week. And as we continue to sharpen our messaging that really appeals to our core consumer. In a couple of months, we'll launch a new chicken sandwich lineup that's significant upgrade from where we are today and gives customers an everyday upgrade relative to what's available in the market. We think that will be another boost. And then as all these things work together, all the levers of Project Fresh, system optimization as operational excellence initiatives take hold and our new and improved approach to menu and messaging, we expect sales to continue to improve as we move throughout 2026. Aaron Broholm: That was our last question of the call. Thank you, Ken and Suzie, and thank you, everyone, for joining us this morning. Have a great day.
Operator: Hello. This is the Chorus Call conference operator. Thank you for standing by. Welcome to Boston Pizza's Fourth Quarter Conference Call. [Operator Instructions] The conference is being recorded on February 13, 2026. [Operator Instructions] At this time, I would like to turn the conference over to Michael Harbinson, Chief Financial Officer. Please go ahead. Michael Harbinson: Very good. Thank you, and welcome to the call. Today, we'll be discussing the 2025 Fourth Quarter Results for both Boston Pizza Royalties Income Fund or the Fund, and for Boston Pizza International, or BPI. For complete details on our financial results, please see our fourth quarter materials filed earlier today on SEDAR+ or visit the Fund's website at www.bpincomefund.com. Should you require additional information after the call, you can reach out to our Investor Relations e-mail address at investorrelations@bostonpizza.com. The Fund is a limited purpose, open-ended trust established under the laws of British Columbia to acquire indirectly certain trademarks and trade names used by BPI in its Boston Pizza Restaurants in Canada. BPI pays royalty income and distribution income to the Fund based on franchise revenue of Royalty Pool restaurants. For a complete description of the Fund and its business, please see the annual information form filed earlier today on SEDAR+. Before I turn the call over to Jordan Holm, President of BPI, I would like to note that certain information in the following discussion may constitute forward-looking information. For a more complete definition of forward-looking information and the associated risks, please refer to the Fund's management discussion and analysis issued earlier today. Forward-looking information is provided as of the date of this call, and except as required by law, we assume no obligation to update or revise forward-looking information to reflect new events or circumstances. And with that, I will now turn the call over to Jordan. Jordan? Jordan Holm: Thank you, Michael, and welcome, everyone, to Boston Pizza's fourth quarter investor conference call. Today, I'll be discussing our fourth quarter results and share a brief outlook and Michael will summarize our key financial highlights. As usual, we'll leave time for your questions at the end of today's call. In the fourth quarter, Boston Pizza continued to deliver strong sales results, sustaining the momentum built throughout the preceding quarters of 2025. This strong performance was hallmarked by Boston Pizza Restaurants achieving the highest annual total franchise sales ever recorded in 2025. These results were achieved despite mounting trade tensions and broader macroeconomic uncertainties underscoring the resilience and strength of our business. The Fund posted franchise sales from restaurants in the Royalty Pool of $244.4 million for the fourth quarter and $976.3 million for the year, representing increases of 4.3% and 4.8%, respectively, versus the same periods 1 year ago. Same restaurant sales or SRS, was 3.7% for the fourth quarter and 4.7% for the year. SRS for the fourth quarter was principally due to continued momentum in takeout and delivery and effective promotional initiatives. The major league baseball playoffs also positively impacted SRS for the period. For the year, SRS was principally due to continued momentum in takeout delivery, effective promotional initiatives and favorable comparisons to a softer performance in the prior year. Hockey and baseball playoffs also positively impacted SRS for the year. From a marketing perspective, we kicked off the fourth quarter with the exciting launch of our game day menu in coordination with the football season, offering value deals for food and beverages and holding weekly giveaways with prizes such as free food and football merchandise. Our game day promotion was complemented by extensive TV, digital and social media coverage to boost guest engagement. The fourth quarter also saw the launch of our holiday menu with new festive menu creations from both food and beverages. This included the Pepperoni Stinger Pizza and Stuffed Crust Mozza Sticks, both of which quickly became guest favorites and will become part of our core menu offering going forward. Complementing the holiday menu was our annual gift card incentive program, where guests who purchase $50 or more in gift cards receive a $10 promotional card redeemable from January to March of 2026. In terms of restaurant development, 9 Boston Pizza restaurants were renovated during the fourth quarter and 40 restaurants were renovated in total during the year. We have an array of exciting initiatives lined up for the first quarter of 2026 designed to maintain our strong sales momentum. I'll continue -- I'll share the details with you shortly. But first, let's hear from Michael about the Fund's financial performance. Michael? Michael Harbinson: Thank you, Jordan. The Fund posted royalty income of $9.8 million for the fourth quarter and $39.1 million for the year compared to $9.4 million and $37.3 million, respectively, for the same periods 1 year ago. The Fund posted distribution income of $3.2 million for the fourth quarter and $12.8 million for the year compared to $3.1 million and $12.2 million, respectively, for the same periods 1 year ago. Royalty income and distribution income for the fourth quarter and year were based on the 372 Boston Pizza restaurants in the Royalty Pool which reported franchise sales of $244.4 million and $976.3 million, respectively. For the same periods in 2024, the Royalty Pool reported franchise sales of $234.2 million and $931.7 million. The Fund's net and comprehensive income was $11.1 million for the fourth quarter compared to $6.6 million for the fourth quarter of 2024. The $4.5 million increase in the Fund's net and comprehensive income for the fourth quarter compared to the same period in 2024 was primarily due to a $5.7 million increase in fair value gain and a $0.6 million increase in royalty income and distribution income, all partially offset by a $1.5 million increase in income tax expense and a $0.3 million increase in net interest expense. The Fund's net and comprehensive income was $42.2 million for the year compared to $31.9 million in 2024. The $10.3 million increase in the Fund's net and comprehensive income for the year compared to 2024 was primarily due to a $10.7 million increase in fair value gain, a $2.4 million increase in royalty income and distribution income and a $2.2 million decrease in administrative expenses, partially offset by a $2.6 million increase in income tax expense and a $0.3 million increase in net interest expense. The Fund's cash flows generated from operating activities for the fourth quarter was $9.9 million compared to $9.4 million in the fourth quarter of 2024. The increase of $0.5 million was primarily due to an increase in royalty income and distribution income of $0.6 million and an increase in royalty income and distribution income of sorry, and increase in changes in working capital of $0.1 million, partially offset by an increase in income taxes paid of $0.2 million. Cash flows generated from operating activities for the year was $39.7 million compared to $38.1 million in 2024. The increase of $1.6 million was primarily due to an increase in royalty income and distribution income of $2.4 million, a decrease in administrative expenses of $0.2 million partially offset by an increase in income taxes paid of $0.7 million, a decrease in changes in working capital of $0.2 million and a decrease in interest received of $0.1 million. While net and comprehensive income or loss and cash flows from operating activities are both measures under IFRS accounting standards or IFRS, the Fund is of the view that net income or loss and cash flows from operating activities do not provide the most meaningful measurement of the Fund's ability to pay distributions. Net income contains noncash items that do not affect the Fund's cash flows, whereas cash flows from operating activities is not inclusive of all of the Fund's cash required outflows, and therefore, is not indicative of the cash available for distribution to unitholders. Noncash items include fair value adjustments on the investment in Boston Pizza Canada Limited Partnership, the Class B unit liability, interest rate swaps and changes in deferred income taxes. Consequently, the Fund reports the non-IFRS metrics of distributable cash and payout ratio to provide investors with, in the Fund's opinion, more meaningful information regarding the Fund's ability to pay distributions to unitholders. The Fund generated distributable cash of $7.9 million for the fourth quarter compared to $7.5 million for the same period in 2024. The increase in distributable cash of $0.4 million or 5.1% was primarily due to an increase in cash flows generated from operating activities of $0.5 million, partially offset by a $0.1 million increase in BPI Class B unit entitlement. The Fund generated distributable cash of $31.6 million for the year compared to $30.4 million in 2024. The increase in distributable cash of $1.2 million or 4.1% was primarily due to an increase in cash flows generated from operating activities of $1.6 million partially offset by higher Class B unit entitlement of $0.2 million and higher interest paid on debt of $0.1 million. The Fund generated distributable cash per unit of $0.369 for the fourth quarter and $1.487 for the year compared to $0.351 and $1.429, respectively, for the same periods in 2024. The increase in distributable cash per unit of $0.018 or 5.1% for the fourth quarter was primarily due to the increase in distributable cash discussed earlier. For the year, the increase in distributable cash per unit of $.058 or 4.1% was primarily due to the increase in distributable cash discussed earlier. As Jordan highlighted previously, during the fourth quarter, Boston Pizza broke its record for the highest year for total franchise sales in the brand's history, enabling the fund to issue a special cash distribution of $0.11. This special distribution was declared on December 8, 2025 and paid to unitholders on December 31, 2025. The special distribution effect of the fund's payout ratio for the fourth quarter and year. The fund's payout ratio for the fourth quarter was 127.3% compared to 118.4% in the fourth quarter of 2024. The increase in the fund's payout ratio for the fourth quarter was due to distributions paid increasing by $1.1 million or 13%, including the special distribution, partly offset by distributable cash increasing by $0.4 million or 5.1%. For the year, the fund's payout ratio was 101.9% compared to 99.9% in 2024. The increase in the fund's payout ratio for the year was due to distributions paid increasing by $1.9 million or 6.2% including the special distribution, partially offset by distributable cash increasing by $1.2 million or 4.1%. For illustration, the payout ratio for the fourth quarter and the year would have been 97.5% and 94.5%, respectively, without taking a special distribution into account. The fund's payout ratio fluctuates quarter-to-quarter depending on the amount of distributions paid during a quarter and the amount of distributable cash generated during that quarter. On February 12, 2026, the trustees of the fund approved a cash distribution for the period of January 1, 2026 to January 31, 2026, of $0.12 per unit and that will be paid on February 27, 2026 to unitholders of record at the close of business on February 21, 2026. The trustees objective in setting a monthly distribution amount is simply that it be sustainable. The trustees will continue to closely monitor the funds available cash balances given the fluctuating economic outlook. And with that, I will turn the call back over to Jordan for more on the outlook. Jordan? Jordan Holm: Thank you, Michael. We are excited to begin 2026 with a lineup of guest favorite campaigns. Boston Pizza launched its first quarter with the Popular Pasta Tuesday all month long promotion in January, giving guests the chance to enjoy pastas every day of the week starting at just $11.99 with gourmet pastas available for $15.99. Additionally, to celebrate the NFL playoff season, we partnered with Pepsi to offer guests the chance to win exclusive NFL prizes, including a trip to a regular season football game. Tomorrow, February 14, we'll be celebrating one of our favorite traditions, Valentine's Day with heart-shaped pizzas at Boston Pizza. For every pizza sold, $1 will be donated to help support local charities in our communities. Further into 2026, we'll be activating on marketing opportunities and supporting franchisees to engage with our communities to cheer on Canadian athletes in the Olympics and in the World Cup. As we enter 2026, we aim to build on the strong momentum of the past year, continuing to monitor the evolving trade landscape and proactively adapting our business to support Boston Pizza Restaurants across Canada. We are encouraged by our sustained performance and remain committed to elevating the guest experience, supporting our franchisees and driving long-term sustainable growth through innovation and operational excellence. With that, I'd like to begin the question-and-answer session. Operator? Operator: [Operator Instructions] The first question comes from Nick Corcoran with Acumen Capital. Nick Corcoran: Congrats on the record quarter and record year. Jordan Holm: Thank you, Nick. Nick Corcoran: Just a couple of questions for me. The first is you're lapping the GST holiday that was the end of '24 and went to '25. I'm just wondering if you saw any impact either in your fourth quarter results or if you've seen anything in your -- I understand you're only a few weeks into '26, but any impact from that? Jordan Holm: Michael, do you want to take that one? Michael Harbinson: So the GST holiday last year a stretched into the -- from December into January, and its impact, I think, on the business was most pronounced in December. So as we lapped kind of December with December. I think elsewhere we saw some impact. But just to put that in context, it wasn't -- the magnitude of that wasn't overly significant. And then in terms of the forward kind of looking aspect of that, without saying anything kind of too substantive, the kind of January over January impact was negligible. I would say, it wasn't overly significant. Nick Corcoran: Good. And then with the Olympics, are you expecting an uptick in traffic as well? Jordan Holm: Yes, we are. And certainly, some of the events of the Winter Olympics are more popular for I'll say, community viewing or viewing in restaurants versus other ones that are more often enjoyed at home, hockey, women's and men's tend to be the 2 larger team sport draws, I'll say. So as those progress into the metal rounds, we expect people to be coming out to Boston Pizza restaurants to celebrate the games together. And the further those go and the more meaningful the games are. There is, of course, the consideration of time zone when the Olympics are over in Europe. But nonetheless, a semifinal or a gold medal game, should we reach that for either men's or women hockey or other sports when it's a gold medal on the line. We definitely have plans in place to make sure that Boston Pizza is the destination to watch those events. Nick Corcoran: Great. And you had a pretty good year, I think, for renovation. Any indication of what you're expecting for 2026? Jordan Holm: Yes. We had 40 renovations last year, which was an increase of 12 from 28 the prior year. So we were pleased with the number of renovations completed in 2025. And that's about the number that we're looking at for this year capacity-wise, it's a lot of projects, a lot of work with our franchisees to schedule with our construction teams those different upgrades to the interior and exterior of the restaurants. But we're really encouraged by the motivation, the engagement of our franchisees in moving forward with the renovations. They are required under our franchise agreement every 7 years. So that's the legal requirement. But nonetheless, we get franchisees reaching out talking to people who have just completed renovations, looking at things like audiovisual investments, tend to be a large part of the upgrade that the guest-facing element of the renovation impacts. So yes, we'll be in that neighborhood of about 40 renovations in fact, in this time of year when restaurants can be a little bit quieter in some locations. We'll often take that opportunity to close down for a week or 10 days and complete a substantial renovation. So we're already off and running in rentals for 2026. Nick Corcoran: Great. And maybe one last question for me. How is the pipeline for new restaurants. Jordan Holm: Yes. So Boston Pizza has a history of continuing to grow, and we have franchising and real estate teams east, west and Quebec-based looking at new opportunities for growth. Traditionally, our growth has come kind of 50% with existing franchisees and 50% with new investors, and that has continued to be the case. We haven't had as many growth opportunities in the last couple of years, including no new restaurants opening in 2025, but we do have projects underway for 2026. We don't give a forecast of exactly the number, but -- and sometimes the reason we don't do that is that it does depend on construction schedules and permitting and those kinds of things. But we -- 2 things, we have projects underway, 1 in BC and 1 in Ontario, in particular, that were originally intended to be 2025 openings that got pushed into 2026. So they'll open relatively earlier in the year, just based on completing those projects. And then we've got others in the pipeline for later in the year. And beyond that, we have lots of pins and maps of locations that we have franchisees who have expressed interest in. We've got underserviced, full-service restaurant marketplaces out there. And because of the resilience and the diversity of the guests -- the resilience of our platform, having takeout delivery, dining rooms, sports bar patio, we can go into markets like Hope, British Columbia, which we entered in 2024 that are relatively small communities, but have great trade areas and can -- to grow into our national average of about $3.3 million of average sales per location. So the development pipeline is heating up for us, and we're looking forward to reporting back as the quarters progress in 2026 on our new restaurant openings. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Jordan Holm for any closing remarks. Jordan Holm: Thank you, operator. With no further questions, we'd like to thank you all for taking the time to join us today. As we have closed out 2025 and on behalf of everyone at Boston Pizza International, we want to express our deepest gratitude to our loyal guests, and thank you for your unwavering support. To our dedicated staff and franchisees, we appreciate your hard work and passion. To our business partners, we value your collaboration. And to the incredible communities we are honored to serve, thank you for welcoming us into your lives. You are an essential part of the Boston Pizza family. We wish you all a happy Valentine's Day, and we invite you to celebrate with a heart shaped pizza at your local Boston Pizza where $1 from every pizza sold goes to a charitable cause in your local community, and we look forward to reconnecting with you all during our first quarter conference call in May 2026. Thank you all, and have a wonderful day. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the DraftKings' Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mike DeLalio, Senior Director of Investor Relations. Please go ahead. Michael DeLalio: Good morning, everyone, and thank you for joining us today. Certain statements we make during this call may constitute forward-looking statements that are subject to risks, uncertainties and other factors as discussed further in our SEC filings that could cause our actual results to differ materially from our historical results or from our forecast. We assume no responsibility to update forward-looking statements other than as required by law. During this call, management will also discuss certain non-GAAP financial measures that we believe may be useful in evaluating DraftKings' operating performance. These measures should not be considered in isolation or as a substitute for DraftKings' financial results prepared in accordance with GAAP. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available in our earnings release, letter to shareholders and earnings presentation, which can be found on our website and in our annual report on Form 10-K filed with the SEC. Hosting the call today, we have Jason Robins, Co-Founder and Chief Executive Officer of DraftKings, who will share some opening remarks and an update on our business. Following Jason's remarks, our Chief Financial Officer, Alan Ellingson, will provide a brief review of our financials. We will then open the line to questions. I will now turn the call over to Jason Robins. Jason Robins: Thank you, Mike. We closed 2025 on a high note, setting new quarterly records for revenue and adjusted EBITDA. Fourth quarter revenue grew 43% year-over-year to nearly $2 billion. Adjusted EBITDA was $343 million, 4x the prior year period. Adjusted EBITDA margin expanded by more than 1,000 basis points year-over-year to 17%. We repurchased another 8 million shares during the quarter, and we expect to remain active with repurchases as our adjusted EBITDA continues to grow. We are in a strong position. Our sustainable advantages in product, technology, trust and marketing continue to drive higher LTV and efficient customer acquisition. AI and machine learning amplify each one by making our products better, our platform faster, consumer trust stronger and marketing more efficient. The result is predictable in improving cohort economics, reinforcing our conviction that we have built an efficient and powerful long-term business model. We are excited to share more details at our Virtual Investor Day on March 2. Now we take our next step. Predictions is rapidly developing into a massive incremental opportunity, and we are moving with urgency. We expect to emerge as the leader in this nascent category. We plan to deploy growth capital to build the best customer experience and predictions and acquire millions of customers. This year, we anticipate significant step function improvements to our predictions offering, including the integration of Railbird and launch of our market-making division. We are targeting hundreds of millions in annual revenue for DraftKings Predictions in the years ahead. We believe there is much more upside over the long term. This should translate to meaningful incremental adjusted EBITDA. In Predictions, we have the playbook to execute and win. Before I go deeper on Predictions, I want to highlight the strength of our core business. In fiscal year 2025, we grew revenue 27% year-over-year to above $6 billion. Adjusted EBITDA more than tripled to over $600 million and exceeded the high end of the guidance range we provided in November. We reported positive net income for the first time and repurchased 16 million shares during the fiscal year. The business is scaling in a durable way. Since fiscal year 2022, we've grown customers by nearly 6 million, revenue by roughly $4 billion and adjusted EBITDA by more than $1 billion. Every year has been better than the last because our LTV flywheel continues to improve, powered by our sustainable advantages. We expect our revenue and adjusted EBITDA to grow for many years to come. I also want to directly address the most common question we are getting. Could a growing Predictions category overlap with Sportsbook over time? To date, we are not seeing a discernible impact from Predictions on our revenue. In our newest Sportsbook state, Missouri, adoption of our offering was higher than in any other state launch in our history through the first 2 months, and activity per customer has been strong. In the fourth quarter, our overall Sportsbook handle accelerated to 13% year-over-year. In January, our Sportsbook handle increased 4% year-over-year, even after 2 consecutive months of Sportsbook friendly outcomes and as our parlay handle mix continued to surge. Internal and third-party data suggest Predictions impacted our January handle only very slightly and primarily impacted low-margin customers. Consequently, the impact to our revenue has been de minimis. Now I'd like to focus on Predictions. We have been building DraftKings for more than 14 years. When a new growth lane opens, we move fast and execute at scale. Predictions is the most exciting new growth opportunity we have seen since PASPA was struck down in 2018. Early signals are strong. On Super Bowl Sunday, DraftKings Predictions had the second most downloads in its category and delivered 3x its prior record for daily trading volume. Customer retention is also strong so far, even with a product that is early and positioned to improve rapidly as we add content. In Predictions, speed and execution, combined with a strong brand, smooth interface and real sports modeling, trading and technology expertise will determine long-term leadership. This is where DraftKings thrives. The opportunity here could be large. Based on analyst estimates, Predictions could represent a $10 billion annual gross revenue opportunity in the years ahead. We expect to capture it across multiple business lines, including the customer-facing platform, our own exchange and market-making. We expect the volume on DraftKings Predictions to keep building with growth accelerating through 2026 and beyond. Our goal is simple. We intend to lead the Predictions category. As such, we support the CFTC's engagement on event contracts and the advancement of a more defined and durable regulatory framework. The CFTC Chair recently directed agency staff to establish clear standards for event contracts to provide certainty for market participants. We view this direction as constructive. Clear rules should reward operators with strong compliance and responsible engagement infrastructure and support the expansion of sports-related Predictions over time. We bring sports, trading and technology together at scale, backed by strong distribution. We originate prices and manage risk every day in our Sportsbook. We have hundreds of data scientists and machine learning engineers building sports models plus a dedicated trading desk that fine-tunes live pricing in real time. We combine that with a trusted brand, a large customer database we can activate efficiently and marketing relationships like ESPN and NBCUniversal that give us flexible, high-intent inventory to deploy as returns dictate. We have run this playbook before. In Fantasy, Sportsbook, iGaming and Lottery, we've built leadership positions by steadily bringing critical technology in-house. In Sportsbook, we successfully integrated acquisitions and continued investing deeply in our proprietary technology to deliver the #1-rated product. Our Sportsbook product is far ahead of our peers in uptime, which is the percentage of a game during which odds are available. Predictions is the next chapter of this same strategy. We have already designed our product to improve rapidly. Our product is built to scale. DraftKings Predictions already connects to multiple exchanges so we can stay nimble as trading options evolve and continuously expand content availability and liquidity. Our recent Crypto.com integration was an immediate upgrade in breadth and engagement, adding new trading options across categories such as player performance markets, golf, UFC and politics. Next, we plan to integrate Railbird near the middle of this year to improve innovation velocity and strengthen customer economics by owning more of the stack. We are also launching market-making because liquidity is a core part of the customer experience in Predictions. Contract listings, fees, market structure, and distribution matter, but tight 2-way markets with depth are what attracts participants. Exchanges see liquidity by incentivizing market-makers and DraftKings can lead market-making for sports contracts because we model sports probabilities exceptionally well, and we have the infrastructure to provide liquidity across a broad spectrum of contracts. This creates two revenue engines for DraftKings in Predictions. First, transaction fees, as we own the customer relationship through DraftKings Predictions and offer a platform to trade across sports and non-sports. Second, trading economics from market-making and proprietary trading on our own exchange and where it makes sense on other exchanges. Over time, we also intend to introduce exclusive combination trading options that may become a major differentiator as the customer experience evolves. With that, I will turn it over to our Chief Financial Officer, Alan Ellingson, to discuss our results and guidance. Alan Ellingson: Thank you, Jason. Before I cover our fiscal year 2026 guidance, I'd like to discuss our 2025 financial performance starting with the fourth quarter. Please note that all income statement measures discussed, except for revenue, are on a non-GAAP adjusted EBITDA basis. Our fourth quarter revenue grew 43% year-over-year to nearly $2 billion, adjusted EBITDA was $343 million, 4x the prior year period. Adjusted EBITDA margins expanded by more than 1,000 basis points year-over-year to 17%. We repurchased another 8 million shares during the quarter, and we expect to remain active with share repurchases as our adjusted EBITDA continues to grow. Results were strong across all our verticals in fiscal year 2025. Fantasy revenue increased as Pick6 has begun to scale. Year-over-year, Sportsbook revenue increased over 30%, while Sportsbook net revenue margin expanded by more than 100 basis points. iGaming revenue increased 20% as we expanded our offering and attracted a broader demographic. Lottery revenue benefited from a stronger jackpot environment as well as rolling out Scratcher Games and Keno in additional states. And we delivered all this while launching our fifth vertical, Predictions. Sportsbook had a standout fourth quarter. Revenue increased 64% year-over-year to $1.4 billion. Handle growth accelerated for the second consecutive quarter to 13% year-over-year. Sportsbook net revenue margin increased 250 basis points to 8%. Parlay handle mix increased nearly 500 basis points. This continues the multiyear trend that is driving our structural net revenue margin higher. Sports outcomes were Sportsbook-friendly in the fourth quarter, and our overall hold percentage was slightly above 12%. As many of you are aware, variance is random in nature and in the short term, can either be a tailwind or a headwind for our business. For the 2025 to 2026 NFL season, our NFL hold percentage was 16%. I would also like to touch on the scale of our Sportsbook business for the fiscal year 2025. Our Sportsbook handle increased 11% year-over-year to $54 billion. Our total potential payouts across all open wagers or capital at risk was $2.5 trillion due to the multiplicative nature of parlays. We achieved this scale even though our Sportsbook is only available to about half the U.S. population. As a result of our strong fourth quarter, we had an excellent year. We grew revenue 27% year-over-year to above $6 billion. Our adjusted EBITDA more than tripled to over $600 million and also exceeded the high end of the guidance range that we provided in November 2025. We repurchased 16 million shares during the fiscal year. We also reported positive GAAP net income for the first time. I am particularly proud of that last fact that we generated positive net income for the fiscal year 2025, as it demonstrates how efficient and powerful our business model is becoming. As Jason mentioned, we expect to share more about the strength of our business model and our sustainable advantages at our Virtual Investor Day on March 2. Now I'd like to touch on our fiscal year 2026 guidance. We are excited about both our results and our business trajectory. In fiscal year 2026, we expect DraftKings to achieve between $6.5 billion and $6.9 billion of revenue and between $700 million and $900 million of adjusted EBITDA. Our revenue and adjusted EBITDA guidance ranges reflect expected investments in DraftKings Predictions, line of sight jurisdiction launches and disciplined planning as business conditions evolve. We assume state tax rates will remain consistent with where they are today. That concludes our remarks, and we will now open the line for questions. Operator: [Operator Instructions] Our first question comes from the line of Dan Politzer from JPMorgan. Daniel Politzer: I was hoping we could kick things off talking about prediction markets. Jason, the tone of your letter and comments certainly reflect the pivot in how you're thinking about this with you, I think, going so far as to say that this is the most exciting growth opportunity since PASPA. I guess the question is, why are you so much more aggressively leaning into prediction markets now? What have you seen in the past 2 months, either from a regulatory backdrop, broad social acceptance or recent rollout of DraftKings Predicts that gives you the confidence that this investment makes sense. And perhaps most importantly, how are you thinking about the level of investment required for 2026, given some of your peers have talked about $200 million to $300 million there? Jason Robins: Well, first of all, we have been excited about predictions for why I think you're right, we're more excited and I wouldn't say it's a change of tone as much as an acceleration of our excitement. I think part of it is there's been a real lean in from the CFTC. What went from sort of a hands off. We're not going to comment posture from the previous interim chair is now full-fledged affirmation that this is something that the CFTC considers to be firmly under their jurisdiction. They intend to defend in the courts and they're going to issue real guidelines and regulations. So anything that creates a stable regulatory environment that allows us to operate more freely is a great upside thing for us. And then you combine that with what we're seeing in our early numbers and what we're seeing in the broader numbers from some of the others in the market, and it's clear that there's a lot of growth potential here. I've seen analyst estimates as high as $16 billion. We centered around $10 billion, which is kind of the average of a bunch and some back of the envelope math we were doing as well. But it's clearly a huge opportunity and we're incredibly well positioned. And I think the biggest thing that was sort of holding us back, if you will, before was the regulatory uncertainty and that has since been cleared up. So with that, I think, really, really excited and you combine that with what we're seeing in the numbers. And I think it's going to be a big year. As far as the investment level, one of the great things for us is we already have a lot of what we need. We have the pricing models. We have the marketing. Yes, we'll probably spend some incremental marketing, but we can repurpose a lot of our marketing. We have a ton of national spend targeting the sports customer already. So there's a ton of synergy there. I think it's a huge advantage for us that we can do that. Daniel Politzer: Got it. And then just for my follow-up. In terms of the guidance, obviously, there's an implied deceleration in revenues. I think it's around 11% in 2026. Can you maybe just give us the building blocks there for how you're thinking about sports betting within that? And then certainly, handle, that's been a focus. You mentioned January was up 4%, but in terms of just the building blocks for sports and kind of that broader revenue growth guide for 2026 would be helpful. Jason Robins: Yes. I just want to start a little bit on philosophy. So first several years we were public, we were very conservative in our guidance. We consistently were beating and raising and we kind of got away from that a little bit. I look at 2023, at the beginning of 2023, we guided to what all of you thought was a disappointing number. We got killed. I think we were down like 16% on the day. And then we proceeded to beat and raise every quarter for the rest of the year and got it back and then some ended up, I think, about $300 million better on the EBITDA side, adjusted EBITDA side from what we originally guided. So I like that playbook a lot better, and we got away from that. I thought we had a good year last year. So it's very frustrating to me that we missed our guide. That was a self-inflicted wound that we did that. We ended up growing our adjusted EBITDA by $440 million. We had a great revenue growth year at 27%. How we could do that and miss a guide is just shame on us, right? So I think we really went back the other way. We said, let's make sure we put something out there that we feel really good about. It kind of went like this. My team came in and showed me a number and said, we can hit this, and I said, no, go make it lower. And they went back and they said, okay, now really like we're sure we can hit this. And I said, I don't care make it lower again. And that's what we got. But for me, missing numbers again is just not acceptable, and so it's not something we're willing to do. Operator: Our next question comes from the line of David Katz from Jefferies. David Katz: Along that same vein as the follow-up. I appreciate the conservatism and the candor there. Can you just maybe walk us through 2026? And just help us -- and this may be better suited for Alan, help us understand how to -- what could drive the revenue higher, right? Is there what do we have for prediction markets in that revenue guide in particular? And obviously, you've given us a pretty a wider field of play, right, on the EBITDA side as well, right? What could cause us to be higher or lower as we go through the year, particularly around Predictions. I think that's the part that we're trying to embed in the models. Jason Robins: Yes. So I think Predictions really is all upside. There's nothing in terms of revenue in the guide. We're assuming that this is a year that we spend a lot on customer acquisition in terms of new user offers. There probably will be some revenue realistically, but it's just too early to quantify, so we didn't put any revenue in the guide. So I think that's definitely a source of upside. And I think the core business has a lot of upside too. Everybody gets hung up on handle, and we've tried to sort of start to educate people that you can't look at that in isolation, a little bit more behind that. So if you look at last year, first 10 months of the year, January through October, right, before we issued our last guide, we had a net revenue margin of around 6.5%. And since then, November, December, January, February to date, so almost the last 4 months or so, we've had a net revenue margin of over 9%, which is about 40% higher. So this has to affect handle, right? So in the beginning of the NFL season, when customers were winning, we had really high teens handle growth a few weeks in that sort of October time frame. And then as we started doing better and as we started also being more efficient with promo, we started seeing more revenue growth. We did great, as you saw from Q4 revenue-wise, but the handle is going to slow a little bit. Even despite that, we're still growing handle, especially if you look outside of NFL, outside of NFL, every single sport is up double digits right now in terms of handle growth. So now that NFL is over, I expect we'll return to something more like what you guys probably expected. But you're going to see a slowdown in handle growth when we're winning that much and also when we're optimizing promo. Operator: Our next question comes from the line of Stephen Grambling from Morgan Stanley. Stephen Grambling: Maybe to follow up on that question. I was hoping you could maybe give a little bit more detail on perhaps what you're seeing in terms of NGR spend in some of the older states, the ones that have been legal longer versus some of the newer. And then as you think about this year and maybe over the next couple of years, maybe how to think through increasing penetration versus increasing spend per head? Jason Robins: We're seeing growth pretty much across states, state cohorts, I should say. So regardless of age, in terms of NGR, obviously, there's differences in where that's coming from. And I'm sorry, what was the second part of your question? Stephen Grambling: How you think about increasing whether it's a penetration of customers within a state, like what the opportunity looks like there versus increasing spend per head? Jason Robins: I think it's got to be both. I mean the reality is that, especially in the older states, the customer growth is going to slow over time, but we still have a lot of upside in terms of monetizing customers. Our retention numbers look great. And so as we drive that parlay mix up as we add more things, I think you're going to continue to see increased monetization. In January, for example, our parlay handle mix was still up another 300 bps year-over-year. So still seeing really strong growth there. So that feels like a lever that's going to continue to produce dividends for at least the next several years. And if you look at some of the parlay mix numbers in Europe and other parts of the world, it's much higher than where we are today. So it seems like there's a lot of upside there. And I still think there's a ton of room to optimize promo. I mean we are just starting to deploy AI in our promo engine in terms of optimization. And I think that's a huge lever for us to get more efficient and probably produce better results on the top line, too. Operator: Our next question comes from the line of Eric Sheridan from Goldman Sachs. Eric Sheridan: I just want to come back to the Predictions topic and ask it maybe just from a bit of a different angle. As you think about the different outcomes that can produce return on the investments in Predictions. How are you thinking about the levers of either expanding activity among existing users, widening sort of pool of people in your platform and sort of expanding the pie on the payer side? How should we be thinking about sort of it as a lever for user growth and activity growth in terms of trying to measure the return? Jason Robins: Well, since the product is so similar, it really isn't something that we see is largely incremental to our existing customers. And that's why we don't see much cannibalization from prediction operators in the states that we have been in. So really, for us, it's about incremental customers and other states. Some of the biggest states in the country like California, Texas, Florida, we were not present in with OSB, and we have Predictions there now. So there's opportunities for us. It was about half the country population-wise, that we were able to launch Predictions. And so that's something really exciting. In some ways, I think of it as like even though it's not exactly the same thing, but just to sort of paint the picture of why we're excited. It would be like if you told me we opened up the rest of the U.S. overnight to some lesser version, but still very strong version of sports product that could really monetize the customers and engage the customers in ways that we never were able to with Fantasy Sports. Operator: Our next question comes from the line of Ben Chaiken from Mizuho. Benjamin Chaiken: Just one on Predictions. Jason, how do you plan to build liquidity in the Railbird exchange? And maybe related, do you view the DraftKings OSB platform as a competitive differentiator in this context? Jason Robins: I think the second one helps answer first. Absolutely, it's a competitive differentiator. I mean everything from our pricing models to our data science around player behaviors to our vast array of marketing and data behind that. We just have so much infrastructure and so much data to be able to build on and leverage. And I think that given the similarities of the products, it's going to be hugely advantageous for us. In terms of the liquidity question, I think, first of all, virtually every market-maker out there is lining up at the door, trying to get set up for Railbird. Obviously, they know we've come to really be aggressive in play here. So they're pretty excited. So we're going to have all the same market-makers that you see on other platforms. And then I think the DraftKings market-maker is going to be a real differentiator in terms of creating liquidity, particularly in some of the new types of markets and combo type of markets that we set up. And again, because we have the pricing models, because we have the trading desk, we have all the things that you need already, we should be able to really quickly become one of the largest, if not the largest market-makers out there. So I think that gives us a huge advantage in terms of supply and liquidity, and we haven't decided yet how many exchanges we want to operate on and exactly how we want to do that, but we'll definitely be operating our market-maker on Railbird. Operator: Our next question comes from the line of Brandt Montour from Barclays. Brandt Montour: So on prediction markets, could you guys help us with just what you spent or what you achieved sort of in late December post the launch? Why wasn't it very splashy? And then when you think about your advertising plan here going forward, how do you get around the fact that most of your work over the last few years has been more national advertising, but this is obviously going to be different with obviously a lot of legal OSB states that you wouldn't necessarily want to be advertising prediction markets in those markets or maybe you would. So maybe you could help us with that. Jason Robins: So when we first launched the product in December, it was very bare-bones. It still is, frankly, but we've added a lot over the last few weeks. But we wanted to make sure, obviously, that we had a product that we felt was competitive, which we really are starting to feel like now. And then also, as we start to launch Railbird, which is coming next quarter, and we start to put more through our fully integrated stack, we're going to capture more of the economics, and that helps a lot, too, to get the returns that you want on the marketing spend. But for us, it's really about having the best product and making sure that when we really come and start being more aggressive that we feel like we have a very strong offering out there, and I don't think we're far off from that. In terms of the question around marketing, I think this is actually a huge advantage of ours. Most customers don't really even understand the difference. So I think the national marketing footprint is a big advantage because we can drive people towards our product, and we can use it in ways that we can rotate messages and have slightly different things, but in essence, it's the same general message to the customer. And I think that provides us a ton of leverage and synergy. It will drive value to both products at the same time. And we actually have a lot more detail on that because I know it sounds a little opaque now, but we have a very clear strategy that we're going to lay out at our Investor Day. I don't want to spoil it now, but I'm pretty excited about it that I think will answer your question directly on how we can really leverage that spend and get a huge synergy out of the national marketing spend that we have already. Operator: Our next question comes from the line of Trey Bowers from Wells Fargo. Raymond Bowers: I was wondering if you'd be willing to just kind of break down a little more granularity around the revenue guide. Is it kind of an expectation of a certain level of handle all year and then different levels of hold and promo against that? Or I know you said that there's too much focus on handle, but I think the investors would love to get a sense of kind of the high end and the low end of the range what went into that. Jason Robins: Yes. It's tricky because you can build it up that way, but then what happens is you're going to have periods throughout the year that you hold higher and you have less promo that handles a little bit lower and then you're going to have periods where there's customer-friendly outcomes or promos hit more, and that ends up pushing handle. So I think we feel much more comfortable in sort of the -- some products of all this. I think by the way, that was part of where we messed up going into 2025 that we've gotten a lot smarter on as we had this sequential, we're going to get this much handle and this much hold rate improvement from all the parlay mix and we're going to cut promo by this much, failing to maybe account for the fact that when you cut promo, even if it's efficient -- sorry, even if it's inefficient when you cut promo, you're going to have some impact. And when you hold better, whether it's because of outcomes or because of more parlay mix, it's going to have some impact on handle too. Obviously, the net is still very positive for us. If you look at it, we had a huge growth year in terms of revenue, but those things do move in tandem. So we can build it up that way. But I think the big difference now is we're sort of looking at it, these things all interact together and if we have plans to raise hold and to cut promo, yes, that will have an impact on handle. It doesn't always play out that way, though, because of outcomes and other things that cause variance. Raymond Bowers: And I guess just a quick follow-up. The monthly unique player number was flat year-over-year. You called out that Jackpocket was down. But can you guys just give a little more color around how that number should trend over time? And if that's even the right KPI to look at or would really be curious just kind of thinking about player counts and further penetration into kind of your younger states. Jason Robins: Yes. So for those who remember, it feels like a long time ago, but 2024, the theme of the year for us was just significant outperformance on customer acquisition, and that just was way more than we expected. Customer acquisition came back down to earth a little bit in 2025. It was definitely still healthy, but it was a big drop from where we were in 2024 and more in line with where we thought we would be probably going into 2024. So good year, but with lower customer acquisition, you're going to see MUP decline because a lot of the early -- basically a new customer counts in the MUPs as you're getting them all year and then a lot of those new customers churn. And then once they've gotten through that early churn period, the retention numbers are really high. And of course, from a revenue retention standpoint, we're still seeing over 100% retention each year after a new user cohort is acquired. So really healthy on that front. But if you look at MUPs, you're going to see a real impact from customer acquisition. And obviously, Jackpocket had a bit of an impact, too, with taxes and some of the other things. So if you take that away, we had about 5% growth in MUPs. Operator: Our next question comes from the line of Robert Fishman from MoffettNathanson. Robert Fishman: Can you talk about how you would characterize the competitive environment and promotional intensity today and expectations may be baked in for the year ahead, both in OSB and prediction players? And then separately, can you just update us on the legislative front and whether production markets are pushing more states to start to consider legalizing OSB? Jason Robins: So first question, I think it's a very rational competitive environment from a promo standpoint right now. Promo is not a huge thing in prediction. So really, where we see some of the things happening there is more on the external marketing spend side, but really rational in terms of promo levels at the moment. Obviously, we said we have a conservative guide. So we're prepared if things change, and we'll be able to deploy more. But as of now, we do think we have some cushion on the promo front in there. And then -- sorry, what was the second question? Robert Fishman: Just around the legislative front for prediction markets. Jason Robins: Yes. I mean, so definitely getting traction on that. I think also with tax increases, we are getting a lot of traction pushing back there. In my view, states would be absolutely crazy right now to raise OSB taxes with everything going on with Predictions. So definitely getting some good traction on both that and on future legalization. Hard to know yet because we're still in the midst of the sessions, whether it's going to make a difference in pushing any new bills over the line. But I am optimistic from what I'm hearing. I mean it is definitely a point of discussion in the states, and I think something they're taking very seriously. So I wouldn't be surprised if that's the difference between getting a state or 2 done this year or not. Operator: Our next question comes from the line of Robin Farley from UBS. Robin Farley: I wonder if you could help us understand -- I know you said you're not including prediction market growth in your guide. But in the EBITDA number, how much of that is a built-in EBITDA loss? Can you help us quantify for your prediction market start-up costs so that we could think about the EBITDA from your core business? And also there was something in the language of your guidance that about line of sight states or something that seems to imply, you were including some start-up costs for new states in your EBITDA guidance, which I think you haven't done in your more recent guidance, but maybe you can clarify if that's what was in there. Jason Robins: Yes. So on the latter question, good capture, Robin. We did put Maine iGaming as well as Alberta in there. So there is some spend allocated to those states. We don't have exact timing on launch yet, but we feel certain enough that they're around the corner that we were able to quantify appropriately and put it in there. In terms of the Predictions question, no revenue, as you noted, is in the guide. So not assuming we're going to get anything on the revenue side. From a spend perspective, I'll break it out into kind of two categories. There's fixed cost, which is double digits, but not that significant. There's mostly existing head count that we can repurpose and there is a lot of new head count too, that we had to hire. So there is something there. But there's a lot of synergy also with some of the things we talked about in terms of the pricing models and other components of the business that we've built and the people operating those. So it won't be entirely incremental. It will be tens of millions. And then I think marketing, we're expecting to spend. So there is some incremental marketing there for competitive purposes, I don't want to give an exact number. But as I also noted, I think a huge advantage we're going to have is that we can repurpose some of our national spend and we can also utilize some of our national spend to drive both OSB and Predictions simultaneously. And we're going to talk a lot more about our strategy for that, which is really a big strategy unveil across product and marketing and bunch of other things on Investor Day, which I think will better explain how we're approaching marketing. And at that point, we'll have more specifics on this. Robin Farley: I appreciate that. Just as a quick follow-up question. You mentioned -- you call it combination trading options, which I guess is like -- would be sort of equivalent like a parlay offering in prediction markets. Can you talk about whether the fact that you have the sports data that at the moment, I think the other prediction markets don't have access to or aren't able to purchase because of sort of gaming license regulatory reasons. It seems like there will be a huge advantage that your -- that you have that data already. And I mean, in other words, isn't that a major advantage over prediction markets that wouldn't be able to access that data to create their own parlays? Jason Robins: I think both that data as well as our vast historical database that we've built all of our pricing. Remember, it's been years that we've been investing in building our pricing models to take all of this in-house. We bought SBTech and integrated in 2021. It wasn't until basically last year when we finally brought all of the major sports in all of the major markets in-house. So it takes time to amass that type of database. It takes time to build those models and really hone those models so that they're working at a level that's ready for prime time. We have all that already. And you're right, we have the data coming in, too. So I think from that standpoint, we're going to be extremely well positioned. Operator: Our next question comes from the line of Clark Lempen from BTIG. William Lampen: I have one on promo. Jason, I know you said you're seeing a rational promo environment within prediction, but I'm curious if -- as we think about the core Sportsbook market, have you seen any uptick in intensity from smaller-scale operators? And if so, is that something that's sort of reflected in the guidance? Is there potentially room for sort of less promotional leverage built into the forecast? Jason Robins: Well, we did build in some cushion. As I said, it's a very conservative approach to the guide. So I don't think that, that is untrue, but not for the reason you're saying. We are seeing a very rational environment across both predictions and our traditional online sports betting and iGaming competitors. We have not seen a surge in promotional activity in a few years, thankfully. So hopefully, that continues. William Lampen: Okay. Alan, I guess, just sort of a quick one on marketing. To the extent that you do end up using a lot more of the sort of Amazon and NBC and ESPN national inventory that you have for prediction. Is there still flexibility in '26 if you're seeing better LTVs and sort of CACs and response rates from the core customers to lean in there? Or how would you, I guess, sort of assess the room to do both. Alan Ellingson: Absolutely. And this is one of the reasons why we're being so measured in our rollout of prediction markets as we start to evaluate the value of these customers. We do have flexibility to lean into marketing spend appropriately to make sure we're capturing long-term value. We're in this to win, and that means spending the appropriate amounts in 2026. Operator: Our next question comes from the line of Jordan Bender from Citizens. Jordan Bender: You might get into this in more detail at the Investor Day, but a question we often get is who are these prediction market players. So from the 2 months that you've been live, your just general expectations, can you just kind of shed light on that? Are they Sharks? Are they Whales? Do they play Pick6? Do they play Fantasy? And just a follow-up. I'm just thinking through the comments around maybe the underperformance on the handle for the NFL. Do you think that's just [ storyline ] driven and kind of match ups? Or is there anything else to kind of pull out in that [indiscernible]? Jason Robins: Yes. I mean the most common theme we're seeing with prediction players is they tend to be Californians and Texans. So I think that's really the big theme. Otherwise, they look a lot like our existing customers. And sorry, what was the second question? Jordan Bender: Just anything to impact on the underperformance in handle and the NFL compared to everything else. Jason Robins: I mean, really, it comes down to the point I made earlier on the net revenue. So we had a -- just to remind everybody, January through October, first 10 months of 2025, we had about 6.5% net revenue margin. That was then -- since then, it has been over 9%, which is a 40% increase. So you're going to see some changes to handle when your revenue is going up that much from other levers. That's the biggest thing. I think another point of evidence in that is if you look at the non-NFL Sports, they're actually up double digits in handle growth. We haven't been holding in promo. We haven't had a strong net revenue margins there. Obviously, there's some player crossover. And if you split it out from players that are not playing NFL and are just playing those, their handle is up even more. So it really clearly points towards there's just fluctuations in handle. But even despite that, we're still growing handle right now. I mean January handle was up. We had handle growing in the high teens after we had some low whole weeks to start NFL earlier in the season. But overall, really you have to look at the kind of net revenue. And I guess you're not going to see 0 effect to handle when you increase your net revenue margin at 40% over a 4-month period after 10 months of holding of -- having it at 6.5%. Operator: At this time, I would now like to turn the conference back over to Jason Robins, CEO, for closing remarks. Jason Robins: Thank you all for joining today's call. We are really excited and positioned really well for success in the future. Please join us at our Virtual Investor Day coming up in March. We have a lot of exciting new things to unveil there, including our strategy for winning in Predictions. Hope to see you all there. Thank you and be well. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good morning, and welcome to FIBRA Macquarie's Fourth Quarter 2025 Earnings Call and Webcast. My name is Diego, and I will be your operator for this call. [Operator Instructions] I would now like to turn the conference over to Nikki Sacks. Please go ahead. Nikki Sacks: Thank you, and hello, everyone. Thank you for joining FIBRA Macquarie's fourth quarter and full year 2025 earnings conference call and webcast. Today's call will be led by Simon Hanna, our Chief Executive Officer; and Andrew McDonald-Hughes, our CFO. Before I turn the call over to Simon, I'd like to remind everyone that this presentation is proprietary and all rights are reserved. The presentation has been prepared solely for informational purposes and is not a solicitation or an offer to buy or sell any securities. Forward-looking statements in this presentation are subject to a number of risks and uncertainties. Actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. These forward-looking statements are made as of the date of this presentation, we undertake no obligation to publicly update or revise any forward-looking statements after the completion of this presentation, whether as a result of new information, future events or otherwise, except as required by law. Additionally, on this conference call, we may refer to certain non-IFRS measures as well as to U.S. dollars, which are U.S. dollar equivalent amounts, unless otherwise specified. As usual, we have prepared supplementary materials that we may reference during the call. If you've not already done so, I'd encourage you to visit our website at fibramacquarie.com and download these materials. A link to the materials can be found under the Investors Events and Presentations tab. And with that, it is my pleasure to hand the call over to FIBRA Macquarie's Chief Executive Officer, Simon Hanna. Simon? Simon Hanna: Thank you, Nikki, and hello, everyone. Thank you for joining us for FIBRA Macquarie's fourth quarter and full year 2025 earnings call. I'm pleased to report that FIBRAMQ concluded 2025 with another quarter of solid operational performance, capping off a year that demonstrated the resiliency and quality of our real estate platform. While navigating a challenging macroeconomic environment, we delivered consistent results that underscore the strength of our strategic execution and the effectiveness of our disciplined approach to capital allocation, positioning us on a path for continued growth. Our results demonstrate the ongoing commitment to 4 key strategic priorities, optimizing net operating income across our portfolio, disciplined and accretive capital allocation, maintaining a well-positioned balance sheet with embedded firepower and deepening our commitment to sustainability, safety and operational excellence. We strive to maximize total returns on a per certificate basis, and we're very proud to have delivered a total shareholder return of 33% in U.S. dollars or 19% in Mexican peso terms for FY '25. Reflecting on our results, we finished the year with strong momentum posting record quarterly consolidated revenues and NOI, contributing to a record full year AFFO in underlying U.S. dollar terms, reflecting both the quality of our asset base and the effectiveness of our operational platform. We remain disciplined in our approach to growth CapEx, and it's worth calling out a couple of highlights we achieved throughout the quarter. First in, Monterrey, in December, we leased a 200,000 square foot flagship development property, achieving a development yield of 10%. Second, we completed the opportunistic acquisition of an under-rented warehouse, comprising approximately 165,000 square feet in Mexico City, following a similar 250,000 square foot deal we completed in the third quarter. The lease on this new investment is scheduled for a mid-2026 renewal with a stabilized cash yield expected to be within our 9% to 11% target range. The industrial development program has been carefully calibrated to current market conditions. While we've maintained discipline in initiating new projects given the subdued demand environment, we've continued advancing infrastructure and predevelopment work across multiple sites. This positions us to accelerate development activity, when market conditions align with our investment thesis, and we are currently assessing some likely near-term opportunities to do so on our existing land bank. Beyond our existing land bank, we're also encouraged by our development pipeline, and we look forward to reporting positive news on this front in the hopefully not-too-distant future. Turning to our fourth quarter performance starting with our industrial portfolio, our stabilized industrial assets continue to generate reliable cash flows with occupancy levels remaining robust despite the broader market headwinds. We executed meaningful leasing activity during the quarter ending the year with an uptick in occupancy, closing at a healthy 95.5%. We executed new and renewal leases on approximately 1.2 million square feet of GLA in the fourth quarter capping a very active year, where we completed 60 leases comprising almost 5 million square feet with a broad range of customers within the industrial portfolio. Notably, we delivered strong full year lease renewal spreads on commercially negotiated leases of 20%, comfortably exceeding our initial expectations at the start of the year. This progress has been particularly valuable given the current market environment, where tenants are prioritizing stability and our existing customer base has demonstrated stickiness giving us confidence as we approach a manageable lease renewal cycle in 2026, comprising approximately 15% of our annualized base rents. Our retail portfolio also delivered a strong performance in the fourth quarter with continued occupancy gains driven by a total leasing comprising 26,000 square meters, representing our highest quarter of leasing activity in almost 2 years. We ended the year with occupancy of 94.1%, up 75 basis points from the end of the prior year. The necessity-based nature of our retail properties has proven to be a competitive advantage with strong cash collections and tenant retention supporting steady NOI growth of 4% for the year in Mexican peso terms. We are very pleased with the continued improvement in our retail portfolio with fourth quarter car and foot traffic reaching a post-pandemic high. Having stabilized its overall performance and notwithstanding some scheduled move-outs to work through in the first half of 2026. Overall, we are well positioned to realize further value from our retail portfolio during the year. What makes our approach particularly compelling is MPA, our scalable vertically integrated platform, which is a proudly unique feature in the Mexican industrial FIBRA sector. MPA provides us with deep market knowledge and operational expertise that maximizes value and customer engagement. Our new developments incorporate the highest sustainability standards, which not only align with our ESG commitments, but also generate operational efficiencies for our customers. As of December 31, our green building certification coverage represented 44.4% of consolidated GLA, an increase of approximately 260 basis points year-over-year. A highlight for the quarter was the lead platinum certification achieved in our 200,000 square foot development property in Mexico City. With a score of 91 points we're excited to announce that this is a new lead platinum category world record, surpassing our previous developments that achieved 90 points. The property has now been installed with solar panels that are poised to achieve incremental green energy income from this year accretively adding to the existing 12% stabilized yield we already achieved upon lease-up. Our balance sheet remains a key competitive advantage, providing both stability to weather market fluctuations and flexibility to pursue value-creating opportunities. Indeed, our embedded firepower is approximately USD 0.5 billion, when considering our available credit lines, portfolio recycling opportunities and investment-grade style leverage targets positioning us well to capture accretive growth opportunities. Before turning the call over to Andrew, I want to emphasize our confidence in FIBRA Macquarie's positioning to sustainably deliver on total returns. We are pleased with the new leasing prospects on our development portfolio and the incremental capital allocation opportunities that should continue to drive both earnings and NAV enhancements. Throughout 2025, we navigated an environment characterized by significant geopolitical uncertainty, particularly around trade policies and the USMCA renegotiation process. While we consider this has impacted market-wide net absorption activity, and contributed to more cautious decision-making among potential customers, we remain absolutely confident in Mexico's fundamental role in North American supply chains. Our portfolio is strategically positioned in key manufacturing hubs and transportation corridors, serving our customers, many of whom operate in industries, where proximity to the U.S. market is fundamental. There's substantial investments in facilities, workforce development and supply chain integration reinforce their long-term commitment to the region and underpin the stability of our lease income. We're also encouraged by the Mexican government's continued focus on policies that support the manufacturing sector, including infrastructure development initiatives and targeted programs to attract investment in high-value industries. These initiatives reinforce Mexico's position as a premier destination for global manufacturing and logistics operations. While near-term uncertainty persists, we believe our high-quality diversified portfolio combined with our disciplined capital allocation approach and a strong balance sheet positions us to continue delivering reliable returns to our certificate holders. I'd like to thank our entire team for their dedication and execution throughout 2025 and all of our stakeholders for your continued support. Andrew? Andrew McDonald-Hughes: Thank you, Simon. Our fourth quarter and full year 2025 results demonstrate the continued strength of our business model and our ability to generate sustained returns even in a challenging operating environment. For the full year, we delivered AFFO per certificate of MXN 2.8519, an 8.3% increase from the prior year and at the high end of our guidance range. Our performance was supported by solid annual NOI growth with our industrial portfolio achieving an 8.2% year-over-year increase in U.S. dollar terms, whilst consolidated NOI improved 8.5% in USD. Quarterly same-store NOI performance in U.S. dollars was a real highlight with the industrial portfolio up 6.7%. Our Capital Markets team was also active during the year, capturing attractive financing opportunities and completing over $1 billion of balance sheet refinancing. In the fourth quarter, we closed on a dual-tranche sustainability-linked unsecured credit facility for $550 million as well as an additional $50 million unsecured credit facility with the IFC -- these financings provide additional liquidity and funding capacity, while extending debt maturities. As a result of these transactions, FIBRA Macquarie's cost of funding remains efficient at 5.5%, while increasing available liquidity to $615 million through committed and uncommitted credit facilities. Our balance sheet metrics remain well within our target ranges with our real estate net LTV at 33% and our debt service coverage ratio a healthy 5.1x as of the year-end. The sustainability-linked portion of drawn debt stands at 68% as of January 31, reflecting our commitment to sustainable financing and our broader ESG initiatives. Our debt profile is well structured with 100% fixed rate debt and 3.7 years of weighted average tenor remaining with very comfortable scheduled maturities of just $75 million during 2026. We declared a cash distribution for the fourth quarter of MXN 0.6125 per certificate, in line with guidance and up 17% on the prior year. Looking ahead to 2026, we maintain a cautious and constructive outlook. Our guidance assumes no material change in the geopolitical landscape or Mexico's key trading relationships, and we expect to continue delivering sustainable returns through AFFO growth and cash distributions. We are initiating our 2026 AFFO per certificate guidance in a range of MXN 2.6 and MXN 2.7 for the full year. This equates to a U.S. dollar range of $120 million to $124 million, representing an annual increase of approximately 3% at the midpoint. We are also introducing cash distribution guidance for 2026 of MXN 2.45 per certificate, an increase of more than 11% in underlying U.S. dollar terms considering the average FX for the period. This outlook reflects the following key factors: our confidence in the underlying strength of our portfolio and our ability to navigate the current environment. Same-store performance is expected to be steady on a natural currency basis. We are forecasting to achieve industrial lease renewal spreads within a range of 10% to 15%. We also expect to deploy $50 million to $100 million in growth CapEx requirements for existing projects. Importantly, our AFFO guidance does not incorporate funding costs associated with any new acquisitions or the impact of any divestment. Our guidance is based on an average U.S. dollar exchange rate of 17.25% for the remainder of the year, which is a meaningful change from the average FX levels experienced in 2025 of around MXN 19.3 per U.S. dollar, which is particularly relevant given the highly dollarized nature of our business. In closing, our 2025 results and 2026 guidance demonstrate our track record of delivering reliable earnings, disciplined capital allocation and attractive total returns. Our strong liquidity position and prudent balance sheet provide us with flexibility to pursue selective growth opportunities, while maintaining financial stability. Our strong operational execution and strategic development capabilities position us well to continue to create long-term value for our stakeholders. On behalf of Simon and myself, I want to recognize the commitment and efforts of the entire FIBRA Macquarie team and thank all of our stakeholders for your ongoing support. With that, I'll ask the operator to open the phone lines for your questions. Operator: [Operator Instructions] And your first question comes from Juan Ponce with Bradesco BBI. Juan Ponce: Simon, Andrew. Could you provide more color on tenant sentiment across your industrial portfolio as the USMCA review approaches. And specifically, are tenants accelerating commitments to secure space before the review in July? Or are they taking a wait-and-see approach and similarly, of your current development pipeline, what proportion would be preleased and how much demand is coming from existing tenants expanding versus new portfolio tenants. Simon Hanna: Yes. Thanks, Juan. Great question. Look, I think what we're seeing at the moment is still very much a wait-and-see dynamic. It's fair to say. We're still seeing, I would say, in general, net absorption being fairly soft failing muted, particularly in the northern part of the country. Now that doesn't mean that we still can't do well in that dynamic. You've seen that we've got the uptick in occupancy to 95.5% average rent is up 6.5%. So I think good momentum. It's part of that retention rate is holding at 80%. So definitely, tenants are not also moving out, which is a fundamental point to note, even though you have that sort of muted demand dynamic on new investment coming into the country. We have seen some green shoots though. We saw some tenants making a move in December or even in January, where I guess you can only kick the can down the road for so long, and some of these companies need to get on with the business, of course, and start making decisions, and Mexico still is a very competitive place to invest even in this unstable environment. So we saw those green shoots, whether it's Monterrey, where we had actually an existing tenant in our portfolio. They moved in to take on the other 200,000 square foot development property we had vacant in Apodaca. So certainly, companies with existing presence are expanding their presence. That's a good example. I'd say in Tijuana, something you'll see in Q1, there's a country -- well, there's a company moving from Asia to Tijuana, relocating production into 1 of our facilities in Tijuana. So that's, I guess, the first time entrant foot for that type of company. They're also making those decisions in this type of environment. So there's definitely green shoots out there, where we are seeing companies making a move. But I would say, fundamentally, it's still a wait-and-see dynamic and -- but we're obviously picking up those opportunities and starting to see some good dynamic across the market. Where we are in terms of spec versus build-to-suit, we obviously refer and have always preferred that spec development building with the best-in-class design. It's worked well. It continues to work well for us. And obviously, if there's a build-to-suit opportunity that's out there that works for us as well from a design perspective, we'll take it, but we'll continue to work on a spec basis. Operator: Your next question comes from Carlos Peyrelongue with Bank of America. Carlos Peyrelongue: Thank you, Simon and Andrew for the call. My question is a bit of a follow-up on the previous one. In terms of vacancies on your key markets, how have they been evolving? Have you seen some improvements? And are there any markets in particular that things are a bit more challenging. Would be the first. And the second, on your spec developments that you mentioned, can you comment on the location, where is it the north more in the center? Just to get a rough idea of where you're deploying the new capital? Simon Hanna: No, sure. Thanks, Carlos. Look, I think just sort of breaking that down sort of regionally. What we saw, we were pleased through the quarter. We did new leasing in Guadalajara, Monterrey, Juarez, Tijuana. We're working on a new lease in Reynosa. So I would say there's certainly activity out there. The big box lease up we did in Monterrey, the 200,000 square foot that was I guess, a good leading indicator of what's to come in terms of being able to put some of those flagship developments off the board. We really expect most of that to be done post USMCA because they're mainly linked to larger CapEx investments and sort of longer-term investments. So we don't necessarily expect a lease-up of those in the near term, particularly before U.S. MCA and that's not factored into our guidance. We continue to see that dynamic, I'd say, the more sort of plug-and-play 100,000 square foot type properties, less CapEx involved. A good chunk of the leasing we're seeing is still in that bucket, and I think that will continue to be the case. So expect that dynamic and expect, I guess, the larger Class A type leases to be done probably towards the second half of the year subject to TMAC renewal. The spec buildings that we've done so far are mainly in our core growth markets. So you're looking again at places like Tijuana, Monterrey, Juarez. And I think you expect to see, again, Guadalajara being a focus area for us and Mexico City subject to additional land banking. That will continue to be our focus and where we think the long-term demand fundamentals will be best playing out. Operator: Your next question comes from Piero Trotta with Citi. Piero Trotta: I have 2 questions. The first 1 is a follow-up on Juan's question, but more specific on the auto sector. How has been the conversations with these types of tenants? And what is your perspective for 2026? Are you seeing to be a more cautious than the average tenant or not? And as we've been seeing the auto exports the U.S. falling throughout the 2025. We would like to understand, if the auto sector is a bit more cautious or not when you compare to the average? And the second question is about the 2026 guidance. Just to understand if you could give us more color about what is the occupancy and the rotation rate that is implied in this guidance just to see throughout the year, if we could see some upside or downside to the guidance. That's it. Simon Hanna: No, thanks very much, Piero. Look, when it comes to auto sector, auto parts, I'd say it's a steady backdrop overall and again, I think a large part of that retention, the 80%, auto parts for sure is a big part of that, and we're not seeing really all that much in terms of systemic risk or move out velocity. The auto parts production for the year for Mexico -- it's slightly off year-over-year. We're sort of talking low to mid-single digits. So certainly, you're not going to go up every year and of course, not in a year, where you've had this sort of tariff uncertainty. So I would say, coming off a few percentage points is very manageable and is not going to be all that disruptive in terms of leasing and demand. And so I think that's -- it's tough to you to work through certainly for a lot of tenants, but I'll tell you, in general, doing okay and sort of mainly working to also get through to USMCA. Having said that, the current tariff dynamic is not all that bad, where the vast majority of tenants, auto parts and other sectors are actually shielded from any tariff impact. So that's also that's also playing to the benefit of a lot of customers. And look, whilst that auto parts export volume is slightly off. I think what ultimately drives the sector here is U.S. car sales, and they're actually doing pretty well and even slightly up. So I think that's good to see. We expect to see further regionalization and if you like, onshoring of the auto parts sector in general, as you've seen out of the U.S. encouragement for increased car production even if that's in the U.S., we're somewhat agnostic because from an auto parts perspective, that's what we're mostly interested in and that feeds into a supply chain, whether it's in Mexico or the U.S., as we all know. So I do think that the outlook remains steady. And if anything, we should be seeing improving trends as you get better visibility on USMCA renewal. With the second part of the question on guidance, I'll hand it over to Andrew. Andrew McDonald-Hughes: Yes, happy to take that. I think particularly as you may know, we do not provide specific guidance on occupancy or retention for the year. However, I can say that our expectations with respect to leased GLA particularly, are expected to remain stable throughout the year, and we're expecting consistent retention metrics, which reflect that sort of broader wait-and-see approach that Simon spoke about earlier. I think it's important also to call out that we have not assumed any material lease-up of our development program or our completed development projects as part of the FY '26 guidance, and that represents meaningful upside in the order of north of $10 million ultimately as we stabilize those projects through '26 and '27. And so that provides, I think, on balance more upside to the guidance, should we see an overall improvement in market conditions throughout the year and obviously sort of subject to what we see on the USMCA resolution and outcome. And hopefully, we see that sort of sooner rather than later because we think there's good tailwinds there that will support further market activity in the second half of the year. Operator: And your next question comes from Alejandra Obregon with Morgan Stanley. Alejandra Obregon: I guess, my question is on your retail portfolio. So we were looking at the variable portion of your income on some of your traffic indicators over the last quarters. And it appears that growth might be moderating to some degree here. So I was just hoping if you can help us understand what are you seeing in terms of tenant sales and trends in your portfolio with that respect? And whether this could be triggering perhaps a more proactive approach when it comes to events or marketing spend just to support for traffic and tenant sales. Simon Hanna: Thanks, Alejandra. Look, I think retail -- in fact, we've been very happy overall with the full year performance. I would say that the 4% increase in NOI has been a good result. We've seen occupancy move up crossing the 94% threshold. So I would say the performance for this year has been very good. And if anything, we'd like to think there's further upside when it comes to 2026 and NOI in particular. So we do have a constructive outlook on the portfolio as a whole that variable component, I think we wouldn't expect it to move too much from where it is on a full year basis as a percentage of total income. Most of our income, as you can appreciate, is on fixed rate lease basis, and that will continue to be the case. I think what you've seen is, if you have well-positioned shopping centers necessity based in major metro areas such as ourselves, and that's where you're going to do well. And I think that's -- that's why we've benefited from always knowing we've got a good setup there. Having said that, we are still seeing, I'd say, variable level of performance between different types of customers. I think gyms continue to do pretty well, and we're seeing expansion opportunities with certain operators. Supermarket is doing very well. Small shops in the main are actually pretty healthy. You've seen the foot traffic recover to support all that. Probably the cinemas, I would say, still remain a soft patch and still trying to -- are still very movie dependent, I would say, to have a good quarter. So that remains probably the softest part of the portfolio, it's fair to say. But overall, we're very happy with the performance and that -- the cash performance at an NOI level, we expect to, if anything, increase into 2026 with -- of course, a little bit of marketing support, where it's needed in selected areas, but nothing too much off trend from what you've seen this year. Alejandra Obregon: Got you. That's very clear. And if I can add an additional question here. When you think perhaps for the medium or long-term evolution of your portfolio, do you see any opportunities perhaps for a change in your asset mix? Or would you think that, that's going to be largely stable over the long run, whether it's acquisitions or recycling opportunities, mostly perhaps recycling on the different buckets or the regional buckets? Like how should we think of your long-term mix on the portfolio? Simon Hanna: I think longer term, there's a good case to saying specialized industrial would be following investor sentiment and investor preference. So we see that as a viable long-term strategy. I think what we're seeing with retail portfolio. Some of the key factors we've always been thinking about that longer-term path to specialization is firstly, optimizing NOI performance and essentially value of the retail portfolio. We've continued to do that this year. We think there's upside to come next year. And in conjunction with that, also mindful of where the local interest rate environment is very encouraging to see the meaningful drop in local rates over the last year. I think that also provides a more conducive M&A backdrop. So certainly, that recycling opportunity, I think, is becoming increasingly attractive. For the time being, our focus will be to continue maximizing NOI. We'll be monitoring that broader retail M&A backdrop through the year, just to see how that all squares up. But certainly, as time goes on and from a longer-term perspective -- maybe into a longer-term perspective, I would say that we -- as we think about embedded firepower, we usually think about that these days as $0.5 billion, whether that's to do with our available balance sheet committed funding lines or that retail recycling opportunity. Operator: Your next question comes from Felipe Barragan with JPMorgan. Felipe Barragan Sanchez: Simon Andrew. So I want to talk about the leasing spreads. Obviously, this quarter, we saw retail leasing spreads a little bit above the industrial and it's positive to see the guidance for next year being the 10% to 15% on the leasing spreads. So the question is, how much upside is there to that guidance, assuming that the USMCA get swiftly approved and whatnot in July. Are tenants more or less ready to just sign and get these properties up and running? Or is it something that we might be seeing more in 2027? Simon Hanna: Yes, sure. Thanks, Felipe. Look, I think what we saw in fourth quarter was just the 4%, I'd firstly say, was a nonrepresentative quarter. We had basically 2 industrial leases there. One was for 290,000 square foot -- the other one was 40,000 square foot, and they're basically renewed at a market rate that are pretty much at already. So very sort of thin renewal volume. I think it's not something to read too much into, probably more representative in terms of where we are from a leasing spread point of view. Firstly, what we did for the full year, that was actually 20%, a good increase actually from last year, which was 14%. So I think the 20% overall we're certainly happy with and when we were actually having a similar conversation this time last year around outlook, we're thinking it's going to be closer to 10% than 20%. So I think we beat our initial expectations, very happy for the the year. And I think it's also good to reference the weighted average rental rates for industrial were actually up 6.5% over the course of the year, which is, again, obviously, a very strong big burst CPI, and it actually accelerated from last year's rental rate increase, which was 5.8%. So 6.5% increase overall I'd say, a tough market is a great outcome. -- coming more towards your question on outlook, the 10% to 15% we think is where we should be based on current market dynamics and what we're currently forecasting. I think it's right to say Felipe, if there's a USMCA renewal sooner rather than later, then we can see the demand environment shift pretty quickly. So yes, potential upside on that. But I would say that we're a long way from seeing that USMCA renewal. We are forecasting our guidance and outlook on basically a wait-and-see dynamic for the remainder of the year. And that's where you get to the 10% to 15%, but yes, potentially upside depending on where USMCA is. Operator: Your next question comes from Jorel Guilloty with Goldman Sachs. Wilfredo Jorel Guilloty: I have 2 -- sticking to the leasing spreads. If I look at your renewal spreads in 2025, it was 20% and then guidance is 10% to 15%. And so I just wanted to understand the downshift, I mean, at the midpoint, we're talking about 750 basis points lower. So I'm just trying to understand, is that downshift in leasing spread expectations, how much of that is driven by just higher base rents, which are closer to market versus your expectations of incremental demand. And then the other question I had was around Tijuana, since you have a JV development over there. I just -- just want to understand how the conversations are going in the sense of trying to lease up those properties or just trying to understand what the potential to manage for those properties are being developed right now and maybe for the market overall. Those are my questions. Simon Hanna: Look, I think what we're seeing with regards to renewal spreads, it's that 10% to 15% you're right to suggest it's also just a reflection of the fact that where those leases are currently are. They're probably, I guess, somewhat closer to market on average than the prior years. So there's a bit of a function on that. We're basically expecting -- when we're thinking about 10% to 15%, we're basically expecting those spot prices to be holding up at around the rent levels. So, yes, steady in terms of mark-to-market pricing and there's just a reflection on a bottom-up working through the leases, where they are relevant to that spot price reference point, nothing more complicated than that. When it comes to Tijuana, again, this is -- in general, in the JV development we have there. In general, Tijuana is a market that we very much love from a long-term outlook. We think that the location and the diversity of our tenants and sectors you have there is a great foundation. We obviously have our 385,000 square foot development, that's in our wholly-owned portfolio that is available for lease-up. That's going to do well. We're encouraged by the level of interest from different types of customers in that product given the location and the KBAs, the land bank that we have with our JV partner is a different submarket, different type of building customer. And again, I think that 1 is going to do well just given that it's a walk-to-work type market with the labor around it. So we're encouraged actually by the submarket demand supply dynamics in that particular location, and we think there's a good basis also to see a construction start in 2026. Taking note that, as I said earlier, we -- we've seen some new leasing actually already in our portfolio in Tijuana with a relocation from Asia of manufacturing operations. So certainly, it's a market that can shift quite meaningfully. And whether it's in our portfolio or other new leasing that's happened in the last month or so with some of our peers. It's certainly -- I think a market that's definitely got more upside to come. Wilfredo Jorel Guilloty: And quick follow-up on the leasing spreads. When you're talking about 10% to 15%, those are in dollars. I mean, they're based on the currency for the lease? Or are you -- when you say 10% to 15%, that's 10% to 15% in dollars? How should we think about the currency for the leasing spreads? Andrew McDonald-Hughes: Out of this U.S. dollars. As you know, we have 93% of our leases in dollars in industrial, and it's effectively a U.S. dollar-denominated number. Operator: Your next question comes from Anton Mortenkotter with GBM. Anton Mortenkotter: Just a quick one. I know it might be a little bit soon. But recently, we saw the announcement of the infrastructure investment plan from the [ property ] administration. I was just wondering if maybe all of these projects announced towards energy and transportation, all of that got some of your clients excited, not sure if maybe you saw a shift in the sentiment from maybe all of the infra side getting resolved, so the development school could accelerate. I'm not sure if you've heard anything there. Simon Hanna: Thanks, Anton. Look, we spoke about some of this earlier. We're encouraged by the Mexican government's tone and policy implementation. I think it's very constructive there. They're obviously focused also on building up the manufacturing base in Mexico and the -- having a great infrastructure and energy plan around that is fundamental. I think we need to recognize that a lot of the benefits that will be coming from these policy implementations, whether it's on the energy transmission, distribution or infrastructure in general. It's a multiyear path to fully realize those benefits, which is fine. I think we have a long-term investment outlook, so do our -- so do many of our tenants. And so I think that definitely creates a positive sentiment and tone knowing that there is an alignment here with regards to building up the infrastructure and energy capacity to support long-term investment. So that's positive. I wouldn't say it necessarily shifts anything in terms of shorter-term leasing decisions just because as I say, there's nothing there that's tangible or makes a difference that quickly. What we need to be focused on is making sure that we have the right portfolio in the right locations with the caviars to service that demand. And that's what we have, and we'll continue to focus on. Operator: Your next question comes from Jorge Vargas with GBM. Jorge Vargas Cuadra: Only 1 question from my side. Professional fees and maintenance expenses increased meaningfully this quarter. Were this primarily one-off in nature? Or should we expect that structurally higher expense base going forward? Andrew McDonald-Hughes: Jorge, happy to take that question. I think the very sort of short answer to that is that that's really a product of seasonality of expenses, and we typically see a step up in those types of expenses in the fourth quarter. And so largely speaking, that's really driven by the seasonality. We are seeing slight increases in costs across the portfolio going into FY '26, sorry. But generally speaking, the costs that you're referring to are exactly that driven by seasonality as well as some customer year-end provisioning. Operator: And there are no further questions. I'd like to turn the conference back to Simon Hanna for closing remarks. Simon Hanna: Thank you, Diego, and thanks for everyone for participating in today's call. Along with Andrew, I want to thank all of our stakeholders for your ongoing support, and we look forward to speaking with many of you over the coming days and weeks. As well as updating you again at the end of next quarter. Thanks, everyone. Operator: The conference has now concluded. Thank you for joining our presentation today. You may now disconnect.
Operator: Welcome to the Advance Auto Parts Fourth Quarter and Full Year 2025 Earnings Conference Call. I would now like to turn it over to Lavesh Hemnani, Vice President of Investor Relations. Lavesh Hemnani: Good morning, and thank you for participating in today's call. I'm joined by Shane O'Kelly, President and Chief Executive Officer; and Ryan Grimsland, Executive Vice President and Chief Financial Officer. During today's call, we will be referencing slides which have been posted to the Investor Relations website. Before we begin, please be advised that management's remarks today will contain forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements regarding initiatives, plans, projections, goals, guidance and expectations for the future. Actual results could differ materially from those projected or implied by the forward-looking statements. Additional information can be found under forward-looking statements in our earnings release and risk factors in our most recent Form 10-K and subsequent filings made with the SEC. Shane will begin today's call with an update on the business and our strategic priorities. Later, Ryan will discuss results for the fourth quarter and full year 2025 and provide guidance for 2026. Following management's prepared remarks, we will open the line for questions. Now let me turn the call over to our CEO, Shane O'Kelly. Shane OKelly: Thank you, Lavesh, and good morning, everyone. I want to begin today's call by thanking our Frontline team for all of their hard work in 2025. During the year, we laid the foundation to build a better future for the company and create long-term value for our shareholders. We are undergoing a significant transformation focused on the fundamentals of selling auto parts through initiatives guided by the voice of our customer. These efforts are beginning to improve our competitive position and are translating to stronger financial performance. In 2025, we returned to positive comparable sales growth after 3 consecutive years of negative results. We also expanded adjusted operating income margin by over 200 basis points from near breakeven levels while also navigating a volatile external environment. Our journey has just begun, and the early progress is being recognized by vendor partners, customers and team members. During 2026, we will continue to execute actions aimed at enhancing parts availability and customer service by building on the foundation established in 2025. We expect these efforts to deliver stronger financial performance in 2026, including an acceleration in comparable sales growth to the 1% to 2% range and expansion in adjusted operating income margin to the 3.8% to 4.5% range and a return to positive free cash flow. We expect to generate approximately $100 million in free cash flow in 2026 while allocating more capital to strategic projects and store investments. The progress made by our team in 2025 has created positive momentum that we are carrying into this year, and I am confident in our ability to succeed in 2026. Before I provide an overview of our strategic priorities for this year, let's recap 2025. We entered the year with a renewed emphasis on the blended box and establishing Advance as a consistent, reliable auto parts provider for both Pro and DIY customers. Our team is already driving results through comprehensive actions taken last year. For example, number one, we rationalized our asset footprint by exiting underperforming locations, including over 500 corporate stores and 200 independents. We achieved this with minimal disruption to our day-to-day operations and saved approximately $70 million in operating costs. Number two, we expanded our assortment by 100,000 new SKUs. We improved store availability to the high 90% range from the low 90% range at the start of 2025, and we also reduced product costs by more than 70 basis points. Number three, we increased our average speed of delivery to Pro customers by cutting more than 10 minutes in delivery time from an average of over 50 minutes at the start of 2025. Number four, we moved with speed to substantially complete the consolidation of our distribution center network. We now operate 16 distribution centers in the U.S. compared to nearly 40 DCs at the end of 2023. And number five, we opened 14 new market hubs and now operate 33 market hub locations. We also opened 35 new stores to further enhance density in our strongest markets, and we invested nearly $90 million in store infrastructure upgrades at more than 1,600 stores. Throughout the year, we also navigated a series of external challenges, including a volatile tariff and consumer spending environment. We maintained focus on executing actions to improve availability and service. This enabled us to deliver positive performance in the Pro channel, which strengthened throughout the year. We are progressing on our strategic plan with a stronger balance sheet, having proactively accessed the capital markets during 2025. As we move forward, we will continue to prioritize actions within our control to improve operational performance. In recent months, we have also strengthened key leadership positions through internal promotions and the addition of talented external expertise. These include: Anthony Sarlanis, former Regional Vice President of our Northeast Operations. He was promoted to Senior Vice President of the Pro business. He has been with Advance for over 15 years and brings more than 2 decades of automotive experience to the role. Kunal Das, our former Chief Data Officer, now promoted to Chief Technology Officer. His team has led the development of proprietary AI tools to improve our day-to-day execution. Ron Gilbert. Ron joined Advance in December as Senior Vice President of Supply Chain. He brings more than 20 years of experience in supply chain logistics with a track record of delivering operational efficiencies in complex supply chain systems. And Tony Hurst. Tony joined Advance in January as Senior Vice President of U.S. Stores. He brings more than 25 years of field leadership and store transformation experience across Pro and DIY, with a proven record of simplifying work for the front line. The caliber of our leadership team reinforces my confidence in our ability to grow transaction volumes through strong customer service and to deliver greater productivity in our store and distribution center operations. Since late 2023, we have acted decisively to stabilize the business, conduct a comprehensive review of operational productivity, sell noncore assets and develop a strategic plan. To date, this team has delivered approximately 500 basis points of adjusted operating margin expansion. We continue to believe that our goal of 7% adjusted operating income margin with a mid-40% gross margin are appropriate medium-term targets for the company. As a reminder, about half of our identified margin opportunity is tied to merchandising excellence with the balance being driven by supply chain and store operations. I am pleased with the progress being made in unlocking this margin opportunity. We concluded 2025 with an adjusted operating income margin of 2.5%. And for 2026, we are targeting an additional 130 to 200 basis points of expansion to the 3.8% to 4.5% range. This guidance includes an approximate 45% gross margin rate, which showcases success against our initiatives on the path to a 7% operating margin target. Our goal is to deliver consistent progress on our plan to narrow our margin gap to the industry. We currently believe that we can deliver at least another 100 basis points of margin expansion in 2027, which would mark the third straight year of 100 basis points or more of expansion. Although this pace would imply an outcome below our previous target of achieving 7% in 2027, it is important to note that this is not the result of any change to the execution of our strategic plan. Rather, we are being prudent about 2 factors as we consider the expected time frame for achieving our goals. First, initiatives across our 3 strategic pillars are progressing at varying rates. We have made strong progress in merchandising and completed the consolidation of distribution centers. We are now in the early stages of implementing supply chain and store labor productivity initiatives. I am excited to welcome new leaders overseeing the implementation of these activities. We expect our investments in 2026 to enable further margin expansion in 2027 and beyond. And second, top line momentum has lagged original expectations. Our pace of same-store sales growth has been impacted in part by external economic factors that have resulted in a softer consumer spending environment. While we are pleased with the strong positive comps in our Pro business, including traction with Main Street Pros, we still have a lot of opportunity ahead as we continue to improve availability and service metrics. I want to reiterate, I am pleased with the progress being made on our strategic plan. I remain confident in the ability of our team to deliver against our operational and financial goals. Our quality of execution is improving, and we expect 2026 to be a pivotal year on the path of long-term value creation. Next, let's turn to an update on our strategic plan. As I've indicated previously, our strategy is unchanged and built on 3 pillars that are supported by targeted initiatives to deliver long-term profitable growth. Turning to our key priorities for 2026, which build on the foundational improvements achieved in 2025. Merchandising excellence is expected to be the largest contributor of margin expansion during the year, and our 4 merchandising initiatives for the year include: first, in 2025, we began repositioning Advance as a trusted long-term growth partner. Our focus on operational excellence and streamlining legacy processes has signaled to the vendors that Advance is here for the long term. In 2026, we expect to further deepen our vendor partnerships to jointly grow our businesses. We are doing this through strategic business planning, exploring supply consolidation, eliminating non-value-add supply chain costs, engaging in training opportunities for the field and collaborating on joint marketing efforts. We expect this to translate to better cost opportunities and stronger margins in the year. Second, in 2025, our pricing decisions were made largely in reaction to new tariff programs. However, we still focused on offering compelling value to our customers through fewer, bigger and bolder promotions. During 2026, we expect to deploy a new pricing matrix, which provides our team better intelligence of market-based pricing by channel and by SKU. Our goal is to offer competitive pricing while continuing to operate rationally in the marketplace. We expect the combination of smarter pricing supplemented with seasonally relevant promotions to drive stronger customer engagement and support repeat purchases. Third, 2025 was an important year for our assortment. We addressed product gaps and also improved brand coverage and application job quantities for parts in our stores. We did this by using a specialized data-driven approach as well as improving internal processes and incorporating feedback from customers to develop a new assortment framework that was fully rolled out to all stores last year. This work has expanded parts coverage for brands we carried previously and also enabled us to introduce new brands. Our success with the brake category is a great example of this. Entering 2025, we were running negative comps in brakes, and we finished the year with strong positive comp growth, showing how deep vendor relationships, targeted SKU placements and thorough market planning can help win market share. While we moved fast in 2025 to address parts coverage, we believe we have additional opportunities to amplify our efforts. In 2026, we plan to invest in systems that help us dynamically balance inventory across the network to support stronger financial returns on inventory. We will also continue to expand the universe of parts carried in our network and optimize the presentation of SKUs in our stores. This includes accessing opportunities to provide more value for our customers. We are excited to launch our new owned oil and fluids brand, ARGOS. As a 94-year-old company, we are pleased to back our legacy with a new owned brand in a top maintenance category. This brand was born out of extensive research. Customers ranked affordability, reliability and strength as top product attributes they value. ARGOS offers engine protection and performance comparable to national brands at a price that provides meaningful savings, which will be valued by both Pro and DIY customers. And fourth, earlier this month, we modernized our DIY loyalty program with the launch of Advance Rewards to replace the prior Speed Perks program. Approximately 60% of our DIY transactions are driven by our loyal customer base of approximately 16 million active members. The new program now provides a refreshed tiered point structure that rewards customers as they spend more with us. With Advance Rewards, members will be able to experience exclusive vendor offers, bonus points promotions, sweepstakes and other exciting new features. Based on customer feedback, we discontinued unproductive offers like Fuel Rewards and enhanced the flexibility to redeem coupons, which are very frequently used for purchases in key maintenance categories. The new Advance Rewards also gives us more tools to engage with our customers, which we believe will help drive transaction growth in the DIY channel. Turning to supply chain. We are on track to complete the consolidation of our distribution centers and expect to operate a total of 15 DCs in the U.S. by the end of this year. We believe our DC network is well positioned to support strong service levels and the continued growth of our multi-echelon network. Consolidating DCs is a difficult undertaking, and we have done so without major disruption to our 4,000-plus store network. Over the past 2 years, we have gone from operating 38 DCs in the U.S. to 16 DCs currently, and I want to thank our supply chain team for their efforts over the last 2 years. Throughout 2026, we are going to be focused on simplifying and standardizing DC operations, along with testing and launching labor performance and transportation management tools. We expect our supply chain productivity initiatives to support gross margin expansion in 2027 and beyond. While consolidating the DCs over the past 2 years, we have also accelerated our pace of market hub openings, which serve as an additional distribution node in our network with the retail storefront. A market hub typically carries between 75,000 and 85,000 SKUs and expand same-day parts availability for a service area of about 60 to 90 stores. At the end of 2025, we had 33 market hubs, and we currently plan to add 10 to 15 market hubs in 2026. Most of these openings will be greenfield buildings serving as new points of distribution in markets where they open. We believe that this strategic expansion will enhance our ability to provide additional hard parts coverage in the previously underserved regions while creating incremental opportunities to gain market share. Next, I will provide an update on key priorities for store operations. We are elevating the experience for our team members through training and simplification of tasks. We have launched targeted programs to provide customized short duration training that combines product knowledge and sales behaviors to better serve customers. Our analysis shows a positive correlation in sales performance for stores following the completion of the training programs. We are also beginning to simplify store tasks and streamline communication with stores to help our team members prioritize only the most critical activities. We are investing in industry-leading tools like Zebra Devices to increase team member efficiency while allocating payroll hours to support market-specific customer needs. In addition to these resources, we are continuing to allocate capital to store infrastructure upgrades as part of a multiyear asset management plan. In 2026, we plan to upgrade more than 1,000 stores. We are also improving service standards in our stores. We launched our new store operating model across all stores in Q4. We believe that this operating model supports better allocation of labor hours and vehicles while strengthening collaboration between our customer-facing outside sales team and our internal store teams. To drive consistency in service, our teams are being held accountable to 2 primary metrics. The first one is NPS, which strives for continuous improvement in customer service, and the second is time to serve, where we target under 40 minutes for delivery time for Pro orders. With the right training, service standards and clear metrics for tracking performance, we expect to improve labor utilization and grow our business. While it is still early in the implementation of newer operating standards in our stores, we are seeing signs of improved performance. For example, our efforts to gain share across Main Street Pro is translating to stronger positive comps in that segment. Within DIY, our focus on selling behaviors is driving greater unit productivity with a sequential acceleration in DIY units per transaction in Q4. While we still have considerable work ahead of us, we are pleased with the direction in which we are moving. We believe that an improvement in service standards will also support enhanced productivity of new stores. In 2026, we plan to open 40 to 45 stores and 10 to 15 market hubs as we march toward our goal of opening more than 100 new distribution points over the next 2 years. In closing, I want to recognize the Advance team once again for their hard work and commitment to delivering progress. We remain focused on prioritizing actions to drive sustained improvement over the long term. I'll now hand the call over to Ryan to discuss our financials. Ryan? Ryan Grimsland: Thank you, Shane, and good morning, everyone. I want to begin by thanking our Frontline associates for their commitment to serving our customers and delivering a strong finish to 2025. For the fourth quarter, net sales from continuing operations were approximately $2 billion, which declined 1% compared to last year. This is mainly attributable to the store optimization activity completed in Q1 of 2025. Comparable sales grew 1.1% in the fourth quarter. Following a softer start to the quarter, transactions improved during the last 8 weeks, resulting in positive comparable sales growth over that time frame. In fact, outside of weather-related comparisons, our business has been averaging low single-digit positive comps over the last 6 months, reflecting operational stability as we execute our strategic plan. Brakes, undercar components and engine management led performance, indicating progress in improving coverage and availability of hard parts. Ticket was positive for the quarter and driven by a combination of better unit productivity and higher average prices. Our Frontline team has been focused on providing complete job solutions to our customers, and I want to thank them as their efforts have translated to an acceleration in units per transaction on a 1- and 2-year basis. Overall, average ticket was still below expectations due to some discrete factors. First, same SKU inflation came in just under 3%. This was about 100 basis points lighter than expected due to successful tariff-related negotiations, which were still underway at the start of the quarter. And second, during Q4, we accelerated the transition of some front-room assortment to introduce new brands following recent supplier changes and to support the planned launch of our new own brand ARGOS. These transitions led to a higher-than-expected markdown headwind of about 50 basis points, which impacted comps. This activity has been completed. It is not expected to impact Q1 results. Looking at channel performance, our Pro business grew by nearly 4% during the quarter, with sales strengthening throughout the quarter on both a 1- and 2-year basis. Trends in DIY remain volatile, leading to a low single-digit percent decline in comps. We believe this is largely a continuation of the market trends we have experienced all year. Our core consumer group has been adjusting purchasing habits in response to rising prices. Moving to margins. Adjusted gross profit from continuing operations was $873 million, or 44.2% of net sales, resulting in nearly 530 basis points of gross margin expansion compared to the same period last year. During the quarter, we cycled through approximately 280 basis points of atypical margin headwinds related to our restructuring activity last year. The balance of margin expansion was driven by savings associated with our footprint optimization activity and benefits from our strategic sourcing initiatives. Additionally, LIFO expense came in at $56 million for the quarter, which was lower than previously expected. Adjusted SG&A from continuing operations was $800 million, or 40.5% of net sales, resulting in nearly 340 basis points leverage. This was consistent with expectations for a high single-digit percent expense decline and driven by a reduction in stores compared to last year. As a result, adjusted operating income from continuing operations was $73 million, or 3.7% of net sales, resulting in nearly 870 basis points of year-over-year operating margin expansion. Our Q4 results also include an extra operating week, which contributed $132 million in net sales and $9 million in adjusted operating income. Adjusted diluted earnings per share from continuing operations for the quarter was $0.86 compared to a loss of $1.18 last year. The extra week added $0.08 to fourth quarter EPS. Moving to an update on full year 2025 results. Net sales from continuing operations declined 5% to $8.6 billion, primarily due to store optimization activity that was completed during Q1 2025. Comparable sales grew just under 1% for the year, marking our return to positive comparable sales growth. Both channels improved compared to last year. Our Pro business grew in the low single-digit range, while DIY declined in the low single-digit range. Same SKU inflation contributed about 140 basis points to ticket growth for the year. Adjusted gross profit from continuing operations was $3.8 billion, or 43.9% of net sales, resulting in about 165 basis points of gross margin expansion compared to last year. During the year, we cycled through approximately 90 basis points of atypical margin headwinds related to our restructuring activity from last year. Adjusted SG&A from continuing operations was $3.6 billion, or 41.4% of net sales, resulting in about 50 basis points of leverage driven by operating fewer stores compared to last year. As a result, adjusted operating income from continuing operations was $216 million, or 2.5% of net sales, resulting in 210 basis points of year-over-year operating margin expansion. Adjusted diluted earnings per share from continuing operations was $2.26 for the full year 2025 compared with a loss of $0.29 for full year 2024. We ended the year with free cash flow of negative $298 million, which included approximately $140 million in cash expenses associated with our store optimization activity. The remaining outflow of approximately $160 million impacted our ability to generate positive free cash flow. About half of the variance compared to our expectations was related to a combination of Q4 business performance, timing of certain cash obligations and the delay in receipt of tax refunds. The other half was associated with variances relative to our expectations for timing of certain inventory payables that drove approximately $80 million of cash outflow and reduced our payables balance at the end of the year. Separately, we also lowered the usage of our supplier financing program to $2.5 billion from $2.7 billion last quarter. We entered 2026 with a solid balance sheet, including more than $3 billion in cash and $1 billion undrawn revolving facility, which is more than sufficient to support approximately $2.5 billion in supplier financing payables over the long term. Our net debt leverage improved to 2.4x at the end of the year compared to 2.6x last quarter and is in line with our targeted range of 2 to 2.5x. Turning to 2026 guidance. We expect net sales to decline slightly year-over-year, mainly driven by 2 nonrecurring items from 2025. First, we generated $51 million in liquidation sales in Q1 last year. And second, Q4 included an extra week, which generated $132 million in net sales. In aggregate, both items drive over 200 basis points of headwind to sales growth. Excluding these nonrecurring items, we expect underlying net sales to grow in the range of approximately 1% to 2%. This includes comparable sales growth of 1% to 2% and about 10 to 20 basis points of pressure related to sales normalization at independent locations following a reduction in locations last year. We expect positive comp growth in each quarter with a stronger first half owing to easier comparisons. Same SKU inflation is currently planned in the 2% to 3% range for the full year and assumes no change in the current tariff environment. In terms of channel performance, we expect Pro to outperform DIY, with both channels contributing positively to comp growth. This is expected to be driven by gradual improvement in transactions. With initiatives focused on enhancing availability and service levels, we are excited to get back on the path of consistently delivering positive comparable sales growth and expect our strategic plan to ultimately position us to gain market share in the future. Moving to margins. We expect adjusted operating income margin between 3.8% and 4.5% for 2026, resulting in 130 to 200 basis points of year-over-year margin expansion. We are forecasting gross margin expansion in the range of 110 to 150 basis points to approximately 45%. This margin expansion includes about 20 basis points of year-over-year favorability from cycling nonrecurring items from 2025. The balance of the expansion is expected to be driven by merchandising initiatives related to strategic vendor sourcing and optimization of pricing and promotions. The benefits from merchandising initiatives will be partially offset by investments to improve productivity in our supply chain operations following completion of the consolidation phase of our DC network. Based on the progress of our initiatives, we expect gross margin rate to build throughout the year, starting with Q1 gross margin in the 44% to 45% range. Regarding SG&A, we expect reported full year expenses to be down year-over-year, contributing 20 to 50 basis points of leverage. Specifically regarding Q1, SG&A expense is planned to be down in the 3% to 4% range as we cycle through the store closure activity from last year. Full year 2025 SG&A expense included about $90 million of nonrecurring items to support liquidation sales in the extra week, which is expected to drive about 20 basis points of favorability in 2026. Adjusting for the nonrecurring expense, SG&A is planned to be higher year-over-year with modest leverage driven by positive comp sales growth. We expect to deploy savings generated from better in-store task management, better resource allocation and a reduction in indirect spending to fund general wage inflation, store opening expenses and strategic labor investments in priority markets. As Shane indicated, we have completed the rollout of our new store operating model, which has enabled us to position labor and truck resources based on volume. As we move forward, we will continue to look for opportunities to further optimize payroll hours to enable our team members to dedicate more time to customer service by minimizing time spent on tasking. Moving to other items in our guidance. We expect adjusted diluted EPS in the range of $2.40 to $3.10. Pretax interest expense for full year 2026 is planned at approximately $210 million, which is expected to be partially offset by interest income of approximately $80 million. We expect to increase capital expenditures in 2026 to approximately $300 million, with spending allocated to new stores and greenfield market hub growth, store infrastructure upgrades and strategic investments. Finally, with respect to cash flow, we expect to generate approximately $100 million in free cash flow for the year, supported by stronger comp sales and profitability. Our free cash flow guidance includes modest carryover spending of $10 million to $20 million related to our store optimization activity. To conclude, I want to thank the Frontline team for their contributions, which supported solid financial results in 2025. During 2026, we expect our initiatives to provide added financial momentum to narrow our operating margin gap to the industry. I will now hand the call back to Shane. Shane OKelly: Thank you, Ryan. During 2026, we are building on the foundation established last year with a clear focus on executing our strategy to deliver improved operational performance. I'd like to close by thanking the Advance Auto Parts team for all of their hard work and commitment to serving our customers. Thank you. Operator, we can now open the line for questions. Operator: [Operator Instructions] And our first question today comes from Chris Horvers from JPMorgan. Christopher Horvers: So my first question is, why is your inflation so much lower than what your peers have reported, specifically Zone and O'Reilly. One could interpret this 2 ways: A, where you're pricing below the market, which I don't think that's what's happening; or perhaps simply your prices were too high before all this inflation came in and when you came into the company, and you were forced to narrow the gap. I guess it could also be sourcing differences, but again, sort of the market price is the market price. So if you could help us out there. Ryan Grimsland: Yes, Chris, I appreciate that. It's Ryan. So our SKU inflation, I think, is consistent with peers, but we have some -- if you look at '25, we have some comparison issues. We were wrapping some price investments that we made in the prior year that wrapped in. So in '25, we still had reported around 3% for Q3 and Q4, which I think is somewhat consistent with them. It was a little bit lower than we expected going into Q4, really had to do with -- we're still negotiating some of the tariffs. So that wrap, the 1.4% inflation in 2025 is really impacted by the wrap of price investments we made in the prior year. Shane OKelly: Chris, it's Shane, just to add, you mentioned first, are we pricing below the market? And your hypothesis is that we're not. That's not our strategy. We're -- it's a competitive market, but a rational market, and we participate in that way. We are using AI to do better with our promotions as to when we do a promotion and on what products and where we do it. So that can help us a bit, but we're a rational player in the market. Ryan Grimsland: We monitor our pricing relative to everyone else, and we want to make sure we're competitive every day. We're not doing anything inconsistent with that. Christopher Horvers: And then my follow-up question is on the decision to reduce your supply chain financing in the fourth quarter. I guess one of the hallmarks of this industry is that the vendors finance essentially all of the inventory. So what drove that decision? Was there anything on the other side because your free cash flow did come in lower than expected because of the reasons that you laid out, Ryan? Was there any sort of push from the other side because of the free cash flow dynamics? Or is it something to do with perhaps sort of the margin versus rate negotiation that's implicit in these arrangements? Ryan Grimsland: Yes. Good question. So about half that change in free cash flow from anticipation was due to lowering the payables, as we mentioned earlier. And not -- we're always going to look to see if it makes sense from an economic standpoint to reduce supply chain finance. But only when it makes sense, we're really happy with our program, especially after the structure we put in place this past summer. It's a very stable program, significant capacity in that program. But it was more about leveling the payables based on the new purchases that we have, based on the sourcing of those and the negotiations we've had. As a reminder, this past year, we've had 500 stores we've closed. We accelerated purchases on inventory for -- ahead of the tariffs. We accelerated our assortment work into our top 50 DMAs. So a lot of moving pieces. On top of that, the merchant organization has been transitioning and working through many PLRs with different vendors as we've executed our strategic sourcing work, and we've yielded really good progress on the margin side. All of that mixes differently sometimes from a payables balance. And I think it's more about the mix of our purchases and where the true payables balance should be that caused a reduction in Q4. And we'll continue to look for opportunities there if it makes economic sense in our P&L to do that. But we're still sitting close to 80% of our COGS is on supply chain finance. We think right now, where we are with our vendors, we're in a good position, 2.4x to 2.6x is the right target range to ebb and flow on supply chain finance. Shane OKelly: Last point there, just on a big picture level, we had our annual conference Accelerate down in Orlando this year. And I would submit that our vendor relations are the best they've ever been. I continually meet with senior leaders from vendors who are behind our comeback and supporting us and the degree to which we're now working on innovative programs to help us grow. I feel great about the vendor community and Advance Auto Parts. Operator: The next question comes from Seth Sigman from Barclays. Seth Sigman: Nice progress. I wanted to ask first about the real estate. Can you talk about the impact that the store closings had on comps and margins in 2025? And then I guess, how are you thinking about the opportunity to optimize the store portfolio further from here? And maybe just in general, what are you seeing in terms of the gap in performance across the store base? Ryan Grimsland: Yes. So good question. The liquidation impact was about $51 million on the year. So we kind of walked the bridge to walk that back off of there, to give you a sense of what that looks like. So a little bit of an impact there. We also cycled over that. We had some liquidation impact in '24 in Q4 as well that had a little bit of a drag on that. No further closures we expect. So growing our new stores, we're significantly growing those new stores. Shane, you might want to... Shane OKelly: Yes. So when I came to the company, we had multiple real estate departments. Worldpac had a real estate department, independents, supply chain stores. And so we weren't cohesive about how and where we thought about building out in a market and opening a store. And you think about everything from construction or leases to fixtures to grand opening protocols. And so we've had a lot of effort going on. We've got a unified real estate program under a single leader. In '25, we opened a total of 35 NSOs. This year, we'll do 40 to 45. And by the way, we're opening NSOs in both the U.S. and Canada. And as we do that, think about in the wake of the closures, we think store density is important. So in the wake of the closures, we're #1 or #2 in 75% of our markets. So we want to expand concentrically in those markets where we have existing density and move down the road to the next part of the market. And we think that's a good play because it leverages the existing store base, the outside sales, the Pro customer relationships, the DC connectivity. And so we're getting better at it, and we're pleased with where we're going. Ryan Grimsland: And Seth, just to make sure we clarify, the closing stores were not in our comp numbers that we reported out. They are in our year-over-year. So that's why just giving you the dollar impact versus the comp impact. Seth Sigman: Was there a meaningful impact to the rest of the store base from closing those stores in terms of sales transfer? Ryan Grimsland: Yes. Pro comps did benefit but still positive even after the benefit. So we did have transfer sales from the Pro business that transferred to the new stores, actually outperformed our original expectations going into that work. But still, Pro is positive even if you back that out. Seth Sigman: Okay. And my other follow-up was just thinking about the 7% margin target. The prior guidance was for a lot of the margin progression to be back-end weighted and the annual gains would ramp really in the out years. Guidance now seems to imply bigger gains maybe upfront, and it's great that you're executing what you laid out for '25, and it seems like for '26 as well but maybe more gradual margin gains going forward. I guess what really drives that difference in the cadence? And I'm just wondering, is there any indication that maybe there's more reinvestment that's required here? Or is it just harder than you thought? Ryan Grimsland: Yes, I appreciate the question. So I still think 7% is the right medium-term target, and we're actually pleased with the progress so far, especially in merchandise and excellence and being able to get to a 45% gross profit margin, really driven in large part by the work the merchandising organization has done. And as a reminder, we talked about 500 basis points that we're going after here and about half of that was merchandise and excellence. And that work started in earnest underway this past year. There is 2 other pieces. And when we talked about it, kind of being back-end, weighted a little bit there, was in supply chain, was the biggest one back-end weighted, and that's because we had to get through the consolidation work. So we're working on getting the consolidation of supply chain down. We've now down to 16 DCs. We expect to be 15 by the end of next year. And once we get them consolidated, then we start working on the productivity within those boxes. And Ron on board, is diving in. And so that takes a little bit of time to work through. And then the store operations pillar, those are the primary -- right now, '26 is a primary investment year for both of those, supply chain and store operations, and then yield the benefit that will come out of it. Shane OKelly: Yes. Just touching on the pillars. As Ryan mentioned, pleased with the progress. We're controlling what we can control and moving forward on all 3 of those areas, merchandising, supply chain and store operations. A lot of great stuff coming on the store side as it relates to labor productivity, task simplification. We're investing in store technology and think about that as servers and POS and Zebra Devices. And then for many of our stores, just basic store appearance improvement. So we touched 1,600 stores last year. Think about that as paint, HVAC, parking lots, signage, racking. So feel good about that, and we'll touch another 1,000 stores this year, so making a better environment for our team members and for our customers. So all of that goes into creating progress that I would just say has been -- we're looking to be incrementally better every year in the business. Ryan Grimsland: And since those 2 big pillars, the supply chain and store operations, is a big investment year, a lot going on in those areas, '26 will really help inform what we really believe that cadence to be going forward, but we want to see '26 play out a little bit so we can have a better informed perspective. And if you look at the bridge we put out around our guidance, we're being very specific. We know we have line of sight to those numbers. That's why we gave a little more detail on that bridge, and we want to be able to continue to do that as we march towards 7%. Operator: The next question comes from Simeon Gutman from Morgan Stanley. Simeon Gutman: Nice job on the margin gains so far. My question -- first question is on margin. So thinking about the gross margin gains and even some of the SG&A leverage, can you talk about the execution risk in getting there? Do you have line of sight with the strategic sourcing? These are deals that are already made? Or is there a degree of which you have to execute in order to gain that level of gross margin throughout the year? Same question with SG&A. How do you both achieve this better service and availability with SG&A up so modestly for '26? Ryan Grimsland: Yes, Simeon, great. I'll start and let Shane chime in. On the merch side, we've got really good line of sight. We've made a lot of great progress this year. Some of that benefit is wrapping into next year. There's still some work to be done, but our merchandising organization led by Bruce Starnes has just done a phenomenal job this year executing against that. It's meeting the expectations we had. So some of it is already baked going into the year. Some of it is still work to be done. In fact, some of those conversations are already starting to work on 2027. So the execution has been solid, and we like to see -- we like seeing what's going on there. As far as the other 2 pillars we talked about, that's work that's being done this year, progress on the consolidation and supply chain has been great. And the reason I bring up supply chain, that's going to have a COGS benefit as well long term as we get more productive in that space. Anything you'd add? Shane OKelly: Yes, I would just say it's a mix. There are vendor contracts that we've signed that will create benefits. So that's not just line of sight, but we think we can tuck that in the run rate. But then we have discussions with the vendor where we haven't signed it, but feel good about it. I would highlight Smriti's assortment work where last year, we improved backroom availability, and we made sure we had left and rights that were matching brands, and we had full kits for different products. She's going to continue doing that. We're doing a better job as it relates to planograms and price changes. So there are certainly things that we have that we feel we can count on as it relates to going forward, but there are also things that we still have to achieve, but we have a plan against how we're going to go about it. And I'll just touch on it, you heard it from Ryan. We feel good about the leaders who sit in the seats. And from my perspective, we are done making changes on the core leadership team. And if you look at the executives that we now have in place, you'll see a mix. You see some internal promotions, you see some external hires, but they're each focused on those fundamentals in their particular area. And that gives me confidence around where we're going on your line of sight question. Ryan Grimsland: And Simeon, just to talk about the SG&A question. So a lot of the SG&A reduction, one has come from the rationalization of our store footprint in DCs but also indirect spend. We went through an initiative and really worked through indirect spend. So an example would be we're able to mitigate not all, but a good portion of inflation seen in our general liabilities, our health insurance, and also getting more productive in the spend. So the spend has not been all that productive. And we talked about reallocating our trucks to make sure they meet the right volume base. And we've talked about how we walked into a store and they've got 3 trucks, 2 of them haven't been started in months and don't start. They just need to get reallocated or reduced. So we found opportunities to reduce SG&A where it wasn't being productive. Now if you look on a like-for-like, so remove the cost of SG&A to support the liquidation sales and it's about $90 million, we're actually slightly increasing SG&A next year. And we're investing in labor. We're investing in new stores. We're investing in training. We're investing in the service element and reduction of tasks within our stores. So if we can reduce tasks that our associates are working on that are not productive and we can put more hours in front of a customer, that will be a benefit for us. So that's where we're investing SG&A next year. Simeon Gutman: Okay. A quick follow-up, the $100 million of free cash expected with the $300 million of CapEx, so roughly $400 million of operating cash. I'm sorry if I missed it, but can you just bridge your net income to get to that operating cash? Ryan Grimsland: Yes. So we are increasing -- so it is net income and your operating cash flow, you're about spot on. You're doing the math right. It's about $350 million is operating income driven out of that. Payables, working capital should be about a neutral. What you would expect, though, just given timing and seasonality of our free cash flow is our typical free cash flow seasonality, you'll see in Q1 a cash outflow and then you'll see Q2 through Q4, you'd see the cash inflow. And then remember, there's like $10 million to $20 million of closure expenses that -- from our previous restructuring that will flow into next year. So that will be in there. As we initially had said about $150 million of cash outflow for the strategic initiatives and store closures, about $10 million to $20 million is shifting over. we realized about $140 million this past year. So you see about $10 million to $20 million shifting. And that's really related to the leases and getting out of the old stores. So you should expect less volatility than we saw last year. Operator: The next question comes from Scot Ciccarelli from Truist. Unknown Analyst: This is [ Shervin ] on for Scott. You mentioned external macro factors acting as a headwind to sales. Can you quantify the sales headwind from DIY in your guidance? Like outside of smarter pricing, are there other initiatives you are helping -- like you're taking to help materialize what I would think is pent-up demand from past maintenance deferrals? Shane OKelly: Yes. So let me touch on -- Ryan can talk about the numbers. Well, let me talk macro and what we're doing. So if you look at the health of the consumer, first, we're in a great industry, right, number of cars, miles driven, age of fleet. So I think that's a good backdrop. But it has been interesting to watch the low-income consumer and to some degree, the mid-income consumer in recent weeks where there has been sort of negative general merchandise spending. Now the good news is 90% of our industry is kind of brake-fix. And so that's helpful. But the overall consumer sentiment in those 2 tranches has been negative, and I think it's manifesting in general merchandising spend. Now for us on DIY, we have a number of key things going on. First, we changed and improved our loyalty program. We have 16 million members in Advance Rewards, formerly Speed Perks. And we ditched parts of that program that were expensive for us, that weren't creating loyalty or sales. And think about that as the Fuel Rewards component. We also improved usability, and we issue coupons when you reach certain tiers, and we made it easy for redemptions to occur. Second, we introduced our own brand of oil and performance fluids, ARGOS, really excited about this. I spent a number of years in the oil business, and I understand both the quality of how you need to manufacture the products and how having your own brand can be very compelling. In the past, we had a different brand. By the way, there were royalties for that brand. That brand was in other retailers. That brand is associated with a parent company that's in financial difficulty. So the idea that we move to our own brand that we can control and we pulse the consumer in terms of what they wanted. They wanted the reliability, the value, the strength of the product. So that is going to be great. By the way, combine that with our other private brands. We've got Carquest, we've got DieHard. So we have a great portfolio of private brands that are about half of our sales. We've got stuff going on in marketing, e-commerce, assortment improvements, training and store experience, all of these things geared towards having us do better with the DIY customer going forward. Ryan Grimsland: And I'll just add a couple of data points as we think about it. Both Pro and DIY, we expect to contribute positively to comp growth with Pro outpacing DIY. A couple of things as we think about trends going into the year. First, last year, we spent a lot of time focusing on the Pro and getting the assortment right. You are now seeing us start to do and execute initiatives that we believe will have a positive impact on DIY. Just coming out of the quarter into Q1, DIY trends have remained stable to what we saw in Q4, in Q1 specifically. And we did see improvement sequentially throughout the quarter in our comp performance. In fact, the last period of P13 in Q4 was our highest Pro comp of the year. So some of the work that we're doing, the initiatives around assortment, we're seeing that take hold. So we're excited about the performance in Pro, but we also want to make traction on DIY in the year. Unknown Analyst: That's all helpful. And really quickly, you also mentioned on the call you could see another 100 basis points of operating income expansion in '27. Just curious what comp assumption that's on? Just trying to better understand the sales and earnings leverage relationship. Ryan Grimsland: Yes. Not necessarily giving guidance on the comp percent for that, but I would expect low single digits that we've given in the past. Operator: The next question comes from Bret Jordan at Jefferies. Bret Jordan: On the private label strategy, given the fact that you're rolling out ARGOS, are you expecting to drive private label higher than that 50% of your sales mix? Ryan Grimsland: No. Bret, I would say it should remain consistent. I mean it's replacing a brand that we kind of considered a private label, so kind of within that. It may inch up a little bit higher because we actually think this is a really good brand that can get some penetration. We think it's the right value offering in there. I think we'll be more competitive in that space. So maybe some minor movement, but we don't have any plans necessarily to significantly increase private penetration. We go category by category and what makes sense for the consumer and having the right assortment and brands for them. Bret Jordan: Great. And then on market hubs, could you remind us how many of your hubs that you have today were converted Carquest DCs versus greenfield and maybe what the pipeline of greenfield looks like? I think you said you're going to add 10, but maybe give us some sort of feeling as far as timing and what these things look like physically. Ryan Grimsland: Yes, Bret, more than 20 of our market hubs are conversions. So a good portion of them. We just started opening up our first greenfields this year, really excited about the greenfields. Going forward, the majority of those market hubs will be greenfield locations. Bret Jordan: Okay. And I guess when you think about the pipeline, which you have for identified properties and sort of you talked about 75,000 to 85,000 SKUs, what do we think about for like a square footage and what kind of capital goes into this box? Ryan Grimsland: Yes. The market hubs on average are roughly $2 million, but that does vary depending on whether that's like a build or a lease or takeover, so it varies. But right now, they average about $2 million for a market hub from a CapEx expense standpoint. Operator: The next question comes from Kate McShane of Goldman Sachs. Mark Jordan: This is Mark Jordan on for Kate McShane. As we think about the comp guidance of 1% to 2% for the year, can you break down how you think about ticket and transactions? Because I think if we look at the expectations for same SKU inflation to be 2% to 3%, I think that suggests either other impacts to ticket or some transaction pressure in the year. Ryan Grimsland: Yes. I mean, for the most part, the DIY transactions, we'd expect to be pressured and continued. Obviously, there's inflation embedded in this. So we talked about inflation. So there is a negative DIY transaction, not inconsistent with what we've seen in 2025. But we'd like to see and continue to drive positive transactions. We want to drive transaction growth in the Pro as well. But I would expect that this is a slightly low single-digit transaction and inflation driving it positive. But really, the pressure is on the DIY side there. Nothing significantly different from the trends that we see today. Mark Jordan: Okay. Perfect. And then as we think about the cadence throughout the year, obviously, first half is stronger due to the inflation benefits. But how should we think about maybe some tailwinds from the recent weather events? Are you seeing anything quarter-to-date on transactions that maybe looks encouraging? Ryan Grimsland: So I mean, that's -- the weather is an interesting -- we are seeing weather categories positive. But then also, there's the offset of those categories that are impacted negatively by weather. So it's been fairly neutral so far. Our current trends within the quarter are within our guidance. So we are seeing some good performance there. But failure items, like batteries, those are doing well, but maintenance items, cooler weathers that has an impact. We do expect trends to improve as weather kind of normalizes. The Northeast, Mid-Atlantic, those have been impacted by the storms. I'd say prior to storm burn, if you guys remember storm burn, big deal, we did have an initial buildup of sales. But post the storm, a portion of our stores were closed. So there's that mix. So you got to get past the store closures, and you see some of the weather rebound. But right now, we're tracking in line with our guidance range. Operator: Our final question today will come from Zach Fadem of Wells Fargo. Zachary Fadem: I want to make sure I understand your vendor finance commentary is. It sounds like you're taking suppliers off the program and generating better gross margins from those vendors, but that also translates to weaker free cash flow due to the impact of payables. So first of all, is that right? And is that the game plan going forward from here? Ryan Grimsland: Yes. No impact on gross margin just yet. We don't have a specific target or game plan to go do that. We like our supply chain finance program. Our vendors like it. It's very stable after what we've done this past year with the new structure. This is more of -- it is a lever and an option that we could pull as we're talking to vendors, and we evaluate that, but we would evaluate any other negotiation. The supply chain finance program is stable. It's in place. We like it. But there's no concerted effort that says we are going to reduce it any further. The vendors like that program. If they do come off the program, we would fully expect a positive improvement to our cost of goods, right? Because they're paying to be on the program, we would want a positive impact for us. That's an investment of working capital. And so we do the math and we want to make sure it makes economic sense to our P&L. If we do move them off that program at a greater rate, it would be -- we would expect a P&L positive impact from it. But right now, we think it's stable, and the program at 2.5x, so anywhere between 2.4x and 2.6x based on payables throughout the year is where we expect it to be. There's nothing in the works right now that would indicate a difference in approach. Zachary Fadem: Got it. And then a couple of clarifications or housekeeping items. First of all, any expectation for LIFO capitalized inventory costs in Q1 and '26? Same thing with restructuring costs in Q1 or '26. And it also sounds like Pro comps benefited in '25 from store closures. Any quantification there as we think about '26? Ryan Grimsland: Yes. So I'll hit the first one on LIFO. On LIFO, in '25, we had about 40 basis points of headwind. In '26, in our guidance, it's in our guidance, we expect about 50 basis points of headwind. And in Q1 specifically, we're expecting about $30 million of headwind related to LIFO. Now the warehouse capitalization cost in there, we expect to be flat as we expect inventory to be roughly flat year-over-year. So don't expect an impact on that. But LIFO expense for '26, which is in our guidance, about 50 basis points of headwind that we'll see. On the other one, we haven't quantified externally what it is. What I'd just say is that we did get Pro transfer sales in our comps this past year. Pro would still have been positive net of that transfer sales. So we like how the team executed moving those accounts to the new sister stores. They did a great job in maintaining the service levels with those Pro customers and actually overdelivered our expectation on it, and they're servicing those Pros really strongly. I think the initiatives we have, the new assortment, the service level improvement really helps drive our Pro comps even above that. And we like how that's positioning us going into the year. Operator: This concludes today's Q&A session. So I'll hand the call back to CEO, Shane O'Kelly, for any closing comments. Shane OKelly: Thank you, everybody, for participating in today's call. More importantly, thank you to all of the Advance Auto Parts team members. It's their hard work that we rely on to deliver the results. We appreciate everything that they do. We look forward to sharing our Q1 results in May, and stay tuned for those when they come. Thanks, everybody. Take care. Bye-bye. Operator: This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.
Stefaan Gielens: Good morning, everybody. Welcome to the annual results presentation of Aedifica. We will start the session right now. We have more or less 1 hour available, and I do apologize because we really have back-to-back meetings today. So we don't have much time to really go beyond the 1 hour that we've scheduled. As usual, the results will be presented by Ingrid, CFO, and myself. And we will walk you, first of all, through the slide deck, a couple of selected slides from somewhat bigger deck that you will find available on the website and then afterwards, take your questions. So not to lose any more time, starting the presentation. And as a quick introduction before Ingrid will take over and walk you through the numbers, a quick view on what really happened in 2025 and how we perceived 2025. And I think the best way of explaining it is by having a quick look at this slide, looking at what we were planning to do and what we really did. I think one of the first things that, in our view, are quite important is that the investment market and the project development market in healthcare real estate is back up and running. We see clearly a more dynamic market. We'll go into that and the reasons why, but we also see it in our own numbers and what we have been doing. So we have been refueling development pipelines, acquiring standing assets more than we expected, so for close to EUR 300 million. And we do see clearly, compared to 2024, that this number is going upwards. Looking at deliveries coming out of our development pipeline, we were more or less on target with 1 or 2 of these projects that have been delivered just after the new year, but we are actually more or less on target. Now compared to 2024, this is a lower number in nominal value, but it basically reflects the market. In the past couple of years, we haven't been refueling the pipeline as we were used to, but we're now back in a phase where we are refueling the pipeline and these project completions in the future will become more contributing to the growth of the portfolio and the top line. And then asset rotation, there, we did what we wanted to do. The must-have to us was divest the Swedish portfolio because as we explained, it was not contributing in a similar way as other geographies to the EPS of the company. So this was a matter of capital recycling. But towards the summer of 2025, we stopped really pushing hard on divesting because we were live in the market with the Cofinimmo transaction, and that comes in the very near future with a quite ambitious divestment and asset rotation program. So this for 2025 was no longer one of our top priorities. But I think the main thing that comes out of this slide is that we clearly see the changes in the healthcare real estate market that we wanted to see a more dynamic and liquid market, which is basically quite promising for the future. Now this being said, over to Ingrid, so she can present the financials. Ingrid Daerden: Okay. Good morning. So we will have a look on the income statement. First of all, the EPRA earnings, they are up by 4%, driven by an increase of 8% in the operating result, mainly coming following an increase of the net rental income. We also worked on a further improvement of the EBIT margin, so we can show a strong EBIT margin at 87%. The financial charges went up compared to previous year, although we can still have a very low cost of average cost of debt at 2.1%. The increase is mainly related to the fact that there was a slightly higher average amount of debt outstanding in the course of 2025. The low average cost of debt is related to the hedging that the company has in place. At the end of 2025, the hedge ratio still stands at 88%. Then you have the corporate taxes. That's the line where you see most of the variance. So it's mainly related to the change of the fiscal system in the Netherlands, the ending of the FDE regime. In 2024, there was still a one-off refund from previous years of EUR 4.2 million. And this year, we recognized in the account accruals for corporate income taxes in the Dutch entities for EUR 4.84 million, explaining the difference in corporate taxes that you see between the 2 reporting years. So this leads then to the EPRA earnings of EUR 244 million or EUR 5.15 per share. Then we move over to the net result. So the changes that are included from going from the EPRA earnings towards the net result are noncash elements, mainly related to the changes in fair value. So this year, we can show changes in fair value for the investment properties of EUR 75 million. This is the most pronounced in countries like the Netherlands, U.K. and Ireland, where we saw strong increases in the valuation of the investment properties. In the Netherlands, mainly driven by the indexation, U.K. and Ireland supported by a strong tenant cover. Then we have the gains and losses on disposals. So this is not a new element. You have been seeing this in our income statement since the end of Q1. It's related to the disposal of the portfolio in Sweden, which was sold with a small discount of 3.9% compared to the latest fair value, but the amount also includes the recycling of the historical currency translation from equity into the income statement. We will now dive a little bit more into detail on the rental income. So globally, for the portfolio, rental income is up with 7%. When we look on a like-for-like basis, we see an increase of 2.7%. This can be split in between 2.6% coming out of the rent indexation. Then we have positive rent reversion of 0.4%, mainly supported by some contingent rents in the U.K. And then there is a slightly negative impact from the currency translation in the like-for-like of minus 0.3%. When we look at the individual countries, you can see that in most countries, the like-for-like is very close to the indexation that we see in each of those countries. What is standing out is the U.K. related to the contingent rents. This year, we also had a historical catch-up of contingent rents, representing GBP 3.2 million. This is not included in the like-for-like. So in the like-for-like, this figure of 4.7%, it's only contingent rents that are related to the previous 12 months that are included. The second country that is standing out is the Netherlands, where we still had strong indexation and we're also able to increase the rental income on some assets related to the fact that we changed the lease agreement more to a B2C model. Moving over to the debt-to-asset ratio. So at the end of 2025, we can report a debt-to-asset ratio of 40.8%. It was slightly below our expectations related to the fact that there is an increase in the fair value of the investment properties. Our financial policy remains unchanged. So that means that we target a debt-to-asset ratio in the low 40s, and we consider 45% as a maximum. The debt outstanding at the end of the year represents EUR 2.5 billion. We still have a good balance between financial resources, debt resources coming from bank facilities and the debt capital markets. In 2025, we have mainly been focusing on refinancing with the banks and adding new financing to the debt portfolio as well for a total amount of EUR 585 million. The tenors on those maturities are between 3 and 7 years, and the average credit spread is around 110 basis points. We have also been working on extensions. So often credit facilities, they have extension options at the discretion of the lender, and we were able to extend those and keep the same conditions in place. And lastly, as a third point, I would like to add that we increased our treasury note program. So there was an additional EUR 100 million that was added to the program, and that was also fully used by year-end. So this allows us to have strong KPIs regarding the debt. So currently, we have a BBB rating with S&P. There is a positive credit watch related to the transaction that has been announced between Aedifica and Cofinimmo that if the transaction can be executed following expectations, there is a probability that the credit rating would improve towards BBB+. Our interest coverage ratio is strong at 6.2x. The covenant stands at 2x. We have a net debt-to-EBITDA of 7.8x, very few encumbered assets. Most of the financing is still done on an unsecured basis. And 53% of our financing is related to sustainable financing. Most of the cases is sustainability linked KPIs that are integrated in the credit facilities. When we have a look on the debt maturity profile. So there, you can see that there's not a lot of refinancing that needs to be handled for 2026. There are some debt maturities starting to kick in, in 2027 and 2028. The timing of the refinancing of those can have an impact on the average cost of debt for 2026. But we still have a lot of headroom on the committed credit facilities, so more than EUR 740 million. This allows us to be able to be in a position where we can say that the financing needs for the company are covered until May 2027 and with a weighted average debt maturity of 3.4 years. Hedge ratio, as I just mentioned, still high at 88%. It will stay at that level until the end of 2027. Then you see it gradually declining in 2028 and 2029. So what we will do is the same policy as we have been following in the past, where we will add additional swaps to the hedging portfolio based on opportunities that we see in the market. Handing over to Stefaan. Stefaan Gielens: I'm going to walk you quickly through the portfolio slides, but focusing on what I think is probably the most interesting thing, and that is about the operator performance. But starting with the portfolio itself, a quick helicopter view on a couple of things. No surprises here. This is totally in line with everything you've seen in the past. Focus of Aedifica's� portfolio is clearly on seniors housing, so elderly care, senior housing. Numbers haven't really changed compared to previous year. The geographical footprint of the group, there has been some change, namely that we divested Sweden in the first quarter of 2025. As I mentioned already, that was a matter of capital recycling. And that now for the first time, I think Spain is popping up with a very small 1%, but we have been delivering a couple of projects in Spain in 2025. And looking at the future, we are focusing a lot on being more active in the Spanish market. Otherwise, absolutely similar image to previous years, the 4 somewhat bigger countries, each around 20%; Belgium, Germany, the U.K. and Finland. And then the Netherlands coming in at 11% and Ireland, where we started investing in 2021, now standing at 7%. Our tenants. Now this slide, once again, is not really showing you anything new compared to previous years. So it still shows a very strong mix of the somewhat bigger European players like Clariane and Colisee in our portfolio with a lot of local heroes. If I'm not mistaken, the top 10 is exactly the same as it was in 2024. We have a big focus, as you know, for historical reasons on the profit sector in Europe. This sector has been growing and consolidating in the last 10 to 15 years. But we have exposure to not for profit and public operators up to 10%, out of which the Finnish municipalities, 4%, they're popping up on this slide are within the top 10 of our operators today. And then I think what I was referring to earlier on, and in my view, the more interesting slide. So what is happening with the operators in Europe. First, look, occupancy, underlying occupancy, resident occupancy, we have been showing these numbers now for, well, I think, 1 or 2 years. What we do see now end of 2025 is a very strong occupancy throughout the whole portfolio. Looking at the average for the mature care homes in our portfolio, we're above 90% now at 91%. Maybe explaining a couple of things. Mature care homes, we are applying a very simple and straightforward definition. A mature care home is a care home that is trading for more than 2 years. And if that is the case, it enters into these numbers. Secondly, we have been working very hard on improving the coverage, and you will see the numbers at the bottom of the slide in the 5 countries for which we are now showing occupancy numbers, we are reaching almost 100% coverage. So this is not a selected part of the portfolio to show you the best possible occupancy. It is really giving a true image of what is happening in the portfolio. Finland is still not on this slide, but even in Finland now, we made a breakthrough in 2025. We're now starting to collect numbers from a couple of operators. As soon as we reach -- well, statistically relevant coverage, we will start also showing you numbers for Finland. But the numbers that we have for Finland are absolutely in line with what we see for the rest of Europe today. Maybe when looking at the countries themselves, as I said, strong performance throughout the portfolio. But one thing which to us, well, it came as a quite positive surprise even though we had the signs already before is Germany. Germany now at 90% in the portfolio. You know that we have been doing a lot of development activity in Germany pre-2022 with deliveries coming in also after 2022. We now see that the ramping up is really coming to maturity and that the German portfolio also in terms of occupancy is absolutely in line with the rest of Europe. So that's quite strong and positive news also looking at the future. But then something that we now added for the first time is a bit more information about rent covers in our portfolio. You know that we, in the past, already mentioned the U.K. numbers, but now we're adding 3 other countries. Once again, before we dive into these numbers on the back of a quite high coverage. So this is not a selected number of a couple of care homes to show you the best possible situation. It really is reflecting what we see happening in the portfolio. Maybe singling out, first of all, the U.K., you have comparable numbers in the past for the Aedifica� portfolio. It remains a historically high, absolutely very strong rent cover of 2.4. These are numbers on 30 September, but LTM for the last 12 months. It's even a bit higher than it was in the number that we mentioned at the end of '24, 2.3. So the U.K. operated market keeps showing an incredibly strong performance. Then looking at the other countries, Ireland, for the people that attended our Capital Market Days in Dublin, I think, in early 2025, we already mentioned there that we see rent covers in Ireland around 1.7. We're now at 1.8. Once again, a very strong rent cover knowing that we started doing business in Ireland back in '21 by acquiring a couple of standing assets, but soon after we start building the portfolio more to development, in this case, more forward purchasing deals. So this is a fairly young portfolio with mature assets, but fairly young. But what we do see in the portfolio in Ireland is that ramping up is going at quite remarkable speed, meaning that for most of these Irish care homes, 12 months after delivery of the asset, we already see occupancy rates going above 80%, in some cases, even reaching 90%, whereas in the rest of Europe, you probably would start to see these numbers after 2 years. So even when we consider them to be mature, we do see that they come in at somewhat lower numbers and keep growing afterwards. Ireland is really doing much better than the rest of Europe. And on top of that, showing a very strong rent cover. And then you have Belgium and Germany, the 2 countries where we have been explaining in the recent past that we do see operators bottoming out. We're now in Continental Europe, should not expect to see a 2.4 rent cover in the near future because these are countries where there's a lot more public money going into the financing of the operators. But as we mentioned, these countries were clearly bottoming out. What we do see nowadays, and once again, it comes in as a quite strong message is that on the back of the increased occupancy and lots of other signs that we had in the German market, we now also see a very good rent cover in Germany of 1.6. To put things into perspective, you probably know that over the past 10 years, when asked about rent covers and underwriting criteria, we each time said that what we use as a rule of thumb is that when we are underwriting new contracts, we would like to see a rent cover of at least 1.5. Now Germany is back above the 1.5, at 1.6 and Belgium is actually very close to the 1.5. So you do see, I think, on average, quite strong -- very strong to good rent covers throughout the portfolio in Europe. Once again, Finland, because we don't have the data coverage comparable to what we see in the rest of Europe. So I'm not going in too many details, but the limited numbers that we see are definitely not deviating from what you see on the slide. So I think it is really becoming a European trend, occupancy back at almost pre-COVID levels and rent covers growing back to normal territory, even strong territory with differences between some of the countries where in some countries, it goes a bit slower than in other countries. But I think that we do see an operator performance in Europe, which is totally recovering, and it is starting to show in operator activity in Europe. To add or to mention one example recently in Germany, where we have seen Domidep taking over Vitanas. So we do see a lot of signs of an absolutely improved operating climate in Europe. Then going forward to -- well, in this case, lease maturity, I'm not going to spend too much time on this. You know that we have a quite long WAULT and that today is standing at 18 years with a 100% occupancy rate. We really only have a couple of buildings which are vacant today. It's I think also a result of a quite active and proactive asset management that we have been applying certainly in the '22, '23, '24 years. We're transferring buildings to other operators if and when needed, but it results in a very strong occupancy rate. And -- but also maybe pointing out that we are basically activating our asset management in countries like Finland, where on average, the WAULT is a bit lower. It has to do with initial duration of lease contracts that are more around 15 years. But we're making a lot of efforts to make sure that we keep the WAULT also in these countries at a quite high level, resulting in the fact that only 1% of our total portfolio will -- at least 1% of the leases for the total portfolio will come to an end in the next 5 years. So basically, I think that we've managed the portfolio quite well in that respect. And then valuation. Pretty much the same message as in the past. What we do see now is that when you look at the average fair value yield for the whole of the portfolio, we're now at 6%. So we're actually stabilizing around this 6%. If you look at what happened in 2025, you will see that we've seen like-for-like value increases around 1.3%. If you just look at the last quarter, it's plus 0.4% to 0.5% with a couple of countries outperforming. The Netherlands coming in with 4.9% has also to do with the fact that inflation was much higher in the Netherlands compared to, for instance, Finland, where inflation was actually quite low in 2025. But also the U.K., and I think that is still reflecting the exceptionally high operator performance in the U.K. market. But what we do see in all of the countries are clear signs of a market that has bottomed out and is basically already starting to turn to growth again also in terms of value. Some of the countries, we do see pluses and minuses. But on average, a lot of signs that the market is back on its feet. And adding to that, that this is also being underpinned more and more by market evidence because we do see a more active investment market. So it's not just valuers making up their minds. I think we start to see more and more evidence in the market. And then a slide that also is very important to us because this should reflect what we think will happen in the market. It is becoming a more active investment market with lots of potential because operators are back, rent payment capacity is improving. And as we announced at the beginning of 2025, to us, that means that we want to rebuild our development pipeline, and it's actually what we're doing. If I'm not mistaken, end of 2024, we were around EUR 160 million, EUR 170 million. We're now back at EUR 276 million. You do see that we have been quite active in Ireland. I just mentioned that ramping up is going so fast. So there's a clear demand for new capacity in Ireland, and it shows in the numbers. Our pipeline in Finland, where, as you know, we are full developers is growing again. So after a couple of years where we were slowing down, we're building up the pipeline again, and we're doing it on the back of the criteria that we want to see happening. So that means yield on cost of 6.5% and development margins around 15%. And based on those criteria, we're building up the pipeline in Finland today. We remain active in the U.K. given the strong operator performance, but I flagged before, we remain cautious in the U.K. because we want to avoid building the portfolio on the top of the market when prices are relatively high, which is, I think, to a certain extent, the case in the U.K. today. And maybe adding, which is not reflecting in this slide yet, but as I mentioned, that we do see a lot of interesting things happening in the German market that just after the year's end, we signed a first new project in Germany. So you do see a lot of potential to build up the portfolio. And then going to the right side of the slide, it's not just about volume, it's also about getting interesting yields. So we are now at a 6.5% initial yield on cost for the whole of this pipeline, whereas I think end of '24, we were around 6%. And if you go back a bit further in time, it was more around 5.5%. So you do see the market becoming more active, more dynamic, and you do see yields and value potential, which we clearly can achieve in this market already today. So basically, looking back at 2025, actually quite happy with the year, not just in terms of our own results, but more specifically in terms of operators' performance, clearly improving in Europe and becoming -- we're reaching promising territory. And also when we look at investment and development activity, we see a lot more potential in this market. Now then looking forward to the future before handing over to Ingrid, I think it's quite clear that what will be probably catching all the attention in 2026 will be the result of our exchange offer on the Cofinimmo shares. I'm not going to walk you through these slides. You know it. I think that the only -- and the main thing right now is to flag that we are in the middle of the initial acceptance period. Talking to a lot of people and well, coming across a lot of support in the market. So our feeling is that things are going absolutely well at this point in time. You know why we are doing it. So we explained the whole rationale behind this operation. I can only confirm and repeat what, by the way, also is in the prospectus today. But add to that, that we do really believe that this operation comes at the right point in time because we do see the European healthcare market opening up again, and we do see European operators improving their performance. So I think it is absolutely the right point in time to create this platform that is operationally and financially stronger than the 2 companies in a stand-alone situation. But that then is my bridge to Ingrid so that she can explain what are potential scenarios for the future for Aedifica, either stand-alone or combined with Cofinimmo. Ingrid Daerden: Okay. So this year, it was a little bit particular situation, I would say, to give guidance to the market on our financial outlook for 2026. So how did we approach this? So first of all, we had a look on the business plan and Aedifica�based on the current portfolio. On that basis, we can say that we have a stand-alone budget, excluding any impact of transaction costs related to the project, the exchange offer. Based on the assumptions that we have in that model, we come to a rental income of EUR 370 million. This is an increase of 2.5% compared to 2025. I think that I need to add as well that in our pipeline, as you might have seen, we are expecting deliveries for 2026 of EUR 160 million, but they will be delivered in the course of the year. So during the first 3 quarters, we are expecting approximately EUR 35 million to be delivered. And then in the fourth quarter, it will be EUR 50 million. So the increase in rental income coming out of the deliveries will be spread out over the year. Then we have a new investment target, EUR 300 million, in line with what we have been announcing this year. But also in this investment target, an important part of it will probably be related to new projects. So for the announcements that we made in 2025, 75% were projects that are added to the pipeline and hence, only later onwards start to contribute to the rental income. So for this budget, we made the assumption that part of it will kick in around the summertime, part of it will rather only contribute for 3 months to the rental income for the part that is related to the acquisitions. And we also included an assumption on asset rotation. So it's a little bit a standard amount, I would say, EUR 100 million. If you take into account the portfolio of EUR 6 billion, that will be spread over the year in the form of disposals. Then other assumptions that we included and an important one is the average cost of debt. We see it still standing at 2.1% in 2026. This is based on the credit facilities that we currently have in place. Depending on what we will be doing for refinancing, there might be some impact on the average cost of debt. I'm hinting on the fact if we would go to the bond market, something that we had on the planning, taking into account the average debt maturity that is standing around 3.4 years. So going to the bond market, that would have an impact on the average cost of debt because we are doing the refinancing earlier than that currently is foreseen in our budget, and that is also needed from a liquidity perspective. Then we have the assumptions on the exchange ratio. So there, you can see that we are cautious on sterling. So in the past, usually, we had sterling standing at EUR 1.15. So currently, in the budget is EUR 1.13. If we would assume that current sterling would be trading at EUR 1.15 where it currently stands, this would lead to EUR 0.03 additional earnings if you have a full year impact. Then the debt-to-asset ratio, we do not include in our budget any assumptions on changes in fair value. So that means if the valuation of the existing portfolio remains flat, our debt-to-asset ratio probably will be around 42% by year-end. Taking into account all of these assumptions, we are expecting that the EPRA earnings will be above EUR 247 million and the EPS will be above EUR 520 per share. Having said that, I must add to this that probably this stand-alone budget is more like a theoretical exercise because most likely, we will be in the second scenario, where we will take control of Cofinimmo at the end of Q1. So what will be our priorities under that scenario? So first of all, we will have the first consolidation that will start at the end of Q1. So normally, the capital increase is expected to take place on the 30th of March. So there will be, for 2 weeks, contribution to the income statement coming out of the consolidation. We will work on the integration. So the scoping, planning and the execution; we are targeting to do most of the work in 2026. And it will also allow us to start working on the synergies where we do expect that the full run rate impact will occur in the course of 2027. We will also focus on the disposal of the healthcare asset disposals, the EUR 300 million that are related to the approval of the competition authorities. So that will also be one of the priorities in 2026. And then we have the intention to work on a legal merger in the second year half of 2026. So this legal merger will allow us to take 100% control of Cofinimmo and to delist Cofinimmo. So taking into account all of these elements, we do not know the exact holding percentage that we will have during the first consolidation exercise, makes it difficult for us to give EPS guidance for 2026 for the combined entity. So there, we will come back to more detailed guidance for the combined entity at the publication of the half year results, which will happen in the beginning of September. But what we can say is that the dividend policy of Aedifica� remains unchanged. So that means that we will continue to distribute 80% of the recurring consolidated EPRA earnings towards the shareholder in the form of a dividend. Stefaan? Stefaan Gielens: Yes. Okay. I think that we are now coming to the end of the presentation part of this session. Maybe to allow you to have a bit more time to ask questions, I'm not going to make a long speech about the conclusion. I think it was quite clear. We do see a much improved healthcare real estate market. We are quite confident about the future potential, both of the combined entity, Aedifica, Cofinimmo and the market itself. Stefaan Gielens: But this being said, let's switch to the Q&A. [Operator Instructions] So if you have questions, now it's time to start raising your hands. Ingrid Daerden: Steven Boumans. Steven Boumans: I have a question there. You are very constructive on the investment market. Do you also imply that the EUR 300 million stand-alone gross investment target that is a bottom? And second, to what extent could we see some yield compression for the portfolio in '26? Stefaan Gielens: Okay. The EUR 300 million that was mentioned in the stand-alone is, in my view, indeed more a minimum than maximum. So I do believe that there is more to be done in the market, both in terms of asset deals, rebuilding the development pipeline and perhaps even M&A. So yes, I do think that if -- well, we could do probably more. That's one thing. Secondly, yield compression. Yes, always difficult to predict that. This being said, I think that we more or less are now at yields that I think makes sense and will be there for a bit longer time. It might depend from one market to another that there might be some first signs of yield compression kicking in. Sometimes wondering whether that is not happening today in Spain, for instance. But given our expectations in terms of long-term interest rates, I do not see a lot of yield compression kicking in, in the near future. But as I said, the market is really shifting into a much more dynamic mode. So we'll have to see what really happens. Ingrid Daerden: Aakanksha from Citi. Aakanksha Anand: So three questions from my side. The first one, mainly on the acquisition opportunities in the market. So I guess you mentioned that there is an increasing number that you're seeing. Markets are more dynamic now. I just wanted to understand what are the main drivers for the increasing number of deals that are coming to the market now? Is it just because operators want to offload into the property companies, so propcos? Or is it increasing distress in the market? Or is it just the fact that operators are -- the profitability of operators is improving, and that's making it more attractive for more players to enter into the market? So that's first part of the question. And the second part would be on the acquisitions. What are the top 3 geographies where you are most keen on acquisitions? That's the first question, and I'll take the other two as we go along. Stefaan Gielens: Okay. First of all, so the drivers of this increased activity in the market, to me, are definitely more positive drivers and not negative drivers. So it's not distressed. It's much more the fact that operator performance is improving. And some countries definitely are trying to do something about the lack of capacity. Now for instance, the indication I gave about the Irish market, the fact that ramping up is going so incredibly fast is a clear indication that there is need for more capacity. And this, combined with operator performance that is improving, it means that operators are turning back themselves to growth. They want to build more capacity because they can do it right now and they can turn it into a profitable business model. So it is really a quite, I think, positive trend that we see returning to the market. On top of that, we do see increased -- well, first signs of an increased M&A activity in the operator world. We have already been approached by some operators asking us if we would be ready to accompany them in those type of operations, if there is some real estate that they want to take out of the balance sheet when acquiring competitors. So these are things that basically we didn't see in '22, '23 and '24 and that are now more and more popping up again. So it's definitely not distressed situations. It's much more -- well, the market shifting to really growth again. And then the top 3 countries, that's always a tricky question. But today, top of mind, I would clearly say Ireland, Spain and then U.K. and/or Finland, maybe a slight preference still for the U.K. Why do I say Finland? Finland is because we're full-blown developers. And we do see that development activity potential is increasing and allowing us also to make -- well, operator -- sorry, development margins, healthy development margins again in Finland, which in the end is creating equity, allowing us to leverage on that. So I think that these are basically the countries that we do believe are very interesting today. I should add that I'm actually becoming more and more positive for Germany, but it's more the cycle that it starts to go upwards in Germany again. So that's, I think, also a lot driven by timing, not waiting too long before you start building up positions in a country and you have to do it at the right point in time. So Germany might be at the right point in time if what we see happening confirms in 2026. Aakanksha Anand: Okay. That's very clear. The second question will be just on the yield on cost on the pipeline. So it has definitely improved to by about 40 bps compared to last year. So what are the main drivers here? Is it just the tenant profitability improving and you're being able to charge higher rents? Stefaan Gielens: I think in the end, that's probably the most straightforward answer. I have been explaining in the recent past that when we look at the market, basically, what we've seen in Europe is a total disbalance between our cost of capital, cost of construction that went up a lot and then rent payment capacity that was in most of the countries under pressure. And what we do see now is in lots of countries that rent payment capacity is very healthy again and increasing. So -- okay, I think also the cost of capital is slightly improving. So given the fact that buildings have become more expensive, we have a certain cost of capital urging us to go for certain yields. So yes, the third factor being rent payment capacity, and that has clearly improved. So I think that, that is the main driver today in terms of new developments. Aakanksha Anand: Perfect. And the third one, I think Ingrid mentioned lease agreements changed to B2C. I think that was for Netherlands. Could you just put some more color around that? Is it something more country-specific or something we can see more of an increase? Ingrid Daerden: Why I mentioned it is because it did have an impact on the like-for-like. So those are 2 independent living assets where we went to a model that is B2C, that is related and creating additional rental income for the company because we are invoicing directly to the tenant, but it also involves some increase in the maintenance charges that will come to the company. But it is a model that we are exploring a little bit. So something that could be part of our business model, but it will remain marginal in the portfolio as a whole, I would say. Stefaan Gielens: Yes. I think, Aakanksha, at this point in time, it's very country specific. So it's clearly something that we see a lot happening in the Netherlands where also other domestic investors are stepping more into B2C models, but always teaming up with an operator. So there is a third party involved, which is the operator, which is providing care, but this is more independent living where the investor landlord really signs a lease with the resident. What we did in the Netherlands is because we -- these are actually buildings that we acquired a couple of years ago, where we had a master lease with an operator, not for-profit operator. But they, for reasons of their own, they wanted to get out of the master lease, but keep focusing on providing care in these buildings, whereas we -- well, clearly, if we could take over their position, that would immediately for us result into higher rental income with also more operational costs. But in the end, it seems to be a very profitable operation. And it is actually totally in line with lots of investments that we see being done by domestic investors in the Netherlands. So it is a bit of an experiment, promising experiment, but at this point in time, very typical of the Dutch market here. Ingrid Daerden: Frederic Renard from Kepler Cheuvreux. Frederic Renard: Maybe a question on the underlying occupancy rate within your nursing homes. Can you help me reconcile a bit the high occupancy rate that you disclosed in Belgium with the relatively low rent cover of 1.4x. That's maybe -- and linked to that, I would like -- well, you know that Colisee changed its shareholder recently. I'd like to see a bit if you had been able to discuss with Blackstone among other recently. Stefaan Gielens: Yes. Okay. No specific -- Belgium, in the end, the rent cover is not only depending on occupancy. It's actually also depending on the revenue that the operators are getting out of it and cost management. So what you see in Belgium today is the market bottoming out at a rent cover, which is not excellent, but definitely not poor or bad either. But where there is room for improvement and improvement, and this is answering your question, I see it coming mostly from managing staffing costs. So what we do see in Belgium in some assets happening today is something that in the past, you've also seen in Germany and even if you go back a bit further in time in the U.K. is that they have to turn too much to agency workers, which come in at a much higher cost compared to employees and for which they are not really being refinanced, knowing that in Belgium, wages of care takers are actually being refinanced through the social security system. So that is something that the Germans were able to address, the U.K. also, where there is room for improvement in Belgium at this point in time will automatically lead to an improved rent cover. And then secondly, but it is more of a political thing, I think that also my opinion, but once again, which could lead to a lot of improvement in terms of rent covers also in Belgium has to do with the pricing flexibility. I think that in certain parts of the country at this point in time, the prices are overregulated and basically slowing down operators in trying to adjust their revenue to the real cost they are experiencing. So in a nutshell, this is why even at the higher occupancy, you see somewhat lower rent covers in Belgium. But there is a clear path forward to improve these rent covers in Belgium. And then your second question, sorry, you have to remind me quickly. Frederic Renard: On Colisee specifically. Stefaan Gielens: Colisee. You mentioned Blackstone, but we haven't entered into a dialogue with Blackstone at this point in time. But what I can say about Colisee is that we had a dialogue with the local management of Armonea in Belgium, which was a very, let's say, constructive dialogue. So as far as I can tell today, but it's not -- at this point in time, nothing more I can disclose because I do not want to, well, intervene in perhaps ongoing conversations at another level. But we had -- let me repeat what I just said. We had a very constructive dialogue with the local management team in Belgium. So I think that we did what we needed to do and that we stabilized the situation. Frederic Renard: Okay. But I guess you know that at some point, they will try to force you to lower [indiscernible], but we'll see later on. Stefaan Gielens: As I just said, we had the dialogue with them. I'm smiling at this point in time, so you don't see a lot of problem I face here. Ingrid Daerden: Valerie Jacob from Bernstein. Valerie Jacob Guezi: I've got three, if I may. The first one is on your 2026 stand-alone guidance. You're guiding for 2.2% like-for-like growth, stable cost of debt and some net investment. So I just wanted to understand why your guidance is so conservative, if there is something I am missing here. Stefaan Gielens: Okay. Well, I'll take the first part. I think conservative, it's coming from the fact that we have been very conservative in budgeting the portfolio growth. So as I keep repeating, we do see a more active and dynamic market. But we know from experience in the past that you can, at the end of the year, show a very high number in terms of new deals that you have been announcing throughout the year. But it is more the point in time that they become cash flow generating, which is important in terms of your guidance. So yes, I expect that we will be very active in terms of investment and refueling the pipeline, already indicated that the EUR 300 million that we mentioned is perhaps also even or even so conservative. But the real impact of that is something that you will see once all of these new deals start generating cash flow in the portfolio. And that's not on the 1st of January. That will be spread throughout the year. And then secondly, maybe adding to that is that we come out of a period where the pipeline hasn't been refueled a lot. So we have to get back to cruising speed. And to me, cruising speed means that you have a constant flow of deliveries coming out of your pipeline at interesting yields. This is what we're now building up again. And on top of that, you have your ongoing investment activity throughout the year. So once you reach that cruising speed, you will see more impact on the top line. So I think it's more of a timing issue as far as I am concerned. But Ingrid? Ingrid Daerden: Yes. What I would also like to add is, like I said in the beginning, this is a little bit of a theoretical budget because if you would have put in on a stand-alone basis, a much higher assumption on the investments. Because in reality, we think we will invest much more, but we also think that we will take control of Cofinimmo and there will be capital recycling, allowing to finance and to redeploy that capital and to finance the new acquisitions. If you just put it into a model, much more investments, then your DTA goes up or you have to add in as well a capital increase. So you have to think about the stand-alone budget as a theoretical exercise with the EUR 300 million, which is in line with what we did in the previous year and what we are very confident that we can realize in 2026 as well. But for us, the most plausible scenario is the second one, where we will take control of Cofinimmo, where we will be working on the divestments that we have been announcing to the market, and we will redeploy that capital. And then it mainly comes to the timing issue element that Stefaan just has mentioned earlier. Valerie Jacob Guezi: Okay. My second question is about your investment strategies. I mean you are doing a lot of very small development of just like EUR 10 million, EUR 20 million. And I just wanted to understand how you think about this type of deal versus scaling the platform with some large portfolio deal. I mean, you're trading close to NAV now, so you could even raise equity. So I just wanted to understand how you balance the size and the profitability of all your sort of potential investments. Stefaan Gielens: Okay. It's actually a very straightforward answer here. We know from experience that the existing platform with our decentralized model with country teams is giving us access to a lot of local deals and very often also to very interesting deals, meaning relatively higher yielding or when talking about development offering, development margins, which basically are creating equity and allowing us to leverage on that. It's something that has been a strength of Aedifica�in the past, and we want to keep that strength, absolutely. So we're going to keep doing this using the network that we have throughout Europe. But I do agree with you, also looking at the challenges that we will have if this Aedifica�, Cofinimmo combination comes through and the quite ambitious divestment program, including the noncore of Cofinimmo that we also will have to scale up in terms of somewhat more sizable M&A type of deals. So looking at the future, it will be a combination of both. Ingrid Daerden: Vivien Maquet from the Degroof Petercam. Vivien Maquet: Two questions on my end. Maybe first, I did not get it right, but you mentioned that you want to avoid building the portfolio in the U.K. at the top of the market, but you also mentioned that it is your third perfect geography. So I just wanted to get a bit of clarity here. And does it mean that you also see risk of price correction? Because if you think it's the top of the market, then you will assume maybe a risk of price correction. Stefaan Gielens: Yes. Maybe taking that one, first of all, maybe underlining, I'm still a firm believer of the U.K. market. So I was not sending out any negative messages about the U.K. But it's just -- actually, it's always all in the timing. We have acquired a U.K. portfolio back in 2018, 2019 from an investor that wanted to step out of the market because they were afraid of Brexit. Okay, that was a bit of a mixed portfolio, but we managed it and brought it to a higher level of quality. And then we started adding a lot of new buildings and mostly through development of forward deals. And that has been very profitable. What we do see now is that the U.K. market and certainly the operator performance is at a very high level, but it remains at a very high level. I do not see at this point in time any indication of a price correction in the very near future. I would actually say that if you look at how active certain U.S. healthcare REITs have become in the U.K. that you could even make a case that prices might go up or at least performance and activity in the U.K. market might even go up, et cetera. But we're long-term thinkers. And what we want to do is when we look at the metrics of our portfolio, we also look at what is the average cost per room, the average cost per square meter, the average rent per unit, things like that is we keep an eye on that also. So we want to avoid doing too many deals that maybe today from a strictly financial perspective seems interesting, but when you look at all of these other metrics, come out as quite expensive deals, where you know that if the market would correct at a certain point in time, those are the deals where probably you will feel the pain afterwards. So that is what we're trying to manage carefully. And this being said, repeating again, still very positive about the U.K. market. But if rent covers in the U.K. would come down to 1.8, that still is a very, very strong rent cover. But if you're buying a lot of assets that really are depending on the rent cover of 2.4, even at 1.8, you will feel the pain. So that is what we're trying to avoid. Vivien Maquet: Okay, clear. Then a question on the disposals, the EUR 100 million, I assume it does not include any Belgian assets. And maybe can you provide an update on the identification of the EUR 300 million portfolio? Are you working mostly on your, I would say, stand-alone portfolio or any update there would be great. Stefaan Gielens: Yes, maybe the EUR 100 million you were referring to in the stand-alone scenario, as Ingrid said, that's a quite theoretical approach. And basically, what we do see as normal asset rotation for Aedifica�stand-alone is that we -- 1% to 1.5% of the total portfolio every year should rotate and then you get to these type of amounts. In real life, we think that the base case is much more the one where we do combine Aedifica�and Cofinimmo, and then you have this, what you were referring to commitment towards the Belgian competition authorities of having to dispose EUR 300 million of Belgian assets. Do we have -- there's not a lot I can tell you at this point in time for lots of reasons, also keeping in mind that we are in the middle of an acceptance period. And I should clearly avoid telling you anything which is not already publicly known and in the prospectus. But this being said, I confirm what I've been telling the market before. When we were talking to the competition authorities about this, we did some market sound ourselves, of course, very limited to just talking to a couple of parties we know. And we got positive signs that there is interest for these type of portfolios. So that was confirming -- sorry, reassuring for us. And then secondly, yes, we have built a case where Aedifica�stand-alone has identified a portfolio, which we can use to accelerate things if need be and if the opportunity would arise. But after taking control of Cofinimmo and certainly after the legal merger with Cofinimmo, legal merger that we see happening in the second half of 2026, we can, of course, look at the whole of the portfolio. And in any case, think that the divestment will not take place before the summer of 2026 and might take place towards the end of 2026, and that will be after the legal merger. Vivien Maquet: Okay. Then two quick questions on the guidance. First, on the 42% debt to assets, you assume as of 2025, that does not include any revaluation. Ingrid Daerden: No, it doesn't. Vivien Maquet: okay. And then it does not include any potential agreement you will get with Armonea either, right? Stefaan Gielens: I think it does, to be quite honest. Ingrid Daerden: Very difficult to answer that question for us. But let's say that I'm not expecting additional impact coming out of such a kind of agreement. Vivien Maquet: So if you have an agreement, that will be already [indiscernible] and therefore, should not [indiscernible] negative on your guidance, right? Ingrid Daerden: Yes. Stefaan Gielens: But as I said to Frederic earlier on, we had a quite constructive dialogue. So I think we know where we will land, and we know it already today. So it's, yes. Vivien Maquet: Indeed, just to know if it's already in the guidance or not. Ingrid Daerden: Stephanie Dossmann from Jefferies. Stephanie Dossmann: Maybe just a follow-up on the disposal side because just to clarify something, are you able to dispose of assets in the Cofinimmo portfolio ahead of the merger if you agree legally, I would say, with Cofinimmo's management? Stefaan Gielens: Yes, of course. Not today, after taking control and then we have to agree between the 2 companies because basically, in the period between us taking control, which will be mid-March, if everything goes according to plan, of course, and the legal merger that we see happening somewhere in the second half of 2026. In that intermediate period, you still will have 2 companies with their own governance, but with a controlling shareholder, it will be like a group, parent company being Aedifica�, subsidiary being Cofinimmo. Yes, we can agree within the group to team up together to do this. That's possible yes. Stephanie Dossmann: All right. So I don't know if you can give some color on the disposal of the offices. Do you have advanced discussions on those? Stefaan Gielens: Yes. The offices -- sorry. yes. The only thing I can tell you today is that we -- and when I say we, I am really talking Aedifica�at this point in time. We did get a lot of inbound from parties in the market that were making clear that they could have some sort of interest in the portfolio, being it part of the portfolio or the whole of the portfolio, which basically was also a very pleasant surprise to us. But we did not engage at this point in time into any really material discussions. I think it's -- we need to wait until we are in this group situation. But we clearly do have some ideas of what could be possible. That's absolutely the case. Stephanie Dossmann: And will it be piece by piece or as a portfolio? Stefaan Gielens: The only thing I can tell you is that we've got interest -- well, as I said, inbound, just people telling us that when you start acting, please talk to us. And that really goes from the whole portfolio to parts of the portfolio and I guess, also for asset per asset. Stephanie Dossmann: All right. Fair enough. On the rest of the disposals targeted, I mean, the EUR 300 million committed. Will it be more on peripheral assets or to lower exposure to specific operators, such as, of course, the big one you have in your portfolio? Colisee, [indiscernible], Korian? Stefaan Gielens: Once again, very -- I think what you should expect to see is that, that will be a portfolio that reflects the reality of the Belgian Aedifica�portfolio today. So I think more or less answering your question, yes. Stephanie Dossmann: Yes. And maybe on the coming merger or the offer actually, what indicators do you watch to anticipate the tender level, I mean -- and the outcome of the initial period? Do you have feedbacks? I mean, what key indicators do you look at, proxies and so on? Ingrid Daerden: Yes, indeed, we have proxy advisers who give us some informal indications. So... Stephanie Dossmann: Can you say something more? Stefaan Gielens: We are communicating a lot at this point in time also towards retail and towards institutional shareholders. As I mentioned, I think, at the beginning of the session, the feedback that we get is straightforward positive. So that's one thing. We will have to see whether people then tender or not. We keep an eye also on the stock price, of course. And I think the stock price also has a clear indication that the market is a true believer of this combination. So I should turn it in the other way. We do not get any negative feedback or pushback in any way at this point in time. Stephanie Dossmann: Okay. Maybe just the last one, very quick. If I'm correct, there was a slight expansion in the yields in Belgium. What is related to? Stefaan Gielens: Yes. No, no, that could be the case. I think it is really, as you said, a slide. So it could be just a rounding. But this being said, what we do -- basically, what we have seen in the latest quarters is that, well, inflation increasing rents are driving valuation at this point in time because what we do see is that there's not a lot of yield decompression going on either. So yields are more stabilizing. But when you dive into one specific part of the portfolio, it could just very well be a mix -- what we do see in lots of countries with perhaps the exception of the U.K. and the Netherlands where it clearly is a very strong positive. Lots of other countries, it's a combination of pluses and minuses. There might be corrections for certain assets, but there also are upward corrections for other assets So it could be just the impact of these pluses and minuses at a certain point in time. But we do not see anything specific happening with the yields in Belgium. I could say on the contrary, there was for the Belgian market, a quite big deal being done a couple of weeks ago by a listed REIT acquiring from the biggest profit tenant in Belgium at a yield of 5.75. So that is really underpinning the valuation. I think there are still people willing to ask questions, but we are basically out of time. Can you -- I do apologize for this, but as I said, we are a little bit in a situation of having back-to-back meetings today. But if we couldn't address your question, please feel free to reach out to Delphine. We will come back to you ASAP. And once again, my apologies that we can't make more time available at this point in time. I thank you very much for your attendance, and we're pretty sure that we will be in touch in the very near future. Okay. Thank you all. Bye-bye.
Operator: Thank you for standing by. This is the conference operator. Welcome to the Alkane Resources Second Quarter Fiscal Year 2026 Financial and Operating Results Conference Call and Webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions] Now let me hand the call over to Natalie Chapman, Alkane's Corporate Communications Manager. Natalie Chapman: Hello, everyone. Thank you for joining our call today. Some housekeeping items to note. The accompanying presentation for today's call is available for download from the company's website at alkres.com. Today's press release, the financial statements and the MD&A are all posted on our website and SEDAR+. For those of you on the webcast, please move through the presentation slides yourself as directed by our presenters. Moving on to Slide 2. I'll remind everyone that this conference call contains forward-looking information that is based on the company's current expectations, estimates and beliefs and may also use terms that are non-IFRS performance measures. Please review Alkane's quarter 2 fiscal year 2026 disclosure materials for the risks associated with this forward-looking information and the use of non-IFRS performance measures. Please note that all dollar amounts mentioned on today's call are in Australian dollars, unless otherwise stated. Also, as management reviews the quarter and half yearly results, please remember that Alkane has a June 30 fiscal year-end. So the quarter ending December 31, 2025, is our second quarter of the 2026 fiscal year. And as we closed the merger with Mandalay Resources on August 5, 2025, our group financial and operating first half fiscal 2026 results shown today only include 5 months from the Costerfield and Bjorkdal mines, the former Mandalay operations and a complete 6 months of results from Tomingley. Please move on to Slide 3. Today's speakers from Alkane Resources are Nic Earner, Managing Director and Chief Executive Officer; and James Carter, Chief Financial Officer. I'll now hand the call over to Nic Earner. Nicolas Earner: Hi, everyone, and thanks for joining us today. Let's go to Slide 4, which provides a quick summary highlighting our record achievements on our very successful first half of 2026. Alkane had a record-setting second quarter and first half of fiscal 2026, both operationally and financially. We produced just over 43,600 gold equivalent ounces in Q2, which gives us just over 74,000 gold equivalent ounces for the first half of 2026. And remember here, the ex Mandalay asset production from July, the month of July is not included in that number. And so when we look at our full year, so the full 12 months, including July, including Mandalay assets, we're on track to meet that group 2026 guidance of 160,000 to 175,000 gold equivalent ounces. So given the strong prices for gold, the strong prices for Antimony and our great production results, our mines generated AUD 133 million of operating cash flow for the quarter, which has boosted our already strong financial position. As of quarter end, we had AUD 246 million in cash, bullion and liquid investments on hand. This strong financial position, combined with what we expect to be continued robust free cash flow from our operations, allows Alkane to aggressively grow the company through exploration, capital programs at each of our mines as well as advance the Boda-Kaiser copper-gold porphyry project and opportunistically grow the company inorganically. Now let me move on to Slide 5 to get into more details on the quarter. On a consolidated basis, in Q2, Alkane produced nearly 43,000 ounces of gold and 267 tonnes of Antimony, which equates to nearly 44,000 gold equivalent ounces. All of these are records for Alkane as a company. This was from mining nearly 581,000 tonnes of ore at an average gold grade of just under 2.4 grams per tonne and an average Antimony grade of just under 1%. Recoveries of just over 90% gold and just under 87% Antimony were higher than in Q1. Now I'm going to get into specifics with each mine shortly, but let me summarize, overall, all our mines are operating well and all of them meet our own expectations, which are very high. So let's move on to Slide 6 and look at Ting. In Q2, we processed nearly 319,000 tonnes of ore at an average recovery rate of 89.8% and an average grade of 2.5 grams per tonne. This led the mine to produce a bit over 22,000 ounces of gold. This is 20% higher than we got in Q1. High production came from slightly improved operations, but mostly from the planned mining sequence moving into higher-grade zones, also continued cost management. And this resulted in all-in sustaining costs in Q2 being AUD 2,216 per ounce. The U.S. dollar amount is on the screen there. This is 16% lower than in Q1. So the primary source of ore at Tomingley continues to be from the Roswell underground deposit. During the quarter, and I'm going to describe this is ordinary course of business for us, but I want to give you detail on this. We had some minor challenges. We had some shock credit downtime that delayed our paste fill. We had some lower development rates leading to lower development ore. And we redesigned some stope shapes to improve load recovery. But all these issues were overcome pretty rapidly and like I said, a part of the ordinary course of business. Our processing plant continues to perform well. We're milling in excess of budget. And primarily, this is a result of us inserting a mobile crusher to pre-crushed material prior to entering our processing circuit. So this pre-crushing material entering the circuit has seen a nominal increase in milling rates to approximately 1.3 million tonnes per annum with further optimization on both throughput and cost options for this mobile crusher continuing. Capital expenditure during the quarter was mainly for the Newell Highway realignment project. Construction of this is expected to be completed in about a year from now in 2027. This is a high-return project, which allows us to access the high-grade San Antonio deposits in 2 new open cut mines. Bottom line, improved productivity, lower costs, higher gold grade, higher gold prices. Cash flow from Tomingley was AUD 67 million in the second quarter or a bit over 70% higher than Q1. Moving on to Slide 7. Q2 at Bjorkdal, we processed nearly 330,000 tonnes of ore with an average grade of 1.04 grams per tonne and an average recovery rate of 87.4%. This allowed us to produce just under 10,000 ounces of gold. All-in sustaining costs in Q2 were AUD 4,117 per ounce. Again, the U.S. is on the screen or 2% higher than in Q1. Bjorkdal was a solid quarter mining performance. All production is going well. We've got consistent stope productivity, and we've got stable development activities. We've also started replacing some critical equipment, which has resulted, as you'd hope, in machine availability. Further equipment replacements are continuing in this quarter, current quarter 3. Mill throughput was a little bit slower -- I mean, lower than the previous quarter. This is primarily due to our mill reline, the new linings we put in were wearing slightly slower than the anticipated rate, good for relining, but it limited our maximum allowable mill load. The completion and commissioning of the return water system from the mine as well has also had a positive impact on flow performance to date, which has led to improved recoveries. With the improved productivity and higher gold prices, operating cash flow from Bjorkdal was AUD 35 million for the second quarter. On to Slide 8. At Costerfield, our gold and Antimony mine, we processed nearly 35,000 tonnes of ore. In Q2, we plan to be in a higher grade sequence in the mine. Therefore, we achieved an average gold grade of just under 10.4 grams per tonne and an average Antimony grade of 0.91%. Both of these were higher than in Q1. Gold recovery rates of 93.9% and an Antimony recovery rate of 86.8% were also higher in Q1. Our increased plant efficiency and throughput rates, particularly as well as the grade, allowed the mine to produce 10,790 ounces of gold and 267 tonnes of Antimony or 11,686 gold equivalent ounces. All-in sustaining costs in Q2 were AUD 2,149 per gold equivalent ounce, resulting in a 12% decrease from Q1. And this demonstrates the focus we have on getting high grade in and expanding our production rates. Costerfield summary, steady operational performance during the quarter, strong mining productivity as well, we continue to advance several initiatives to improve our ore quality and recovery. We continue to try and optimize drill and blast optimization, remembering this is a narrow vein stoping environment where we're trying to keep our widths as tight as possible. We continue to focus on operator training, and we are moving towards emulsion explosives because we want to improve some recovery and reduce dilution. So as we prioritize here on Costerfield, operational consistency and grade control, and we use this to underpin our strong production outcomes that we expect to get over the coming quarters. So with this great productivity, with our cost control, high gold prices and, of course, higher gold grade, operating cash flow from Costerfield was AUD 30 million for the second quarter. Now moving on to Slide 9. One of the key strategic initiatives that we have is to drive organic growth by increasing mineral resources, we have an aggressive exploration program across our portfolio. I'm going to tell you about that now. So on Slide 9 here that we're at. At Tomingley in Q2, we invested AUD 2 million for the quarter in several programs. This includes 1 and 2 on the picture, extension drilling under the existing pits of Wyoming and then Caloma North. #4 on the picture, resource infill drilling at Roswell, and we get results here like just under 8 meters at nearly 0.5 ounce per tonne. At #3, discovery of a new zone of gold-rich mineralization at McLeans right next to existing infrastructure, intercepting gold intercepts like 26 meters at 4.36 grams per tonne of gold. Down at # 5, and we own the land under this, drilling in El Paso, which also resulted in several significant intercepts, including 8.2 meters at 3.74 grams per tonne. And then last but not least, at #6, we commenced testing Peak Hill for its gold copper porphyry potential. And number seven, we're conducting geophysical targeting and drill testing for low sulfidation epithermal gold quartz veins at Glen Isla. What I want to show you here is that a lot is happening at Tomingley to expand the resources. And more importantly, the sheer volume and range and distance of this work alone demonstrates big potential and the reason why we continue to focus on exploration. So let's move on to Slide 10, Bjorkdal exploration. Here, we invested AUD 2 million on a program at # 3 there, Storheden on 2 programs to test the Northern and Eastern depth extensions #1 and 2 with the goal of extending the ore body that's currently being mined. So for example, at Storheden, the #3, the results of this drilling highlighted the doubling of the known depth and extent within a series of Bjorkdal, just like the deposit to the south style veins interpreted across 3 target domains. This was all released in December. The highlight results included 34 grams a tonne over 1.6 meters, 142 grams a tonne over 0.6 meters and 111 grams per tonne over 0.5 meter. This narrow vein, high grade, this is the backbone of what we see at Bjorkdal, and we've got the expertise to mine these type of veins, either narrow vein or over broader swarms efficiently. In additional, over at #4 to the right of your page, work has recently commenced to extend the Norrberget resource. So let's move on to Slide 11. At Costerfield, we invested AUD 6 million in Q2 on near-mine drilling with 3 main focus areas. Number one, Brunswick South drilling. We focused there on building the high-grade intercepts we discovered earlier in the year, so earlier in 2025 with progression to infill drilling late in the quarter. And number two, Kendall drilling, we're exploring a series of veins, quite high grade above the currently active Youle workings. And number three, the Sub King Cobra, we call it, we're drilling focused both on infill and extending the mineral resources below the existing Cuffley and Augusta workings. But additionally, perhaps even more excitingly, numbers 4 and 5, True Blue has progressed with 3 diamond rigs predominantly concentrating on infill drilling with a focus on step-out testing at our surface geochemical anomaly there. Meanwhile, #6, we're also testing the potential for a Sunday Creek style mineralization -- mineralization just below Costerfield's historic mines. So moving on to Slide 12. This is the Northern Molong Porphyry project, the entirety of which is shown on the map of this slide or stylized map on this slide, and this is a highly prospective gold and copper corridor. This project also encompasses in the bottom right of your page, our Boda-Kaiser copper gold project. During the quarter, we invested AUD 3 million on several programs, including a mobile magnetotelluric survey we completed across most of the deposit you see there, and we think this will guide us towards future high-value work programs. And we continue to make progress on a 4,500-meter reconnaissance drill program to learn more about the project's potential. Of course, we'll announce results as we receive them. What I want to make clear to you, the reason why we're focused on this is we're looking to further increase the already substantial gold and copper inventory. This project and what can come from it is incredibly leveraged to the current price. As you can see, the exploration work going on at each of our projects. Our goal is to expand resources to increase mine life production levels and drive new discoveries. Undoubtedly, I want you to see that exploration is a key pillar of our strategy that's fundamental to our organic growth objectives. And with that, I'm going to hand over to you now, Jim, to provide a review of our financial performance. Thanks. James Carter: Thanks, Nic. So if everybody could -- we'll turn to Slide 13. And so I'll start with an overview of the key financial highlights for the second quarter ended December and also the 6 months ended -- or the first half, which is the 6 months ended December as well. So we'll focus on these 2026 results because the results for the prior year do not include the former Mandalay operations. So consolidated revenue for the quarter was AUD 256.7 million at an average realized price of AUD 5,785 per ounce or around about USD 3,857 per ounce. And that was 18% higher than our Q1. Average antimony prices were AUD 42,500 per tonne or about USD 28,327 per tonne. And that was 19% higher this quarter than the previous quarter. These are record revenues were achieved in the second quarter. They were a result of strong operations, robust gold and antimony prices. And cash flows for our second quarter could have been a bit higher, about AUD 18 million higher. We had a shipment from Costerfield that sort of departed around the Christmas period. So -- that payment, which normally would be received a little bit quicker sort of because of the Christmas holiday period that came into -- received in early January, and that will be recognized in our Q3 cash flows. Site operating costs on a consolidated basis were AUD 2,031 per gold equivalent ounce produced. That was about 8% lower than the September quarter. This is a result of improved throughput levels, capturing some synergies from the merger and just trying to be -- maintain the cost discipline. All-in sustaining costs were AUD 2,739 per gold equivalent ounce or about USD 1,826 an ounce produced. That's about 8%. That was also 8% lower than the previous quarter. So at these cost levels, we are within our 2026 guidance range. EBITDA for the second quarter was a record AUD 147.2 million. Sustaining capital during the quarter, that was AUD 20 million. That included AUD 10 million for capital development at our Bjorkdal operation in Sweden and AUD 4 million of mining ancillary equipment at Bjorkdal and Tomingley. Our growth capital in the quarter was AUD 9 million, and most of that was at the Tomingley operation on the Newell Highway alignment, which Nic touched on a little bit earlier on the Tomingley slide. So for the event, that gives us access to the eventual mining of the San Antonio open pit in 2027. Exploration expenditures for the second quarter were AUD 11 million, and I think that was all captured by -- in the slides that Nic was talking about just slightly earlier. So if we turn to Slide 14, now, and we're really -- we're having a look at our second quarter cash flow. So in the December quarter, cash flow from our 3 operations was AUD 133 million or 82% higher than the first quarter. Corporate and other expenses were AUD 20 million. That included AUD 7 million for corporate and technical support across the group, AUD 6 million for a cash-back bond, which we were required to put down as part of our Newell Highway realignment project. That's a bond that sort of will come back to us over the course of the next 18 months or so upon successful completion of that project and AUD 3 million for Boda exploration at about AUD 2 million for Lupin closure costs. So after all of that, after sustaining capital growth, exploration, taxes and corporate, we ended the quarter with AUD 218 million in cash. So overall, there a AUD 58 million increase from the September quarter, which was really pleasing. So at December 30, 2025, liquidity remains exceptionally robust. We got cash bullion listed investments totaling AUD 246 million. So we've got a clean balance sheet. debt is just limited to some equipment financing for our mobile equipment across the group. So that's just giving us a really enviable financial foundation that we think that [indiscernible] and the peer group can match, underpins the foundation to grow the business, pursue our organic growth targets, which Nic had spoken about a bit earlier and gives us flexibility to act on strategic value accretive opportunities as they arise. So with that, I will turn the call back to you, Nic. Nicolas Earner: Thanks, Jim. All right. Let's go on to Slide 15. I want to focus on our outlook, which I think you can see has a pretty clear momentum. Leveraging the financial strength Jim just outlined, we're well positioned to scale up our business. We've got a dual track strategy. We're fueling growth while keeping a sharp focus on cost efficiency, a discipline that's reflected through the maintenance of our 2026 guidance. With our record-setting first half behind us, we're carrying a lot of energy into the remainder of the year. We're firmly on track to achieve the annual production minus the July Mandalay of 155,000 to 168,000 gold equivalent ounces. But as I say, let's look at this 3 operations for 12 months, 100% basis, full year guidance is pretty impressive, 160,000 to 175,000 gold equivalent ounces. Now on the cost front, we're disciplined. We want to drive down the cost at Bjorkdal. We're disciplined. We've got a consolidated all-in sustaining cost firmly on track at AUD 2,600 to AUD 2,900 per ounce. So this is US between USD 1,690 and USD 1,885 per ounce. The real story is our impressive commitment to organic growth. We're putting AUD 78, somewhere, it will land somewhere between AUD 78 million and AUD 88 million into growth capital and exploration to unlock the next chapter of this company. Tomingley, I don't want you to see this is just infrastructure. It's a gateway. This realignment of the Newell Highway is the key that unlocks the high-grade large-scale San Antonio deposit in about a year from now. And at Costerfield, our objective here for drilling is clear. We're extending the mine life and building the case for potential future processing expansion. And over at Bjorkdal, our focus is on precision. We're building a high-grade inventory that we want to redefine our future mine studies and increase the mining rate. So this guidance is more than just set of numbers, it's a road map that we're trying to build a larger platform achieving the vast potential of this business. So let's move to Slide 16. What you can see on this slide is more than just a plan. We have a commitment to performance, and we're delivering on that. We're squarely positioned to meet our production targets, but we're not stopping there. We're deploying the drill bit, which I've talked about across the entire portfolio to expand the resource base. This is the bedrock of the strategy, extend mine life and accelerate production growth at all 3 operating mines. And let's not forget Boda-Kaiser. This world-class copper-gold porphyry project remains an important part of our long-term value. We're moving with a purpose on the environmental studies, the permitting and the consultation to advance this project. And in doing so, we're giving ourselves maximum flexibility to consider ways to unlock value. Corporately, our balance sheet is a clear strategic advantage above our peers. In this gold price environment, we expect to continue building our cash position. And as we seek inorganic growth opportunities, we're well positioned to move quickly but with discipline, and we have strong financial flexibility. We're confident, we're focused. We're well positioned to drive long-term value for the shareholders. And with that, I'll hand the call back to the operator to start the Q&A session. Thanks, operator. Over to you. Operator: [Operator Instructions] We're going to take the first question on the line. And it comes from the line of Daniel [indiscernible] from [indiscernible]. Unknown Analyst: Congratulations on the very nice results. I have a question and I guess, a comment. So my question is you announced an ADR -- sponsored ADR program, and you already have an unsponsored ADR program and the shares trade in Canada and also Australia. And I know you talk all the time about increasing liquidity. And I'm just curious whether basically having these 4 venues for where your shares are trading is actually fragmenting liquidity and not really increasing it. That's my first question. Nicolas Earner: Yes. Thanks, Daniel. How about I answer that and you can ask the second part if there was one. Yes, clearly, we took a fair bit of advice out of North America on this one. The clear expectation that we think will occur is that most people will go with the issuer-sponsored ADR because of the increased liquidity that will come there rather than the nonsponsored vision just because the liquidity will be less there. And what's really interesting is what we wanted to do, and it remains to be seen whether this is correct, right? But what we wanted to do was create a vehicle for particularly retail investors in North America to be able to access the stock with liquidity in a clear price point because there would appear to be, particularly as gold has such interest, quite a degree of people that are using that mode and method and who just don't access the TSX and the ASX. So we're watching with interest, and we certainly think that it's something that we should try in this market. Unknown Analyst: Okay. And 2 more, if you don't mind. You talked a lot -- no, no, recently, you mentioned your aspiration to get into the ASX 200. And I recall at the time of the merger with Mandalay, there was a lot of talk about what a wonderful thing it would be to join the ASX 300. But it doesn't seem like joining the ASX 300 has done anything. I mean I look at this Edison report and that shows how undervalued you are compared to your peers and so forth. So I just wonder whether aspiring to join the ASX 200 is just sort of a waste of energy. Nicolas Earner: I -- you've got me a little bit baffled there because -- and happy to get you all comment on in case I've misinterpreted what you said. So if you look at Alkane and Mandalay pre this, Alkane's typical turnover was AUD 1 million a day. And Mandalay's at one point was AUD 0.5 million and then it rose up to be similar. And then post the merger, we are typically AUD 8 million to AUD 9 million. Mandalay is AUD 1 million to AUD 1.5 million. And we have seen a lot of index funds enter our register. And then from the point that we stabilized at in share price of a nominal sort of AUD 1.10, we've seen a drive up to AUD 1.50 with a lot of buying come across in the 12 months. So certainly, the index inclusion appears to have helped the register, the buying the share price to support the visibility of it. And all our understanding is that the ASX 200 will further deepen that pool. Are you looking at information that I'm not looking at, so I've misinterpreted you. Unknown Analyst: No, I just -- I'm not looking at sort of liquidity or trading volume and so on. I'm just looking at the valuation of the company compared to what at least Edison considers your peers. And the stock has been -- remains quite undervalued. And I just wonder whether joining these indices really helps at all. Nicolas Earner: I think if we -- look, I think if we had not joined the indices, then we would be horrendously undervalued, not just undervalued. So if you look at some of the peers that we have, like if you take, for instance, Catalyst and Ora Banda, they have passed into the ASX 200, both with an uplift in buying that's coming from that. And so as to where all these things settle, I think the fundamental basis of our cash flow, our reasonably consistent production performance. Of course, that has to shine through. And the index inclusion should be something that simply flows from that. But there's certainly value in exposure to a very large volume of money in the Australian superannuation funds being an ASX 200 versus ASX 300. Unknown Analyst: Okay. Great. And then if you don't mind, one final thing. So you've built up this large cash pile here, and you talked about the uses. I'm curious what the priorities are. You've got this quite exciting Boda-Kaiser project, and I imagine that will potentially involve a lot of CapEx. Mandalay, as I remember, years ago, used to pay a dividend and some of these large gold companies that you aspire to emulate pay dividends. And then you talk about corporate development and so forth. I'm just curious if you could talk a little bit about your priorities. And just one final thing. This earn-in seems like a very clever deal. But it would seem to me that proving that Mandalay has been -- or is a great deal would go a long way towards convincing people that the next deal is going to be a good one. That's it for me. Nicolas Earner: Yes, sure thing. A couple of different things to unpack within that. So let me -- hopefully, and you can come back to me if I miss one of them, my apologies. So if we look at -- our analysis suggests that right now, we can create more value for our shareholders by delivering on production, reinvesting into the businesses to keep the costs low, expanding the resource base and then also inorganic growth where other businesses are undervalued. And so that's our view. Unknown Analyst: [indiscernible] more undervalued than you are. Nicolas Earner: Yes, of course, me. Unknown Analyst: Okay. Yes. I'm sorry, I interrupted. Nicolas Earner: Yes. No, no, it's not the interruption. It's the assumption that we go and pursue a business that's higher value than we are. Anyway, so -- so then when we look at dividends, if you look at our peers on the ASX, of the top 20 gold companies, about 5 or 6 pay dividends at present. So clearly, as a Board, we look at that each time we meet around dividend and capital allocation. At the moment, our view is that we will continue to look for those internal things to create shareholder value. And then clearly, if we don't see that and our cash balances rising, then we would look to return those to shareholders, yes. So the second part of what you said is we're referring to the Nagambie earn-in. I think the thing that is really key to understand there is that there's a 30-day right of first refusal that Southern Cross [ hold ] on a deal they did with Nagambie a long time ago. I couldn't give you the exact timing. So they may either elect to match that or not. In the event that they don't elect to match that, yes, we're pretty interested in really seeing if the potential that we think could exist there at the Nagambie deposit does because logically, it could absolutely either dovetail into the later years of Costerfield or in an ideal world, allow an expansion of that facility. All those things would need approval. Yes. And last but not least, you spoke about convincing people that the Mandalay deal has been a success in order to do it. Yes, I can't -- of course, I can't say what the parallel history would have been if we hadn't have done the deal. We don't know in this rising gold price environment. But certainly, -- as a combined entity, both of us have had more value realized in our stock and our price to NAV and all the other multiples than we were equivalently on our own. So it certainly appears successful in all of those metrics. And certainly, a share price that's been achieved for Alkane or Mandalay in reverse that just did not appear possible on a stand-alone basis. So certainly, that's the feedback I'm getting from the vast majority of share. Operator: [Operator Instructions] And at this moment, we will proceed with the written questions. Natalie over to you. Natalie Chapman: Thank you, Nadia. I'm heading off to the written questions. So for M&As, where is your focus from a geographic perspective? Do you see any opportunities to build on operations in Australia and Europe? Or are you looking in other regions? Nicolas Earner: Yes. Thank you. Australia, New Zealand, U.S., Canada, Scandinavia. Natalie Chapman: Awesome. Thank you. Mandalay was very excited about True Blue. Is that the highest potential target at Costerfield? Or do you see another target as a priority? Nicolas Earner: Yes. Good question in terms of -- it depends on the time frame that you're talking about. So Kendall and Brunswick South are the near-term targets that we're most excited about. But I don't see either of those containing 300,000, 400,000 ounces at the moment. They appear to be more incremental adding of 1 or 2 years production. So True Blue, we're more excited about from a longer-term perspective because indications are that we may be able to replicate the entire corridor length that we see all the way Augusta to Brunswick, all the old mines, which have pulled over 1 million ounces out at [indiscernible] in the past. So that's -- so time frame-wise, True Blue, yes, is a more exciting prospect for us. Natalie Chapman: What exploration target or opportunity within your existing portfolio most excites you? Nicolas Earner: I think again, it depends on which hat you want to put on. I'm most excited by the potential of discovering a swan -- like a similar Swan Zone type thing as seen at Fosterville, discovering a similar thing deep at Costerfield. But that is a very long-dated bet, but it is the most exciting because of how transformational is in that sheer volume of ounces that they had. Yes. Hopefully, I've answered that, but please write another question if I've misanswered your question. Natalie Chapman: We're halfway through quarter 3 and gold prices are higher than quarter 2. What visibility into quarter 3 results can you share with us at this stage? Nicolas Earner: Yes. So we're -- our full year guidance is on a 12-month basis is 160,000, 170,000 ounces. And on the half year, we were a bit over 80,000 ounces equivalent and just under the top end of that guidance. So we expect a quarter similar to the quarter we just had. So yes, we're very happy with where we're at. Natalie Chapman: When do you think you might be in a position to make a decision on processing expansion at Tomingley? Nicolas Earner: Yes. So I think people may have seen some of the subtlety in what I've described. So at the moment, we're achieving what we were hoping to achieve or had planned to achieve, sorry, with the plant expansion. We're achieving that with pre-crushing. We're probably -- we were hoping to add 450-odd thousand tonnes of extra throughput on the addition of about AUD 45 million capital expansion. And we thought that we would try a whole heap of other things given all the money that we've invested into the circuit. On fine grind and all that sort of stuff. And pre-crushing was one of the things that we considered. And at the moment, we're north of 1.3 million tonnes per annum and with a line of sight of 1.4 million tonnes per annum. So all things going smoothly, I think that we will continue to eke out really small throughput improvements of the existing Tomingley plant because chasing effectively, we'd be putting AUD 45 million in for 100,000 to 150,000 tonnes per annum, which is not quite the case. And we don't have the, in my view, the ore resources yet until we get another major, major discovery of the size of Roswell to warrant updating the plant to say, 2 million tonnes per annum or something. Hopefully, that makes it clear for people. Natalie Chapman: [Operator Instructions] I've got another question in here. Given your strong cash position and the high price of gold, has consideration been given to buying out your hedging position? Nicolas Earner: Yes. I mean, as you can imagine, we talk about this at each Board meeting. We talk about all the financial instruments that we have or could put in place. One of the other things we do is we talk a lot to our shareholder base about it. And the current view at present is to deliver into the hedges in accordance with the schedules that we publish now, quarterly reports. One of the reasons for this is we're in a very, very volatile gold price environment at the moment. And the feedback from a lot of our shareholders is that they wished to be the ones taking the gold risk that we were a known quantity themselves. So that's our current plan. Obviously, we continue to review that. And then even in some of the things with Daniel cash balance, all these other things are things that we take into account. But at the moment, if you're putting together a financial model, just assume that we are delivering into the hedge book. Natalie Chapman: Right. Excellent. We have no further questions. So I'll hand the call over to Nic for closing comments. Nicolas Earner: Great. Thanks, everyone. I appreciate you taking the time to join us today. And look, whilst as per one of the questions Nat just asked, look, we've had a successful year so far, and we really look forward to showing you more of this progress and showcasing for those of you in North America, getting people here in Australia to understand these assets more and reflecting more of the value that exists in these really strong cash flows into our share price. So look forward to our next call in a few months. And as always, reach out if you have any questions. Have a good day, everyone. Appreciate it. Cheers. Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.
Operator: Thank you for standing by, and welcome to the Westwood Holdings Group, Inc. Fourth Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press 11 on your telephone. If your question has been answered and you would like to remove yourself. As a reminder, today's program is being recorded. And now I would like to introduce your host for today's program, Jill Meyer, Corporate Security Secretary and Director of Fiduciary Services. Please go ahead. Thank you, and welcome to our Fourth Quarter 2025 Earnings Conference Call. Jill Meyer: The following discussion will include forward-looking statements that are subject to known and unknown risks, uncertainties, and other factors, which may cause actual results to be materially different from those contemplated by the forward-looking statements. Additional information concerning the factors that could cause such a difference is included in our press release issued earlier today as well as in our Form 10-Ks for the year ended 12/31/2025, that will be filed with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. You are cautioned not to place undue reliance on forward-looking statements. In addition, in accordance with SEC rules concerning non-GAAP financial measures, the reconciliation of our economic earnings and economic earnings per share to the most comparable GAAP measures is included at the end of our press release issued earlier today. On the call today, we have Brian Casey, our Chief Executive Officer, and Terry Forbes, our Chief Financial Officer. I will now turn the call over to Brian Casey. Brian Casey: Good afternoon, and thanks for joining Westwood Holdings Group, Inc.'s Fourth Quarter 2025 Earnings Call. I am looking forward to sharing our full-year results, key developments from the past quarter, and a look into what this year holds in store. First, here are some of last year's more significant milestones and achievements. Brian Casey: Our ETF franchise now exceeds $200,000,000 including our latest ETF, Enhanced Income Opportunity. In addition, MDST surpassed the $170,000,000 mark in AUM. We closed our second oversubscribed private equity fund, Westwood Energy Secondary Fund II, with more than $300,000,000 in commitments for the fund and two related co-investment funds. Our Managed Investment Solutions team secured its first institutional client, and we had strong full-year sales growth, $2,500,000,000 versus $2,100,000,000, up 20%. Many key equity indices posted new records last year, however, investors were pulled in different directions during the final quarter. The S&P 500 rose less than 3% but still ended the year up 18%. Despite economic headwinds, the U.S. economy did manage to record modest growth against the backdrop of consumer confidence remaining near all-time lows. The Federal Reserve cut short-term rates by 75 basis points from September through December, amid weakening labor market conditions. Signs of fatigue in the long-running bull market in tech stocks started to appear, as investors shifted their focus from the promise of AI towards more tangible near-term financial results. Bond markets generated positive total returns for the year supported by declining yields. Several of our investment strategies demonstrated resilience and competitive positioning across multiple time horizons and asset classes. Within U.S. Value, our SMID Cap strategy is performing well, with top-third rankings over three-year rolling periods. Solid results like these are founded upon our disciplined approach to identifying high-quality businesses trading at attractive valuations. Our Multi-Asset strategies are demonstrating exceptional long-term strength. Credit Opportunities has delivered outstanding results, ranking in the top decile among peers over three- and five-year periods. Income Opportunity is providing attractive returns, posting competitive peer rankings while delivering consistent income to investors. Our Salient energy and real estate strategies continue to deliver competitive long-term performance. Real Estate Income ranks in the top third over rolling three years, and our MLP and Midstream strategies have provided strong absolute returns in an environment favorable to energy infrastructure. Looking ahead, we anticipate continued market uncertainty driven by a variety of economic indicators and policy developments. No matter what happens, we believe our focus on high-quality businesses with strong fundamentals positions us well for the future. As investors broaden their focus beyond mega-cap technology stocks, high-quality companies with low levels of debt, high returns on invested capital, and strong management teams should be viewed very favorably. Against the backdrop of elevated market valuations, good companies trading at a discount to market or peers should prove resilient and offer attractive shareholder returns. Turning to distribution, our team delivered exceptional results last year, demonstrating the appeal of our product lineup and the effectiveness of our distribution strategy. The institutional channel achieved gross sales growth of 36% versus the previous year. This strong performance reflected our ability to gain traction with institutional investors across multiple strategies, particularly in SMID Cap and Small Cap Value. Several significant pipeline opportunities advanced last quarter, including defined contribution plans with major national consultants. We are very pleased with the progress being made by our Managed Investment Solutions team, are holding constructive conversations with clients and prospects regarding customized solutions, and we look forward to additional wins early this year. The infrastructure and liquid real asset strategies we launched last year have attracted strong interest from institutional investors seeking alternatives to traditional equity and fixed income allocations. The intermediary distribution team also achieved outstanding results, posting full-year gross sales growth of 32% versus 2024. This was our strongest annual intermediary performance in several years thanks to the successful execution of our intermediary distribution strategy. Particular strength was demonstrated in our energy and real asset products, which resonated with advisers and clients seeking income and diversification. Our MDST ETF has now achieved the asset scale required for approval on major broker-dealer platforms, and we expect new platform additions this year. The expanding breadth of our offerings, spanning traditional active strategies, income-focused solutions, tactical approaches, and alternative investments, positions us well to meet diverse client needs. We continue to invest in our distribution capabilities, and the momentum we have built provides a strong runway for growth in 2026. Throughout last year, we conducted a deep dive within our wealth to better align our services with the direction of the industry and how we are uniquely positioned to grow our business. Multigenerational families are looking for integrated, high-touch guidance that spans investments, planning, trust, and legacy needs, all of which represent a great long-term opportunity for Westwood Holdings Group, Inc. given the strength of our trust company and our long history serving complex Texas families. As a multifamily office with corporate trustee powers, we are well equipped to understand a family's complete picture and can step in seamlessly when named as executor or successor trustee. Our objective approach, dedicated teams, long-term continuity, and rigorous regulatory oversight combine to provide a level of professionalism that is difficult, if not impossible, for individual fiduciaries to match, while our deep expertise in trust administration allows us to manage complex requirements efficiently and consistently. Throughout the year, we clarified our purpose and vision for our wealth division, rethought our service model, and began transitioning to a more coordinated, team-based delivery structure designed to enhance consistency and scalability. We completed a comprehensive assessment of our competitive position and identified opportunities to strengthen long-term economics by attracting new ultra-high-net-worth families, deepening existing client relationships, and aligning pricing with market standards. This marks the early phase of a disciplined multiyear evolution of our wealth division, and we remain focused on enhancing the client experience, improving scalability, and positioning our business for sustainable long-term growth that benefits clients, employees, and shareholders. Beyond our core business performance, we achieved several significant milestones last quarter that strengthen our competitive position and expand our market opportunities. We launched the Westwood Enhanced Income Opportunity ETF, ticker YLDW, late in the quarter. This offering expands our income-focused ETF lineup; initial acceptance has been strong. Our flagship MDST ETF, Enhanced Midstream Income, surpassed $170,000,000 in AUM, validating our differentiated midstream strategy and opening doors to additional platform approvals. With the addition of YLDW, our total ETF franchise now exceeds $200,000,000 in assets, marking an important milestone for Westwood Holdings Group, Inc. We closed Westwood Energy Secondaries Fund II on December 31, with over $300,000,000 in capital commitments for the fund and two related co-investment funds, double our initial goal. The second fund builds on the success of our inaugural energy secondary strategy and underscores our ability to raise capital in specialized alternative investment strategies. WES II allows institutional investors to access secondary market opportunities in the energy sector, complementing our suite of energy investment solutions. Since launching WES I, our initial flagship energy secondary fund in 2023, we have raised nearly $350,000,000 and have invested over $250,000,000 across both Energy Secondaries flagship funds and three co-investment funds. As we turn the page on last year and look ahead to this year, we remain confident in our strategic positioning and value proposition. Our diverse range of strategies, expanding ETF platform, and robust distribution momentum position us for continued growth. Our achievements last quarter—the launch of YLDW, the milestone success of MDST, closing our second private equity fund, and outstanding sales growth across institutional and intermediary channels—demonstrate our ability to innovate and execute while maintaining our core strengths in active management. With assets under management of $17,400,000,000, strong competitive performance across multiple strategies, and a proven ability to deliver results across market cycles, we are well positioned to capitalize on opportunities as market conditions shift towards active, value-oriented investment approaches. We are committed to delivering value to clients via high-quality investment solutions and to creating long-term value for shareholders. Thank you for your continued support and confidence in Westwood Holdings Group, Inc. I will now turn the call over to our CFO, Terry Forbes. Terry Forbes: Thanks, Brian, and good afternoon, everyone. Today, we reported total revenues of $27,100,000 for the 2025 compared to $24,300,000 in the third quarter and $25,600,000 in the prior year's fourth quarter. Revenues increased from the third quarter due to significant investor interest in our exchange-traded funds and private energy secondaries funds, along with higher performance fees. Revenues increased from 2024's fourth quarter primarily due to higher average assets under management and higher revenues from our ETFs and private energy secondaries funds, partially offset by lower performance fees. For fiscal 2025, total revenues of $97,800,000 compared Terry Forbes: to $94,700,000 in 2024 driven by higher average assets under management and higher revenues from our ETFs and private energy secondary funds. Our fourth quarter income of $1,900,000, or $0.21 per share, compared to the third quarter's $3,700,000, or $0.41 per share, due to higher performance-related incentive compensation in the fourth quarter and unrealized appreciation on strategic private investment in the third quarter, offset by higher revenues. Non-GAAP economic earnings were $3,300,000, or $0.36 per share in the current quarter, versus $5,700,000, or $0.64 per share, in the third quarter. Our fourth quarter income of $1,900,000, or $0.21 per share, compared to the prior year's fourth quarter income of $2,100,000, or $0.24 per share, as a result of higher revenues and the impact in 2024 of changes in the fair value of contingent consideration, offset by higher performance-related incentive compensation expenses and additional professional services costs. Economic earnings were $3,300,000, or $0.36 per share, compared to $3,400,000, or $0.39 per share, in 2024. Our 2025 income was $7,100,000 compared to 2024's $2,200,000 on higher revenues, unrealized appreciation on strategic private investments, and the impact in 2024 of changes in the fair value of contingent consideration, offset by higher professional service and information technology costs. Economic earnings for the year were $14,300,000, or $1.61 per share, compared with $7,000,000, or $0.82 per share, in 2024. Firm-wide assets under management and advisement totaled $17,400,000,000 at quarter end, consisting of assets under management of $16,500,000,000 and assets under advisement of $900,000,000. Assets under management consisted of institutional assets of $8,300,000,000, or 50% of the total, wealth management assets of $4,300,000,000, or 26% of the total, and mutual fund assets of $3,900,000,000, or 24% of the total. Over the year, our assets under management experienced net outflows of $1,000,000,000 and market appreciation of $1,000,000,000, and our assets under advisement experienced net outflows of $18,000,000. Our financial position continues to be very solid, with cash and liquid investments at quarter end totaling $44,100,000 and a debt-free balance sheet. I am happy to announce that our Board of Directors approved a regular cash dividend of $0.15 per common share, payable on 04/01/2026 to stockholders of record on 03/03/2026. That brings our prepared comments to a close. We encourage you to review our investor presentation we have posted on our website reflecting quarterly highlights as well as a discussion of our business, product development, and longer-term trends, revenues, and earnings. We thank you for your interest in our company. We will now open for questions. Operator: Certainly. 11 on your telephone. If your question has been answered, and you would like to remove yourself from the queue, simply press 11 again. We will pause as we compile the queue. This does conclude the question-and-answer of today's program. I would like to hand the program back to Brian Casey for any further remarks. Brian Casey: Well, you, Jonathan. In closing, we felt like we had a really good year in 2025, but we want to acknowledge the outflows in the fourth quarter, which were disappointing. I do want to make a few comments on those. More than 80% of the outflows were from our Large Cap Value product, and that product has really struggled in recent years against a very narrow, low-quality market environment. If you know Westwood Holdings Group, Inc., you know that we are always seeking high-quality companies that are improving, that are mispriced, and that is not what the market has wanted in the last couple of years. So most of those Large Cap outflows, in fact, more than 80% of those flows were from one sub-advisory client that carries a fee of less than 20 basis points. So while it is a big number going out the door, it is less impact on revenue. We did have a new client come in yesterday with $200,000,000, and they will add another $100,000,000 to $200,000,000 over the next couple of months. We also have a new defined contribution plan that will fund on the last day of the first quarter in our SMID product for $450,000,000, and that will take our SMID AUM very close to the $2,000,000,000 threshold AUM level. Our pipeline looks great. We have, you know, we reached another new threshold last night where MDST, our Midstream Enhanced Energy Income fund, crossed the $200,000,000 threshold. We are in the process of due diligence to onboard MDST under one of the largest wirehouses, which will significantly expand our opportunity set. So we are very bullish on the ETF that we started a couple of years ago. So appreciate your time today. I hope everybody enjoys a long weekend. Please visit our website, westwoodgroup.com, if you have any questions. Thank you. Operator: You, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
Operator: Welcome to the Eutelsat Half Year 2025-2026 Results Presentation. [Operator Instructions] Now I will hand the conference over to the speaker, Jean-François Fallacher, Chief Executive Officer; and Sébastien Rouge, Chief Financial Officer. Please go ahead. Jean-François Fallacher: Hello. Good morning, everyone, and thank you for joining us today. I am Jean-François Fallacher, CEO of Eutelsat. And I am joined on this call by Sébastien Rouge, our new CFO. So before getting into the details, a quick recap of the highlights of the first semester, which has been truly pivotal for Eutelsat. In terms of performance, first half operating verticals were almost stable. Within this, LEO revenues were up nearly 60%, reflecting the ongoing strong commercial dynamic and driving rise in revenues in all 3 connectivity verticals. The adjusted EBITDA margin is just over 52%. It's reflecting the impact of sanction-related loss of video revenues as well as the effect of the product mix with LEO revenues that are still during their ramp-up stage. As a result of the first half year performance, we are able to confirm our full year financial objectives. We made great strides in our refinancing plan with the successful completion of our EUR 1.5 billion capital raise in December, leading to credit rating upgrades from Moody's and Fitch. Subsequently, we have recently announced that we obtained almost EUR 1 billion in expert credit agency financing. We have also secured operational continuity for the OneWeb constellation with the procurement of a total of 440 new LEO satellites with technology enhancements. Finally, the disposal of our passive ground segment asset has been halted. While disappointing, this has no impact on Eutelsat's ability to finance its strategic development plan. And I will come back to this later. Now let's have a quick look at the key financial data. Total revenues for the first half stood at EUR 592 million, stable on a like-for-like basis and down 2.4% reported. Revenues on the 4 operating verticals stood at EUR 574 million. They were down 0.6% on a like-for-like basis, excluding a EUR 20 million negative currency impact. As stated above, LEO revenues grew almost 60% to EUR 111 million and adjusted EBITDA was equating to a margin of 52.1% on a like-for-like basis. That means excluding currency and hedging effect, the EBITDA margin declined by 3.4 points. CapEx was at EUR 291.5 million, but clearly should not be extrapolated for the year as a whole. We will come back to this. Let's now have a look at our H1 performance in more depth. Noting please that all commentary from now on will be on a like-for-like basis, [indiscernible] at a constant currency rate. Let's have a look at our revenues by vertical. I remind they stood in total at EUR 592 million for the last semester. So revenues of the 4 operating verticals excluding other revenues amounted to EUR 574 million. Video is representing 46% of the revenues, EUR 266 million, down 12%. And I am pleased now to note that all the connectivity verticals delivered growth this semester. Fixed connectivity, representing 23% of our revenue was up 17%. Government Services representing 17% of the revenues was up 8% and mobility, representing 13% of the revenues, up 8.5%. Our other revenues amounted to EUR 18 million. This is reflecting the revenue recognition from IRIS2 project. As you know, we are involved in the consortium system development -- in the consortium system development prime. And these other revenues are also including EUR 8 million positive impact from hedging operations. Let's now zoom in the Video business unit -- in the Video segment. First half year revenues were down by 12.3% to EUR 260 million. They are reflecting the impact of further sanctions imposed on Russia. This is amounting to circa EUR 16 million for the full year '25-'26 as a whole, which came on top of the underlying trend in this mature business. Second quarter revenues stood at EUR 133 million, down by 14.1% year-on-year, but broadly stable quarter-on-quarter, as you can see there. And on the commercial front, we had good news. We announced several renewals with quite long-standing partners at very key orbital positions, notably beIN, the media company, for distribution of DTH services across the MENA regions. This is reaffirming the strategic value of our 7/8-degree West video neighborhood. And in Europe, we were very pleased to announce the renewal of the deal with Polsat. We renewed a multiyear multi-transponder contract at a very flagship HOTBIRD Video neighborhood. Let's now take a closer look at the connectivity. Our total connectivity revenues for the first half stood at EUR 307 million, up by 11.8%. Within this mix, GEO revenues stood at EUR 196.8 million, which is a decline of 4.5%. And as you can see, obviously, this decline was more than offset by the strong ongoing momentum in GEO revenues, which rose 60% up to EUR 110.5 million. And second quarter revenues stood by EUR 157.9 million, up by 15% year-on-year and by 5.8% quarter-on-quarter. LEO revenues up 50% at 56.4%, while GEO revenues were stable, as you can see there at EUR 101.5 million. Let's now zoom in each vertical in more detail. I will start with the fixed connectivity vertical. The first half fixed connectivity revenues, they stood at EUR 132 million, up by 17.2% year-on-year. This is clearly reflecting the continued growth on LEO-enabled connectivity solution. As well, we have a one-off impact, and this is resulting for the upfront recognition of revenues relating to a capacity contract with a GEO customer for an amount of circa EUR 7 million. The second quarter revenues stood at EUR 70 million, up EUR 18.3 million year-on-year. On the commercial front, Eutelsat reinforced its presence in Africa with a distribution agreement with MSTelcom in Angola for LEO services for businesses located in hard-to-reach regions as well as new multi-million, multi-year agreement with Paratus for services across Southern Africa. Let's now have a look at the Government Services segment. Revenue stood at EUR 99 million, up 7.7% year-on-year. They are reflecting again here the growth of LEO-enabled solutions, notably with a number of services delivered in Ukraine as well as increased demand from other governments. Second quarter revenue stood at EUR 46 million, down by 2.2% year-on-year. This is mainly reflecting the softer revenues coming from the U.S. as well as lower terminal sales in Q2 than Q1. Key highlights of the past semester, including the successful partnership with Airtel to support the Indian Army's relief operation with LEO connectivity. And we had also some activities in flood impacting Sri Lanka. Elsewhere, Eutelsat obtained approval for the first military-grade manpack terminal with our OneWeb network. This is a terminal for the armed forces developed in partnership with Intellian Technologies. It's now -- this terminal is now available to government and defense customers that will need a portable, resilient connectivity solutions. Now let's have a look at the mobility segment. Revenues stood there at EUR 77 million, up 8.5% year-on-year, reflecting the activation of contracts with aero mobility customers. We now have almost 600 certified antennas installation on planes, out of backlog of over 1,500 aircraft compared to what we had last year, 100 certified antennas and a backlog of 1,000 antenna. So you see the great evolution of our backlog and a number of antennas, which are actually active on planes. This impact is even more visible on the second quarter, where revenue stood at EUR 42 million, up to 34% year-on-year and 21% quarter-on-quarter. On the commercial front, we are happy also to pinpoint the multi-year deal we've inked with CMA CGM Group on maritime. This is a deal we closed with Marlink to integrate OneWeb into the connectivity solutions of CMA CGM global maritime fleet. Elsewhere, Eutelsat's OneWeb LEO network will provide passenger WiFi services on railways. We have signed a deal with Transgabon in partnership with Airtel Gabon. This is also reinforcing the Eutelsat Airtel partnership. And this is the start of business we are going to do in rail connectivity across Africa. Let's now if you wish to have a look at the backlog. The backlog stood at EUR 3.4 billion on end of December '25 versus EUR 3.7 billion earlier. This backlog of EUR 3.4 billion is equivalent to 2.7x the 2024-'25 revenues. And for you to know, connectivity represents 59% of the total backlog versus 56% a year ago. This evolution is reflecting the rapidly increasing weight of LEO business in the mix. And as a reminder, these LEO business contracts tend to be shorter. Moreover, only the success of the take-or-pay contracts, the LEO take-or-pay contracts are -- while what we call pay-as-you-go contracts are not reflected in the backlog at all. As a result, while it remains a useful indicator, the evolution of the backlog is a bit less correlated -- is now less correlated with future revenue trends than it used to be in the past. Let's now turn to the financial performance, and I will pass the floor to Sébastien. Sébastien Rouge: Thank you, Jean-François. Good morning, everybody. Revenues were covered in detail. So let's now jump to group profitability. Adjusted EBITDA stood at EUR 308 million for the half year ended on the 31st of December compared to EUR 335 million a year earlier, so down by 8%. On a like-for-like basis, it's down 6.1%. Operating costs stood at EUR 283 million, up EUR 12 million and well contained in spite of the large growth of the LEO business. They reflected mostly an increase in the -- related cost of goods sold. The adjusted EBITDA margin stood at 52.1% reported versus 55.2% a year earlier, so down 3.1 points. It is a consequence of the impact of sanction-related losses on Video revenue as well as the effect of product mix within LEO revenues during the ramp-up stage. If we look now at the rest of the P&L, the net result was a loss of EUR 236 million, largely reduced from the loss of EUR 873 million a year earlier. This reflected limited other operating losses at EUR 69.6 million as compared to EUR 691 million last year. As a reminder, in the first half of '24-'25, we included goodwill and satellite impairments totaling EUR 650 million. You can note we have also lower D&A at EUR 357 million versus EUR 434 million last year, reflecting notably the end of the amortization of certain intangible assets. As well, we have the positive effect from the securing of operational continuity of the LEO constellation, and that follows the procurement of the additional 340 satellites. Finally, we have a favorable currency impact in D&A. Net financial cost of EUR 95 million versus EUR 99 million last year, notably reflecting lower interest following the full repayment of the 2025 bond. And finally, corporate tax of EUR 21 million versus EUR 7.6 million last year. That's an effective tax rate of 10%. If we move now to our CapEx plan. Gross CapEx amounted to EUR 292 million as compared to EUR 175 million a year earlier. This reflects the timing of key milestones in LEO investment programs. I will remind, it should not be extrapolated for the full year since most of the investment will be deployed in the second half. Nevertheless, because of the phasing of LEO programs as well as an increased vigilance on our GEO spend, CapEx for the full year is now expected around EUR 900 million, while we announced EUR 1 billion to EUR 1.1 billion previously. Going forward, CapEx will remain focused on LEO activities in line with the group's strategic vision, primarily for the OneWeb follow-on program. GEO CapEx will be limited to ensuring service continuity. In this context, the group has canceled the procurement of the so-called Flexsat Americas following a review of its business case, resulting in future CapEx savings over EUR 100 million. Now in terms of financing structure of Eutelsat. The most important thing, on December 31, '25, net debt stood at EUR 1.3 billion, down EUR 1.3 billion as well versus the end of June '25. That is clearly reflecting the net proceeds from the capital increase. As a result, the net debt to adjusted EBITDA ratio stood at 2x as compared to 3.9x at the end of June '25. It will not stay at this level up to the end of the year because of the phasing of CapEx, which is skewed to the second half. The average cost of debt after hedging stood at 4.2%. It was 4.8% in the first half of last year. Weighted average maturity of the group's debt is 2.3 years as compared to 3 years at the end of December '24. We enjoy a great level of liquidity with undrawn credit lines and cash, which stood in total around EUR 2.1 billion. On this good note, now back to Jean-François to comment the outlook and next steps. Jean-François Fallacher: Thank you, Sébastien. On the first half of 2025-'26, clearly, it's been a crucial semester for Eutelsat, most notably with the successful execution of the foundation of the refinancing plan with the success of the EUR 1.5 billion capital raise, that was clearly fully supported by our core shareholders and followed by credit rating upgrades from Moody's, up two notches to Ba3; and Fitch up three notches to BB with stable outlook. Subsequently, as announced, earlier on this, we have secured almost EUR 1 billion Export Credit Agency financing. And our intention is clearly to build on these strongly improved financial fundamentals to undertake the refinancing of our bonds in order to complete the strategic refinancing plan. In parallel, now I'm going to the next slide. We are taking steps. We have taken steps -- important steps to secure the operational continuity of our LEO constellation. We've procured 341 web satellites on top of the previous order of 100 bringing the total number of new satellites to 440. The availability of these satellites will assure full operational continuity for customers of the constellation that will be progressively replacing early batches of satellites that were coming to an end of life. And moreover, we are having the possibility of taking on board hosted payloads on some of these satellites, opening the possibility for Eutelsat OneWeb to a new type of business development. Furthermore, we diversified our options for access to space. We have signed a multi-launch agreement for the future launch of LEO satellites starting in 2027 with France launcher MaiaSpace. Before wrapping up, a quick word on the recent announcement on the transaction to dispose of the passive ground segment. At the end of January, we announced that this transaction will not proceed as all the condition precedents have not been satisfied. In that case, the condition precedent was the approval of the French state. While disappointing the noncompletion of the transaction does not affect our ability to fund the capital expenditure related to our strategic growth trajectory following the refinancing measures that we have undertaken since this announcement. It has no effect on our financial objectives for the current year with the exception of the net debt to EBITDA, which is now expected to stand at around 2.7x at the end of the year versus the 2.5x previously announced this project would have gone through. On the other hand, the effect on the EBITDA margin is positive to the tune up to roughly 5 points as clearly, we will not be paying the leases of circa EUR 75 million, EUR 80 million per annum that was planned to be paid to the acquirer. Let's now turn to our financial objectives. The first half performance was in line with expectations, enabling us to confirm our full year '25-'26 objectives. I'm reminding them now. Combined revenues of the 4 operating verticals in line with the levels of '24-'25 with LEO revenues growing by 50% year-on-year, and adjusted EBITDA margin expected slightly below the level of full year of '24-'25. Gross capital expenditure in full year '25-'26 initially expected in a range of EUR 1 billion to EUR 1.1 billion, now expected to around EUR 900 million. Following the capital increases in December '25 and taking into account the nondisposal of the Ground segment, net debt to EBITDA is estimated at circa 2.7 multiple by end of the year '25-'26, reflecting clearly a robust and self-funded financing structure. Looking further out, Eutelsat demonstrates, I believe, some of the most attractive growth and profitable prospects in the sector with revenues expected in a range between EUR 1.5 billion and EUR 1.7 billion in the end of the full year '28-'29, supported by the strong momentum of LEO revenues, which are significantly outperforming the market. Our operating leverage is expecting to drive to a mid- to high single-digit percentage points of improvement in the EBITDA margin, resulting in a margin of around 65% by '28-'29. In the long term, post full year '28-'29, the B2B connectivity market is expected to pursue its growth, clearly with a double-digit rate driven by the LEO market expansion. So a few words to sum up. First half revenues once again confirmed the significant momentum in LEO revenues. Our financial situation is significantly reinforced following the capital raise of EUR 1.5 billion and the attention of the EUR 1 billion ECF funding and the operational continuity of OneWeb constellation well assured with the procurement of further 440 LEO satellites. So now with both financing secured and operational continuity assured, we can look forward with confidence as we focus on our growth strategy based on the development of our LEO business. I'm thanking you very much for your attention, and we are now ready to take your questions. Operator: [Operator Instructions] The next question comes from Aleksander Peterc from Bernstein. Aleksander Peterc: I just have a first a couple on connectivity. Do you expect government to bounce back? We had a bit of a weaker-than-expected revenue in the reported quarter. So I was wondering if this is just due to one-off installation effects and so on. And conversely, on aviation, do you see the strong traction there continuing given your strong backlog numbers and installed planes numbers that you disclosed in the report? So should we be a bit more bold in our estimates for this vertical going forward? And then secondly, on your debt, do you plan a bond issuance soon? The bond issuance conditions your access to the ECA financing? Is that a near-term event? And once you complete that and you have access to the ECA EUR 1 billion, do you think you have a credible path to investment grade in the medium term? Joanna Darlington: Alex, it's Joa on the line. So I'll take your first question, and then I'll pass the other questions on to the others. So you're right, there's a slight slowdown in Q2 on government services. I think that the first thing to remember is that in Q4 of last year and Q1 of this year, there was quite a high level of equipment sales in the mix, and this obviously reflects the very strong momentum that we saw in government services throughout financial or calendar year 2025. The fact is that, that mix has been slightly different in the second quarter. But I think I would say 2 things. The first thing is that the -- it's absolutely a good signal to have terminal sales in the mix because obviously, you need to install the terminals so that you can then get the service revenues going. And the other thing I would say is these are long-term businesses. So I wouldn't extrapolate a trend based on the performance of one quarter to another. I think on your second question, I mean, yes, obviously, we have been making very strong progress on aviation. You can see that the number of installations has gone up as has the backlog of planes. As a reminder, all of these customers are serviced by our distributors, not directly by us. So this means that the distributors who are Intelsat, Gogo, I mean, obviously, they're Panasonic, they're getting momentum in terms of selling the OneWeb service. So yes, it's a positive sign. We knew that once the kind of we got to a certain critical level of global coverage, then it would unblock the pipeline for Aero, and this is what you're beginning to see. I mean how you adjust your forecast is up to you. I would highlight that for the year as a whole, we are not changing our revenue forecast for the group. And I think your third question about the bond issuance, maybe Sébastien wants to take that. Sébastien Rouge: Look, I think you're right. The last step of the full refinancing of the group after the capital increase, renegotiation with the banks and the setup of the ECA loan is actually to issue some bonds to make sure that we refinance some of the maturities that come in the next years. The only thing we can say is that it's clearly on the radar, and we're in preparation mode. Whenever we are ready, we'll announce that to the market. As far as investment grade is concerned, I had the first interaction with our rating agencies. Before we anchor ourselves completely in investment grade, I think there are a few steps that have to be followed, in particular, phasing and the way IRIS2 will be financed. I think we first have to answer to this question before we entertain a complete clarity vis-a-vis the rating agencies. Aleksander Peterc: Can I just have a very quick follow-up? You have one expensive bond at 9.75%. Would that be a candidate for an early redemption? Sébastien Rouge: Yes, we are looking at this one in particular with -- in the foreseeable future, yes. Operator: The next question comes from Roshan Ranjit from Deutsche Bank. Roshan Ranjit: I have 3 questions, please and I guess, perhaps related to the first one around government. Interesting that you have canceled the Flexsat Americas satellite. I was just wondering what the kind of reasoning behind that is. If I remember correctly, that satellite was clearly directed over the Americas for activity and government business. So are you perhaps seeing less of a U.S. kind of demand? Clearly, you are seeing strong pickup in Europe. But is there a bit of a softening, as you say, the U.S. side, please? And just added to that, if you could give us -- remind us of the mix of U.S. DoD revenues within your government vertical, that would be helpful. The second question is on video. And clearly, the headwinds from the Russian sanctions still impact it. But if I adjust for that on my calculations, I think high single digit, perhaps very low kind of double-digit underlying decline in video. Your previous message was kind of a mid-single-digit decline. So should we think the new normal is kind of high single digit for the video business? And lastly, could you just give us a quick update on IRIS2? I understand that we're supposed to be getting a kind of this rendezvous point in the coming weeks to kind of finalize the numbers and get the ultimate go ahead. Is that still the case? Jean-François Fallacher: Maybe I will take -- thank you for your questions. On the Flexsat Americas, I mean, the decision is not linked to the U.S. or to the continent itself, the U.S. continent itself. Now the decision we have taken is linked to the fact that we didn't see a viable business case or at least the return was going much further down the years, 2030s with the Flexsat Americas, simply linked to the fact that we see more LEO constellations coming, and we thought, basically, we would not have a flying business case anymore if I may say so. And that was the main reason why we decided to cancel now on an amicable basis this -- the construction of this GEO satellite. So this is obviously going to avoid a lot of CapEx to us in the very short term for a business case that was more and more shaky. So that's the main reason of this decision. Maybe I will take the question on the IRIS2, and I will let Joanna tell you a few words about -- on the video and how we see the evolution of our video business. Keep in mind always that on the video business, of course, we can talk about trends, but we have long-term big contracts with a number of different parties. So every year is a bit different. So it's a bit difficult to talk about trends, but I will let Joanna say more on that. On IRIS2, where are we? So we are, as you know, one of the key, let's say, players in the consortium, SpaceRISE consortium together with SES and Hispasat that have won this concession from Europe. We've been working the full year 2025, calendar year 2025 with actually suppliers and the supply chain in order to solidify the constellation we want to build. We are now entering a so-called -- on level 1 with European Commission. And this semester will be key because this is the moment where we will actually finalize our commitments. I'm talking about the SpaceRISE consortium towards Europe to actually build this constellation, this European constellation further. So we are having a very important semester now in this project. So stay tuned. Maybe Joanna, a few words on the video. Joanna Darlington: Yes. So I think -- thanks, Jean-François. So on video, not really a lot more to say. You're right that this year, obviously, is affected by Russia. And I mean, technically, if you remove Russia and recalculate, yes, it gives you a decline, which is a bit higher than mid-single digits. But as you know, because you've been covering the sector for a long time, it can be quite lumpy based on renewals. So again, I wouldn't necessarily extrapolate that into a long-term trend. I think we can probably say that what we've been seeing in the last year or so is a bit higher than mid-single digit underlying. But -- so your other question, I think, was the mix of U.S. DoD within government. It's now less than 50%, and we expect it to continue to decline as we build up with other governments and obviously, notably the framework agreement with the French DoD, but not only. Operator: The next question comes from Ben Rickett from New Street Research. Ben Rickett: I had 2 questions, please. Firstly, in the context of your Flexsat Americas cancellation, I'm just wondering how you think about the long-term viability of your GEO constellation. Do you think you will ever launch a GEO satellite again? And related to that, what level of GEO CapEx should we be expecting going forward? And then second question, it seems increasingly likely that Germany is going to build its own LEO constellation for their military. I don't know how much interaction you've had with the German government, but I'd be interested in your perspective in why Germany is doing this rather than using the IRIS2 constellation. Are there technical limitations with IRIS2? Or are there other factors? Jean-François Fallacher: Thanks very much for your 2 questions. On the GEO satellites in your question, will we ever build new GEO satellites in the future? So first of all, we have one project, one GEO satellite project still live, new GEO satellite with -- together in partnership with Thaicom, so which is a satellite that will fly over Asia. It's a connectivity satellite. So this one, we are feeling very confident, and we are really happy to keep it. We see the business plan still extremely valid over that region. Let's remind that when we look at our fleet of 34 GEO satellites, we have a big number of video GEO satellites. So these satellites have a long life duration. I believe in the future, we will have to invest in new GEO satellites for video because we have a number of regions where actually video is still -- the video business is still going very well. I was just saying, we are proud to have re-signed an important contract with Polsat, which is 1 of our 2 large customers in Poland. So there are a number of geographies where actually video is holding very well. I'm not even quoting Africa, where we have Canal+, MultiChoice as big customers. MENA, where you have seen we have renewed the contract with beIN. Our 7, 8 West position is a very strong one over MENA. So some of these satellites will, at some point, come to an end of life, but that will be post 2035, more in the '35 -- 2035-2040 region. So probably in a few years, we will need to look at the evolution of our GEO satellites, take decisions. Not much I can say now because, I mean, these GEO satellites can be also moved from one place to another place. So all of this is basically going to be looked at carefully. In the very short term, I mean, in the foreseeable short term, there is no such project, but for sure, in the future, there will be additional investments in GEO satellite. That's the first question. The second question about the public announcements of Germany. So just to put back these things in their context, first of all, there are announcements. We are taking them, obviously, very seriously. There are announcements from the German Bundeswehr, so the German MoD wishing to build its own military-grade LEO constellation. Obviously, we are in touch with Germany at multiple level. The reading and the reason why this project came to see the light, I think, it should be more asked to the Germans. We have obviously our ideas. One of them could be that they were expecting a very late arrival of IRIS2. And believe me, we are working very hard to have IRIS2 coming and becoming live in 2030 as was initially explained. So that's the only thing that I want to say. I take the opportunity that you are all here to say that what I'm advocating, we had a press conference this morning, and it's not the first time I'm saying it. Basically, personally, I believe that this is one of the pitfalls or one of the traps that Europe could have, is to fragment and that each country. And we understand that Europe is 27 countries, with 20 sovereign countries -- 27 sovereign countries, and there is always the temptation to build your own national object. But looking at the size and the complexity of building a LEO constellation, I remind, OneWeb, $7 billion invested since the beginning of the project in 2015, 7 years before OneWeb became really operational, and we could start to sell services over this constellation. So I believe, for Europe, that would be a trap, that would be a pity that Europe would fragment and that some of the countries would build their own constellation. I mean nonetheless, obviously, we are respecting the sovereignty of Germany and whatever decision they will take, but we are clearly advocating and trying to convince the Germans not to go that way. Operator: [Operator Instructions] The next question comes from Stéphane Beyazian from ODDO BHF. Stéphane Beyazian: Just a follow-up on the discussion about Germany, and perhaps I could add Italy as well. I mean if these 2 countries were to decide to build their own constellation, I would suspect that this probably changes your guidance for revenues coming from IRIS2 and possibly the return on investment. So yes, I was just wondering to what extent these 2 countries are important in the calculations that have been made about future revenues coming from IRIS2. And second question, I was just wondering if -- obviously, without revealing anything that could be confidential. But is there any major or big contract tender that is ongoing and which is public? I was thinking about the SNCF, which I think is looking for a provider of connectivity. Any update there? I mean any other major contracts that could be coming up and that is publicly known? Jean-François Fallacher: So just on your first question, it's much too early to answer to this question, obviously, but just -- I mean, because, again, I'm insisting, I mean, these are announcements. There is nothing concrete at this stage. Takes very long time to build a constellation. Let's never forget that this constellation, whether it's ours, whether it's IRIS2, are worldwide constellations. Low orbit satellites are flying by construction all over the earth, meaning that the economic model of this constellation cannot be standing on just one region. The economic model of OneWeb, the economic model of this constellation are worldwide. Just a few numbers, they are facts. The French -- the turnover of Eutelsat in France, France represents 7% of our turnover. Full Europe represents 27%, out of my memory, of the total turnover of the group. So I mean, of course, I mean, Germany is an important country, no discussion. Italy is at the same -- I mean, evenly a very important country in Europe, no discussions. But again, I mean, the revenue expectations and the business case we are having post 2030 linked to IRIS2 are also based clearly on international revenues in many other countries than just European countries. I remind that, as we speak, OneWeb is opened and we can sell in 180 countries across the world, not to name maritime, not to name planes, aero. So again, too early to make any statements about that. And we are working extremely hard and very focused on the Eutelsat side on making IRIS2 a success. Your last question, SNCF. Yes, obviously, we are in discussions with SNCF. Much too early to say. I mean SNCF is still in the process of, let's say, preparing their RFP. They have announced it. I believe there will be an RFP somewhere this year on basically the equipment of the French trains. Allow me also to give you an update on our NEXUS contract. We had a bit of, let's say, late start of the revenues in this contract simply because, as you have probably seen, France was having difficulties to finalize the budget for the country. The good news is that this has been now finalized 2 weeks ago. So that will also allow the French MoD to really take actions now. We've been working very closely with them since the announce of this frame contract since summer last year. We have things in the pipe, and hopefully, we'll be able to make some announcements in the second semester that has already engaged because now that the French Army has a budget, I mean, they will be capable of taking some actions and taking -- sorry, and signing purchase orders basically, which is what we expect now. Stéphane Beyazian: And I have a third question. Do you think it's possible? Joanna Darlington: Yes. Stéphane Beyazian: My third question is do you see any area for possible diversification? I'm thinking about earth observation or data analytics. And I would stretch the question to something that is probably a little bit different and more CapEx intensive. There's been a lot of talks also about computing in space. Anything, any color you could provide on that? Jean-François Fallacher: Thank you for your question. It's an excellent question. The first -- so we are not going to go into space observation. This is too far from our current business, although, I mean, it's -- actually, I understand why you think about that. There are 2 things we could quote now: one -- the first one because this is very concrete and this is very material. This is hosted payloads. In the satellites we have purchased to Airbus, 340 satellites, we have actually built an option on these satellites to embark what we call hosted payloads. So this is some, let's say, physical space we have on these satellites. Well, for those of you in the call, which are not familiar, I mean, the size of this OneWeb satellites are the size of, let's say, a big refrigerator or a big washing machine, something like that. We have actually some space that allows us to take an additional payload. So -- and what we would provide to these payload is basically electricity coming from our solar panels and batteries and a little bit of connectivity so that we could have people indeed doing earth observation or some kind of monitoring or whatever payload, scientific payload, military payloads. We can plug them in the space, in our satellite and take them with us in space and fly them with us. So these are -- this is really a new business in which we believe because this is win-win. This is, for us, the possibility to open a new stream of business. And this is for parties, which are having projects to put in space some specific missions and could not do it because it's very expensive to build a platform, to build a satellite. It's very expensive to launch a satellite. It's very expensive to maintain a satellite, to operate a satellite fleet. So that's a win-win. It's a new business line that we have opened with these 340 satellites that we are now marketing, selling to a number of space and new space actors across the globe. And I hope, without revealing anything, that we can have some announcements in the first semester. That's the first thing. The second thing, although it's very early to say, I mean, obviously, the deal with EQT that has been halted has been actually showing -- I mean, putting an eye on the ground assets of Eutelsat. These assets used to be seen as technical assets and operational assets in the past. Through the deal, we have prepared with EQT -- I mean, it became very clear that this asset could be a bit sweated. So we could derive some business from these assets. So clearly, now that the deal has been halted, these assets are still ours, obviously. We have started some kind of carve-out. So we are going to look, obviously, at the possibility to monetize a bit more these assets. So this is, I would say, the second direction. I want to pinpoint on what additional businesses could we -- aside our core business, could we start to launch basically. So -- and we have other projects in the cupboards, but I want to stay there for now because these projects are much too -- at a much too early phase. But we are seeing actually innovation and business development as also a key potential direction for the future. Stéphane Beyazian: And what about the orbital data centers? Anything on that? Or that's part of what you don't want to comment too much today? Jean-François Fallacher: No, we -- I mean, we've obviously seen and read like everyone the starting projects on this area. I mean, at this stage, we have no such projects at Eutelsat. Operator: There are no more questions at this time, so I hand the conference back to the speakers to conclude the call. Jean-François Fallacher: So thank you very much for your questions. Again, first half results confirming the momentum in LEO revenue. Our financial situation significantly reinforced capital raise of EUR 1.5 billion, ECA of EUR 1 billion. More to come as you understood today on the bond side, operational continuity of the constellation on the way with the order of 440 satellites. So now financing secured, operation continuity assured. We are looking forward to the future with confidence and we are focusing on our growth strategy based on the development of the OneWeb LEO constellation. Thank you very much, ladies and gentlemen. Operator: This concludes the call. You may now disconnect.
Operator: Greetings, and welcome to the Public Storage Fourth Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Brandon Reagan, Director of Investor Relations. Thank you. You may begin. Brandon Reagan: Hello, everyone, and thank you for joining us for our fourth quarter 2025 earnings call. I'm here with the Public Storage leadership team, Joe Russell, Tom Boyle and Joe Fisher. Before we begin, we want to remind you that certain matters discussed during this call may constitute forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to certain economic risks and uncertainties. All forward-looking statements speak only as of today, February 13, 2026, and we assume no obligation to update, revise or supplement statements that become untrue because of subsequent events. A reconciliation to GAAP of the non-GAAP financial measures we provide on this call is included in our earnings release. You can find our press release, supplement report, earnings presentation, of which we will refer to during this call, SEC reports and an audio replay of this conference call at our Investor Relations website, investors.publicstorage.com. We ask that you initially limit yourself to 2 questions. However, if you have any additional questions, please feel free to jump back into queue. With that, I'll turn the call over to Joe Russell. Joseph Russell: Thanks, Brandon. Good morning, and thank you for joining us. Today is a significant day for Public Storage. We're here to discuss our fourth quarter and full year results, but more importantly, we're unveiling PS4.0, the next era of Public Storage leadership and strategy. Tom, Joe and I will walk you through the full range of changes we're making to drive accelerated performance and long-term value creation. Then we'll open it up for your questions. Let me start with the leadership transitions and additions we announced yesterday. Succession planning has always been a top priority for our Board, and the objective has been crystal clear: place exceptional talent in every single leadership position at Public Storage. I'm pleased to say we've met that objective. On the management side, I'm thrilled to announce Tom Boyle's promotion to CEO and Trustee. Tom and I have been partners for nearly a decade since we both joined Public Storage in 2016. As you know, Tom has proven to be an exceptional leader in both his CFO and CIO roles with outstanding accomplishments across capital allocation, operations and financial strategy. Tom is more than ready to lead Public Storage into PS4.0. Our Board, management team and I could not be more confident in his skill, drive and vision. Congratulations, Tom. I'm also pleased to welcome Joe Fisher to the executive team as President and CFO. Joe's tenure at UDR as President, CFO and CIO, along with his stature in the REIT industry, made him an exceptional fit for our senior leadership team. Joe joins Public Storage at a great time and adds outstanding depth to our leadership ranks. Welcome, Joe. Tom will cover other significant leadership changes in a moment. At the Board level, Ron Havner is stepping down as Chairman after 15 years of iconic leadership and will continue as a Trustee. Ron is a legend in our industry and has been a tremendous mentor to me and the management team at Public Storage. I can't thank him enough for his dedication and insight. John Reyes, our former CFO and current Trustee, is retiring from the Board. John has guided Public Storage with nearly 3 decades of financial acumen and discipline. His impact on this company is immeasurable. And I'm excited to announce that Shankh Mitra, CEO of Welltower and an independent Public Storage Trustee for the last 5 years, will now take the role of Chairman. Shankh brings a proven track record of value creation, strategic clarity and leadership. We're excited to have him guide and mentor the management team in his new role. And as noted in our press release, Shankh Mitra and Ron Havner have purchased $25 million and $5 million, respectively, of out-of-the-money 10-year options with a 6-year lockout, demonstrating their commitment and confidence of what PS4.0 will deliver to shareholders. Now let's go to Page 4 of the earnings presentation and briefly step back to reflect on our financial performance and highlight how we've built the platform to drive value. From 2023 to 2025, Public Storage has led the sector in same-store revenue growth, NOI growth and NOI margins. Our core FFO per share growth leads the sector, and our total shareholder returns of 18.6% outperformed our peers over that time frame. Over the last 5 years, we built a platform designed to win. Here are a few significant accomplishments. First, deployment of the most robust omnichannel digital ecosystem in the industry, where over 85% of our customers engage with us using self-help tools, and we're infusing AI to optimize conversion and cost. Second, completion of the Property of Tomorrow program, a $600 million investment to rebrand and modernize all 3,400-plus properties with solar on nearly half of the portfolio by the end of 2026. Third, executing accretive growth at scale. We've invested over $12 billion expanding our portfolio by 763 assets, which are delivering outsized growth with more to come in the future. And fourth, inspiring the team through our winning culture, and also being named Best Place to Work for 4 consecutive years. I'm proud of what we've built, and I'm even more excited about what's next. On a personal note, as I retire from Public Storage, I want to thank the investor and analyst community for the opportunity to work with you over the last decade. I've enjoyed our relationship and the healthy respect we've developed. I've lived by a philosophy of telling it like it is, and I know Tom and the team will continue to communicate with you under that same doctrine. And to my Public Storage colleagues, thank you for the tenacity, fellowship and commitment to success. Public Storage has a strong and vibrant culture and has always been a team of winners. I've been humbled to lead you over the last 10 years. I could not be more excited to hand the reins over to Tom and the team and cheer them on as they take Public Storage into its next era. Now I'll pass the call over to Tom. H. Boyle: Thank you, Joe. I'm incredibly humbled and grateful for this opportunity to lead Public Storage forward. Joe, to you and the entire Board of Trustees, thank you for the trust you've placed in me. I'm energized about the next era. And Joe, on behalf of the entire Public Storage team, thank you for a decade of exceptional leadership. Your accomplishments resulted in sector-leading total shareholder returns over the past 1, 3 and 5 years. But beyond the numbers, your personal impact on the team from property managers, corporate teams in Dallas and Glendale, inspired us to be our best through every challenge and opportunity. Thank you for your mentorship. I also want to recognize Ron Havner and John Reyes at the Board level. The 3 of you have built a tremendous foundation for what's next. Now on Page 5, let's talk about where the industry is headed and where we're headed. The pandemic created noise, but the signal is clear: self-storage adoption has increased over the last decade. Generation Z, millennials and the 65-plus cohort are all participating. Today, 10% of the U.S. population uses storage, and that trajectory is building. Storage is an affordable space solution in a high cost of living environment. Competitive supply is slowing as new development becomes harder and more expensive. And while we haven't yet seen a national inflection point on rents, momentum is building in our strongest markets. The trends are there. The self-storage industry also remains highly fragmented. Generational transitions and continued institutionalization of ownership will create more trading activity from here on. Industry fundamentals have been some of the best in real estate longer term. And while they haven't been exciting for a few years, we're not waiting around. We're building the team and the platform for the future today. Moving to Page 6. We're unveiling PS4.0, the fourth era of public storage leadership, 53 years from our founding, by industry visionary Wayne Hughes. This is a generational transition and a strategic vision designed to drive accelerated performance. As Joe said, our objective is simple: build the best team to attack the opportunity ahead, and we have. We have new leaders joining the effort: Joe Fisher, President and CFO, here with us today, most recently with UDR. Ayash Basu, Chief Revenue and Marketing Officer, most recently with Boston Consulting Group. Gwen Montgomery, Chief Human Resources Officer, most recently with Gates Corp. And we have leaders stepping up: Natalia Johnson promoted to President, Chief Digital and Transformation Officer; Chris Sambar, promoted to President and Chief Operating Officer; and Paul Spittle, who's stepping up to head our acquisitions efforts. We've brought in diverse perspectives from multifamily, consulting, manufacturing and telecommunications. This complements our multifaceted and experienced leaders in every part of the company with proven capabilities that have driven our outperformance over the last several years. We've also shifted our headquarters to Frisco, Texas, where our largest corporate presence is today. And with our L.A. team relocating to a new long-term office space, I'm delighted to lead this premier team into the next era. On the next slide, our strategic vision rests on 3 core pillars: PS Next, our value creation engine and own it culture, which will collectively drive performance for our shareholders. First is the launch of the PS Next operating platform to meet the customer where they're going. Today's customer expects a fast, seamless and quality experience, which will rapidly evolve with AI playing an important part of all customer journeys. PS Next combines the industry's leading owned property portfolio with the only scaled omnichannel digital-first platform, advanced data science and exceptional property managers and care center agents. Customers demand more from the brands they do business with today, not only a core reliable in-store experience, which we enhanced with our Property of Tomorrow program, but also the digital and AI-led interactions of the future. We commit to innovate to meet and exceed those expectations across both the customer experience and the operational delivery of that experience. Customer obsession is critical. PS Next will drive both revenues and expenses, building on our margin leadership. Our third-party management platform fits too. The target result is organic growth acceleration. The second pillar, the value creation engine, captures the external growth opportunity. Building on PS Next operational leadership is a critical component for value creation, capital allocation. With PSA's capital resources and costs, we have a capital opportunity each and every year. I've grown increasingly passionate and energized about this opportunity over my time at Public Storage, leading to my expanded role several years ago as Chief Investment Officer. We will allocate our capital resources to: one, improve our portfolio; two, accelerate our per share earnings and cash flow; and three, compound our returns. My vision of our value creation engine is not just about doing more, given our capital resources, but also better across our acquisitions, development, expansions and lending investments. These 4 value creators will differentiate our return profile by fueling our non-same-store growth. Assets that are placed into the PS Next operating platform will earn more cash flow than others in the industry. Data science will lead our underwriting and targeting, leveraging the industry's largest datasets to enhance portfolio composition. Scale advantages compound as we reinforce PS Next and drive earnings growth. And lastly, the industry's best balance sheet is a competitive advantage and prepared to support it all. We have significant capacity paired with a differentiator, $600 million of retained cash flow that's growing and will help us execute our strategy. We're investing in this value creation engine. We're growing deal teams, streamlining processes and infusing data science to increase the speed of execution. We've been active over the last several years amidst a slower transaction market industry-wide. The transaction market is poised to accelerate from here, driven by those generational sales and institutionalization, setting the table for our value creation opportunity. The target result is accretive portfolio growth. The third pillar is what I call the own it culture. As a leadership team, we're enhancing our strong culture that's been built over the past 53 years. With an infusion of new talent and perspectives complementing our strong team, we are raising the bar for performance. We will empower with accountability. And I've been working with Shankh on redesigning our incentives, given their power as we launch our new era at Public Storage. With Shankh and the Board, we have redesigned our NEO incentive program for 2026 with a focus on per share and total return outperformance. And now with the launch, we have the opportunity to rethink the incentive structures throughout the organization to get the incentives right: meaningful incentives, not based on marginal improvements or tweaks, but on the same per share earnings growth and total return for alignment across the teams. Our goal is clear: we will win or lose as a team. The target is more energy, urgency and engagement driving results for our shareholders. We're just getting started. PS4.0 is about customer obsession, strong capital allocation with a focus on per share earnings and cash flow growth. Over the coming year, you'll see these initiatives come to life as we showcase these pillars. Now I'd like to turn over the call to Joe Fisher for his first Public Storage earnings call. Joe, welcome to the team. Joe Fisher: Thank you, Tom, and good morning, everyone. I want to start by saying how excited I am to be here. I've known and followed Public Storage for the last 20 years of my career, and I've known many of you and members of this team for much of that time. I want to first thank Joe Russell, Tom Boyle, Shankh Mitra, Ron Havner and the entire PS team and Board for the opportunity to join this great company. It was clear from our initial discussions last September that the vision and strategy we are unveiling here today was something I wanted to be a part of. Over the past several months, I've spent substantial time with the teams in Dallas and Glendale and onsite at properties getting up to speed. What I've witnessed is a team full of talented, dedicated A players with a will to win. There's a clear excitement for PS4.0 and a shared commitment to drive performance for our stakeholders through our 3 key pillars. Now let's get into the results on Slide 8. First, you'll notice we've made several enhancements to our press release and supplemental. As always, we're seeking to be best-in-class in all areas of our business, and we welcome your feedback. Core FFO in the quarter was $4.26 per share, resulting in full year core FFO of $16.97 per share at the high end of our guidance range. Same-store revenue and NOI growth in the quarter were minus 0.2% and minus 1.5%, respectively. Declines in move-in rents were offset by strong existing customer performance, resulting in in-place rents up 20 basis points and occupancy down 20 basis points. We're confident in our team's ability to continue driving outperformance in revenue growth just as we have in recent years. I've been incredibly impressed by the sophistication of our revenue platform and the intersection of pricing, data analytics, machine learning, AI, marketing, customer experience. And I'm excited to see where Ayash and the team will take it next. Expense growth was contained for the year with Q4 at 4.2%. Property tax growth was offset by continued benefits from payroll optimization, utilities and marketing. Outside the same-store pool, NOI growth of 20% in our non-same-store pool helped drive core FFO per share higher by 1.2% year-over-year. This is a critical area of our value creation engine and our ability to drive core FFO performance well in excess of our stabilized same-store growth. It's also worth noting, if we utilized a same-store definition similar to our peers, 2025 NOI growth would have been positive 0.2% instead of the negative 0.5% reported. On to transactions. During the quarter, we acquired $131 million of accretive new acquisitions that will drive growth through our industry-leading PS Next operating platform. This brings our 2025 total to $953 million with deployment diverse across size, geography and seller type at stabilized yields in the high 6s. On the development and expansion front, we had openings of $409 million during the year. We ended the year with a total development pipeline of $610 million with stabilized yields targeting 8% and remaining amounts unfunded of $416 million. Our lending platform continues to grow with $131 million deployed in 2025, bringing our total outstanding lending business to $142 million at a current rate of approximately 7.9%. Lastly, our fortress balance sheet remains in excellent position from both a metric and liquidity perspective. At quarter end, we had available liquidity of $1.8 billion between our line of credit and cash on hand, plus approximately $600 million per year of annual free cash flow. Our balance sheet remains one of the strongest in the REIT sector with debt plus preferred equity to EBITDA at 4.2x and debt plus preferred equity to enterprise value in the low 20% range. Moving on to guidance on Slide 9. We've established an initial core FFO range of $16.35 to $17, resulting in a midpoint of $16.68 and a year-over-year decline of 1.7%. Negative same-store NOI growth and refinancing activity is being offset by positive contributions from our non-same-store pool and our tenant insurance program. From an economic backdrop perspective, we expect 2026 to look slightly better than 2025, consistent with consensus expectations. Same-store revenue and NOI guidance are minus 1.1% and minus 2.2% at the midpoint, respectively. We believe occupancy for the year will remain roughly stable. Move-in rents will remain negative in the mid-single digits for the year, but will improve throughout the year, and our ECRI contribution will continue to help support total revenue. Specific to Los Angeles, we've guided to the state of emergency staying in place for all of 2026, resulting in a drag on same-store revenue of approximately 80 basis points. With good demand and limited supply, it is a matter of when, not if L.A. returns to strong outperformance down the road. To attain the high end of guidance, we would need to see the state of emergency end sooner and for occupancy, new move-in rates and ECRIs all to perform slightly better. The inverse would take us to the low end. Expense growth is expected to remain constrained again in 2026, with mid-single-digit property tax growth being offset by expense-constraining initiatives in personnel and R&M. In addition, our non-same-store NOI is once again expected to be a significant contributor with year-over-year growth of 16% before factoring in future transaction activity. We also continue to drive cash flow growth in areas beyond property operations, including our tenant insurance business and third-party property management platform. From a capital perspective, we expect to remain active in driving future FFO accretion through our various capital deployment levers. We have substantial amounts of free cash flow and debt capacity. However, we have not factored in additional acquisitions or lending into our guidance at this time. With that, I'd like to turn the call back over to Tom for some closing remarks. H. Boyle: Thanks, Joe. Let me close with this. The opportunity ahead for Public Storage has never been stronger. Our target is clear: elevated customer experience, strong capital allocation, a winning culture and compounding shareholder outperformance. I'm energized by the team and the platform we're building. This is PS4.0. With that, let's open it up for questions. Operator: [Operator Instructions] Our first question comes from the line of Eric Wolfe with Citi. Nicholas Joseph: It's Nick Joseph here with Eric. So I guess just asking about capturing the external growth opportunity you talked about allocating capital aggressively and intelligently. What are the greatest near-term opportunities you're seeing? Is it one-off assets, smaller portfolios, I guess larger M&A, international? And how's that different based on PSA 4.0 than what you were seeing previously? H. Boyle: Yes. Sure, Nick. This is Tom. I think there's a couple components there. One, we were encouraged by what we saw through 2025 in terms of the breadth and variation of seller type as well as size of activity. So we had a good number of single and double type opportunities which are really the bread and butter of the industry and we continue to try to capture as well as small- and medium-sized portfolios. We underwrote a lot. We probably underwrote $7 billion of real estate last year, ultimately transacted on about $1 billion of that. The majority of what we underwrote did not trade. And so there continues to be active dialogue amongst larger portfolios and a breadth of different seller types as we move into 2026. And as we think about -- you also highlighted international. That's an area certainly we spent some time on last year and continue to spend time on going forward as well. So a broad set of opportunities and one that we think is building from here into 2026. In terms of what's different as we head into PS4.0, there's a number of things that I just highlighted that are important to note. It's not just about capturing the opportunity and growing more. As I said, it's about how do we fine-tune and get better. So we're investing in the team. Our data science team has done tremendous work with our revenue management and marketing team over the last several years, and we're spending more time with them now and going forward on capital allocation as we think about targeting sites and underwriting, streamlining our processes and looking to take advantage of the industry's largest data set that we have at our disposal. So all of those things will set us up to be a better buyer and enhance our reputation in the industry, and we look forward to taking advantage of that and deploying capital. The last piece you didn't ask about, but I highlight is just to reinforce the balance sheet opportunity that we have. The company has competitive advantages across the balance sheet as well as retained cash flow, which means we have a capital opportunity every year and one that we want to maximize. Eric Wolfe: That's helpful. This is actually Eric. Sorry to keep switching analysts on you, but you mentioned in your prepared remarks that momentum is building in your markets. But it does look like your same-store revenue guidance, excluding L.A., so putting L.A. aside, it looks like things are expected to get a little bit worse from current levels. So could you just talk about what you expect from same-store revenue growth, again, putting L.A. aside just for the other 85%? And what do you expect the cadence of that same-store revenue growth to be throughout the year? Joe Fisher: Eric, it's Joe. So as you guys all know, year-over-year revenue is a backward-looking indicator. And so that minus 30 bps or so when you back into what the rest of the same-store pool would be doing, excluding L.A., is really a byproduct of what's been taking place more recently, not necessarily the forward indicators that will drive revenue growth into the future. So as we start to pull in the fourth quarter results, which did have a little bit more challenged new move-in environment, although I'd point out that occupancy at year-end did pick up. We do still expect new move-ins to be kind of the worst of 2026 here in the first quarter, although we are seeing improvement relative to the fourth quarter. And so we do think we're going to see a little bit of pressure on year-over-year revenue as we move into the middle of the year from a lagged perspective. The piece that we're excited about is how we think about the exit velocity and what we're seeing kind of underneath the hood as a forward indicator. So occupancy for the year we expect will be relatively static. We continue to see really good existing customer activity in terms of pricing power and length of stay and retention. And then new move-ins, we do forecast that while down mid-single digits for the year, we're going to start low and continue to lift throughout the year. And that's really driven by our view of a little bit of improvement on the macro environment, what we're seeing with existing customers as well as those coming in the funnel. And then, of course, supply decreasing throughout the year. So we do expect that year-over-year revenue starts to improve probably by the fourth quarter of next year -- or this year, rather. H. Boyle: Yes. And Eric, maybe just to add to that, my comments earlier around momentum building, we've been highlighting for some time the strength in some of the markets, be it West Coast, Midwest, Northeast, that continue to show good trends there. And you can obviously see that evidence in fourth quarter performance as well. But I think big picture as we sit here today, we're focused on not knowing exactly which quarter things are going to move around. Obviously, we gave you a range of estimates. The focus is on what is it we can do now with the platform and the team to set us up for success moving forward. And obviously, that's the focus of PS4.0 and where we're headed from here. Operator: Our next question comes from the line of Spenser Glimcher with Green Street. Spenser Allaway: Can you provide an update on move-in rents thus far into 1Q? And then can you just remind us how your pricing strategy has evolved with the growing use of AI? H. Boyle: Yes. Sure, Spenser. Happy to cover that. So we did have a January that was a healthy one. Move-in rents for January, which is I know one of the things you're getting to, down 7% in the month of January, so sequential improvement as we moved into the month of January. We did experience interesting weather across the country in the month of January, so we had lower move-ins but also lower move-outs, occupancy right around where we finished the year on a year-over-year basis, up about 40 basis points over the course of January. So a good start to the year and the start of -- and continuation of the trends that we saw through the fourth quarter and speaks to the trends that Joe just highlighted. Spenser Allaway: Okay. Great. And then are you able just to comment on the pricing strategy and how often you guys are kind of resetting rents just with the growing use of your AI platform? H. Boyle: Yes. As I noted earlier, the data science team and revenue management team have been working together for the last several years and continue to evolve our processes there. I just highlighted we hired a new leader for that effort who is getting up to speed and we're excited about where he and the team are going to take it from here. But continued evolution there as we think about attracting the right customers at the top of funnel, being able to understand what we think their length of stays are going to be and their price elasticities, and then toggling our pricing, promotion, advertising in order to be able to maximize NOI from that customer base as it goes. So continued efforts there, and we're excited about where Ayash and the team are going to take it going forward. Operator: Our next question comes from the line of Juan Sanabria with BMO Capital Markets. Juan Sanabria: Congrats to all, Tom and Joe. Welcome back, Joe. Just on the '26 same-store revenue guidance, Joe, you made an allusion to improving at year-end. Wondering if you could give us a general sense of where you expect to end the year, the fourth quarter run rate, as we think about kind of the trend -- the improving trend throughout the year that is in the forecast. Joe Fisher: Yes. Juan, so we typically don't go into true quarter-by-quarter guidance. What I would say is you've kind of grouped the portfolio into a couple different buckets. And if you look at our coastal markets in combination with some of the Midwest markets, so some of the leaders like Chicago and Minneapolis, that portfolio continues to do really well in terms of plus or minus 2% revenue growth through the year. And we do think that lifts a little bit going into the fourth quarter of next year. When you look at the more supply-challenged markets, so primarily the Sunbelt markets, so Dallas, Atlanta, Florida, et cetera, that's probably going to be down a couple percent on same-store revenue throughout the year. But again, we expect that to start to lift as we get into kind of fourth quarter of this year, just given the fact that we're comping against an easier fourth quarter as we did have a little bit more challenge in new move-ins in the fourth quarter and then given that supply really starts to dissipate as we continue to move throughout the year. Juan Sanabria: Good segue to my next question. Supply, I'm not sure if you saw, but you already kind of put out a revised supply stack for this year -- for the end of last year and this year, they came to the conclusion that supply actually reaccelerated in the back half of the year. So just curious if that jives with what you guys are seeing on the ground. And if you could kind of quantify exposure of assets to supply in '26 versus '25 or any sort of numbers you can put around supply and how you think about it would be helpful. Joseph Russell: Yes, Juan, I think we've been more right than wrong on the trajectory literally over the last 4 or 5 years debating some of the external tracking data sets out there. I think more often than not they seem to overemphasize or overplay potential momentum coming into markets. We don't really see a trend or a change in the trajectory that's been going on now for the last 4 or 5 years, which is year-by-year decelerated deliveries. So hard to justify what kind of data they're looking at to say there's a reacceleration. By all accounts, the development business continues to be quite complicated, quite commanding approval levels, costs, underwriting issues. There certainly are a handful of markets that may see supply as they have over the last year or 2, but we're not seeing any reacceleration. And as you know, we have a very strong team out in the markets nationally. We're being very judicious. We're putting our own development activity, and we see that as a great tool for us to continue to deploy capital even under the umbrella of PS4.0 that Tom and Joe are talking about. Operator: Our next question comes from the line of Samir Khanal with Bank of America. Samir Khanal: I guess with the implementation of 4.0 PS Next, which you all have talked about, I mean, what is the long-term profile, so the growth profile of the company, you think, from same-store NOI or FFO growth perspective? H. Boyle: Well, I think you highlighted a couple different components there, and we can talk more about PS Next if you're interested in it. As we think about PS4.0, in aggregate, the objective is to build on the outperformance that we've been able to put together over the last several years through organic growth. And that is driven by a strong focus on the customer, the customer experience, our leading brand and then also embracing continued digitalization and now AI interactions that are going to be ever more present going forward between us and our customers and build on that outperformance as we think about how we deliver that customer experience. So both on the revenue side as well as the expense side for organic growth outperformance. That's then paired with the value creation engine that we're speaking to, and that is an opportunity year in and year out across 4 different levers. So we think about acquisitions, which we just spoke to -- Joe just spoke to development, our expansion efforts as well as our lending platform, which will all be additive to FFO growth. And you've seen that over the last several years with our non-same-store performance with our operating platform being able to achieve more cash flow than when we purchased the property. And so very encouraged by that opportunity and where we're going, and that will be additive to FFO growth. And then our ancillary businesses, right, some of the things that I just hit on like lending, for instance, also support our third-party management business and our tenant insurance business, which are also having a healthy growth year this year. So looking to drive organic growth performance and outperformance, stronger value creation engine as we look to plug assets into that operating platform and utilize our capital competitive advantages and drive our ancillary businesses all to a stronger FFO growth profile going forward. Samir Khanal: Got it. And I guess on the move of the headquarters to Frisco, I guess what's the operational or financial benefit from that and is there any sort of cost associated with sort of the relocation that we need to think about? H. Boyle: Yes. So I think a few things to highlight there. One, we've had a presence in both Glendale as well as in Dallas for a long time and we've been growing both offices. But as we move through the last 5 to 7 years, we oftentimes would open roles in both places, be in Dallas as well as Glendale, and oftentimes we would fill those roles in Dallas. So we did see the office increase in size there to the point where today our office in Dallas is our largest corporate presence. So it makes sense to relocate the corporate headquarters name tag to that Dallas office, and we're moving into new space there. In addition, as I noted earlier, we're going to be moving into new space in the Glendale area as well with a long-term commitment to be in that market. So it's about finding the right talent across the country and building the team going forward. And we look forward to strong leadership in both offices going forward. Joe Fisher: Samir, just related to cost question, so that is embedded within the corporate transformation costs that the team announced about a year ago. We've incurred roughly $4 million of that, I believe, of that $15 million to $20 million. So we will see more costs this year. A lot of that's due to relocation, hiring, severance, the office change, et cetera. But what the group had talked about in the past was from a return on capital perspective, you have both offices, you have great pools of talent in both locations, but this also allows us to do more with an automation perspective and offshoring perspective to the tune of about $4 million in run rate benefit. So it's a good ROI as well. Operator: Our next question comes from the line of Ronald Kamdem with Morgan Stanley. Ronald Kamdem: Congrats to everyone, first of all. But the question is just thinking about the reacceleration of organic growth that you sort of mentioned. Is there any sort of large capital plan or reinvesting plan that's sort of coming with that? Or you think that could be done sort of based on sort of the existing platform, existing system? H. Boyle: Sure. So let me talk a little bit about the PS Next platform and what it represents and the investments that we'll be continuing to make within that platform. I think we've continuously gotten the question over the last year or 2, like, what's next? And how are you going to take the platform from here? And PS Next is really the answer to that. If you step back about 10 years ago, honestly, storage was behind in terms of digital customer experience and interacting with our customers. 10 years ago, our customers would show up at a property and sign a paper lease, for instance. I think the -- what the team has accomplished over the last 10 years has been impressive, and we've obviously been communicating that over the last several years in terms of how we interact with our customers today across both a stronger digital experience on our website, our eRental platform, our app, but also reinvesting in the brand and the platform there and then also how we deliver that customer experience. So we've spoken about the operating model transformation and getting more efficient and effective throughout how we deliver that customer experience. So that's all shifted us forward into a very omnichannel and digital-first environment but we're now sitting at an inflection point going forward. And that inflection point does center around AI and a further digital investment. And you think about what customers were expecting 10 years ago from an Amazon or a Starbucks, we sought to replicate and deliver a customer experience that was more similar to what consumer businesses were offering at the time. That is moving even further ahead, and customers are expecting more. They're not just expecting options, they're expecting recommendations and fast answers to questions. And we're investing as a team across the platform to deliver AI-infused experiences both across the customer experience, but also to our teams and how we deliver that customer experience. So more to come there as we launch that PS Next platform. In terms of the investments that will go on, they will be throughout that customer delivery, both in terms of team as well as technology platforms, et cetera, and we'll share those as we go. But we're excited about them because the returns on them will be strong. Ronald Kamdem: Great. And then my quick follow-up is just on the top of the funnel demand, some of the other indicators that you sort of look at from website visits and so forth. Maybe can you just talk about what you're seeing there and how that sort of correlates to maybe the slow housing activity we've been seeing? H. Boyle: Yes. Top of funnel activity has been pretty consistent at the start of the year. The one thing I would note is January and the start of February has been pretty unique given the weather across the country. So we've had weeks where you've seen activity really drop off because of the weather and then pick right back up as things warmed up. And so the start of the year has been really embodied by that. But if you kind of look through the peaks and the troughs, as I noted earlier, seeing good trends across move-in customer demand as well as existing customer performance. Move-in rents, again, trending in a better direction into January. The existing customer continues to perform incredibly well. Move-outs down again in January like they were in the fourth quarter, just demonstrating the strength of the storage consumer. Operator: Our next question comes from the line of Nicholas Yulico with Scotiabank. Viktor Fediv: This is Viktor Fediv on with Nick Yulico. I have a follow-up on the external growth opportunity set. So you mentioned that you executed around $1 billion of acquisitions in 2025 while roughly around $7 billion was under consideration. Have you noticed any recent shift in seller expectations? And how is this translating into bid-ask spreads and this 1 to 7 conversion ratio, so to speak? H. Boyle: That's been something that's been really evolving over the last several years, right? I mean we had a time period where cost of debt was really low, cap rates were lower, and it's been a readjustment for both sellers and buyers over the last several years. As time has gone on and you've seen a 10-year Treasury, for instance, just to pick one metric that's been in a relatively tight band for the last several years, there's been an ability to transact more rationally, I think, for both sellers and buyers, and that led to some of our successes last year. And I think momentum is building towards that in 2026 based on our dialogue. No question, in many instances, there's still a healthy disconnect between buyers and sellers, and that's okay. We're ready to transact when sellers are ready to transact and continue to monitor the marketplaces they're in. And -- but we are optimistic around '26 and '27 as the cap rate ranges start to narrow. Joseph Russell: And I'd just add to that, as Tom mentioned in his opening comments, part of the multiyear trend, and this has been going on literally for the last decade plus, is the number of owners coming into the sector with a different set of capital, either constraints or opportunities that can feed activity, either predictable or unpredictable, based on their need to bring assets to market. We saw a fair amount of that in 2025 where some larger portfolios ended up coming to the market. We curated a number of those larger portfolios into the assets that we thought were best suited for our own investment requirements. But that activity and that level of ownership structure within the REIT sector continues to grow, and that, too, is going to create opportunities, some predictable and in some cases some unpredictable. The team is ready to embrace those opportunities. And a lot of those conversations take time to cure. That's why some of the volume that we saw from an underwriting standpoint has yet to play through from a transaction. But step by step, we're more confident more activity along those lines could come through. Viktor Fediv: Got it. And then geographically speaking, where do you kind of want to grow the most and where do you see the most opportunities available for you? And probably do we -- should we expect to see more growth in Texas even more than recently? Yes. H. Boyle: Sure. We have tremendous advantages because of the operating platform we have across the country in terms of understanding trends, having long-term datasets to understand what's taking place in submarkets. And so you may see in the supplemental, for instance, we're acquiring in this state or that state, but what we're really focused on is capturing the opportunity at the submarket level and being able to identify those submarkets where there's a real fit for our portfolio and a fit from a customer demand standpoint where there's an opportunity to deploy capital. And that goes to the data-driven approach that we use today and one that we continue to infuse energy into moving forward. It's a submarket story in storage, and that's the opportunity we're chasing. Operator: Our next question comes from the line of Michael Goldsmith with UBS. Michael Goldsmith: Congratulations to everyone involved, including Joe, Tom and Joe. Lots of exciting announcements about the platform and the customer experience today. How much of what you are doing is reliant on an improving demand environment versus what you can control given the existing demand backdrop? H. Boyle: Yes. Thanks, Michael. Good question. As we sit here today, obviously, I highlighted earlier our views around the industry outlook, which we do think is a strong one over time, and storage has been one of the strongest performing subsectors within real estate over time. The last several years have not been particularly exciting, as I noted earlier. And certainly, as we look at 2026, it looks pretty similar to 2025 in terms of many of the trends. That's not holding us back. In fact, it just energizes us in terms of what it is we can do now with the team and the platform and to be able to take advantage of this environment, both in terms of capital allocation opportunities as well as platform investments to set ourselves up for the future. And we can't guess exactly when same-store trends are going to be what they've been in the past, but what we can do is invest in the platform and control there. And that will benefit us in the interim period and certainly when things improve as well. Michael Goldsmith: And my follow-up question is, you've hired some new executives. You're building out the acquisitions team. Is that built into the G&A number? You did $107 million the last 2 years and guidance is calling for roughly the same. So just trying to understand the trajectory of expense. Joe Fisher: Michael, it's Joe. We have factored in a lot of those expectations related to new hires as well as investments into the platform. So Tom talked a lot about technology, data science, AI, we'll be investing in the platform in that respect as well. So that is captured in those numbers. What we obviously hope to do is go out there and drive performance for shareholders. And as that occurs, performance improves and hopefully compensation improves along with it. Michael Goldsmith: Congratulations again. Good luck in 2026. Joe Fisher: Thank you. Operator: Our next question comes from the line of Todd Thomas with KeyBanc Capital Markets. Todd Thomas: And yes, congrats on all the promotions and appointments. And Joe Russell, best of luck in your next chapter. I wanted to ask with regard to some of the leadership changes, I'm just curious how the Board sees its oversight role evolving under 4.0 here, particularly with regard to capital deployment and capital allocation and sort of tying into that on the balance sheet, should we expect any changes to the company's capital structure leverage policy? PSA used to be unlevered. You mentioned, Tom, it's 4.2x on a net debt-to-EBITDA basis and talked about some of the refinancing headwinds this year and perhaps over the next couple of years. Should we expect any evolution or changes around the company's cap structure moving forward? H. Boyle: I don't know how many parts are in that question, Todd. We'll do our best to cover them all. Joseph Russell: I'll start off, Todd, and then Tom and Joe can add any additional color. So first of all, just as far as the Board's role and where we have gotten to relative to the host of announcements as part of PS4.0. Without question, our Board's always had a high degree of commitment on succession planning, seeding the company with the most robust and talented set of leaders, no change relative to their continued involvement as the team moves forward. In my experience over the last decade with the Board itself, I would say that's an active and continued discussion that's always, a, quite helpful to the management team as a whole. And with the talent and the range of perspective that we have on our Board, and in our case, we feel like we've got a very talented Board with great range of experiences. They're there for counsel, advice and perspective. We're really excited about Shankh taking his role, knowing his knowledge of the REIT industry as a whole and his success at Welltower, et cetera. So all very powerful components of what led to the whole host of decisions that came through the announcements yesterday. To go more specifically into how that translates into some of our more tactical components in the very near term. I'll let Tom talk a little bit more about that and give you more color. H. Boyle: Yes. Thanks, Joe. I think the only other thing that I'd highlight related to the Board and oversight and guidance and perspectives that I look forward to is around the formation of a new investment committee of the Board. And obviously, our Board does have a lot of capital allocation experience and perspectives and so look forward to that. That committee is going to be chaired by Ron Spogli, who's a founder of Freeman Spogli & Co. And him, alongside with Shankh, obviously bring very strong capital allocation perspectives, and I look forward to having lots of good dialogue and perspectives from that group moving forward as we launch our value creation engine. Joe Fisher: Todd, this is Joe, and I'll try to close this question out relatively efficiently. But from a balance sheet perspective, I'm very fortunate as CFO to be able to inherit a fantastic balance sheet. The team has done a phenomenal job, as everybody knows, in terms of setting up the balance sheet for success and having both defensive and offensive capabilities depending on the period of time that we're in. And so from a metric and policy perspective, the team has talked about in the past wanting to be in that 4 to 5x debt-to-EBITDA range. Today, we're at 4.2x. So the expectation is to continue to stay there, continue to manage our liquidity, continue to have phenomenal balance sheet metrics and duration overall. I do think we're in a position where we can be offensive with this to really support the value creation engine. So we have that $600 million of free cash flow each and every year. In addition, we have roughly $1.5 billion of capacity on debt just to go to the midpoint of that debt-to-EBITDA range. So I do think we're in a position to potentially be offensive with the balance sheet depending on the opportunities and accretion that are out there as well as with a balance sheet and platform of this size, there's a multitude of sources to fund the business and that goes beyond just the typical debt sources or equity sources. We have had discussions on, do we look at joint venture capital and dispositions in the future as well. And so there's a lot of different levers to pull here to evaluate value creation for the investor base. Todd Thomas: All right. That's helpful. And then just following up on acquisitions, as you look to sort of accelerate those efforts a little bit, what's been the biggest constraint for acquisitions as you kind of look back over the last several years? Obviously, you've been very active, but I'm just curious, it sounds like the efforts sort of ramping up a little bit. And I'm just curious if you feel there was sort of a constraint and whether you're looking to maybe increase your risk appetite or change your return hurdles at all as you layer assets onto the platform, see the value there. H. Boyle: Yes. Thanks, Todd. I would say I think the question earlier was around buyer and seller expectations and transaction volumes. I'd say that's been probably the biggest impediment to accomplishing more capital allocation over the last several years. But as we look ahead, the value creation engine we're speaking to is not about lowering our return hurdles or getting into assets that we didn't view as attractive in the past. It's around how can we be better in what it is we're doing. How can we build the relationships with a growing team? How can we be faster in terms of how we underwrite and provide feedback to brokers and sellers? How can we get more off-market opportunities and more singles and doubles in those pockets and submarkets that we're attracted in? And if we think -- if we're successful in doing those things, there'll be more activity and better activity for us to deploy our capital into. Operator: Our next question comes from the line of Brad Heffern with RBC Capital Markets. Brad Heffern: Big picture question on move-in rates. Why do you think we haven't found the floor yet? COVID was a long time ago. The consumer's been stable, housing's been stable, supply's declining. So I'm just curious like why are we still seeing these year-on-year declines? And do you think that we get to neutral at some point, maybe late in the year? H. Boyle: Yes. So I guess 2 components there. One is maybe looking back in time, how have we gotten here from a move-in rate standpoint? And I think there's a couple of things there. One is new supply in some of the markets that we operate in continues to come in. And so we spoke about some of the markets in the Sunbelt, for example, Atlanta, Dallas, Charlotte, Orlando, where new supply is weighing on performance. No question that competition of new supply drags down move-in rents. And I think we're still seeing that and absorbing that. The good thing is occupancies are lifting there and that absorption is taking place, which is encouraging in a forward look as it relates to where move-in rents will trend in some of those markets. The flip side is we are seeing move-in rent growth in lots of our markets. So we highlighted some of those stronger markets that Joe mentioned earlier, Minneapolis, Chicago, San Francisco, D.C., for instance, we have move-in rate growth, and that move-in rate growth is supported by good demand and more limited supply. And so it's really not a story of a national phenomenon, but I think really a summation of market dynamics at play. Brad Heffern: Okay. Got it. And then on the new compensation plan, Tom, you mentioned you were working with Shankh. Obviously, Welltower has a new compensation plan as well. Are there any similarities there? Or are they unrelated? H. Boyle: Sure. I think there's a couple things to highlight there. The incentive is an important part of what I call the own it culture. The program that I've been working with Shankh on for the NEOs is very different than the program that he more recently announced in October, and it's more similar to a more traditional plan that you've seen from us, but at the same time very, very different. And the differences relate to the performance period being around a 3-year period with delayed vesting. The focus really is around total shareholder return, absolute and relative performance versus storage as well as the RMZ as well as stretch goals. And I'd say that's one of the biggest components there is stretching the goals for us as an NEO team and obviously stretching those goals out to benefit shareholders as well if we can go out and achieve those stretch goals. So very much aligned with shareholders, 100% performance-based and the shareholders and the team will win together. And that's really the focus around that incentive redesign. It's a big shift. And as we think about taking that as part of the own it culture and PS4.0, we have an opportunity to rethink incentives across the organization. And that is really the goal to infuse energy, urgency and engagement across the organization to drive results. So I'm passionate about how we think about incentives for the organization and excited about where we're going from here. Operator: Our next question comes from the line of Ravi Vaidya with Mizuho Securities. Ravi Vaidya: I wanted to ask about expenses. The expense forecast came in relatively low, about 100 bps below last year's inaugural forecast. Can you comment on some of the line items that are driving this? And maybe if there are any areas where there could be some levels of conservatism built in? Joe Fisher: Ravi, it's Joe. So it's really just a continuation of what you've seen from this team for a number of years now. They continue to attack with a whole series of initiatives, all the various line items while also being cognizant of the delivery of the value to the customer. And so when you look at what took place in 2025, obviously, you saw from a personnel perspective, we kept that constrained. Utilities was constrained, R&M constrained. I think you're seeing a continuation of that within our guidance of that 2.2% midpoint. You have property tax leading the way. But if you jump into things like payroll, there's continued initiatives on that front from an hours perspective as we continue to use machine learning to really understand when are the customers there, what do the customers need and how can we better serve them. So more hours reductions, but a critical offset within that is increasing pay for those property managers on site at the same time. So trying to get a win-win there. I think on the R&M side, you're seeing continued initiatives around how can we reduce costs there. So there's a number of pilots in terms of in-sourcing various aspects of R&M. When you go into the utility side, we've had a pretty consistent solar effort over the last number of years to the tune of $50 million to $70 million a year. So you continue to see constraint from a utility perspective. And then you get into some of the centralization efforts that are taking place, so trying to find a more specialized approach to certain things. So thinking about sales functions, customer relations, bad debt, issue resolution, moving some of those efforts off of the field and into the centralized team to try to get better outcomes. So it's a whole slew of initiatives. There's a whole stack of them that we'd be happy to take you through offline at some point, but a continuation of what the team's done here for a number of years. Ravi Vaidya: Just one more here. Can you offer some more color on your current ECRI policy? If you're expecting any other regulatory or legislative restrictions that are outside of California that may weigh on same-store revenue growth? Do you have a buffer or something like that built into the guide? Because it seems that this has become a category that more municipalities are likely to include in moratoriums. H. Boyle: Great. So I guess 2 parts to that question. One is in terms of how we think about the existing customer rate increase program. And we've communicated in the past we think about that in terms of a number of components. One is, what's the health of the customer base, what do we think the price sensitivity is and their behavior, and we continue to be encouraged by that. As I noted earlier, vacates are down, customer price sensitivity is consistent, and so a very healthy storage consumer. The other side is the replacement cost and what our occupancies are, what demand is for that unit, what marketing costs are, all those sorts of things play into the replacement cost side, and that's something we navigate on a unit-by-unit and property-by-property basis. So those 2 combine to really drive that program, and it's a very data-driven approach to meet the customer and move rents as appropriate based on the dynamics at play at the local market. In terms of the regulatory environment, certainly we've spoken over the last year around some of the California activities and SB 709 specifically. And we're certainly compliant with that and communicating with our customers around the disclosure requirements for customers in California. We're certainly aware of some of the recent pronouncements out of New York, for instance, and other states around pricing transparency storage specific or not and certainly monitoring those around the country and making sure we're in compliance with all of those laws and being transparent with our customers around our pricing approach and what they can expect. Operator: Our next question comes from the line of Michael Griffin with Evercore ISI. Michael Griffin: First off, congrats to the team all around. Joe Russell, best of luck in retirement, and Joe Fisher, welcome to the team. Maybe just stepping back to get some perspective on sort of the PS4.0 initiative, can you give us some context? What was the genesis behind this? Joe, maybe you went to the Board, maybe it came down from the Board. It seems like it's been in the hopper for some time. So just ultimately, what was the catalyst that brought this about given that despite the headwinds the industry has faced, Public has been a leader throughout it? Joseph Russell: Yes, Griff, I wouldn't say there was a trigger or a catalyst. This is, I would say, an outgrowth of what the Board and the management team constantly do, which is look at strategic initiatives, look at generational opportunities in terms of again, our own skills, investments, the deployment, particularly in our case, of a very robust environment where we've continued to optimize and drive the level of success through the portfolio operationally, our tools tied to capital allocation, our balance sheet, et cetera, and then putting that entire set of opportunities into the hands of very skilled and talented leaders in every part of the company. So this is the outgrowth of a very intentional and ongoing strategic process. When Tom and I and some other significant leaders of the company, Natalia Johnson, et cetera, all came into the company about a decade ago, we went through, frankly, a pretty similar process as well, and that internally was called 3.0. We've learned and optimized many things through the last decade. And step by step, we felt and everything percolated to the point it was time for 4.0. So very excited about what it entails. I think the team is going to be transparent around the more direct things that will come from 4.0 based on all the things that Tom and Joe are already speaking to. And we're excited about what's ahead. Time and again, through our history, 53 years now plus, we've led the industry on a whole host of initiatives. We've been very proud of the fact that over the last decade we continue to lead the industry in many areas. And yet again, we're going to challenge ourselves to take the next opportunity to drive forward. So it's a really great time. Super excited about Joe Fisher coming into the company as well as some other key hires, too. So it's a great time for us to launch. And with this launch, we don't stop either. We keep challenging ourselves to reinvent, to optimize, and that's the DNA of Public Storage. Michael Griffin: Great. I certainly appreciate the context there, Joe. And then I know a question was just asked sort of on the regulatory front, but maybe if I could sort of spin it a different way. Obviously, there was one of your peers named in a lawsuit with New York earlier this week. Is stuff like this maybe the canary in the coal mine as it relates to sort of the pricing practices in the industry? I know there have been pushes whether it's at SSA or the trade level around greater disclosures, but like is there a worry that greater, I guess, regulatory oversight from these municipalities could preclude what has been this ECRI pricing strategy regime we've been in, call it, over the past couple years? H. Boyle: Sure, Griff. So I think there's a couple components to that. One, obviously, we saw some of the New York activity, and we continue to work with the National Self Storage Association and the State Self Storage Associations around working with regulators and legislators and frankly ensuring that they understand the benefits of our business, how affordable our business is, how affordable some of our new customer promotional rates are, some of those things that -- and earlier in the conversation we spoke about how affordable it is versus other space alternatives. So being able to communicate that and educate folks, and then obviously part of PS4.0 is a customer focus and improving the customer experience, and that goes everything from pricing all the way through to the day-to-day experience at the property. And so as a team, we're very focused on that customer experience and will be moving forward. Operator: Our next question comes from the line of Hong Zhang with JPMorgan. Hong Zhang: I guess should we expect any changes with the third-party management platform as it relates to PSA 4.0, especially revolving around, I guess, income since you've traditionally ran the platform with less of an immediate profit motive in mind? H. Boyle: Sure. So in terms of the third-party management platform, we're excited, obviously, to launch the PS Next, next-generation operating platform. As part of that, our third-party management clients will benefit from those advances that we make in the customer experience and our operational delivery of that experience. So we're excited to share more with them as well as we move forward. In addition to that, as part of the leadership appointments, Chris Sambar, our Chief Operating Officer, is going to be working very closely with Pete Panos who runs that business day-to-day, and seeking to grow it and to grow our third-party platform from here. In terms of profitability, profitability of that program has increased modestly over time and as that portfolio stabilizes and grows from here, the profitability will grow as well in addition to the lending components and the tenant insurance components which are synergistic with that platform. Hong Zhang: Got it. That leads to my follow-up. I guess, is there any color you could provide about how we should expect growth in the lending program over the near term? H. Boyle: Yes. We think that's an opportunity for us. Joe Fisher walked earlier through the book as it stands. So certainly an opportunity to grow that going forward in support of our third-party management customers and the synergistic benefits, again, around the third-party platform, tenant insurance as well as the capital component of the investment. So something we look forward to growing from here. Operator: Our next question comes from the line of Brendan Lynch with Barclays. Brendan Lynch: Joe, congrats on a terrific career. And Tom and Joe, congrats on your new positions. Maybe a question on what the primary KPIs you are measuring when you think about the customer experience component of the platform enhancements and how we can measure the progress that you're making. H. Boyle: Sure. I think there's a couple there. I think stepping back, obviously PS Next overall is about customer experience, it's about brand, but it's also about our financial and organic growth performance as well. So across that metric, some customer metrics you can look at are certainly some of them operationally that you see move-ins, move-outs, tenant retention that you'll see from a financial standpoint. As we think about the platform overall, the focus is clearly around where we're headed with organic growth and organic growth performance and outperformance over time. Brendan Lynch: Great. That's helpful. And then maybe just quickly on international growth, just give us an update on what your appetite is to maybe test the waters in some of these international markets that you've looked at in the recent past. H. Boyle: Yes. We continue to have appetite to explore international opportunity. Obviously, you've heard from us around Australia in the past. We have a strong presence in Western Europe with our Shurgard platform there. And there are markets around the world where the storage is growing as an industry and customer demographics are supportive of a growing storage industry. And so we evaluate those over time and are looking for the right entry points in order to purchase a platform that will give us access to an expanded pie of both operational as well as capital allocation opportunities into growing storage markets. I will say, and we always caveat that with the U.S. continues to be, by far, the deepest and most vibrant storage market in the world, and we're not taking our eye off that ball, but we do think there's an expanded pie opportunity internationally, but we have to find the right fit and the right platform. Brendan Lynch: Maybe just a quick follow-up on that. When you look at the international portfolios that might be available, how do they compare to U.S. platforms that might have a more advanced data analytics and things of that nature? Like, what is the gap that the PSA platform has relative to the 2 different buckets of potential acquisitions? H. Boyle: Yes. I would say for the most part, the platforms internationally are of a smaller scale and because of that don't have some of the scale and platform and data advantages that we and others here in the U.S. have. And so I think that's probably a pretty clear opportunity. We see that in the U.S. as well as we think about smaller operating platforms and what we can do when we acquire or manage for companies that have a smaller platform to go. So there are real advantages of scale in this business. We've continuously seen that across our portfolio acquisitions over the last 4 or 5 years. And I would say international is right in that same wheelhouse. Operator: Our next question comes from the line of Eric Luebchow with Wells Fargo. Eric Luebchow: Great. Maybe you could talk about the development business a little bit. Your development deliveries have slowed down a bit the past couple of years, down to $300 million this year. And I guess maybe you could talk about kind of whether that's due to the tougher lease-up environment, the higher cost to develop. Anything else you could call out there? H. Boyle: Yes, sure. So the development business is one that, that we're passionate about internally because of the ability for us to pick that submarket, pick the land site, design the building, create the unit mix and then ultimately place it into our operating platform where we can earn more cash flow. So it's one that we have a national team out looking for sites. It's also one that's been navigating through a challenging development environment, one with rising costs and obviously rents coming down in some of the markets with strong population growth. And so as we look at this year, we're anticipating a little less deliveries this year than last year, but we're focused on growing that business over time to take advantage of a growing storage demand environment in many of the submarkets around the country. And we view it as a very strong risk-adjusted capital return. And so as we think about the value creation engine, no question, there's a strong focus on what it is we can do there to grow that business over time. Eric Luebchow: Great. And then just one follow-up. I know you touched a little bit on how you're using AI internally. As we think about the evolution of some of the large language models, potentially including ads over time and customer acquisition and the evolution from traditional paid search, how are you thinking about that, how that may evolve over the next couple of years as a lot of these models become more and more ubiquitous? H. Boyle: Yes. No, I think they are. I think consumers, myself included, probably lots of us on this phone call are using the large language models more and more in our daily lives. And that speaks to the PS Next platform and not only interacting with them through the LLMs, but also as customers land on our website, for instance, or otherwise they can interact with agents or on our app, et cetera. And so we're excited about some of the initiatives we have going internally to take advantage of those LLMs and frankly the customer expectations that continue to move towards that direction. And we think we have exciting things to share there, and we'll do that over the next 6 to 12 months. Operator: Our next question comes from the line of Samuel Ohiomah with Deutsche Bank. Samuel Ademola Ohiomah: I wanted to focus on Shankh as the new Chairman of the Board and his commentary around execution even in an environment of unremarkable growth. So I was wondering if you guys could just talk a bit about what opportunities exist in such an environment and like the idea of buying assets with low occupancy at attractive basis ahead of an eventual turnaround in fundamentals. I guess if you guys could talk a bit about that, I'd really appreciate it. H. Boyle: Sure. So obviously, Shankh's quote speaks for itself. I think as we think about the opportunity ahead here, we do think that there's an opportunity to deploy capital in an environment where industry fundamentals haven't been particularly exciting over the last couple of years, but we have confidence in where they're going. And we're investing in the people and the platform to be able to do that from here. And I think the -- if you look at just, for instance, the basis on the assets that we purchased last year on an attractive basis. And we think overall, valuations are attractive today. Obviously, it depends on the submarket, but we'll continue to deploy capital for the right opportunities and we think that will benefit the platform over time from here. And we have a lot of confidence in the long-term fundamentals of storage. And as those return, that's great, but we're not waiting around for that. We have the opportunity to invest today to benefit the platform over time. Operator: Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Boyle for any final comments. H. Boyle: Great. Thanks very much for everyone joining today. We're energized by the opportunity ahead and look forward to sharing more about PS4.0 down the road. Thanks very much. Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Good morning, ladies and gentlemen. My name is Vanessa, and I will be your conference operator today. [Operator Instructions] At this time, I would like to welcome everyone to the Agnico Eagle Mines Limited Q4 2025 Conference Call. [Operator Instructions] Thank you. Mr. Ammar Al-Joundi, you may begin your conference. Ammar Al-Joundi: Thank you, operator. Good morning, everyone, and thank you for joining our Agnico Eagle Fourth Quarter and Year-end 2025 Conference Call. I'd like to remind everyone that we'll be making a number of forward-looking statements, so please keep that in mind and refer to the disclaimers at the beginning of this presentation. This morning, we're pleased to announce another strong quarter, capping off a remarkable year. In 2025, as gold prices hit new highs throughout the year, Agnico Eagle delivered on our production targets, we delivered on our costs, and we did it responsibly and reliably. While the price of gold went up $1,700 year-over-year, our cash costs went up $76 per ounce. This means we delivered over 95% of this gold price increase to the benefit of our shareholders, delivering on our core mandate of providing gold upside leverage to our owners. In 2025, we repaid almost $1 billion in debt. We built up almost $3 billion in cash, and we returned over $1.4 billion directly to our owners through dividends and share buybacks, all while continuing to invest heavily in our future through the largest exploration budget we've ever had and through continued strong investments into our 5 key growth projects. In an exceptional year for gold, Agnico Eagle delivered on our commitments to our owners, to our employees and to our communities. This strong momentum continues into 2026 and beyond, supported by a stable annual production profile of between 3.3 million to 3.5 million ounces over the next 3 years at peer-leading costs while reporting record reserves, record resources, record inferred ounces and an increase to our dividend. While 2026 cash costs are forecast to be up a little over $100 per ounce compared to last year, more than half of that increase is from the assumption of higher royalties and a stronger Canadian dollar. Excluding those assumptions, our cost increase is about 4% to 5%. This would be at or slightly below the inflation we saw in the industry last year. So good cost control on the factors that we can influence. Our reserves are at a record 55.4 million ounces, up 2%. Our resources are at a record 47.1 million ounces, up almost 10% and our inferred ounces are at a record 41.8 million ounces, up a remarkable 15.5%. 2025 was an exceptional year, and our near-term prospects look even better. But the real story this morning, the real excitement is not in looking back or even the next 3 years. The real excitement this morning is that Agnico Eagle is in the best position we've ever been in, and we're already aggressively advancing our next phase of growth and growth per share. This morning, we want to focus on our plan to increase production by up to 20% to 30% over the next decade with a path to over 4 million ounces of annual production by the early 2030s. This growth is from the highest quality projects in the best jurisdictions in the world. This growth is from projects we already own in jurisdictions we know well with existing teams and in most cases, leveraging off existing infrastructure. This is important because our job isn't simply to grow but rather, it's to grow value for our owners on a per share basis. And in our industry, growing in stable jurisdictions, leveraging existing infrastructure not only delivers to our owners the best return on capital, but also the best risk-adjusted return on capital. Next slide, please. These assets were over the past few years, we've been investing substantial time, energy and money and where our investments are accelerating. We're at a point where we see a step change in production per share starting in 2030, and we're eager to share our progress with you this morning. At Detour Lake, the largest gold mine in Canada, where we're executing a plan with the potential to deliver an additional 300,000 to 350,000 ounces per year through the development of an underground mine, we've added 4.3 million ounces of resources during the past year in the high-grade mineralized corridor that's amenable to this underground mining. And we're tripling our investment from $100 million to $300 million as we accelerate our work towards a go-ahead decision mid-2027 and potential to start underground production as early as 2028. At the Canadian Malartic complex, the second largest gold mine in Canada, where we see an opportunity to add a remarkable 400,000 to 500,000 ounces per year through our fill-the-mill strategy. We've added 9 million ounces of reserves since our last technical update. We're ahead of schedule on the ramp, expected first production from East Gouldie this quarter and ahead of schedule on the first shaft expected to commission in 2027. We're making excellent progress evaluating opportunities to fill-the-mill further via the Marban open pit via Wasamac underground and via a second shaft, all 3 with targeted first production by 2033. At Upper Beaver, which is expected to produce over 200,000 ounces per year, we're ahead of schedule again on both the ramp and the shaft. We're increasing our investment from $200 million to $300 million to accelerate the development of the project with the goal of bringing production forward to 2030. At Hope Bay, where we're working on a study that supports a 400,000 to 425,000 ounce per year operation, we saw a 46% increase in inferred mineral resources, primarily from Patch 7. We expect a study update and potentially a project approval as soon as May of this year. We continue to make good progress at San Nicholas and hope to have permits to move forward shortly. These projects alone have the potential to add 1.3 million to 1.5 million ounces of highly profitable annual production. And in each case, we've made excellent progress, and we're moving forward aggressively. With that introduction, I will now turn over the presentation to our CFO, Jamie Porter, to review our third quarter and full year results. James Porter: Thank you, Ammar. As Ammar mentioned, we delivered record financial results in 2025, driven by a strong operating performance disciplined cost control and a supportive gold price environment. We finished the year with a solid fourth quarter, producing approximately 841,000 ounces of gold at total cash cost of $1,089 and all-in sustaining costs of $1,517 per ounce. Costs increased quarter-over-quarter, primarily due to higher royalties, lower production volumes and higher costs at our Meadowbank mine associated with extending mine life. Despite higher costs, we delivered a number of financial records in the fourth quarter, including record adjusted earnings of approximately $1.4 billion or $2.70 per share and record free cash flow of over $1.3 billion or $2.62 per share. For the full 2025 year, we exceeded the midpoint of our guidance with gold production of 3.45 million ounces, underscoring our consistent track record of execution. Total cash costs and all-in sustaining costs were $979 and $1,339 per ounce, respectively. Both were slightly above the top end of our guidance ranges due to higher royalty costs driven by an average realized gold price of $3,454, nearly $1,000 per ounce above our guidance assumption. We exclude the impact of higher royalties, our total cash cost would have been $937 per ounce, $42 per ounce lower and below the midpoint of our guidance, again, reflecting strong cost discipline and execution by our operating teams. With this performance, we generated strong leverage to the gold price, capturing approximately 95% of the increase in gold price and margin expansion and delivered record financial results across the board, including approximately $4.4 billion in free cash flow for the year. We turn to the next slide. Our record financial performance and continued margin expansion benefited our shareholders, both through increased direct returns and through a materially stronger balance sheet. In 2025, we repaid approximately $950 million of debt and increased our cash position by $1.9 billion, ending the year with $2.9 billion of cash. We delivered record shareholder returns through share buybacks and dividends, totaling approximately $500 million in the fourth quarter and a record $1.4 billion for the full 2025 year. We are in the strongest financial position in our company's history, and we believe we are exceptionally well positioned in the current gold price environment. We expect to continue to increase shareholder returns. We increased the quarterly dividend by 12.5% to $0.45 per share. And at current gold prices, we expect to be more active on share buybacks. To support this, we intend to renew our normal course issuer bid in May and increase the purchase limit up to $2 billion. In 2025, we returned approximately 1/3 of our free cash flow to shareholders, and we see the potential to increase that to 40% or higher this year with flexibility depending on the gold price and the needs of the business. At the same time, we remain focused on further strengthening our financial position. As a reminder, given our strong profitability, we are required to pay a significantly higher cash tax liability related to the 2025 fiscal year this February, which is approximately $1.3 billion, and we have the cash on hand to fund that obligation. Lastly and importantly, we continue to deploy capital in a disciplined manner to advance our highest return organic growth opportunities. While current gold prices are driving strong cash flow generation, we remain committed to disciplined capital allocation with a continued focus on enhancing long-term shareholder value. We move on to the next slide. We have updated our guidance and continue to expect stable production levels over the next 3 years. We're especially proud of the work our team has done as we were able to provide an improved outlook for 2028 relative to consensus, supported by a life of mine extension at Meadowbank and higher levels of production from Canadian Malartic, Fosterville and Kittila. We turn to costs. The midpoint of our 2026 guidance ranges are $1,070 per ounce for cash costs and $1,475 per ounce for all-in sustaining costs. Approximately 60% of the increase in cash costs relative to 2025 reflects higher royalties, driven by a higher budgeted gold price of $4,500 per ounce and the impact of a stronger Canadian dollar. The remaining 40% of the increase reflects expected inflation of approximately 4% to 5% and the impact of lower grade mining sequences. Beginning in 2026, to enhance consistency and comparability across our Nunavut operations, we have adjusted the calculation of total cash costs and all-in sustaining costs to exclude certain payments at Amaruq that are made to the NTI, an organization representing the Inuit of Nunavut. These payments have similar characteristics to mining duties we pay under the Nunavut mining regulations, which are already excluded from the calculation of total cash costs and all-in sustaining costs. Our cash costs and all-in sustaining costs remain hundreds of dollars per ounce below those of our peers, reflecting the quality of our asset base and continued cost discipline. If we look at our capital expenditure guidance, it reflects our focus on reinvesting in the business to lay the groundwork for our next phase of growth. We are accelerating capital at Detour Underground and Upper Beaver through mid-2027. In addition, Hope Bay represents an attractive growth opportunity. If approved, we expect additional capital of approximately $300 million beyond what is currently reflected in the guidance for 2026. Dom, Natasha and Guy will provide further detail on these projects later on the call. Together, these projects represent compelling opportunities that deliver strong returns with significant upside and the potential to create value for decades to come. Overall, our updated guidance reflects a consistent and reliable business at peer-leading costs as we continue to advance our pipeline of growth projects and remain well positioned to deliver meaningful leverage to higher gold prices. With that, I'll turn the call over to Dom. Dominique Girard: Thank you, Jimmy. Good morning, everyone. In my part, I will cover the operation and key project highlights for Quebec, Nunavut and Finland. Q4 has been a very stable, again, consistent quarter that contributed to a strong 2025 on production and costs. Thanks to all employees and management teams for their commitment, engagement, but specifically about the collaboration to keep improving the business. And a good example of that collaboration is about how we are around how we are better usage -- we do a better usage of our data. It is highlighted here in the outlook. At LaRonde, the last 6 months, they've worked on telemetry to analyze the data, the behavior of the equipment and the behavior of the operator to better understand how this was going. And they've been able to improve the number of hours on the transmissions and motors from 3,000 hours up to now 6,000, 7,000, 8,000 hours. This has been done by building an in-house expertise on analyzing data and finding trending and then getting back to the operator, getting back to the trainers to go in that direction. So this is a very good way to be more efficient. And this is also something which is transferable to other operations and other projects that we're currently building. So through that collaboration, now we're transferring that to Goldex and then it's going to go also to other divisions. Same thing with the fleet management system. We're piloting right now at LZ5. So specifically, we're going to have a dispatch system into our ramps for you that have already been underground into a ramp, you could see how it could be a mess sometime. So we're now bringing that to another level. And all that knowledge is going to be rolled out also at Odyssey and Amaruq later this year. Another good news on the outlook is Meadowbank mine life extending up to 2030. Meadowbank has played a very important role in smoothing our 2026, 2030 production profile by bringing those additional ounces. Thanks to the Meadowbank team for this key contribution. Those ounces are, yes, higher risk, but no higher risk. I mean, higher costs, but low risk into, let's say, currently -- current infrastructure. So that's very positive. And thanks for the team also to keep looking for more options to potentially extend it beyond 2030. This is still under review. Next page. Malartic fill-the-mill strategy. So back in 2023, when we released our first or updated study on that, we had 9 million ounces. The mine life was going to 2042. With the good drilling done, we've been able to potentially extend by double that mine life. So with the first shaft, which is illustrated on the first line here at the bottom and the ramp, we're still very in good position to deliver that on time, on budget. But since we are adding more ounces, that could bring us up to 2056, 2057. So this is why the second line is now into play. How could we bring those ounces faster into the time. So the team is working on that to potentially have a second shaft in operation in 2033. That's one part of the vision of the 1 million ounces. Again, back to the 2023, we, at the time, set a vision, okay, how could we bring that to 1 million ounces using just 1/3 of the mill. The first second shaft is a good example. And as well in the last 3 years, we have worked to bring also Marban and Wasamac satellite ore body that's going to be transported to Malartic, and that also could bring more ounces. If you add, you do the sum of that, we're at the 1 million ounces. We are progressing well into the studies, and we're targeting to give you more information on that potentially end of Q3, early Q4 next year that you're going to be able to have a better view on all of them. So very positive news. The-fill-the mill strategy is taking place, and there's still room also at the mill. If you do the sum, all of that, you're going to be at 46,000 ounces per year. So there's still over 25 drills running into the region around Canadian Malartic, and who knows where we're going to be in 3 years from now. Next slide. At Hope Bay, back in 2021 after the acquisition of TMA, we quickly set a target to bring it over, let's say, north of 350,000 ounces per year to make that project economical. So the good news is we are reaching that now, and we are looking to release and to give you more information about that in May this year. The study looks like a 6,000 tonne per day north of 400,000 ounces per year. So we're reaching our target. We're going to be able to start to, let's say, first kick off a 10-year life of mine. This is what we're looking for. And if this goes forward, we're going to be able to spend -- we're well prepared to spend an additional $300 million on top of what we're guiding right now. So it's very positive. And the study is built on strong foundation using Meliadine and Amaruq mine benchmark. So we know what's going to be the cost. We know how we're going to operate that. It is backed with historical background, historical information on the OpEx, on the CapEx, how it's going to cost to build. Secondly, we are over -- we're going to be over 50% of engineering. That was a clear target. We're reaching that. And on the execution, it's not our first barbecue in Nunavut. So we know how to do it. It's going to be the same team using the same contractors or partially same contractors, and we know it's going to be a success. On that, I will pass the mic to my great teammate, Natasha. Natasha Nella Vaz: Thanks, Dom, and good morning, everyone. I'll cover the operational highlights for Ontario, Australia and Mexico. The regions delivered full year production as planned and demonstrated balanced execution across the portfolio. And at the same time, they continue to advance initiatives to further optimize our performance. At Macassa, we're very proud of the team as we've achieved record gold production. And in 2025, anticipating declining reserve grades in the coming years, the team proactively initiated work to increase mill throughput. And now in 2026, we continue to advance these initiatives with a target to increase throughput to 2,150 tonnes per day by the end of 2027. At Fosterville, we're taking a very similar approach to managing declining reserve grades. We now have a plan to increase the milling and mining rate to 3,300 tonnes per day by 2028 through various optimization efforts. And this plan is expected to support annual production of somewhere around 160,000 to 190,000 ounces starting in 2028 and into the early 2030s. And we continue to see significant upside at Fosterville through exploration to support mine life extension. At Detour, despite the pit delays this year, the mill achieved record annual throughput of 28 million tonnes. That represents a 35% increase since the mill expansion began 6 years ago. I just want to take a moment to commend the site team for this achievement. It was a lot of hard work to get there. So I just wanted to say a quick thank you to the team. The team is now focused on further optimization with a revised time line to support a more measured ramp-up to 29 million tonnes, giving the team a little bit more flexibility and to optimize processes and embed sustainable operating practices. Now moving to the next slide. The mill optimization that I just spoke about to 29 million tonnes is part of Detour's next phase of growth, which also includes the development of an underground operation. We're advancing on both fronts, and we have a clear line of sight to achieving 1 million ounces of annual gold production in the early 2030. In 2025, we made good progress in advancing permitting in exploration, in high-intensity drilling, in establishing the key infrastructure on surface and, of course, developing the exploration ramp. So given our increasing confidence in the underground project, we've decided to accelerate approximately $200 million of capital through to mid-2027. This acceleration of capital is expected to derisk project construction and ramp-up and also could accelerate the development towards the main ore zone. At the same time, we're also assessing to begin incremental underground production from a shallower Western extension zone as early as 2028. So since our last project update in June 2024, the mineral resources have increased significantly. As a reminder, only 4 million ounces were included in the underground study update in June 2024, while our year-end mineral resources are now roughly at 6 million ounces in measured and indicated and another 6 million ounces in inferred. And considering the continued exploration success, we feel that there is an opportunity for a larger underground mine than the one we first envisioned. The combination of exploration success and this higher gold price environment has given us a lot of optionality at Detour that we're in the early stages of evaluating. This could include a higher milling capacity, a larger underground scenario or a larger open pit. We said when the study was completed in 2024 that this was just a snapshot in time, and we continue to believe that. So stay tuned. We feel that further opportunity is still ahead at Detour. Now moving to Upper Beaver. The project continues to advance very well there. The exploration ramp is ahead of schedule. And in the fourth quarter, we began shaft sinking and by year-end, the shaft reached a depth of 155 meters. The team has done an excellent job. And given their strong execution, we're now planning to spend an additional $100 million from now until project sanction that's expected in mid-2027. Again, like the Detour underground project, this acceleration of capital is expected to derisk the construction and ramp-up and also accelerate initial production to 2030. Now I've said this before, but the Upper Beaver project could unlock significant long-term value across the company's wider Kirkland Lake camp. In addition to the potential extension of the mineralization at depth at Upper Beaver, the project could also support a centralized mill strategy for satellite deposits that are nearby, like Upper Canada or Anoki-McBean . All in all, the Upper Beaver project is progressing very well. I would like to end by just thanking the teams for their passion, their persistence, their incredible efforts in 2025. It's very much appreciated, and I look forward to continuing to advance the optimization efforts with you and the key projects. With that, I'll pass the call over to Guy. Guy Gosselin: Thank you, Natasha, and good morning, everyone. First of all, I would like to take a moment to thank all of the exploration team at the different mine sites and regional exploration offices across the company for an excellent year for safety, productivity and cost control. We had more than 120 drill rigs in action through the year in 2025 and safely completed nearly 1.4 million meters of core drilling while controlling our unit costs that were slightly lower than previous year. Our commitment to innovation led by our drilling excellence team continue to pay off and will be an important part of our success moving forward as we are undertaking 2026 with an objective to exceed 1.5 million meters of drilling. On Slide 14, the 2025 exploration drill program across our operation and key pipeline project, combined with the acquisition of Marban project next to the Canadian Malartic complex led to a very strong mineral reserve and mineral resources total at year-end 2025. Year-over-year, our mineral reserves are up 2.1% to 55.4 million ounces. Our measure and indicated mineral resources are up by almost 10% to 47 million ounces. And our inferred mineral resources are up by an impressive 15.5% to 42 million ounces, demonstrating the strong exploration upside of our asset. And as we can see on the graph on the right-hand side of that slide, if we look globally since the merger in early 2022, despite the fact that we've mined approximately 15 million ounces over that period of time, we'll still manage to significantly grow our mineral reserves net of mining depletion to a record of 55.4 million ounces through successful exploration, conversion, delivery of studies and smart acquisition over the last 4 years. From a results standpoint, I would like to comment on 3 projects. On Slide 15, in Malartic, the great result produced throughout the year at East Gouldie, Odyssey and the parallel Eclipse zone led to an addition year-over-year of about 470,000 ounces in underground proven and probable reserves and of 2.9 million ounces in inferred mineral resources, including 600,000 ounces from the newly discovered Eclipse zone parallel to the East Gouldie close to our planned mining infrastructure. And on the adjacent Marban project, 128 drill were completed totaling in excess of 39 kilometers of drilling in 2025. An initial mineral reserve declaration of 1.58 million ounces was made from 52 million tonnes at 0.95 gram per tonne as part of our fill-the-mill strategy. The initial mineral reserve was calculated from the existing drill hole database at the time of the acquisition and did not incorporate any of the 2025 drilling. We plan to deliver an updated study of the Marban project at the end of '26, incorporating new drilling as well as additional opportunities for synergy with the Canadian Malartic complex relating to workforce, equipment and facilities in order to optimize Marban as part of our fill-the-mill strategy. Now on Slide 16, at Detour, drilling has continued extremely well in the year with 215 kilometers of drilling completed, mostly focused on the infilling and expansion of the mineral resources towards the west to advance the underground project. 2 areas were specifically targeted, one below and around the center point of the current reserve open pit illustrated here in orange on this graphic. The results in this area continue to support the 2 mining approach with several wide intervals with combined width exceeding 200 meter locally between 1 and 2 gram per tonne, including narrower high-grade intercept reaching up to 10 grams over 10 meters that could be mined sooner from underground while keeping the option to mine a much wider, lower grade surrounding mineralized envelope in a future larger open pit scenario. The other area being targeted is located 3 kilometers to the west and outside to the west of the current ultimate open pit scenario, close to the underground exploration ramp currently being developed. This area also returned strong results up to 10 grams over 10 meters and remains open at depth into the west. At year-end 2025, the resources amenable for underground mine project now stands at 5.5 million ounces in measured and indicated and 5.8 million ounces in inferred. This will provide a much larger mineral resources base for the upcoming update of the Detour underground project compared to the 2024 initial study that incorporated only 4.6 million ounces in the first iteration of the mine plan. And last but not least, at O3, we had 6 drill rigs operating through the year, completing an excellent total of 131,000 meters of drilling in 2025. We continue to see strong results in the Patch 7 area, both at depth and in the southern extension. The excellent result provided through the year led to the addition of 1 million ounces year-over-year in inferred resources, mostly from the Patch 7 area. With the strong addition of mineral resources since the acquisition of the project in 2021, we have a much larger resources base to support the project development -- redevelopment plan that was discussed earlier by Dominique. In 2026, exploration will continue to focus on growing and converting resources to reserve to support the project development and deliver an updated reserve estimate at the end of 2026. So all in all, an excellent year in exploration that translated into a significant addition of reserve to support our short- to medium-term production growth vision, but even more importantly, a very significant increase of 15% in our inferred resources that makes us confident in a bright future. This result keeps demonstrating the phenomenal exploration upside of our portfolio of projects and the outstanding work being done by our great exploration, technical services and operation team across our different operation and key value driver project. And on that, I will return the microphone to Ammar for some closing remarks. Ammar Al-Joundi: Thank you, Guy. At Agnico Eagle, we are proud of our record of growing value per share for our owners over decades, not only by providing full leverage to gold prices, but also importantly, by growing gold production per share. As we look forward, we're excited that even as the second largest producer of gold in the world, we see a clear path to a decade of continued and meaningful increases in production per share at peer-leading costs with exceptional risk-adjusted returns. And we're already working on additional projects that have the potential to add even more growth, including early work on Hammond Reef, Timmins East and Northern Territory. Next slide, please. As you can see, we continue to work hard for all of our stakeholders, and we will continue to build off the same foundational strategic pillars that have served us well over the past 68 years. We're going to continue to focus on the best mining jurisdictions based on geologic potential and political stability. We'll continue to be disciplined with our owners money, making investment decisions based on technical and regional knowledge, creating value through the drill bit and through smart acquisitions where and when it makes sense. We are uniquely well positioned with a quality project pipeline, leveraging existing assets in the best regions in the world and where we believe we have a strong competitive advantage. And we will continue to be focused on creating value on a per share basis and on being leaders in our industry in returning capital to shareholders as evidenced by over 42 years of consecutive and growing dividend payments and increasing share buybacks. In summary, 2025 was a great year for the gold market. 2026 is off to an even stronger, albeit volatile start. And while we don't have a crystal ball to predict prices next week or next month, we do remain constructive and positive on the long-term gold price going forward due to global structural financial and political currents that are not easily changed. Our goal is not only to give our owners full upside leverage to gold prices, but to give them more gold per share over time. We've done that for decades, and we have a solid plan in place to continue to do that over the next decade. all while having the highest quality assets in the best jurisdictions in the world at peer-leading costs. At Agnico Eagle, our business is going well, and we're in the strongest position in our almost 70-year history. Thank you again for joining us on this call. Operator, may I ask that we now open up the call for questions. Operator: [Operator Instructions] And we have our first question from Lawson Winder with Bank of America. Lawson Winder: If I could just tackle the subject of M&A right off the block, and I understand that it's probably a little bit sensitive right now, but any color you could provide would be helpful. But has Agnico decided if they would tender their shares to the offer currently out on Foran. Ammar Al-Joundi: Well, thanks, Lawson. Look, like any M&A activity, the decisions are up to the various shareholders, and there's a lot more shareholders than us. So that's not really something I would be comfortable discussing. Lawson Winder: Okay. I thought I would try anyway, but I completely understand. And then maybe just sticking with that theme, there has been an acceleration in M&A activity in the gold space in recent years, but even in recent quarters. What is the current view from Agnico in terms of M&A? And of course, I mean, I acknowledge that you have tremendous growth potential in the existing portfolio. But I mean, opportunities do emerge from time to time. What is the thinking on that, particularly with respect to jurisdiction, but also just respect to your thoughts on potential urgency around M&A. Ammar Al-Joundi: Well, it's an excellent question. And I'll start M&A, like exploration, like project investment is a capital allocation decision. And it's our owners' money, and we take that seriously. And everything we invest in is designed to create value for our owners on a per share basis. What does that mean for M&A? That means a couple of things. The first part is, are you positioned to be able to identify and assess good opportunities to invest your owners' money, including in M&A. And I think we're very well positioned. You know us. We know everybody in the communities and the regions we work with. We have good relationships. We have, in many cases, a very good understanding of the various assets out there. So we are well positioned, and this is important, like it's easy to buy stuff. it's hard to buy stuff that makes money for your owners. So the first thing is, are you positioned to have a knowledge advantage. And I think we are well positioned there. But what I would say, Lawson, is we are willing to move and we have moved when we see an opportunity on the M&A side that actually creates value per share. We're not interested in just getting bigger. The hard part is actually creating value per share. And so that's going to always be the driver, not only of M&A, but all of our capital allocation decisions. Operator: We have our next question from Fahad Tariq with Jefferies. Fahad Tariq: Maybe just to clarify, there were a few cost productivity initiatives mentioned in this presentation. I remember there were a lot more also mentioned in the last quarter presentation. Is this already incorporated in the 2026 ASIC guidance? Or is this further improvement from the guidance that's provided? Dominique Girard: Dominique speaking. I would say it's partially included, but not all. We all -- it's Natasha and myself role to put the bar at the right place for budget and guidance, but we keep some flexibility in that. Fahad Tariq: Okay. And then just on the underlying inflation, I think the comment was made, and this was in the press release, somewhere around 4% underlying cost inflation. Can you just remind us like -- or any other color on consumables versus labor? Fuel is probably a tailwind at this point. And any key labor agreements that are coming up for renewal in 2026? James Porter: Yes. So Fahad, it's Jamie. I can comment on that. I'd say, I mean, our biggest cost apart from taxes now is labor. It's about 45% of our overall cost structure. And we've seen labor inflation running in around 4%. Across the other consumables, chemicals, reagents, equipment, parts and supplies, there's some fluctuation. But overall, I think across the industry last year, inflation -- cost inflation ran around 5%. So 4% on labor, 5.5%, 6% on everything else. Ammar Al-Joundi: And I'll make the comment. When you observe what's really pushed costs up in the past, it hasn't been so much that labor costs went up 6% instead of 4%. It's been when you can't get the labor and when you can't get the parts. At $5,000 gold, we anticipate there is going to be more pressure on workforces. But one of the advantages we really believe we have at Agnico is our lowest turnover in the industry. We've been the #1 employer in the regions we operate for decades. We have really good relationships with our people. And more than the -- whether it's 5% or 6%, it's going to be, can you keep your turnover low? Are you going to get the kind of productivity that you depend on from really the best workers. And we think we are very well positioned in the market for that. Operator: We have our next question from Josh Wolfson with RBC Capital Markets. Joshua Wolfson: If everything goes according to plan with the project portfolio, I'm wondering if we should expect CapEx to increase in future years? Or should we think about the current run rate as more of a plateau going forward? James Porter: Yes, Josh, it's Jamie here. It's a good question. And I think, I mean, with the 20% to 30% production growth starting in 2030 and ramping up through the decade, you're seeing the benefits of that capital spending. Assuming we go ahead with Hope Bay and approve construction of that project in May of this year, that would add about $300 million to maybe $350 million of capital. So if you factor what we've guided, the $2.1 billion that we guided of the $300 million for Hope Bay, we're about $2.5 billion -- $2.4 billion, $2.5 billion of capital this year, plus another $400 million of capitalized exploration. I think that's an appropriate range over the course of the next few years. We will see capital kind of stay at that elevated level. And then once we start to see that stair step increase in production in 2030, you'd expect the capital to start to come off. Ammar Al-Joundi: And it's important to note, we are voluntarily accelerating these investments. These are not overruns. These are not things we are voluntarily accelerating because at these prices, these projects really do deliver exceptional returns in the sort of 30% to 60% IRR range. And again, our job is to make our owners money. And if we can make them an IRR of 30% to 60%, that's a good thing. So we -- again, to emphasize, these are voluntary decisions we made to accelerate what we think are the best projects in the world. Joshua Wolfson: I hear you. I look forward to these project updates and the IRRs at $5,000 gold. Just on the capital allocation side of things, at current gold prices, even with the new dividend and assuming completion of the $2 billion upcoming NCIB, by our forecast, you're still building pretty meaningful cash at these levels. So when you think about our projections outlined potentially excess of $5 billion in the back half of this year of net cash, how do you think about allocating that in the event gold prices stay at these levels or potentially go higher? James Porter: Yes. Thanks, Josh. I mean, obviously, we want to have as much financial flexibility and financial strength as possible because it just creates optionality in terms of how best to grow value in the business. to Ammar's point, I mean, we've identified the 5 key value drivers and how we think we can expand those. But based on the success that we've had through the drill bit, the projects keep evolving, and there could be the potential for further growth and further accelerations in capital spending. So we do want to make sure that we've got the balance sheet to be able to support that. If we end up between 3% to 5% of our market cap in cash on the balance sheet, I don't think that's a bad place to be. Again, it just gives us that financial foundation to be able to have the capacity to invest in further growth in the business. Joshua Wolfson: Got it. And maybe just to tie in that sort of train of thought and maybe Lawson's questions on M&A. I'm wondering on the M&A side, you sort of outlined, Ammar, the opportunity to create value per share, but there are a lot of projects the company has that look outstanding at current gold prices. So when you think about measuring external opportunities against the internal portfolio, what would make an M&A opportunity really look compelling beyond just per share upside? Ammar Al-Joundi: That's an excellent question, and I'm glad you put it in the context of competing with internal projects because you always want to -- like anything else, you want to pick the best investment for your owners. I think with regard -- so on the one hand, internal projects, you always have more knowledge. You just do. And so that's a bit -- that kind of leans towards -- if I had something at the same return that's internal versus external, your natural reaction would go to the one that you have more confidence in, which is always internal. That said, what would really interest us and what has really driven us for external M&A has really been exploration upside. That -- everything we buy, you know this industry, if you buy a high-quality asset, you end up paying what seems like a full price, but the real value is, are you -- do you have a very strong view on the exploration upside. And that's frankly been the modus operandi of what we've done on the M&A side. The real the real return to our owners has been from expanding what was -- expanding well beyond the initial view of what was there. Operator: We have our next question from Daniel Major with UBS. Daniel Major: Can you hear me okay? Ammar Al-Joundi: Yes. Daniel Major: Great. few questions. First one, can you give us an approximate cost estimate of the ounces coming from the life extension at Meadowbank like out to 2030? Ammar Al-Joundi: Well, I probably should have said to Dom because he's got more updated numbers. I think the last number I saw was sort of in the $2,200 to $2,300. Dominique Girard: Yes, right there. Ammar Al-Joundi: Okay. Good. I just wanted to point out that those are additional ounces. So it's not like the costs went up. These are just additional ounces that make an awful lot of money at current spot prices. Something that's interesting, I'll just throw this out there. Meadowbank is on our books for, I think, $866 million. In 2025, Meadowbank made $870 million in cash flow. So it's been really quite a remarkable asset. Daniel Major: Okay. Yes. And sorry, just to be clear, that 2,200, 2,300 is that's an ASIC, not a total cash cost is correct? Dominique Girard: Yes. Daniel Major: Yes. Okay. Yes, the second one, just to perhaps follow on from the capital allocation question in terms of returning excess cash to Josh's question, yes, I mean, would you consider the combination of buybacks and special dividends in a continued high price scenario? Or would you just extend the EUR 2 billion buyback facility? James Porter: Yes. Thanks. I think we could really do either. I think there's no reason for us to rule out ever paying a special dividend. That would certainly be a consideration in, as you say, a continually rising gold price environment. If we achieve that cap of $2 billion, and we're still generating excess cash beyond what we need or anticipate needing to run the business, then that would certainly be a consideration. Daniel Major: Okay. And then one more, if I could, and it sort of incorporates your current project pipeline and other options. You obviously accelerating capital spend and adding more projects to the pipeline. Do you feel that any point in the organization is reaching a limit in terms of technical and kind of human capital? And if that is the case, in terms of other options like Hammond Reef, Taylor, Holt, et cetera, what could they be worth to somebody else? And would it ever be a consideration to recycle those projects? Ammar Al-Joundi: Again, excellent question. So we always look at how do we get the most money for anything for our owners. So I would say that we are at a point with what we've got on the table very comfortable, but we are using a lot of our people. And so to the extent that we would look at, say, Hammond Reef or some of the others, they would be scheduled to take that into account, the manpower availability. And a lot of these jobs are very highly skilled, highly specific jobs. But your point is a good point. If it makes sense for someone else to own one of those assets, and they view that they can pay our owners more money than we see in it, we would always be open to that. Daniel Major: Okay, great. Thanks and congrats on a great year. Operator: Our next question is from Anita Soni with CIBC. Anita Soni: I think we've talked about capital allocation a lot, but I did want to understand the -- like the way you think about the downside on dividends. I get you guys are conservative and said you never want to cut your dividend. But how did you sort of come up with the 12.5%, say, versus the 25%? Is there some kind of pricing scenario that you're using in order to determine the dividends and that's like the baseline scenario that you use? James Porter: Anita, yes, it's Jamie. There's no specific gold price scenario that we're using in a specific downside scenario to come up with that dividend. The reality is the gold price could pretty well be cut in half, and we'd be okay maintaining that level of dividend. So I'm very confident in an increase. And the increase is $100 million from $800 million to $900 million a year. It's a pretty modest percentage of our overall free cash flow. So very comfortable increasing the dividend to that level. And really, we'll use the share buyback as the -- we will either increase or reduce that depending on our profitability and cash flow generation. Anita Soni: And then secondly, I just wanted to talk a little bit about the projects. So thanks for all the detail on the projects that gives us something to work with to bring to life some of these reserves and resources and that organic pipeline in our models. So could you just -- specifically on Hope Bay, I guess you're putting out an updated study in May. Could you give -- I mean, could you give us a little bit of a teaser on in terms of the CapEx and numbers that we could potentially be looking at? Dominique Girard: Yes, Anita, it's Dominique. Yes, CapEx is going to be around this $2 billion. Again, we're still working on it, but that's where we're looking for. The project is going very well in terms of -- it's like Meliadine, we're preparing the field like we're going to have over 400 rooms, new rooms ready for the construction. We're preparing the landfill. We have currently around 100 people working full time doing engineering to make sure that we're going to be at 50, 60. And this is what you need to be able to have what is the CapEx that's going to be spent. When you have a lot of detail, the good amount of detail, it's easy, you could go in tender, you work with the contractor, the supplier to firm up your number. If that's what we did at Meliadine. We end up 6 months in advance and on budget at the time. So we're looking to do the same thing. Ammar Al-Joundi: And as Dominiquestion sort of said, and I think he used the expression, not our first barbecue in Nunavut. But in Nunavut, because of the logistics if you make a mistake, it's a lot more expensive. And so the team has done a great job on engineering and a great job on preparing the site. I'll add upgrades to the port facility, upgrades to the laydown facility. We've emptied already the previous no building. I mentioned the camp, like all the things between preparation and engineering to make sure that you're in the best possible position for execution, which is important in any project and particularly important in projects that have sort of those kind of logistical challenges. Anita Soni: Just wanted to say congratulations on the growth. That's truly a standout for the senior group. And also on Hope Bay, I think I remember you took a bit of flag for that acquisition 4 or 5 years ago, and it looks like it's going to be -- I mean, just by my rough math, you're like a sub-$300 all-in acquisition and build costs. So congratulations on that. Operator: Our next question comes from Tanya Jakusconek with Scotiabank. Tanya Jakusconek: Can you hear me? Ammar Al-Joundi: Yes, we can, Tanya. Tanya Jakusconek: Okay. Great. I was just going to continue with Hope Bay, if I could, from Anita's question. Dominique, can you remind me, you said if we get the go ahead in May. And by the way, if we do have a mine tour, Dominique, it better be in May or [indiscernible] barbecue for us to attend. Would -- can you just remind me of what exactly you have permitted up there to do for that $300 million that would be spent in 2026? And what exactly would that $300 million go for? Dominique Girard: Yes. We have all the permit to spend that $300 million. It's not an issue. There's some element to do before, let's say, getting into production, but there is no red flag on that. What we're going to spend, it's mainly procurement. It's mainly putting steel, concrete and everything we need. Again, we work with barge season. It's always what we need to spend from mid or let's say, the first barge in September '26, getting to the September '27, we need to put everything on the boat. So it is approximately 8 boats that we need to fill up and to deliver to site and to start some more work. This is one part of the spending. The other part is to do ramp development. So keep preparing the field to be ready for full production in 2030. So that's going to be the other part where we're going to spend money. Tanya Jakusconek: Okay. Okay. Look forward to that study in May. And then I have a second question, which comes back to this capital allocation. again. I wanted to understand, Ammar, from you. First of all, as I look at all of these projects and think about the time frame of 2031 for some of these to come in and '23, should I be thinking that there's about $5 billion of capital to support this growth? Is that somehow how I should be thinking about it? Or maybe Jamie can help me out on that as well. James Porter: Yes, sure. I mean, at a really high level, if you walk through each of the projects, the Detour underground, potentially, if you round up $1 billion Upper Beaver is $1 billion. Hope Bay is $2 billion. Beyond that, we'll be providing an update on San Nicholas likely later this year. But yes, $5 billion to $6 billion of growth spending over the course of '26 through 2030, I think is about the right estimate, Tanya. Ammar Al-Joundi: And I would point out, it's sort of subtle, but the team has done a great job in pretty much keeping the sustaining CapEx steady. Tanya Jakusconek: Okay. And if I can squeeze one more in, I know. But maybe for yourself, Ammar, as you think about this capital allocation and as you think about M&A and as you look at obviously returns to shareholders, one thing is how important is it to own 100% of your assets? And the reason I ask is if Teck was to sell their 50% interest in San Nicholas, would that be something you would consider for your capital allocation? Ammar Al-Joundi: If it made money for our owners on a per share basis, absolutely, we would consider it. Operator: Our next question is from John Tumazos with John Tumazos Independent Research. John Tumazos: We increased the underground resources at Malartic this year, 7.5 million ounces. Should we expect 7.5 million more in the coming year? Or are we getting done with it first. Then second, in terms of converting the inferred resources eventually to reserves, is it more efficient to wait until after 2030 when the first and second shafts might be done, significant development has been completed and the zones can be either visually inspected or channel sampled or close space drilled from underground without the substantial cost of 0.5 mile or 1 mile holes from surface. Guy Gosselin: John, this is Guy. So your first question, this year, we made a big push at converting the outskirt when you look at the pale green mineral inventory in the outskirt of East Gouldie to bring it to the inferred. So this is where you saw the big addition. There's still some mineral inventory in the outskirt, but much less than we were used to have. And it was by design because we wanted to tight fill that mineralized envelope to bring it to infer. And to your second question, we are already kind of doing some with the current infrastructure, with the ramp in the upper part of East Gouldie. We're going to be doing more and more of that conversion to reserve because you're right, achieving kind of the drill spacing to classify it to indicated or reserve is much more cost efficient from underground. So we're going to be doing having access from the current linkage ramp that goes all the way to the East Gouldie and from the upper part of East Gouldie, trying to do as much of the reserve conversion from underground. But there will be also a continuation of drilling from surface. But we've seen over the total number of drill rig that Dominique was mentioning, there is a progressive shift towards much more drilling from underground compared to the drilling from surface. So we were really aiming to bringing it to infer from surface, and we're going to be doing a lot more of the conversion towards reserve from underground. For the reason you mentioned, the fact that in order to achieve the drill spacing at 30- to 40-meter drill spacing, it's much easier to achieve that and less -- and more cost effective to do that from underground. John Tumazos: Is it sort of the maximum capacity to add 2.5 million ounces a year to reserve? Or could it be faster? Guy Gosselin: To resources you meant because in terms of reserves. John Tumazos: No, no. from inferred to reserve. Guy Gosselin: From inferred to reserve, this year, for example, we've added 470,000 ounces and our pace is about that to convert about 0.5 million ounces from resources to reserves moving forward. I think that's the achievable pace we're targeting. John Tumazos: So you got 20 years' worth of that in front of you? I'm kidding you, Guy. Operator: We have our next question from Bennett Moore with JPMorgan Chase. Unknown Analyst: Congrats on a record year. Could you unpack the slowing of the mill ramp and change of sequencing at Detour Lake a bit further and implications on cost and CapEx for the next few years ahead of that growth trajectory into the next decade? Natasha Nella Vaz: Sure. You're talking about the time line, Bennett, for the mill ramp-up at Detour? Unknown Analyst: Yes. And any implications, I guess, also including incremental stripping and things like that. Natasha Nella Vaz: Okay. Sounds good. So I'll start with the mill. So in terms of the mill, we did reach 28 million tonnes this year. It's a remarkable achievement for the team. The mill has been in expansion mode for the last 6 years, Bennett. And so the team was looking to just take a bit of time to stabilize the throughput and ensure that we have the sustainable operating practices in place. And this just gives the team a little bit of flexibility. So with respect to the time line, we're looking at still getting the mill up and running to 29 million tonnes by 2030. And at the same time, when we reran our life of mine plan, we're looking at reaching the 1 million ounces in the early 2030s. So not much of a change on that end yet. Ammar Al-Joundi: Yes. Part of the thing with -- and this is getting maybe a little bit pedantic, but it's not just the throughput, it's make sure you don't have any recovery issues, you don't have any reliability issues. So Natasha's point, it's -- they've done a great job. And I think we have some of the best people in the world on that, and we always take their advice on how to do things the best way. Unknown Analyst: And then coming to Meadowbank, the mine life, it's nice to see extended to 2030, even if it's incrementally higher cost ounces. But wondering if you could give a better understanding of the opportunity beyond 2030 as it relates to an underground-only mine. I mean could this be of similar size and scale as we've seen over recent years? Dominique Girard: Yes. The team are looking, targeting, and again, this is very conceptual 250. Is it something possible by -- we know it is going deeper underground. So we could just keep mining. They're also looking for smallest pushback here and there. They're looking below what we've mined at Goose at the time, below what we've mined at Vault at the time, putting that together to see could we extend the Meadowbank. Of course, the USD 5,000 per ounce gold price is very welcome for Nunavut, for Meadowbank. It is also very welcome because we keep drill -- the drill keep running. And who knows? We just need one hole, and that could change the picture. So it's very positive. Yes, it is higher cost. But as Ammar mentioned, it is on top of with existing infrastructure with minimal CapEx to deliver that. So we are still working on it. Maybe 20, I will say not before 2027, we give you -- we could give you more on that. Let's see how the team is going to be able to work at it. Operator: There are no further questions at this time. I will now turn the call over to Mr. Ammar Al-Joundi for closing remarks. Ammar Al-Joundi: Thank you, operator, and thank you, everyone, for joining us. Please have a, for those of you who get the long weekend, please enjoy it with your families. Thank you. Operator: And thank you, ladies and gentlemen. This concludes today's conference call. We thank you for your participation. You may now disconnect.
Operator: Greetings. Welcome to the Electrovaya Q1 2026 Financial Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, John Gibson, CFO. You may begin. John Gibson: Thank you. Good afternoon, everyone, and thank you for joining today's call to discuss Electrovaya's Q1 2026 financial results. Today's call is being hosted by Dr. Raj Das Gupta, CEO of Electrovaya; and myself, John Gibson, CFO. Today, Electrovaya issued a press release concerning its business highlights, financial results for the quarter ended December 31, 2025. If you would like a copy of the release, you can access it on our website. If you want to view our financial statements and management discussion and analysis, you can access those documents on the SEDAR+ website at www.sedarplus.ca, the SEC's EDGAR website at sec.gov/edgar or at our updated website at www.electrovaya.com. As with previous calls, comments today are subject to the normal provisions relating to forward-looking information. We will provide information relating to our current views regarding market trends, including their size and potential for growth and our competitive position within our target markets. Although we believe that the expectations reflected in such forward-looking statements are reasonable, they do obviously involve risks and uncertainties, and actual results may differ materially from those expressed or implied in such statements. Additional information about factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in the company's press release announcing the Q1 fiscal 2026 results and the most recent Annual Information Form and Management's Discussion and Analysis under Risks and Uncertainties, as well as in other public disclosure documents filed with Canadian and U.S. securities regulatory authorities. Also, please note that all the numbers discussed on this call are in U.S. dollars, unless otherwise noted. Now I'd like to turn the call over to Raj. Rajshekar Gupta: Thank you, John, and good evening, everyone. It is a pleasure to speak with you today as we review our first quarter fiscal 2026 results. Q1 provided a strong start to the year. Historically, this has been our weakest quarter due to seasonality in our core material handling vertical. Despite that, we continue to demonstrate meaningful momentum. Revenue increased nearly 40% year-over-year, margins improved materially, and we maintained profitability, delivering approximately $2 million in EBITDA and over and about $1 million in net income. I'll begin by highlighting key operational developments during the quarter and year-to-date, followed by updates on our product and manufacturing initiatives. During the quarter, we further strengthened our balance sheet through a combination of solid operational performance, support from our financial partners, and the equity raise completed in November 2025. We ended Q1 with the financial foundation to execute the next phase of our strategy, including expansion of manufacturing capacity in Jamestown, New York, expansion into new verticals, and continued development of next-generation products and technologies. Within our core material handling vertical, we continue to make strong progress. Our new OEM integrated high-voltage battery systems, developed over the past 2 years, are now scheduled to begin commercial deliveries in March 2026. We also made deliveries during the quarter to an existing global defense contractor for our new vehicle platform, expanding our relationship to two distinct applications with that OEM. We expect defense to become a meaningful contributor to revenue this fiscal year and a strategic priority for the company over the long term. In robotics, we initiated commercial deliveries of our latest modular 48-volt battery systems to a robotic OEM partner this January. We view robotics as a high-growth vertical aligned with our technological strengths, and we expect deployments to accelerate. Testing of our initial Airport Ground Support Equipment battery systems continues across multiple locations and climate conditions with a leading U.S. airline. While this process has taken a bit longer than initially anticipated, we remain optimistic and believe this product line represents a meaningful long-term opportunity. We also established a Japanese subsidiary during the quarter to support growing demands across Japan and the broader Asia Pacific region. We are seeing encouraging interest across multiple verticals and believe this presence will support long-term growth in the region. Turning to some product development activities. Demand trends in automation, robotics, advanced mobility, and energy storage for data center infrastructure are increasingly aligned with Electrovaya's core strengths, which include safety, cycle life, and high-power capability. We are making strong progress on several key initiatives, including the rapid charging version of our Infinity technology and new energy storage systems focused on high power, especially 800-volt DC architectures. Our ultra-fast charging power system cell development is advancing well. This product integrates a next-generation anode technology with our Infinity platform, including our ceramic separator technology, to deliver enhanced safety and long cycle life while targeting five-minute charge and discharge capability. We have seen significant application potential, ranging from high intensity robotic systems to data center infrastructure support, and we are targeting commercialization in 2027. In parallel, we are developing energy storage systems, energy storage systems designed for emerging 800-volt DC data center architectures. These systems are intended to provide short duration ride-through capability and manage rapid power fluctuations associated with workload shifts and generator transfers. We are currently in early-stage discussions with potential partners in this area. To support these initiatives, we recently hired a new Head of Energy Storage with extensive industry experience to help guide our technical and commercial strategy for this key area. We are also advancing our next generation ceramic separator technology, which is expected to further improve energy density and thermal stability beyond our current platform. We are already seeing strong results and are moving forward with plans to domestically scale up this strategically important technology. Closer to market, we plan to launch new products for Class III material handling vehicles, as well as next generation software and analytics solutions at MODEX 2026, this coming April. Finally, regarding our Jamestown expansion, we have commenced both interior and exterior facility upgrades. Initial dry room equipment required for cell manufacturing has been delivered, and we've begun hiring key personnel to support equipment installation and automation activities. This expansion remains a critical component to our strategy to increase capacity and support domestic production. With that, I will now turn the call over back to John for a detailed review of our financial results. John Gibson: Thanks, Raj. Electrovaya continued its steady growth into the first quarter of fiscal 2026. As Raj mentioned at the top of the call, the company has historically had lower revenues in this quarter due to customer seasonality. However, Q1 showed significant growth year-over-year, and we entered Q2 fiscal '26 with a strong balance sheet and the capital to continue our engineering focus on new market verticals and support organic growth. Revenue for the quarter was $15.5 million, compared to $11.1 million in the prior year. Year-over-year growth of 39%. Our gross margins for the quarter were 32.9%, an increase of 240 basis points over the prior year gross margin of 30.5%. As is the case with previous quarters, gross margins are primarily driven by product mix. However, managing suppliers, prices, and tariffs continues to be at the forefront of our activities as we scale. Management believes the company is well-positioned to maintain strong margins as we continue through 2026. Operating profit increased significantly year-over-year. Operating profit for Q1 was $1.4 million, compared to an operating loss of $0.2 million in the prior year, and the company generated a net profit of $1 million in the quarter, a significant increase from the net loss of $0.4 million in the prior year. Q1 now represents the fourth consecutive quarter of net profit and positive earnings per share, and we believe we can continue this trend of profitability into fiscal 2026 and beyond. Our adjusted EBITDA was $2 million for the quarter, compared to $0.5 million in the prior year, an increase of $1.4 million or 265%. EBITDA grew in the current year due to improved margins and managing operating costs. Adjusted EBITDA as a percentage of revenue was 13% for the quarter. The company generated positive cash flow from operations of $1.7 million, after accounting for net changes in working capital, compared to cash used in operating activities of $0.3 million in the prior year. The company ended the first quarter with positive net working capital of $51.9 million, compared to $12.6 million in the prior year, a current ratio of 6 compared to 1.6. A clear indicator of improved financial performance and management is committed to continuing this positive trend. At December 31, our total debt was $27.3 million, compared to $15.3 million in the prior year. This debt includes both working capital debt and debt from the EXIM facility. The working capital debt was $10.9 million at the end of the quarter, a decrease of $4.4 million over the prior year. This improved debt balance was driven primarily from cash flows from operations. At the end of the quarter, we had drawn $16.4 million from the EXIM loan. We're still in a period of no cash payments with EXIM, with interest payments starting on March 31, 2026, and principal payments starting March 31, 2027. During the quarter, the company raised gross proceeds of $28 million from an equity issuance. The company has utilized some of this cash for engineering and R&D efforts at the end of the quarter. The company had cash on hand of $22.7 million and availability within its banking facility of $9 million. We believe we have adequate liquidity to support our expansion into these new verticals and our anticipated growth as we continue through fiscal 2026. The company made a solid start to fiscal '26, maintaining disciplined progress across operations, which we see continuing into Q2. We expect to build on this momentum as we continue through the remainder of the fiscal year and are reaffirming our revenue guidance of 30% growth for fiscal '26. Finally, I wanted to elaborate on one of the items detailed in the AGM material relating to the re-domiciling of the company. After our equity financing in November, and based on trading activity being substantially higher on the NASDAQ than the TSX, the company expects to lose its foreign private issuer status and be treated as a U.S. domestic filer under SEC rules. This change will subject the company to the full domestic reporting and governance regime, but absent a change in corporate domicile, without the structural and legal advantages typically available to U.S.-incorporated issuers. In addition, as a U.S. domestic issuer, the company will become eligible for inclusion in certain U.S. equity indices. Taken together, these changes position us to broaden our investor base, improve trading liquidity, and ultimately enhance long-term value for our shareholders. That concludes our financial overview. Raj and I would now be pleased to hold the question and answer session. Operator: [Operator Instructions] Our first question comes from Colin Rusch with Oppenheimer. Colin Rusch: Could you give us a bit of an update in terms of the scope and scale of the customers that are moving into your sales funnel, and then how quickly they're moving through and how quickly they're getting qualified on the product? We're just curious about the velocity of some of that sales activity. Rajshekar Gupta: Thanks, Colin. Are you referring just in general or specific verticals? Colin Rusch: Yes. Specific to material handling, just related to numbers. Rajshekar Gupta: Yes, material handling. So in terms of the end customers, there are -- it's dominated by a number of large Fortune 100 and Fortune 500 companies. The largest two buyers have given us very good indications of their demand over the next -- for the full fiscal year, which is partly how we determined our guidance for the year. And they are large retailers, generally, of course, like to take delivery, especially in the quarters outside of this reported quarter. So there, we have very good visibility. At the same time, we have a pipeline of new customers in various stages. Sometimes they're just testing solutions. More often, they have already done that, and they're ordering small batches of systems to get to pilot and then full, full distribution scale. So there, there are various stages there, and that's a pretty good place to be in that segment. So, we're seeing good from there. We're also now starting to add some additional sales resources to broaden that pool. But in the other verticals, I'll talk about robotics there a bit. So we already have a number of partners we have, and we're already now shipping growing numbers of batteries to a couple of these OEMs. For instance, if you visit our plant today, you'll see quite a large number of smaller 48-volt battery systems under various stages of assembly, and that's for robotic applications. But, in addition to that, we are in discussions with approximately three or four additional OEMs in that space. Of course, you know, when you're working on OEM projects, it takes, there is a time quotient, which is a little longer than a standardized product, which is the material handling product. The long answer to your question. Colin Rusch: No, that, that, that's super helpful. And then I'm just curious about preparations for the pilot on the stationary storage project or, product. How those are proceeding, if you had any incremental interest since announcing the new product, where it's a little bit different, you know, characteristics and, and performance specs. It seems like it's, it's really well-tuned to what we're seeing on the data center side in terms of what the real needs are? So just curious about the, the timing on those pilots and, and growth and potential customers there. Rajshekar Gupta: Great question. So essentially, we're coming out with two products for the energy storage space. One is more of a standardized product, which is based on the existing cell that we currently manufacture. And it's a design for high power applications still, 30-minute, 1-hour energy storage. And for that product, we have pilots scheduled. One is a government-backed, a U.S. government-backed project, which we'll hopefully announce soon. And then we are planning some internal pilots as well before we put them at customer sites. The second product, which I mentioned in our prepared remarks, is that 800-volt DC system. And that is something that we've been in discussions with, I'd say some generation, electricity generation companies. So if you look at these data centers, they're often putting diesel gensets and turbines on-site for jet power generation. But those devices need, when you're looking at these 800-volt architecture, they need a energy storage component to deal with the seconds to minutes of demand response there. And so that's the system we're very excited about. That's under development right now, and that system will utilize this ultra-high power cell that we're developing. Operator: The next question comes from Daniel Magder with Raymond James. Daniel Magder: Just curious, as it relates to these new verticals, given the announced deliveries in the defense sector, do you still expect robotics will be the second largest revenue driver in the near term or could defense potentially leapfrog it? Rajshekar Gupta: We are expecting robotics this year to be larger than defense, but they'll both be present in a material way. The robotics deliveries have just started in the current quarter, so there were zero deliveries in fiscal Q1. Daniel Magder: And I guess just a follow-up here, recognizing you have the EXIM loan, the New York State grants and incentives. Given, obviously, the growth in defense and the current administration's focus on it, are there other potential government programs you think you could potentially be able to tap into? Rajshekar Gupta: We think so. This is something that we're starting to look at. Currently, our number one focus is, of course, getting the partners, the right partners here. So we already have two very good, well-established defense contractor customers. We are in discussions with another two. One of them is planning to test our products. So, I think that's the route we're going at it. Eventually, as perhaps look at some of those opportunities you just mentioned. Daniel Magder: Got it. And, I guess lastly for me, given all the positive progress in other areas, is energy as a service still a key initiative for you? And, just wondering if you could provide any color on how it's progressing. Rajshekar Gupta: It still is a key initiative. It is, we are -- we have, what we've seen is some of the customers we thought would be going down that route, decided to make, purchase orders instead, which is great, of course. However, we are looking at a couple partnership opportunities to support energy as a service. One route is partnering with a group who has a large company who has a long history in supporting similar type of activities. And that's something we're considering pursuing. Operator: The next question comes from Eric Stine with Craig-Hallum. Eric Stine: Just jumping around between calls, so I apologize if I'm touching on things you already have. But maybe just material handling, I know that's, the lion's share or the majority of your outlook here in fiscal '26. But when you think about that growth and when you think about the opportunity going forward, how do you think of that between existing versus adding new customers, and, you know, maybe penetration level with those existing customers that you've currently got? Rajshekar Gupta: So today, Eric, we're already supplying at various stages of penetration level, the world's largest companies. And so you couldn't have a better pool of end customers than we have. They all are relatively early in adoption rates, right? So if you look at the addressable market within our existing customers, it's massive, right? So the need to bring in new end customers is actually not, you know, it's important, but it's the larger opportunity is selling more to the folks who are already buying the product. In terms of penetration rates, I'd say we're still early days. The largest operator of our systems has a very large number of distribution centers globally. So I'd say we're early innings with the existing customer base. Eric Stine: Got it. And maybe following up on that, you know, I know that your thought process has been that your solution is really applicable to all sizes of facilities for those existing customers. And has that come to fruition? Are you thinking any differently about the opportunity? And I guess that just speaks to the size of the overall opportunity. Rajshekar Gupta: Yes. The number of solutions -- battery systems we deploy at a typical distribution center can vary widely. There doesn't seem to be a limit to how large a site we can support. And it's so I'd say that's not really a factor. John Gibson: Yes. And we have a site, Eric, with over 300 batteries deployed in vehicles. Rajshekar Gupta: Yes. Eric Stine: I was actually getting at it the other way, that there are some solutions out there that it's, you know, it's tougher to go to the medium and smaller sizes, which is obviously a big part of the market. Whereas that is an area where, you know, I would think that you do quite well in. Rajshekar Gupta: For sure. So there are plenty of sites operating our solution with probably under 10 systems. So there seems to be a broad range that we can service. Eric Stine: Okay. Let's see. Maybe last one for me, just on the defense side. So just so I'm clear, so what you called out is just, you know, so expansion with one of, I think, you currently have two, defense contractors that you've been working with. So I guess first, just confirming that. And then secondly, when you talk about the two plus two additional you're talking with, I mean, are these -- I know it's hard, you maybe can't disclose a whole lot, but are these similar applications with those contractors or is it using your solution in a wide range of things? Rajshekar Gupta: It appears, you know, we only know so much, but it appears these are different applications. So with the defense contractor we discussed in our prepared remarks, they initially, and they continue to use our solution for an autonomous land-based application. And the second application, which we just made initial deliveries for, is for a hybridized vehicle system. The second defense contractor is a submersible application. But in general, you know, we see defense as a good vertical for this technology, given the safety and high performance of our technology. Operator: The next question comes from Craig Irwin with ROTH Capital Partners. Craig Irwin: So, Raj, I have a bunch of small questions around Jamestown that would be really, you know, important to understand as we shape the future. So the first one is, the CapEx outlook for this year. Can you maybe, shape that as far as the quarterly tempo and what your expectations are in this fiscal year? And then, associated with that, you know, where, where do you stand on the, the hiring and training of the workforce, that would be necessary, sort of in tandem with the installation and, and commissioning of that equipment? Rajshekar Gupta: Yes. Craig, I'll let John answer the first part, and I'll jump on the second part. John Gibson: Hi, Craig. So essentially, where we were at the end of the quarter was we'd drawn $16 million, just over $16 million of the full $50 million EXIM loan. So we expect to spend that money before the end of the fiscal year or at least, you know, 90% of it, kind of before the end of the fiscal year. So from a CapEx perspective, you're going to see an increase, certainly within Q2 and Q3. The majority of it will be within Q3 and Q4, though. So yeah, fully spending or at least spending 90% of that loan, and including that CapEx within the fiscal year. Rajshekar Gupta: Yes. and on the second question, Craig, we are hiring people right now. So, about six months ago, we hired a senior individual from LG Chem, who was closely involved with one of their large-scale giga plants. And more recently, we've started hiring other employees. Some will be located at the site, who have experience with other battery manufacturing sites in the United States, some of which may have been closed down. We also hiring great talent, hoped to, you know, there's a long list of folks we're in process of giving offers to, and it seems to be an opportune time to bring in these types of individuals. If we were building this plant a year ago, it would have been much harder to find this level of talent that we're seeing in the market today. Craig Irwin: Understood. That's a good thing. So, next question is, can you maybe give us some color on the revenue contribution out of the Jamestown facility this year? You know, I know your cell manufacturing is supposed to start at the end of the year, if you could just confirm the timeline for that. But do you expect any cell revenue in 2026 from the Jamestown facility? And, you know, roughly what percentage of revenue would you expect this facility to contribute? Rajshekar Gupta: Yes, Craig, all along, we were anticipating Jamestown, especially at the cell level, contribution starting from fiscal '27. So fiscal '26 for us ends at September 30th, and there will be no cell contribution to revenue. Battery systems, on the other hand, that's different. We will, you will likely see, some revenue generation out of that plant in our fiscal fourth quarter, both probably on a module and system side of things. Craig Irwin: Sorry, I meant calendar year. So I'm assuming that all of the cell manufacturing equipment will be in place in your fiscal year before the end of September, with commissioning work underway. But do you expect cell production in that facility in the first quarter of your fiscal seven, the last three months of this calendar year? Rajshekar Gupta: Potentially, correct. Potentially, yes. Of course, it's going to -- It doesn't start out. We'll make sure the output of the plant is matching what we need, of course, right? There's a bit of a start-up period associated with that, but we could most definitely see some contribution in that quarter. Craig Irwin: Understood. Last question, if I may. Can you update us on 45X, what you think the benefit will be on equipment purchases, whether or not you're seeing tariffed equipment impacted, and what you think the potential contribution is, you know, once you are manufacturing your own cells in Jamestown in fiscal '27? Rajshekar Gupta: So there'll be two parts of 45X. There's the $10 per kWh associated with module production, and then there's $35 per kWh associated with cell production. And under the new rules, under the Big Beautiful Bill Act, you can only get one or the other. So what we anticipate is we will start off with the $10 per kWh as we manufacture modules, and when the cell production hits a certain speed, we'll transfer to the $35 per kWh and for the cells and sacrifice the modules. Operator: Up next is Amit Dayal with H.C. Wainwright. Amit Dayal: Most of my questions have been asked, but just with respect to the outlook for the year, you know, the backlog still is at $100 million-$125 million. So the, you know, the top-line guidance seems a little conservative. You know, can you maybe provide any color on what could drive upside to the 30% growth you are targeting this year? John Gibson: So the growth is based on not just the backlog, but the frontlog as well. So that number you quoted is backlog plus frontlog. So essentially, we're taking purchase orders we've received, purchase orders that we know are coming in, confirmation from customers of demand, and then our, you know, our estimates of run rate. And then what we do is we take that number and discount it back based on historic experience with customer delays or purchase order changes, et cetera. So, yes. Rajshekar Gupta: And Amit, you know, 30% growth is not a bad number. I think there, as you can see in our Q1, right, and some people forget this, there is some seasonality on our core material handling vertical. Sometimes distribution centers open a little later than they plan to, if they're a new site. So there's some of that activity you have to take into account. But, of course, there's some upside. You know, we haven't taken into account meaningful revenue from the airport ground equipment space, which could most certainly come into the current fiscal year. But overall, you know, we're very focused on maintaining growth, maintaining the profitability, and these new product developments and new technology developments, in addition to the Jamestown setup. Amit Dayal: Understood. And then on the solid-state side, any important milestones you are targeting to hit this year? Do these include maybe any pilots that could begin with customers? Rajshekar Gupta: Yes, good question. I didn't discuss the solid-state battery much in the prepared remarks, but we had reached a certain level of development, I'd say, back in the summer, which was looking good, but we were somewhat hamstrung by equipment in terms of to get it to a pilot scale. We ordered the equipment several months back. It has arrived at our lab site already and is being installed. So we will start scaling up cells using our solid-state battery technology really from April onwards. And at that point, if things look good, we will start looking to sample them as well. So there's definitely activity there. We've added a couple of key researchers to our team. Most definitely, we have not forgotten about that technology. On the IP side as well, we're close to being awarded some patents around our solid-state technology, but, you know, we're in the back and forth with the examiners at the moment. Operator: Next question comes from Jeffrey Campbell with Seaport Research Partners. Jeffrey Campbell: Raj, my first question is, I assume the OEM integrated high-voltage batteries refers to Toyota heavy-duty MHE, but you can correct me if I'm wrong. If so, can you give us some color on how many models are integrated at present, and what it might look like over the next couple of years? Rajshekar Gupta: Yes, you're probably correct. You are correct, yeah. The model I referred to is a high-voltage system, which is going into -- there are a couple models of batteries and is going, we believe, into two distinct vehicle systems. And so there are orders for those vehicles already. The reason production is starting in March is it coincides with certification. Jeffrey Campbell: Okay, great. My next question was regarding the solutions you mentioned. I think you're going to have a place where you're going to display your solutions targeting Class III MHE. I was wondering, is this going primarily to robotics applications or will you also support more traditional Class III equipment? Because I believe in the past, you've tended to identify Class III as generally unable to support your margins. Rajshekar Gupta: It is the latter. So it's our expanding in the material handling vertical with a Class III product, which we normally had shied away from. We believe we can maintain those margins. The reason we're developing that product is it has sort of been driven customer-driven, and but we will be able to maintain the margins with that product. It takes advantage of some aspects of the robotic battery systems that we've developed, so there's some overlap in the design of the system. Jeffrey Campbell: Okay. Yes, that's very interesting. And I guess my last question for today is kind of a more open-ended one regarding the next-generation ceramic separator development that's undergoing. I was just wondering, what are the specific areas that you see demanding improvement here? I'm not trying to be coy, but the existing tech is class-leading, so I'm interested in your insight here. Rajshekar Gupta: Yes. That's definitely a valid question. So the current technology is working well. It's very well-validated. Of course, you want to continue to improve that technology, and that's one aspect of what we're doing here. Improvements would be to make it thinner, make it even higher thermal stability, use new novel materials, which we're working on. And also, the current separator is working very well. It's being manufactured under contract in Japan. This one will be manufactured domestically. So that's another, I wouldn't say benefit, it's just an addition. But it supports some activities, like, for instance, this high, super high, ultra-high power cells. It has a benefit there. Potentially, this new material can also be utilized in other cell formats. That would be a major breakthrough for us, but it's too early to say. Jeffrey Campbell: We'll stay tuned for that. That sounds provocative. Operator: We have a follow-up coming from Colin Rusch with Oppenheimer. Colin Rusch: I was missing asking around the ground service equipment opportunity and how we should think about the cadence of that moving forward, going from piloting into a more substantial order and kind of the order of magnitude of that opportunity set for you guys right now? Rajshekar Gupta: So what we're looking at is to go to that more substantial order. We've already received some pilot orders, which are essentially already been delivered or some of them are mostly been delivered, but this would be a go to scale, right away. And so the opportunity we're looking at with this first airline is for, for a reasonably large-scale deployment. Operator: The next question comes from Graham Tanaka with Tanaka Capital Management. Graham Yoshio Tanaka: I'm just putting this all together. You have a lot of moving parts, and I just wonder if you could summarize for the next two years, what are the main areas that can increase gross margins and operating margins versus decreasing? And on the decreasing side, if you could address your semiconductor content and what kind of cost increases you're getting in semiconductors. Rajshekar Gupta: So, overall, you know, as you saw in this current quarter, margins improved, going from about 30% to about 32%. We expect to maintain that level of activity, that level of improvement in the coming quarters. That's sort of what we're anticipating. Those, I'd say, relatively modest improvement in margins, but it comes with, you know, it correlates to improved financial results. The bigger change in margins will occur following Jamestown cell production coming online, and that will be due to, A, you know, the vertical integration, but B, the ability to leverage the 45X production tax credits. And the second part of your question on, I guess you mean-you don't mean semiconductors, you mean input materials. We're, you know, Electrovaya, our batteries are generally more expensive already, so input material price variations have an impact, of course, but I probably have a more nuanced impact than it does on our commodity-driven rivals. Graham Yoshio Tanaka: So, I just want to make sure that if there's any issues on supply or cost increases in semiconductors, which we're seeing across all Silicon Valley companies, whether you can cover any cost increases and can secure all supply that you think you might need in semiconductors. Rajshekar Gupta: So in terms of material inputs, the one that, you know, has fluctuated is lithium carbonate pricing, but it hasn't fluctuated enough for us to have any noticeable impact on margins. We, of course, can also update pricing to our customers, which we haven't needed to, if those prices do go in the wrong direction enough. The only materials which probably are common with the semiconductor space is maybe alumina, but there, again, it's not substantial enough in our bill of materials to have a major impact. Graham Yoshio Tanaka: Right. That's great. I don't know if you can have added it up, but what percent of your business can be coming from military spending? You addressed defense, but it kind of goes into a few different areas. I'm just wondering if that is going to rise as a percentage of the mix and are the margins going to be lower in defense? Thank you. Rajshekar Gupta: So sorry, on the last part, margins in defense, we would expect to be higher. Now, the defense space, at least from our experience, it moves slowly in terms of qualification, and they're very, very careful. A lot of testing validation goes into this. There's also certain certifications. I don't want to get too deep into it, but there's MIL and Navy certification levels that you have to achieve sometimes. So it moves -- It's a sticky space. Once you get designed in, you're designed in. But in terms of how quickly it scales in volume, my anticipation is it scales slowly. Operator: We have no further questions in the queue. I'd like to turn the floor back to management for any closing remarks. Rajshekar Gupta: That concludes our call this evening, and thank you for listening. We look forward to speaking with you again after we report our second quarter 2026 results. Have a wonderful evening. Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Sebastian Frericks: Good morning, ladies and gentlemen, and welcome to the three months '25/'26 analyst conference of Carl Zeiss Meditec. My name is Sebastian Frericks, I'm the Head of Investor Relations. Our CEO, Andreas Pecher; and our CFO, Justus Wehmer, will present the three months results and guide you through the financials and some prepared remarks. After the presentation, we look forward to the Q&A. I would like to hand over to Andreas. Please go ahead. Andreas Pecher: Thank you. Good morning, dear analysts and investors. Welcome to the three months '25/'26 analyst conference of Carl Zeiss Meditec AG. Maybe some of you know that I've been at Zeiss Executive Board Member since January 2022. Back then, in the very early part of that month, Meditec was valued above EUR 16 billion. Now it is valued at below EUR 2.5 billion. This is not acceptable for all of you and also not for Zeiss. Zeiss has taken the biggest loss of all above EUR 8 billion since then. And the new low point also is in the level of trust when we have to withdraw our full year guidance on January 22. The minimum I can do is to apologize, which I want to do personally and on behalf of the Management Board. I assume more important for you and also Zeiss as the main shareholder is that we reverse the trend and build up trust again by working on our business performance and meet what we said before over and over again. For that, we need to strongly focus on execution now. We will talk about how business conditions have evolved since our last update in December 2025 and what the key building blocks are for the remainder of the fiscal year. Justus will address these topics in more detail later in the presentation. And of course, following the presentation, we'll be happy to take your questions. But before that, Justus and I will walk you through the quarterly overview and financial results. So, let me start with an overview of our first quarter performance. Well, to cut it short, this was not a good quarter, and we're not happy with the results. We had a weak start to the year with both revenue and EBITA coming in below the prior year, driven primarily by currency headwinds and an unfavorable product mix with weaker sales of refractive treatment packs as well as intraocular lenses in China, which weighed on margins. Revenue for the quarter amounted to EUR 467 million, representing a decline of 4.8% year-over-year. On a constant currency basis, revenue declined by 2.1% year-over-year, driven primarily by movements in the U.S. dollar. When fully reflecting all currency headwinds, FX effects amounted to EUR 20 million. FX-adjusted revenue was relatively flat at minus 0.7%. And beyond the U.S. dollar, these currencies -- currency impacts were mainly related to the Chinese yuan. In this adjustment, we are also eliminating all currency effects related to the exports into the ZEISS Group global distribution network. The revenue decline was visible across both equipment and consumables. The quarter was impacted by a soft start into the fiscal year following an exceptionally strong equipment delivery baseline in September last year. And in China, we also saw revenue loss from bifocal intraocular lenses following the withdrawal from the current VBP tender as well as delayed sales of refractive treatment packs due to the later timing of the Chinese New Year holidays. Looking at the revenue mix, equipment accounted for 52%, consumables for 37% and services for 11% of total revenue in the quarter. Order intake reached EUR 471 million, down 9.7% year-over-year or down 6.9% on a currency-adjusted basis, which is mainly related to the strong year-end close in September 2025. Our order backlog increased to EUR 405 million at a slightly higher level compared to the end of last fiscal year. Now turning to profitability. EBITA came in at EUR 8 million, a 77% decline versus the prior year, resulting in an EBITA margin of 1.7% compared to 7.2% last year. The significant decline was mainly driven by negative FX effect and unfavorable product mix and negative operating leverage as our cost base remained largely stable while revenues declined. So, now I'd like to hand over to Justus, who will provide you with more background and will discuss the SBU figures in more detail. Justus Wehmer: Yes. Thank you, Andreas, and also a warm welcome to all of you from my side. So, as usual, I will briefly walk you through ophthalmology performance first and afterwards, microsurgery. So we had a weak start, driven mainly by refractive phasing and a loss of bifocal IOL sales in China. Let's start with the revenue. Reported revenue came in at EUR 357 million, which is down 5.1% year-on-year and foreign exchange adjusted basis, revenue declined by 2.4%. The performance was impacted by several factors, of course, currency headwinds, as already explained by Andreas, strong equipment sales at prior year-end, which created a much slower start in the following month and later phasing of refractive treatment pack sales due to the later occurrence of the Chinese New Year vacations. And ultimately, the loss of the bifocal IOL sales in China, where we have reported that we lost there the right to participate with one lens category in the tender. One item to highlight here is the potential bifocal IOL scrap risk associated to what I just explained and estimated at around EUR 8 million in total, which will fall in quarter 2. This will be treated as a nonrecurring impact, and it's worth noting that registration of the successor model is progressing well. The chance seems good to receive the license before the start of the next tender. Moving to EBITA margin. The EBITA margin declined to minus 0.4%, representing a 5.2 percentage-point decrease year-on-year. This was mainly driven by a 1.9 percentage points decline in gross margin, largely due to the currency effects and an unfavorable product mix. The OpEx ratio weighed on margin by additional 2.8 percentage points, although [ obsolete ] expenses remained stable as particularly the changes in APAC currencies cannot be locally hedged with most of our OpEx in euro. Finally, looking at the revenue split, ophthalmology accounts for 76% of total OPT revenue. And within ophthalmology, consumables represent 46%, equipment accounts for 45% and service contributes 9%. Turning then to microsurgery. Overall, we saw a margin decline, mainly driven again by currency headwinds and an unfavorable product mix. Revenue reached EUR 110 million, which is down 3.7% year-on-year. On a currency-adjusted basis, revenue declined by a more moderate 0.9%. The softer revenue performance despite a relatively modest comparison base is largely explained by exceptionally strong deliveries towards the prior fiscal year-end, which created a pull-forward effect. In addition, we saw an unfavorable mix with slower deliveries of neurosurgical microscopes following the strong year-end close in September '25, which not only impacted revenue phasing, but also weighed on profitability. The EBITA margin decreased to 8.7%, representing a 6.5 percentage-point decline year-on-year. This was mainly driven by a 5.5 percentage-point decline in gross margin, reflecting currency effects and unfavorable product mix and the amortization of capitalized R&D related to KINEVO. In addition, the OpEx ratio weighed on margin by around 1 percentage-point, while [ obsolete ] expenses remained stable. Looking at the revenue split, microsurgery accounts for 24% of total revenue. And within microsurgery, equipment represents the largest share at 79%, service contributes 15% and consumables account for 6%. Let me walk you through our regional development. Overall, EMEA remained stable, while we saw softer performance in the Americas and APAC. Starting with the Americas, the region accounts for 25% of group revenue. Revenue came in at EUR 117 million, down 13% year-over-year, with currency-adjusted revenue declining by 6%. This reflects a weaker investment climate, driven largely by heightened geopolitical volatility and a decline in key markets, including the U.S. Overall, demand momentum in the U.S. remains subdued during the period as a consequence of overall tariff-related price increases. Moving to EMEA. EMEA represents roughly 37% of group revenue and showed a largely stable performance. Revenue reached EUR 174 million, moderately below last year, while currency-adjusted revenue actually grew slightly. This resilience was supported by growth in selected markets, particularly in the Middle East. At the same time, core European markets, including Germany, Spain and the Nordics remained broadly sideways. Finally, Asia Pacific region, APAC represents 38% of revenue, with China contributing 18% in this quarter. Revenue amounted to EUR 178 million, down 3% year-over-year, with a currency-adjusted decline of 2%. Performance across the region was mixed. China remained stable, while India and Australia showed positive trends. This, however, was offset by weaker revenue in Japan and South Korea, which weighed on the overall regional result. Turning to the P&L. Margins came under pressure in the quarter, while operating expenses remained broadly stable. Gross profit declined to EUR 227 million, with the gross margin decreasing to 48.6% from 51.4% last year. This was mainly driven by currency headwinds, a lower contribution from neurosurgical microscopes, IOLs and refractive treatment packs as well as higher amortization of capitalized R&D expenses related to KINEVO. Looking at operating expenses. Total OpEx was flat year-over-year at EUR 226 million. However, as a percentage of sales, OpEx increased to 48.4%, reflecting a negative operating leverage. As a result, profitability was significantly impacted, both EBIT and EBITA declined sharply. Earnings per share decreased to minus EUR 0.06, driven by the sharp EBIT decline and negative financial results, primarily due to higher interest expenses. On an adjusted basis, adjusted earnings per share was EUR 0.03, excluding noncash valuation effects on contingent purchase price liabilities while exchange rates and hedging results were not adjusted. The next table provides a brief overview of the bridge from EBIT to EBITA and to adjusted EBITA. Regular amortizations on purchase price allocations amounted to EUR 7 million in Q1, including D.O.R.C. effect of EUR 6.5 million and smaller effects from former acquisitions. In terms of special items, the current quarter includes legal expenses in connection with the lawsuit related to former IanTECH in the U.S. On the contrary, the prior year benefited from a one-off gain from public grants received in China for our IOL production. Adjusted for special items, EBITA amounted to EUR 10.3 million, with a margin of 2.2%, significant decline compared to previous year. Next, we have a quick overview on the cash flow statement. We saw a clear improvement in operating cash generation. This improvement was mainly driven by a strong reduction in receivables, particularly from third parties as well as income tax refunds, which reflect the weaker operating result in the period. Cash flow from investing activities also improved primarily due to lower investments in property, plant and equipment compared with the prior year. Financing cash flow declined, mainly impacted by the reduction of liabilities to the ZEISS Group treasury. By end of Q1, net financial debt decreased to EUR 282 million at a lower level compared to a year ago. And now I'd like to hand it back to you, Andreas. Andreas Pecher: Thank you, Justus. So let's move to key topics and outlook. I will outline the main triggers behind the current guidance suspension and also share my recent impressions from a visit to China that happened last week. Then Justus will illustrate the key building blocks shaping our outlook for the remainder of the fiscal year. So let me briefly explain what has changed since December 2025 and why we decided to temporarily suspend guidance in January. Well, let me start with the bifocal IOL situation in China. As we communicated at the December '24/'25 analyst conference, full year conference, our bifocal IOL was withdrawn from the existing VBP tender. As a result, it cannot longer be sold to public hospitals under that framework. While the product license itself remained valid, there is still, of course, ambiguity around the VBP withdrawal, and we were still assessing whether limited sales to other markets for the private sector are feasible. At the same time, the treatment of existing inventories remain unclear. In a worst-case scenario, this could require a partial recall and scrapping of stock. We're now seeing only limited resale opportunities for bifocal IOLs more broadly as this product has been removed from the reimbursement scheme following the withdrawal of VBP qualification. So, since January, we have negotiated a partial recall with external distributors in Carl Zeiss China, which will result in an estimated earnings risk of around EUR 8 million for Carl Zeiss Meditec. Second, moving to VBP and competitive dynamics. Our assumption in December was that the second nationwide VBP tender would put some pressure on IOL pricing, but to a lesser extent than the first tender as we learned from other peers, which are subject to consumables VBP. Meanwhile, we've identified the competitive landscape has intensified more than expected. In multifocal categories, several Chinese competitors have successfully passed registration, increasing price competition. As a result, we now expect pricing pressure in premium IOLs to be tougher than previously assumed. Beyond IOLs, competition in equipment is also starting to heat up, supported by expanding local procurement policies. And finally, on equipment demand, we're currently seeing weaker demand in the U.S. and broader Americas market, particularly in the ophthalmology segment, this seems to extend beyond the impact of the strong September deliveries, causing a slower start into the new fiscal year. Based on this, internal sales forecasts have been adjusted to reflect a more cautious CapEx environment for the fiscal year. While putting all this together, regulatory uncertainty in China IOLs, higher competitive pressure and softer equipment demand, we concluded that temporarily suspending guidance was the most responsible step until visibility improves. We will update the market as soon as conditions stabilize and assumptions can be reliably quantified. We're currently working very hard in defining measures, and we'll update you as soon as possible, latest with the half year reporting as previously promised. But before I close and hand back to Justus for the outlook, let me talk briefly about China with a more long-term view. I just came back from, I would say, intensive visit in China last week. And I was meeting there, of course, government officials, for instance, the Shanghai Party Secretary, Chen Jining. He's one of the -- well, he is the highest ranking official in Shanghai. We also had the corporate size, Greater China headquarters campus construction launch ceremony. And of course, we did that alongside many of our customers, the local officials, and lastly, I met a number of our customers, particularly the Aier Group and its CEO, Mr. Li, and of course, our team. And let me be straight in assessing the long-term competitiveness of Zeiss in China. We currently are in a period of, let's call it, vulnerability, not having localized our manufacturing fast enough. The transfer of manufacturing for key consumables and equipment is happening as we speak, and we will be largely completing this over the next 2 years. We have all the support we need from our local team and from the local and regional officials, and I will personally look over this. We expect to be strongly competitive again across our portfolio with our state-of-the-art production facilities in Guangzhou and Suzhou. Having the strongest brand in ophthalmology in China, keep in mind, Zeiss is even more recognized from a brand point of view in China, as in Germany, very close relationships with our key customers and an excellent reputation in the Chinese market from consumers to set that on brand recognition to doctors, to the government. And this can also be demonstrated by the largest ever infrastructure investment corporate ZEISS has made in China today. That, of course, also benefits Carl Zeiss Meditec. Now back to you, Justus. Justus Wehmer: Thank you, Andreas. So let me now outline how we are thinking about the timing of new guidance and the main factors that will shape our outlook. At a high level, we continue to see several external headwinds, including trade barriers, regulatory changes, a softer consumer environment and currencies, which are putting pressure on this fiscal year. Right now, we don't foresee any alleviation of these headwinds in the near term. There are 3 groups of internal factors we are monitoring closely. First, swing factors, which could move performance either way in the near term. This includes the timing of the successor bifocal IOL registration and launch. We have already received, as we mentioned before, positive signals and currently expect to receive the license around March in time for the new volume-based purchasing tender. We are also awaiting the outcome of the VBP tender expected in April or May, which will have an important impact on our IOL business. And lastly, refractive procedure demand around the Chinese New Year period, which will provide a good indication on overall market sentiment. In the first quarter as well as extending into January, our refractive consumption data indicates continued stability, whereas the market was quite weak overall based on our data. We are satisfied about our relative outperformance, but currently cannot count on a growth outcome to offset other pressures in the business. Second, nonrecurring items. In Q2, we expect the scrapping of certain old bifocal IOL inventory. As just explained, we have agreed with Carl Zeiss China and external distributors to take back a certain quantity of intraocular lenses, which will cause a burden of around EUR 8 million to gross profit in the second quarter. We are developing our strategy and reprioritizing R&D projects, which will likely have an impact on IP and cost allocation. And in addition, we anticipate one-time reorganization-related expenses that will mainly affect the second half and beyond. As we have said in our release on January 22, more details on measures will be presented with our half year report. Third, key positive drivers. We expect continued momentum from the VISUMAX 800 and the associated SMILE pro rollout in China, further global traction for the KINEVO 900 S. So overall, while near-term volatility remains elevated, we see both risks and clear operational levers. Once these swing factors crystallize and the one-offs are better quantified, we will be in a much stronger position to provide reliable guidance. Timing-wise, no later than our half year results. And with this, I'd like to conclude our presentation for today, and now we look forward to your questions. Operator: Yes. Thank you so much for the presentation. We will now move on to our Q&A session. [Operator Instructions] And we have already received a question, Mr. Reinberg. Oliver Reinberg: Oliver Reinberg from Kepler Cheuvreux. Just 3 questions, if I may. And the first would be on China refractive. I mean, obviously, the kind of Chinese New Year season is starting soon. And given you have just been in China, can you just provide some kind of feedback, a, what you have seen in terms of stocking ahead of the event and also what kind of feedback you get in terms of the expectation for the season from your clients? Secondly, just on the counteraction you're going to take. I mean, obviously, you're going to execute the plan that was developed before. Can you just provide some kind of flavor to what extent you also consider to accelerate these kind of measures given the kind of current earnings pressure? And then thirdly, just on China and the political background. I mean, buy-local has been a theme for quite a while. Can you be a bit more specific in which equipment parts you specifically see this kind of pressure and whether there's also anything happening in the refractive space. I mean, obviously, there's so far no local competition to SMILE, but if there's any kind of push towards LASIK or anything here? Justus Wehmer: Thank you, Oliver. I can probably take the first 2 questions and Andreas... Andreas Pecher: I can probably take the second and take the third one. Justus Wehmer: Yes, exactly. So, China refractive, yes, you're absolutely right, Oliver. We are actually -- as we are sitting here entering into this Chinese New Year vacation period. And in a nutshell, I think the stocking into the distribution channel is right now tracking on a level that is, I'd say, within our expectations. It is comparable to last year's level, but the proof is then in the pudding. The proof is ultimately in the consumption during the vacation period. And I think only once we know that, we will really have a good indication whether our assumptions for this year's overall consumption are actually correct or maybe higher or outperformed or underperformed. On measures, I can tell you that we are in full steam, so to speak, in the assessment and the decision-making process on what needs to be done. But I have to ask for your patience. As you know, there we have to follow a governance protocol. And we also, frankly spoken, also don't want to share anything premature here in public and clearly also not to feed our competitors with information that might be interesting to them. And on the Chinese political pressure, I think... Andreas Pecher: Maybe I can add to the second one, Oliver. Thanks for those questions. Well, that was the main reason why I stepped in, right, that we don't want to lose the time here. And we talked about that in December already. First measures have been implemented, for instance, the commercial organization that's being rolled out now. And of course, the other items, we're working together as a team to make sure that we develop those plans as fast as we can. That's clear and implement what we can implement. And for other things, we, of course, need the governance. That's clear. So rest assured that this is one of my and the whole team's highest priorities. Now coming to your third question, well, let me first comment with sort of a general statement. What we observe is typically there is buy-local policies for areas where you have local competition coming up, of course, because it makes sense, right? Other things have to be imported. We observe that specifically in the diagnostic areas, and there is some risk in ophthalmic areas. The good thing is we have all this in our hand. We can localize. I mean we have large really good infrastructure in China. We have the right people. I just met them again last week that can do that, and we have the willingness to do that. And in addition, we also have the support from the local governance and officials. I spoke to them last week. They really want us to be successful in this market. So I would say we have everything in place to counter that and take on competition as it arises. Oliver Reinberg: And do you see any risk that this kind of political pressure is also moving toward private space of refractive? Andreas Pecher: I wouldn't say political pressure. I mean, you can call it political pressure. In the end, it is the will to localize manufacturing in parts R&D. And if you follow that, our impression is we have a very good position in that market. And by the way, that's something that I also see in other businesses of size. This is not just in medical. I mean we have that in our vision business as well. And what we see is, as long as we follow those rules, we have a very strong position in those markets. I mean vision is #1, for example, in China. And there is, of course, strong competition. So we have the means to do this and of course, work with the officials to make sure that we can do that. Operator: Thank you so much, Mr. Reinberg, for your questions. We move on to Mr. Jon Unwin. Jonathon Unwin: I actually just had a quick follow-up on Oliver's question on the equipment and the buy-local policies. You mentioned it was mainly in diagnostics, but also in other areas of ophthalmology. Is that all other areas of ophthalmology, so refractive, cataracts and microscopes or one more than the other? So just a quick follow-up there. I'm just interested how order intake has progressed in Q1 and Q2 for microsurgery. Obviously, we saw strong deliveries in the fourth quarter, but have orders progressed well so far year-to-date? And how do you feel about the ability to deliver those in the rest of the year? Andreas Pecher: Maybe I'll take the first question. Thank you for those questions, Jon. Well, it depends in terms of the competition. I would say, generally, it's probably the highest on the cataract side, right? Then microscopes, I would see that more on the lower end coming in. And then the third one is refractive. That's the way I see it. And the good thing is we have a strong position in China. Zeiss overall is more than 7,000 people working for us in China. We see what's going on in the market. We can react. Essentially, we have the control over that. We can localize things quickly. Of course, you all know medical has regulatory restrictions, that's clear, but we can do that, and we're willing to do that. and one after the other. And this is nothing new to Zeiss generally. In general, I mean, we've seen that ambition as well. Years ago, we reacted and we're #1 there. Justus Wehmer: Fine. Then your question on MCS order intake and outlook. I think, yes, the first quarter has been soft, but I just spoke yesterday with the management of that division, and they are totally confident that they will make their numbers and volumes. The funnels, the project funnels are full. The order entry comes in. I obviously can't disclose here data for the current quarter. But I think what I want to convey to you is that for MCS, as we had said in December, for this year, I think that we will clearly benefit from the global roll-in of the KINEVO 900 S and the PENTERO, good sales volumes that we have seen last year, end of last year, also going into this year. So therefore, I think overall, for MCS, we are currently pretty confidently looking into this year. Operator: Thank you so much Mr. Unwin for you questions. We now move on to Mr. Marchesin. Davide Marchesin: I hope you can hear me well now. I have 3 questions, 2 on refractive. The first one is about the rollout of VISUMAX 800. So last year was better than you initially expected in China. Can you just make a comment how Q1 has continued and where are you right now? Second one is also you said that in China, refractive was stable. Can you comment whether this stable is related to volume or value as SMILE pro implies some positive ASP effect? And the last one is you also said in your comments that the planned delivery of neurosurgical instruments was slower than expected. Is it something that you see is just temporary? Or do you see that it will spill over more towards the further quarters? Andreas Pecher: Maybe on the first one, just you saw the picture that we showed, the one with the right background. That's actually me and our team standing together with the management of Aier Group and unveiling one of the VISUMAX pro systems, the SMILE pro systems. Just as a highlight there, they are dearly waiting for that, and they were really, really happy to have us roll that out. But that to just sort of highlight and Justus will go more into the numbers. Justus Wehmer: Yes, Oliver (sic) [ Davide ], happy to share with you that we are going into this year and order entry is currently trending nicely. We are in a neighborhood of 50 VISUMAX 800 in our books for China, out of which already more than 30 have been shipped and installed. So that, I think, is a pretty solid number after the few months that we are in this new fiscal year. And then your second question, what I was referring to the stable was the procedure numbers. And just to also comment maybe on your underlying question, we still see a good pickup in SMILE pro treatments. And from that perspective, I also can confirm that by now, we do not see any further deterioration of margin in the market. So hopefully, that covers your question. And sorry, and you had one on MCS. Once again, I wouldn't derive out of Q1 any conclusions that would indicate softness or weakness for MCS for this fiscal year. As I said, the funnels are very solid. And we also know that this category in the hospitals, so neurosurgical procedures is a money-making procedure. And therefore, we clearly expect that there will be a robust market demand for this year. Operator: Thank you so much Mr. Marchesin. We have a question by the number with the last of digits of 219. Jack Reynolds-Clark: It's Jack Reynolds-Clark from RBC. I hope you can hear me. I had 3, please. So the first is on European core market weakness. Could you run through which subsegments specifically are impacted, i.e., was it refractive versus kind of cataracts versus D.O.R.C.? What do you think is driving the weakness? And do you think it's temporary or longer term? The next is on the U.S. So do you -- or does the ongoing weakness in the U.S. change how you view the attractiveness of the U.S. market for you from a bigger picture perspective in the longer term? And then my third question was on the CEO search. Could you update us on where you are with this and share any kind of developments around your thinking about what it is that you're looking for? Andreas Pecher: I'll take the third one. Justus Wehmer: Yes. Jack, it's Justus. So on the core market segments in Europe, actually, I don't know whether that was maybe mispronounced or misunderstood in my statements because actually, we are not so, how should I say, unhappy with Europe. As I said, we have some regions that still grow nicely and some regions, Germany amongst them, which have a more sidewards development in the first quarter. But that I would not yet take as indication of a softness of the business. So therefore, really nothing particular to point out here. I think if I look back on the 8 years that I'm now here with Meditec, Europe is always a mixed bag. You always have due to local politics and so on, you always have different investment behaviors across the board between South and North and East and West. But I think overall, we have always been able to, in total, then grow year-over-year in Europe. So therefore, really nothing that I would point out here, especially since you were asking about any particular business sectors of ours. The U.S., the weakness that you have commented on, of course, we are not happy with it. But first of all, we have installed in the U.S. a new head of our sales organization, a very industry-known veteran who has also worked in his history partially for some of the major U.S. competitors of ours. So, yes, it's an environment in which we have probably more hostile competitors than in other markets. But we -- I don't think that we should give up on it. And there is products in the pipeline, as you know, whether it's the hydrophobic trifocal lens, which we would expect by next year as well as the VISUMAX 800 flat cutting modality, unfortunately, only also next year. But I think the completion of our portfolio should actually in the next year give us some better opportunities or provide better opportunities for us to be in the U.S. in better shape. And on this third question, I think... Andreas Pecher: Maybe build on the question. Thanks, Jack, for those questions. Justus and I spent 3 weeks ago, we spent a good week in the U.S., of course, talking to customers as always, we always do that, but also to our team. And the new person heading our U.S. sales organization is not coming from the outside. He was at other companies before he came from another one of our markets and has a, yes, a proven track record of bringing a lot of value to those markets. That is, I would say, one of the first changes that came out of the new organization, the new commercial organization. So, as you see, we're in full swing of changing things, as I would say, to the better. On the CEO search, well, shortly said it's in full swing, right? I said before, I personally have a strong interest in keeping that short as my family. But, joke aside, we all have an interest, right, to make sure that we have the long-term person in there. So we are currently looking outside and have actually several candidates. And of course, I hope you understand that we cannot disclose anything more precise today, and we'll announce this as soon as possible. But it will be a person that, I would say, has a solid track record in the medical industry. Operator: Thank you so much for your question. We're moving on to Mr. David Adlington. David Adlington: Three, please. So, firstly, I just wondered, you indicated you put through some price increases in the U.S. to offset tariffs. I just wondered how much price you have put through and whether you're thinking about changing your strategy on price there. Secondly, on gross margins, obviously, quite a big impact from both foreign exchange and an increase in R&D amortization. It would be great to get your thoughts on how gross margins might evolve from here through the rest of the year. And then finally, with the VBP on multifocals coming through, I just wondered what you expected the price impacts to be? And any thoughts around where volumes might go? Justus Wehmer: David, I start, and Andreas, you just if you have anything that you want to highlight and I didn't cover on it. Price increases were, in total, probably in low single -- high single digit. It varies a little bit from category to category. But overall, you can say that cumulatively, it is a high single-digit number of price increase. And of course, that you have to compute it on our transfer prices and therefore, in the end, to offset for the tariff barrier, you basically have to then calculate it backwards from your speed price. And that is something like, as I say, high single digit. But you have to understand to build on that, David, that this hits in the U.S., the very important category of diagnostical products. And the diagnostical product, a, is anyways a very contested market. And secondly, you may say so, it's a market where in an environment like this, price increases, uncertainties on tariffs, some optometrists and ophthalmologists will simply delay their decisions. If you have a field analyzer, if you have an OCT or so, typically, it's something where you can also hold back for a while until you have more clarity on your investment decisions. And that, I think, is overall explaining the situation that we are in. So, hopefully, with a little bit more stability in the transatlantic relations and disappearing sentiment that there might be more movements happening, then we hope that the investment appetite will return. Gross margin, you were asking on, I think, what exactly we are anticipating for the remainder of the year. We clearly would see that the gross margins will recover with higher portions of consumables kicking in over the course of the year with the one caveat that I want to highlight and that leads to your third question on the VBP. Obviously, that also is a function of how aggressive pricing will be reduced in this second round tender. Frankly spoken, the only thing you can refer to is analogies from other consumables in the medical sector in the past. Typically -- again, typically, the second and third tenders were not as brutal in terms of the price impact. But now we have an unknown factor as outlined in our presentation. And also, please understand that I will not give you any detail on our expectations, what others do because as you can imagine, this is competitively sensitive information, and I don't want to have anybody speculating on how we would respond. Andreas Pecher: Yes. Nothing to add. And frankly, nothing I want to add to the last point here as well. Operator: Thank you so much for your question. We're moving on to Ms. Susannah Ludwig. You may speak now. Andreas Pecher: Susannah, if you speak, we cannot hear you yet. Susannah Ludwig: Can you guys hear me now? Andreas Pecher: Yes. Susannah Ludwig: I have 2, please. First, can you confirm if sort of long term, there will be any benefits to COGS from the shift to manufacturing in China and when you would expect to be sort of fully ramped on this shift to manufacturing in China? And then second, I wanted to follow up on what has changed from December to January when you pulled the guidance? So, first, on China, I guess, why had you originally believed that the price cuts would be softer in the VBP? I know you cite the Chinese companies passing sort of registration, but Eyebright had a trifocal approved since January 2025. So had you anticipated that they would be part of the tender? Or were you thinking there was a chance that they would not be? And then on the U.S., were December sales weaker than anticipated? And was that what led to the weaker internal forecast? Or was there something else? Justus Wehmer: Susannah, let me start with the last one. And in the week that we pulled the guidance, there was a pretty hefty discussion on Greenland. And within that discussion, there was at least a serious threat by the U.S. administration that there would be additional, on top of all other tariffs, additional 20% on products out of Germany going in the U.S. So that, of course, would have dramatic impact on our business. And as I said before, the U.S. is our second biggest market, and it's almost 90% device market. So therefore, that explains why this discussion at that moment in time was playing a significant role also for our ability to assess how the U.S. market may develop or not develop. On your question on our expectations for the tender, I think in a nutshell, one Chinese competitor in a tender in a category is already changing things, but we also have seen in the past that the Chinese authorities for good reasons, always try to distribute and don't want to be in a situation in which then suddenly one company is not able to fulfill the entire volumes that have been allocated. So with one player in the game, we were still reasonably confident that our strategy could fold out in a way that it would and therefore, was part of the guidance expectations that we published in December. However, learning then that at least a second player, Chinese player, will be participating with just recently approved lens that can, of course, once again change the volume allotments significantly. And that is one of the key reasons. And your first question was on the long-term benefits of -- Andreas? Andreas Pecher: I can start and you can chime in. There's 2 aspects when it comes to localization in China. The first one, and I think it's the more important one, an urgent one is to make sure that we have access to the market. That's why once those regulations come in, actually are anticipated, we can do that and essentially localize and make sure that we have access to that. The second one, of course, is a question about cost of goods. In general, there is a potential of doing that. And the question is always that we are taking is, are we taking step one means localization together with step two, and that's something that we have to assess essentially also in terms of cost and timing considerations. So, typically, there is a potential to be very clear. And sometimes we do that right away with step one. Sometimes we do that in a step afterwards by localizing also the supply chain. Susannah Ludwig: Great. That was very helpful. Can I just follow up in terms of the U.S.? Could you confirm, I guess, just how December performance looked versus October and November? Justus Wehmer: Susannah, sorry, I missed on that one. I think there is -- within the quarter, nothing in particular that I see. Probably October and November were weaker than December. That's the only pattern that I could share here with you. But I think -- I don't know whether this answers precisely your question, but that is what I... Operator: Thank you, Ms. Ludwig, for your questions. We're moving on to Mr. Graham Doyle. Graham Doyle: Yes. So this is a very complex system versus what we're used to. So it's -- and the UBS tech doesn't always allow me. So it's good you can hear me. Right. I've got 3 questions, please. So, firstly, I think when I was speaking to Sebastian earlier, he was talking about the UV biomaterial being a part of the issue in terms of the registration for the bifocal. And of your -- and I estimate of your sort of EUR 70-ish million revenue of IOLs in China, how much is not based on the UV biomaterial, just to get that? And secondly, just on D.O.R.C., could you just give us an update on how new instruments placements went in Q1? And then lastly, it's a sort of a bigger question. I know you don't often talk about the pipeline, but I think this would be a pretty good opportunity to do, which is, say, R&D as a percentage of sales has been well above the rest of the sector. And we obviously have seen some innovation, but it will be good to get a sense as to what really excites you. So rather than talking about the cost cutting, what excites you in the pipeline today that we might see in the next 1, 2, 3 years that can drive future growth for the group because you've got a great track record in R&D. So it would be good to get a sense as to what's in there. Justus Wehmer: Graham, may I -- just your second question, I missed that one because I was taking notes for the first, sorry. Graham Doyle: Sorry. The second question was just on D.O.R.C. in terms of new unit placements, how has that progressed in Q1? Justus Wehmer: Okay. So, on the UV biomaterial, we're actually in full swing of transitioning. I think it's right now probably more still in the neighborhood of 50%, but actually of the total business volume. But actually, with the one lens that we are expecting to hold the paperwork of the registration in our hands in a couple of weeks, we then actually would have, going forward, completed the transition. And then we have the portfolio on UVE. The D.O.R.C. placements, I think overall, just yesterday, had a discussion on it. We are still growing year-over-year nicely and in full swing of rolling out now also the D.O.R.C. portfolio into Asian markets. Last year, as you may remember, we were focusing first on U.S. and Europe, some European countries. Now Asia kicks in. And we actually also see in some of our key accounts that are loyal, refractive and partially cataract customers, also now high interest in the D.O.R.C. portfolio. So, overall, I think we are quite happy with the development. And I think on R&D, Andreas can talk. Andreas Pecher: I can say a couple of words on that. Well, thank you, first of all, for stating that we've been having a good track record on innovation. Of course, that's the core of the company, right? That's the core actually not just of Carl Zeiss Meditec, but Zeiss, an innovation-driven company. Let's do the following. That's -- how about we talk a bit more about that when we do the May -- latest in May when we do the half year results and show you a couple of the highlights. There's highlights in both the OPT and the MCS pipelines that I'm excited about. They actually go beyond that. That's -- we're always looking at short, midterm innovations, but we're also looking at the long-term innovations where we think we can go into even new markets. The one thing that I'm focusing on right now also is to make sure that we get a higher efficiency and effectiveness of our R&D. You've seen the R&D expenses going up in the last couple of years, which is good. It can be good if you get the right output. And that's one of the things that I'm focusing in my time also here and together, of course, then with the SBUs, I'm sure my successor is going to focus on. So what I want is return on R&D investment, and I want to increase that even more. That would be my statement. And sorry for not telling you any of the exciting products yet, but it's maybe better to also do that and see them. Operator: Thank you so much Mr. Doyle for your questions. We're now moving on to Mr. Falko Friedrichs. Falko Friedrichs: Three questions, please. And the first one, do you have an update on when exactly the VBP implementation for IOLs is expected to go live? My second question is on the downturn in Japan and South Korea. Can you add a bit more flavor on the specific market dynamics you've seen over there and what the expectation is for the rest of the year? And then third and last, can you share your high-level view on what we should keep in mind when modeling sales growth and margin dynamics for the second quarter? Justus Wehmer: Falko, update or your question on go-live of the VBP, again, it's -- there is no official statement at this point in time when the tender is published. And therefore, it's all speculation. I think last time between the tender publishing and then the actual roll-in, there were several months in between, and it started with single provinces applying it. And then until it was rolled out across China, I think it almost took 2 quarters. Assuming this year, this process is swifter, then maybe it's only 1 or 2 months before it becomes effective. But since we don't know the date, and I mean, what's reasonable to assume is, clearly, Chinese New Year is basically now. So it will be then most likely not within the next 2 weeks, then we are already almost crossing into March. And as we said, our team expects the tender being published anywhere March, maybe at the latest April. And then counting on that, probably a period until it's becoming fully effective of whatever, 4, 8 weeks, maybe 12, that would be our estimation at this point in time. Japan, South Korea, my perspective would be that with the focus that we are having on these markets, and I think we shared this in earlier calls and also some registrations, especially for products in Japan. Here, for example, the VISUMAX 800, just to mention one very important product. My expectation clearly is that over the course of the year for Japan, we should see some growth. And Korea, as you know, is already a strong market. There's always a little bit of fluctuation. But again, overall, for Korea, I would also not be too negative on our total outlook for the year. Andreas Pecher: Maybe on Japan, just keep in mind, we still have a fairly low market penetration in Japan, which I would see as an upside. Justus Wehmer: And I mean, high-level question on sales growth for the remainder of the year. Quite frankly, if we -- and now we are back to the rationale on cutting or revoking the guidance. At this point in time, I don't have the data points to give you a sales indication. The project funnels look decent. But if we have a big blast from the tender outcome that can be painful and can take away quite a bit of potential on the top line. And likewise, if the winter peak or the performance of the winter peak is, as we said before, one key indicator for the remainder of the year, also something where, I'd say, in 4 weeks, we can comment on that more comfortably. And therefore, I don't want to start speculation here and now. Falko Friedrichs: Justus, my last question was more referring to the second quarter now, the sales and margin dynamics. Justus Wehmer: In the second quarter, here, I would pretty much probably refer you to our typical seasonal patterns. And with the caveat that we, as we said, have potentially the scrapping issue, but that we would consider as a one-off. But typically, the second quarter is compared to the first quarter, a better one. And at the moment, I would also assume this will be the case in this fiscal year. Operator: Thank you very much, Mr. Friedrichs, for your question. We're having another question by Davide Marchesin. Hello? Can you hear us? We unfortunately cannot hear you. Maybe we can move on to another question while you're figuring out the microphone situation. We have another question by Jon Unwin again. Jonathon Unwin: I just had 2 follow-ups, both actually on equipment. The first one is on cataract equipment, so like phaco machines and biometers. Can you maybe just talk a little bit about the sort of regional trends that you're seeing across the U.S., Europe and China? Because I think there was a comment that the cataract equipment was a bit weak in Q1. And also, are you seeing any increased pressure from new competitor launches, specifically in phaco machines that we've seen recently? So that's my first question. And then my second question is on diagnostics. On my numbers in diagnostics for FY '25, it seemed like this business declined quite significantly, maybe even like low double digits. So is that correct? And do you see this sort of similar level of decline in FY '26? And maybe you can help us understand how much of the pressure there is general market weakness, a result of your own price increases and just general delays of the market? And have you got any intention to simplify the portfolio in diagnostics just to focus on say CLARUS and CIRRUS? Justus Wehmer: Jon, on cataract first, I think U.S., as we are or have fairly, frequently commented, we are certainly not where we are since we do not have this bundle capability. I think outside of U.S., Europe and China, I would see us trending pretty decently. So nothing that we observe in particular changing as impact by new machines being offered by competition. On diagnostics, yes, it's the most contested market. That's correct. And obviously, the price increase in the important U.S. market is not helpful. And -- but it's still early in the year. And there, we also have a bit of a seasonal pattern in this business. So therefore, I would still expect recoveries in the course of the year. We also have with the commercial organization, clearly more focus on this portfolio and the associated efforts in selling this portfolio. On the simplification on the portfolio, you probably understand that this is nothing that we're going to share certainly not on speculation or indicating on any specific products, that certainly nothing that we want to read about than in the public, yes. So I'll leave it there. Andreas, anything? Andreas Pecher: I mean it's an obvious question. That's something that obviously we always do. It's part of normal business to always look at your portfolio, where do you add and where you take out. That's -- yes, no specific comment on that one. Operator: Thank you so much for your questions. Mr. Davide Marchesin, do you have any possibility to unmute yourself because I sent you the invitation and I can see that you're unmuted, but we cannot hear you properly. Sebastian Frericks: If not, we can give feedback to the IR team as well, of course. Operator: Yes, exactly. Maybe it's better to place your questions to the IR after this meeting or you can put it into the chat box and I can read it out loud for you if it's too much trouble. Unfortunately, we cannot hear you. Oh, but I can see in the chat that you just placed your question there. I'll read it out loud. The U.S. was significantly down in the first quarter, minus 12.7% organic. You are the only one company reporting such weak results from the U.S. and all the others are reporting strong equipment investment cycle, example, Siemens and Philips. What are the specific issues you're facing there? Justus Wehmer: Thank you. I think I almost gave the answer already. The diagnostical portfolio in the U.S. is one where we typically see the highest sensitivity in terms of prices and price increases. And whereas if you are referring to companies like Siemens Healthineers and their portfolio, they are typically in categories similar to our KINEVO, for example, where reimbursement policies are more favorable and therefore, investment decisions are then made less dependent on price swings. So therefore, I think that, to me, is basically the key difference here that I would highlight. And maybe, again, if you look carefully on the last quarter of the previous fiscal year, there was a very, very strong August and September in the U.S. for devices, and that was always somewhat at the expense of Q1. Operator: There are 3 more questions by Mr. Marchesin. The second one is the IOL business is just EUR 80 million annual revenue or just slightly above 3% of the group revenues and should be a significant component of your weak performance. Justus Wehmer: I think there is a misunderstanding. The 80 million refers to the IOL volume in China. So that for clarification. So therefore, I'm not sure whether knowing this now, whether the question remains the same. But otherwise, frankly spoken, then maybe it's good to follow up with the IR team because it's a little bit difficult to communicate right now. Operator: All right. Thank you so much. I'm going to read out the last question. Is there the possibility of a buyout of your company by Carl Zeiss? Just to know if there is a technical possibility. Andreas Pecher: Maybe I'd comment on that one. Actually, that's something I wouldn't want to comment on to not feed any speculations or get into sort of insider information. Operator: Okay. Thank you so much. By now, we have not received any further questions. So, ladies and gentlemen, if there are some, please raise your hand and I will happily unmute you. As there are no further questions, I would say we come to the end of today's earnings call. And with this, I would hand over again to Mr. Frericks for some final remarks. Sebastian Frericks: Thanks, everybody, for joining, for asking questions in this call and the discussion. Please reach out to the IR team for anything that may have not gotten answered completely or maybe coming up in the next few days. We'll be around talking to sell side and buy side over the next few weeks quite a bit. So look forward to that and to hear you again on our next call at the very latest on May 12. Bye-bye. Andreas Pecher: Thank you. Bye-bye.
Coimbatore Venkatakrishnan: Good morning. Thank you for joining us today. So thank you. We have today the Barclays Full year 2025 results, our progress and our target update. Today, we will outline targets for the next 3 years to deliver an even better run more strongly performing and a higher returning Barclays. This builds on the improvements which we have delivered in the last 2 years of our plan and which we shared with you in February of 2024. But first, let us take stock of the progress so far, starting with our 2025 results. There will be an opportunity for those in the room to ask questions at the very end of our presentation. So turning now to Slide 4. Barclays achieved all financial targets and guidance in 2025. We generated a return on tangible equity of 11.3%. Our top line grew by 9% year-on-year to GBP 29.1 billion, and we achieved our NII guidance for the group and for Barclays U.K. Our cost/income ratio once again improved year-on-year to 61%. And the group loan loss rate of 52 basis points was comfortably within the 50 basis points to 60 basis points through the cycle guidance. We have also announced today GBP 3.7 billion of shareholder distributions for 2025. This is up from GBP 3 billion in 2024. This includes dividends of GBP 1.2 billion and share buybacks of GBP 2.5 billion, and that includes a GBP 1 billion tranche, which we announced today. And importantly, we remain well capitalized, ending the year at the top end of our 13% to 14% CET1 range after accounting for today's buyback. We are delivering these improvements as we said we would. In 2025, we simplified the bank further, achieving GBP 700 million of gross efficiency savings versus the GBP 500 million target, which we had for the year. We divested the remaining nonstrategic businesses, and we announced a long-term partnership for payment acceptance. Operational improvements across the group are creating a better Barclays, driving stronger financial performance. All our divisions generated double-digit RoTE in 2025, and this was an improvement on the prior year. In the Investment Bank, greater capital productivity and cost efficiency contributed to a 2.1 percentage point increase in RoTE to 10.6%. And the U.S. Consumer Bank RoTE increased 1.9 percentage points to 11%. This reflects additional scale and operational progress to improve the business mix to improve pricing and improve efficiency. Finally, we are continuing to rebalance the group towards the 3 highest returning U.K. businesses. We have now delivered GBP 20 billion of the GBP 30 billion RWA growth, which we targeted for the end of 2026, and this includes GBP 7 billion in 2025. So we see good momentum with 6 consecutive quarters of organic loan growth in Barclays U.K. and 5 such quarters in the U.K. Corporate Bank. Progress in each of these 3 areas is delivering structurally higher and more consistent group returns. It has also increased my confidence in and my expectations for the group. Stronger and more consistent returns mean that we are better equipped to serve our clients and that we have more capacity to invest in the business. All of this is providing a solid foundation to create more value for our shareholders in the next phase of our plan through to 2028 and beyond. We will return to this later. Our progress in the last 2 years reflects the consistently excellent work of our colleagues, over 90,000 of them. They implement our strategy every day and are core to our success. So I'm therefore pleased to announce today a grant of approximately GBP 500 of shares to the vast majority of our colleagues, essentially all full-time employees outside of managing directors. This is the second year of such a reward, and it is more than just a reward for past effort. We are aligning the actions of our colleagues with the ultimate outcome of their efforts, which is the change in our share price. And I believe this equity ownership is really important for all our colleagues. With that, over to you, Anna. Angela Cross: Thank you, Venkat, and good morning, everyone. Slide 6 summarizes the financial highlights for the fourth quarter and full year. Before going into the detail, I would remind you that a weaker U.S. dollar reduced our reported income, costs and impairments. Return on tangible equity increased from 10.5% to 11.3% year-on-year, in line with guidance. Pre-provision profit increased by 13% as income growth, coupled with efficiency actions supported 3% positive draws. Profit before tax increased 13% to GBP 9.1 billion and earnings per share by 22% to 43.8p. My focus, as ever, is on operational progress, which strengthened throughout the year. Income increased by 9% year-on-year to GBP 29.1 billion. We grew stable income streams by 9%, supported by 8% growth in retail and corporate businesses and 17% growth in financing within markets. The strength and predictability of this growth means we are upgrading our expected group income to circa GBP 31 billion in '26 versus circa GBP 30 billion previously. Elsewhere in the Investment Bank, intermediation revenues increased by 13% as we helped clients navigate a volatile environment whilst our IB fees were stable. Group net interest income increased for the fourth consecutive year and by 13% year-on-year to GBP 12.8 billion, reflecting 3 factors: First, stable deposits across the group supported further significant growth of structural hedge income, which I will discuss shortly. Second, lending grew across all divisions, and we exited the year with strong momentum. And third, operational progress in the U.S. Consumer Bank drove stronger NII and NIM. Turning to the structural hedge. As a reminder, the hedge is designed to reduce income volatility and manage interest rate risk. We had assumed that we reinvest 90% of maturing hedges, but we fully reinvested assets throughout '25. We also reinvested hedges at higher rates than planned. As a result, hedge income increased GBP 1.2 billion to GBP 5.9 billion, contributing 46% of group NII, excluding IB and head office. The increase that I -- in the average hedge duration that I called out last quarter from 3 to 3.5 years further supports the predictability of hedge income, which I will return to later. Now moving on to costs. We delivered GBP 700 million of gross efficiency savings in '25 and GBP 1.7 billion cumulatively towards the GBP 2 billion target by '26. These savings have contributed to 10% positive jaws since '23. The group cost-to-income ratio decreased again to 61%, in line with guidance despite several cost headwinds in the year. Total costs increased by GBP 1 billion to GBP 17.7 billion, with nearly half of this coming from the addition of Tesco Bank. And we chose to accelerate some discretionary investments, ending the year with structural cost actions around the top of the GBP 200 million to GBP 300 million guided range. The '25 group cost base also included some items that we do not expect to repeat. First, the GBP 235 million of finance provision in Q3 without which we would have ended the year at 60%. and second, circa GBP 50 million of one-off costs in Q4, including a VAT expense in Barclays U.K. Turning now to impairment. The full year impairment charge of GBP 2.3 billion equated to a loan loss rate of 52 basis points, in line with the through-the-cycle guidance of 50 to 60 basis points. The credit picture remains benign with low and stable consumer delinquencies and wholesale loan loss rates below the through-the-cycle range. The Q4 loan loss rate of 48 basis points fell versus Q3, reflecting lower single name charges in the Investment Bank. Calibration of our impairment models to better capture consumer behavior resulted in lower loan losses in Barclays U.K. throughout '25, including in Q4. With these now largely complete, you should expect the Barclays U.K. loan loss rate to be closer to 30 basis points from Q1. The U.S. Consumer Bank loan loss rate was higher in the quarter as expected, shown on the next slide. 30- and 90-day delinquencies were seasonally higher versus Q3 and broadly stable year-on-year, and U.S. consumer behavior remains resilient as we show on Slide 95 in the appendix. The Q4 impairment charge increased GBP 52 million quarter-on-quarter, reflecting higher balances. As a reminder, the Q1 loan loss rate tends to remain elevated following holiday-related spend in Q4. Turning now to U.K. lending. We have now deployed GBP 20 billion of business growth RWAs in the U.K., including GBP 13 billion of organic growth, and we exited '25 with strong momentum. Mortgage balances have grown for 6 quarters, and we delivered GBP 3.1 billion of net lending in Q4. Mortgage applications in '25 were higher than in any prior year, supported by Kensington and increased broker engagement following improvements to the platform in Q3. We also acquired 1.4 million new credit card customers in the year, up from 1.1 million in '24. As we show in our operational data pack on Slide 79, this included 300,000 new Tesco Bank customers. Supported by this, credit card balances grew to the highest level since 2017. Core business banking lending has grown for 4 consecutive quarters, and we expect overall balances to grow in half 2 as headwinds from the runoff portfolio diminish. U.K. Corporate Bank lending grew 18% year-on-year and market share increased 100 basis points in this period to 9.6%. In each case, we have further to go, supporting our plan to deploy GBP 30 billion of RWAs by '26 and onwards from there. Turning to Barclays U.K. in more detail. You can see financial highlights on Slide 15, but I will talk to Slide 16. RoTE was 23.8% in the quarter and 20.7% for the year. NII of GBP 2 billion increased 11% year-on-year and 3% quarter-on-quarter. On a full year basis, NII of GBP 7.7 billion was in line with guidance, and we expect an increase to between GBP 8.1 billion and GBP 8.3 billion in '26. The hedge is expected to drive around GBP 550 million of additional NII. As I'll cover in more detail later, this is a smaller allocation of the total hedge income growth versus '25 with more growth now allocated elsewhere in the group. We expect a circa GBP 100 million product margin impact in our mortgage book, driven by maturities of higher-margin loans written during the stamp duty holiday in early '21. This will be weighted to half 1. We also expect lending growth to continue throughout the year. As a planning matter, we expect this benefit to be offset by continued, but easing deposit margin compression. These effects will lower NII quarter-on-quarter in Q1 with stability and growth from Q2 and Q3. And on a year-on-year basis, we expect growth in each quarter of '26. Non-NII of GBP 247 million was broadly stable year-on-year with a full year just above GBP 1 billion. We expect a similar level in '26 with some seasonal variation. The one-off items I described earlier accounted for around half of the year-on-year increase in operating costs in Q4. These should not repeat in Q1 '26. Moving on to the Barclays U.K. balance sheet. Deposit balances increased GBP 3.1 billion versus Q3 and were broadly stable versus last year. Customers continue to seek higher-yielding products and time deposits, which both grew quarter-on-quarter. Lending grew for the sixth consecutive quarter and by 4% year-on-year, driven by mortgages and cards. Moving on to the U.K. Corporate Bank. RoTE was 19.1% in the quarter and 18.9% for the year. Q4 income grew by 18%, while costs grew by 8% as we accelerated discretionary investments. These investments support delivery of a high 40s cost/income ratio in '26 following a 4% improvement in '25 to 51%. Q4 NII growth of 22% reflected stronger volumes across both sides of the balance sheet. Lending grew 18% year-on-year, reflecting improvements in the lending process. Deposits grew by 7%, resulting in a 34% loan-to-deposit ratio, up 3 percentage points. Turning now to Private Bank and Wealth Management. RoTE was 26.3% for the year, on track for the greater than 25% target for '26. Q4 RoTE was impacted by higher costs from an acceleration of investments and a historic litigation charge. This was small in the context of the group, but reduced this division's Q4 RoTE meaningfully to 12.6%. Client assets and liabilities grew 9% year-on-year and assets under management grew 11%. More than half of this AUM growth came from net new assets under management of GBP 3.3 billion, including GBP 0.6 billion in Q4. This contributed to 4% quarter-on-quarter income growth, and we expect continued volume and income growth in '26. Turning now to the Investment Bank. As a reminder, our objective here is to generate higher structural returns by improving the productivity, mix and efficiency of the business. Risk-weighted assets have been stable for 4 years. Income to average RWAs has increased by 110 basis points since '23 to 6.6%. In the top right, more stable income from financing and the International Corporate Bank grew 14% and accounted for 42% of IB income, up from 32% in '22. Moving to the bottom left, Markets income has grown year-on-year for 7 consecutive quarters as we deepen client relationships and investment banking income has grown for 5 of the past 7 quarters. Together with 7 consecutive quarters of positive operating jaws, this has improved the financial performance of the division. The Investment Bank delivered a full year RoTE of 10.6% in '25, up 210 basis points. Q4 RoTE was seasonally low at 4%, up modestly year-on-year. Income grew 7%, which we show in more detail on Slide 25, and costs were flat. In U.S. dollars, markets income was up 17% year-on-year, delivering around 2/3 of the Investment Bank's income in the quarter. FICC and equities grew 14% and 21%, respectively. We saw particular strength in securitized products within FICC and prime and equity derivatives in equities. Financing income grew 20% year-on-year and for the sixth consecutive quarter, with prime balances up 30% year-on-year, including strong growth in Asia. In Investment Banking, income was broadly stable. The U.S. government shutdown weighed on ECM activity with the majority of Q4 IPOs pushed into half 1 '26. This was offset by a 7% increase in DCM fees and an 18% increase in advisory fees. The M&A pipeline is strong, and our share of announced fees and volumes due to complete in '26, has increased year-on-year. International Corporate Bank income was broadly stable, including 5% growth in transaction banking income. Turning now to the U.S. Consumer Bank. Operational progress has continued. Net receivables grew 5% quarter-on-quarter and 10% year-on-year, around half of which related to the addition of the General Motors balances at the end of Q3. Our partnership cards business has grown faster than the overall market in 16 of the last 20 quarters. NIM improved slightly versus Q3 to 11.6%, supported by the repricing that we undertook in '24 and portfolio mix. Retail deposits grew 5% quarter-on-quarter and 20% year-on-year, which improved the funding mix. And we continue to drive greater digital interactions, supporting a 41% cost/income ratio in the quarter. We expect this progress to continue, reflecting sustainable improvements in returns. Q4 RoTE of 15.8% was supported by a one-off benefit, which I'll come to shortly, adjusting for which RoTE was 12.5%. And the full year RoTE increased 190 basis points to 11%. In U.S. dollars, Q4 income grew by 28% year-on-year, whilst costs were up 4%. NII increased 19%, reflecting stronger volumes and margins. Following a review of customer behavior, we have updated our assumptions to reflect more transacting versus revolving balances and longer duration customer relationships. This has allowed us to more precisely allocate partner rewards, which has 2 accounting effects. First, a one-off benefit largely in non-NII of circa GBP 45 million in Q4. Second, an ongoing change in income mix, reducing non-NII by circa GBP 50 million from Q1, offset by a broadly equivalent increase in NII. Q1 NIM will be around 12.5% with total income of circa GBP 950 million. There are considerable inorganic changes in the business in '26. So to help with modeling, we have included some details in Slide 96 in the appendix. Following the sale of the AA portfolio in Q2, we expect NIM to rise to nearly 14% in half 2, supporting a circa 12% RoTE in '26 before the AA gain on sale. We ended the quarter with a CET1 ratio of 14.3%. This included 33 basis points of capital generation from profits. Given this strong capital position, we have announced a GBP 1 billion share buyback and a GBP 0.8 billion final dividend equivalent to 5.6p per share. Looking ahead, we continue to expect between GBP 19 billion and GBP 26 billion of regulatory RWA inflation. Within this, the circa GBP 16 billion effect of IRB migration in the U.S. Consumer Bank remains our best estimate. Around GBP 5 billion of that will now happen with the implementation of Basel 3.1 on 1 January '27 with the remainder anticipated that year. We expect a reduction in the group Pillar 2A requirement following each of these changes. We have been operating around the top of our 13% to 14% CET1 range, with the returns and distributions in the plan announced today based on that level. Post implementation, we will consider where we operate across the range. More broadly, in the U.K., we welcome the constructive tone in the recent FPC review of capital requirements and we'll continue to engage closely with the Bank of England. Turning now to the RWA walk. Investment Bank RWAs decreased due to seasonality and accounted for 55% of group RWAs at the end of the year. The reduction in Barclays U.K. reflected a securitization in Q4 to manage risk on the balance sheet. As usual, a word on our overall liquidity and funding. We have a strong and diverse funding base, including a 73% LDR and an NSFR of 135%. And we are highly liquid across currencies with an LCR of 170%. These measures reflect purposeful and prudent management of our balance sheet, delivering resilience and thus ensuring we have the capacity to support customers in a range of economic environments. TNAV per share increased 17p in the quarter and 52p year-on-year to 409p. Attributable profit added 9p and 43p per share, respectively. Movements in the cash flow hedge reserve added 5p per share in the quarter, and we expect this to largely unwind by the end of '26, adding around 9p to TNAV. To summarize, we are pleased with the group's performance in the second year of our 3-year plan, having achieved all our targets and guidance. We now expect group income of GBP 31 billion in '26, GBP 1 billion more than originally expected. And continued operational progress means we are more confident in delivering target RoTE greater than 12% in '26. Venkat will now outline the next 3 years of the plan before I take you through the '28 financial targets in more detail. Venkat, over to you. Coimbatore Venkatakrishnan: Thank you again, Anna, and welcome back. Barclays is now on a journey to sustainably higher financial returns. I think of this journey as taking place in 4 stages. First, from 2021 to '23, we stabilized the bank's financial profile, exercising capital discipline in the Investment Bank while starting to build out our areas of strength. Second, since the launch of our simpler, better, more balanced strategy in February '24, we've positioned the bank for income growth and for higher returns. We have simplified our processes to drive efficiency, and we exited nonstrategic businesses. We've invested in digital capabilities to create a better customer experience. And we've grown our highest returning U.K. businesses to create a more balanced Barclays with more stable returns. Today, we set out the third stage of this plan all the way to the fourth. In this third stage, we will build on the foundations we have created so far to increase returns for the bank and to make them resilient across a range of environments. Year-by-year, we are improving the profit signature of the bank. Stronger financial results create the capacity to invest to secure sustainably higher returns. This is the fourth stage, and it extends beyond 2028. Two years ago, we presented a vision anchored in measured ambition and disciplined delivery. I said then that we were building a potent set of businesses, which were strong in themselves and mutually reinforcing. Our vision was harnessed to our home U.K. market, where we aim to deepen our presence even as we engaged with the world from London. Our vision today is one of accelerating ambition, still anchored in disciplined delivery. We will forge segment-leading operationally efficient businesses that are primed to support growth, and we will drive structurally deeper client relationships by connecting these businesses. We have more capacity to invest. We build upon a strong track record of delivery. Our drive is greater and our commitment is unwavering. We will increase investments twofold to drive deep technological transformation and modernization of the bank. This includes embedding AI at scale across the group to deliver better products and services. And importantly, we will pursue our ambition while generating higher returns in each of the next 3 years. In 2028, we are targeting a return on tangible equity of greater than 14%, up from greater than 12% for '26. Stronger capital generation will enable greater than GBP 15 billion of distributions across the period of '26 to '28. And this provides capacity for additional investment and growth beyond the levels set out in the plan today. And as we have done, we will exert considerable discipline over any investment given the importance, which we place on shareholder distributions. In 2026, we expect the Investment Bank to represent a mid-50s percent of group RWAs. This is above the initial target, and it reflects the postponement of previously anticipated regulatory changes. We expect this proportion to fall to about 50% by 2028 as we continue to maintain broadly stable RWAs in the Investment Bank and deploy more capital in our consumer and corporate businesses. We will continue to be guided by 3 goals, and these are to make Barclays simpler, to run it in a better way and to make it more balanced. Our journey began by creating a simpler business structure organized and operating in a simpler way. It continued with the simplification of our processes and customer journeys to improve the quality of our service and to drive efficiency. In the next 3 years, we will be deploying digital capabilities and AI to further this progress. To harness these technologies successfully, we must standardize our data, we must modernize our approaches, and we must harmonize systems and processes. Delivering in this manner will not only enable greater productivity, it will improve our operational resilience, our reliability and security. And importantly, and I'll come back to this, it will create a fulfilling working environment for our colleagues. For some time now, technology has revolved around our businesses. Now our businesses are revolving around technology. Customer interactions in the U.S. Consumer Bank are almost entirely digital today. Elsewhere in the group, we've made significant progress to build easy-to-use customer-facing platforms, and we'll continue on that journey. By 2028, we will deliver a simpler but more sophisticated suite of products and AI-enabled services. So how are we doing this? Our transformation is built on 3 pillars: cloud computing, data platforms and AI adoption. To date, we have made the most progress in employing cloud computing built on scalable and robust infrastructure. We are one of the leading adopters in this sector with 89% of applications on the cloud versus 75% 2 years ago. And this platform provides greater stability and faster product deployment. We are also migrating core data onto a standardized platform. This helps us to provide personalized services for our customers and to implement models more rapidly. And by building on these modular foundations, we can accelerate the development, testing and deployment of code and models. So with cloud infrastructure and data platforms in place, we are now able to deploy AI at scale. Across the group, we have more than 250 AI tools and models in use. And by 2028, we expect more than half of our customer journeys in the U.S. Consumer Bank to be digitally personalized. Technology is creating a more stimulating working environment for our colleagues who are at the heart of these developments. And let me share some examples. In the past 2 years, we've held a number of AI hackathons, where employees prototype quick solutions to existing business problems. Every time I visit a hackathon, including one just 2 weeks ago, I'm overwhelmed by the seemingly limitless ambition and inventiveness of our colleagues. And their winning ideas translate into actual projects and actual products. This includes an AI chatbot that we recently launched for FX trading. We call it Box bot. And this tool delivers FX quotes 75% faster than the previous approach. It is driving better execution for our traders and swifter service for our clients. In the U.S. Consumer Bank, we are launching a conversational AI tool in our app. This accelerates customer query responses by 95% and enables more personalized service. We've also built the infrastructure and provided colleagues with tools to drive greater efficiency and productivity. In doing so, we enable them to perform in the economy of the future. The rollout of GitLab to 19,000 developers means we are now able to implement code 15% faster. And we are one of the largest users of Microsoft Copilot in the financial services industry with around 90% of our colleagues on the system. In 2025 alone, this saved our teams more than 1 million hours of work. Insofar, I've spoken about improvements in the way we engage with clients and how they engage with us. I want Barclays to be renowned for operational performance, excellent operational performance. And to me, operational performance and financial success are 2 sides of the same coin. With 3/4 of our colleagues engaged in operating the bank, simpler operations can improve efficiency materially. So let me just highlight 2 examples to bring this to life. In finance, Anna's area, we are simplifying our accounting platforms, moving from 11 to 3 subledgers within the trading book. And this will lead to fewer manual reconciliations, faster reporting and more efficient data analysis. On the risk side, close to my own heart, our wholesale credit risk systems remain overly manual. And so we are rebuilding the architecture and using AI to aggregate and analyze data and generate reports. This supports fast and accurate credit decisions. To summarize, the simpler Barclays is both well organized and well run for colleagues and customers alike. And at the beating heart of this is a standardized infrastructure supporting harmonized processes and enabling modern approaches to product development and delivery. And it's powered and curated by our talented and inventive colleagues. Moving to better. Having a simpler business means we can focus on delivering better service for our customers, and this results in improved returns for our shareholders. In this next stage, we are building a better bank by forging segment-leading businesses and deepening client relationships. To me, segment leadership is built on 2 pillars: best-in-class offerings and deep client relationships. And we begin from a strong position. We are the largest non-U.S. investment bank with deep expertise in fixed income and financing markets. We are a leading U.K. retail bank with an established and growing private bank and wealth management business. And our U.S. Consumer Bank is a highly sought-after partner for customers and corporate clients alike. The second pillar of segment leadership is combining the strengths of our products in each business and our capabilities across businesses. In doing so, we create deeper client relationships. And there is significant potential to increase connections between Barclays U.K. and the Private Bank and Wealth Management through our premier proposition. The acquisition of Best Egg in the U.S. allows us to bring market-leading digital lending capabilities to our credit card partners. And as the only U.K. bank -- U.K. investment bank, we bring a unique global reach and sophisticated capabilities to our U.K. corporate clients. By investing to strengthen these connections, we make each business individually stronger. And by forging connections across the group, we will unlock sources, new sources of fee growth beyond 2028. So let me share how I think about this, and I'll start with the Investment Bank. As I said, Barclays is the leading non-U.S. investment bank. We are U.K. domiciled, but we actually look more American than European with 50% to 60% of our revenues coming in the U.S. The Investment Bank has built a diverse and stable income mix. Two years ago, when I stood in front of you, I said that improving the investment bank was the hardest part of our plan. So what have we done and how have we done it? At that time, we had asked our business to do 4 things: First, to leverage further the traditional areas of strength. And for a long time, fixed income has been the calling card of Barclays. This is true in trading, financing, debt capital markets. And in markets, we identified 3 focused businesses where we plan to grow income by gaining share, European rates, equity derivatives and securitized products. We've made good progress, gaining share by about 150 basis points between 2023 and the first half of 2025. We have also leveraged our historical strength in fixed income financing to grow in prime. My second task was to drive greater capital productivity. The business has consistently increased return on RWAs. Now we will build on those successes. The third request was to increase fee share. The bankers who we hired in 2023 and 2024 have become more productive. Early results are good, but there is more to do. And so we will continue to invest and realize the full benefits of this investment over time. The final ask was to deepen relationships in the International Corporate Bank. And here, we've made strong progress rolling out what we call our treasury coverage model beyond the 1,500 top clients of the bank. And in the next 3 years, we will leverage strong transaction banking capabilities from the U.K. Corporate Bank and build on existing debt capital market strengths. We will be providing a more complete service to global corporates. And in doing so, we expect the International Corporate Bank to become a larger part of the Investment Bank by 2028. And this will remain an important source of fee growth beyond 2028, and I will discuss this later. Turning to Barclays U.K. Barclays aims to be the premier bank for all U.K. customers. We have a strong customer base, including around 1.1 million, what we call mass affluent customers in Barclays U.K. Our premier proposition provides exclusive rewards and priority service for this cohort, but only 50% of eligible customers have a premier account. This provides a material opportunity to increase engagement. Investment to improve our service has raised NPS scores among premier customers, and we plan to enhance our offering further by expanding the product range and rewards. We can also support this segment's investment needs more fully, and we will achieve this by strengthening connections between Barclays U.K. and Private Bank and Wealth Management. Within Barclays U.K., we have identified 400,000 customers who could benefit from financial advice. In 2025 alone, we onboarded 65,000 customers to Barclays Direct Investing, which is the new name for our digital self-investment platform. And in 2026, we will launch premier Wealth Management to provide planning and advice to premier customers. This will be human-led, but digitally enabled, fairly priced, transparently constructed and clearly disclosed. Turning now to the U.S. Consumer Bank. Our leading digital U.S. consumer bank is delivering strong growth and customer engagement. Our focus partnership business was among the top 4 fastest-growing credit card businesses in 16 of the last 20 quarters. And since 2023, we have achieved a 12% organic growth in receivables. By driving growth and customer engagement in this way, we are retaining existing card partners and attracting new ones. Last year, we renewed partnerships with Upromise, Carnival and Wyndham Hotels, and we successfully integrated General Motors. Operational progress in the U.S. Consumer Bank is also driving higher returns for Barclays. We will continue to use our digital deposit capabilities. In fact, the launch of a tiered savings product in 2024, has enabled 34% retail deposit growth, with the cost of this funding being about 50 basis points below the funding it replaced. And in doing so, we support the broader banking needs of our card customers. The acquisition of Best Egg in the second quarter of '26 will further expand the breadth of our digital capabilities. Around 90% of Best Egg's consumer loan originations come through digital channels, including online aggregators. And Best Egg's strong capabilities and enable flexible product design to suit a range of customer needs. We will leverage these capabilities to accelerate growth, including through closer integration with our card partners. So as you can see, the U.S. Consumer Bank is more than just a cards business. I strongly believe that happy and satisfied customers are the sine qua non of any enterprise. We aim to improve customer service by investing in it deeply, making it a point of ambition and pride. And as I said earlier, operational excellence and financial success are 2 sides of the same coin. I see them as the same. In Barclays U.K., last year, we launched a new platform to improve materially the speed of more applications for more than 26,000 mortgage brokers. Digital adoption in the U.S. Consumer Bank is already higher than in any of our divisions. And as I said, we are deploying AI tools to improve personalization further and ease of use. We're also making it easier for customers to come to Barclays, including in the Private Bank and Wealth Management division. Our digital platforms are a critical part of providing a superb experience to deepen customer engagement. This year, we will relaunch the Barclays app to deliver more personalized support through digital channels. Even as we emphasize digital engagement, we recognize that customers sometimes value the quality and depth of engaging with us in person, especially with complex issues and in important life moments. So we will look to enhance and expand our branch footprint. This will enable us to tailor our services to meet the changing preferences of our customers. And in the U.S. Consumer Bank, we are leveraging our capabilities across cards, deposits and loans to drive even greater customer engagement. The secret sauce in our investment bank is in our synergies, which we use to deepen client relationships. We are big enough to offer multiple sophisticated products to our clients, and we have the nimbleness and the cultural drive to customize delivery and create tailored solutions. We now rank top 5 with 62 of our top 100 markets clients. This is up from 30 in '21, 49 in '23, and we are on track of our target of 70 in 2026. Our leading fixed income and prime equity financing products are integrated on a single platform. Operating in this way provides a single view of risk, both for the client and for Barclays. And of our top 100 markets clients, 97 are also financing clients. So by continuing to leverage our integrated financing platform, we do 2 things. First, we build a stronger foundation of stable income, which supports returns in a range of environments. And second, we deepen relationships and drive greater engagement across the investment bank, including in intermediation. So over the next 3 years, we will bring together our investment banking and transaction banking strengths to accelerate growth in the International Corporate Bank. We are the top sterling clearing bank. We have a comprehensive suite of products and differentiated payment strength. By replicating some of these capabilities in the U.S., we have already driven a circa 140% growth in dollar deposits since 2023. And we plan to leverage this strength in other products through simple, but complete digital channels. In Europe, we will also extend the reach of our existing product suite from 9 to 15 countries to provide a more complete client coverage. We are also creating a better client experience to support this growth. So by the end of the first quarter of this year, all U.K. corporate clients will be enabled on an enhanced platform that we call iPortal. This combines 5 previously separate platforms for corporate banking into one. And in doing so, we make it easier for clients to access a broader range of products. Across the banking system, technology is not just affecting how we do business. It's also affecting what business we do. And nowhere is this likely to be greater than in new asset types and new payment methods. We are deeply engaged in understanding the role that Digital Assets will play in meeting the future needs of our clients. We are developing our own tokenized deposits to increase the speed and simplicity of transactions. And we are testing retail and wholesale use cases, including for corporate bond issuance and investment. We have been structurally improving the profit signature of Barclays, and we're doing it in two ways. First, by changing the mix of the group by growing our highest returning U.K. businesses. And I'm pleased with our progress, having grown these businesses from 30% of group RWAs to 34% in the last 2 years. We also now expect higher returns in Barclays UK. We will continue this progress, increasing lending by more than 5% annually while generating an RoTE greater than 20% across the three U.K. businesses. Second, we said we would strengthen returns in the lower returning divisions. The US Consumer Bank RoTE has increased from 4% in 2023 to 11% in 2025 in all the ways I described to you. And we expect this to build to mid-teens while absorbing regulatory RWA headwinds. And when I stood in front of you 2 years ago, I said we would increase returns in the Investment Bank by improving productivity on a stable RWA base. And I'm very pleased with the progress to date. IB RoTE is up from 7% to 11% in 2 years, but we have more work to do. With greater visibility 1 year out to the end of '26, we expect the Investment Bank to generate circa 12% RoTE this year. And by 2028, we expect this to rise to more than 13%. Let me be very clear. We remain ambitious for this business and for the returns it should be generating. And importantly, this should be done on a sustainable basis. More broadly, the ongoing change in the mix of RWAs across the group means that we are relying less on the IB to drive improvements in group RoTE. This is exactly as it should be. In summary, the better Barclays will continue to show higher returns, and it will also be built on segment-leading businesses, which offer the best-in-client service and experience. Our third goal is to create a more balanced Barclays. We will continue to maintain capital discipline in the Investment Bank while growing parts of the retail and corporate businesses. But being balanced, being more balanced also means growing new sources of fee income beyond 2028. Two years ago, I said that every global bank had to be strong at home. We've been a U.K.-centered bank for more than 3 centuries, and it remains a great place in which to do business and from which to do business. The economy is resilient. The legal and regulatory environment is both strong and trusted. And we remain committed to investing and growing in this our home market. Our investment will focus on diversifying sources of NII beyond deposit income, and we will increase U.K. lending in two main ways. First, we will leverage strong multi-brand offerings to reach new customers. For instance, the acquisition of Kensington in 2023 enabled us to provide mortgages to more complex borrowers. And the acquisition of Tesco Bank added significant scale in unsecured and open market capabilities in personal loans. Second, investment into the business is supporting growth by simplifying and improving customer journeys, as I discussed earlier. We are encouraged by progress in the UK Corporate Bank and expect momentum in core Business Banking lending to build in 2026. Importantly, we expect to grow U.K. lending by more than 5% annually in the next 3 years, above the growth in nominal GDP. And we will do this by continuing to grow in segments where we were underrepresented and by leveraging our expanded product range and capabilities. We will invest to support growth. In the next 3 years, we plan to more than double investment to support growth and efficiency compared to the previous 3 years. We will accelerate the adoption of digital technologies and AI across the group. And investments in the next 3 years will be substantially more weighted towards new sources of fee income growth beyond 2028. Through these investments, we will continue to develop best-in-class offerings, which is the first pillar of segment leadership. As I have said, we will also build connections across our business, and this is the second pillar of segment leadership. In the U.K., new capabilities will support customers across the wealth continuum. We will leverage U.K. transaction banking strength in the International Corporate Bank. And Best Egg will enable us to originate assets directly for investors in our leading U.S. asset-backed securities business in the Investment Bank. So as we move beyond 2028, we expect more of our growth to come from fee income versus net interest income. And by building more diverse sources of revenue this way, we support more resilient returns and we position ourselves better to navigate a range of environments. So changes in the operating environment globally present both risk and opportunities for large global banks like Barclays. And we look to manage this in three ways. First, by building strong customer businesses diversified by geography, customer, product and income type. Second, by deepening client relationships across products and where appropriate, across business segments. And third, through diligent management of economic, financial, operational and technological risks. AI, for example, is a transformative opportunity, which contains risks that need to be managed. And so to harness the technology successfully, we are standardizing our data, modernizing our infrastructure and harmonizing our business processes. By approaching risk and opportunities in this way, we aim to deliver consistently for our customers with strong operational performance. And this, in turn, will generate resilient financial performance in a range of environments for our shareholders. So to bring this all together, progress in the past 2 years provides a solid foundation for the next phase of our journey, and we are confident in the path to 2028. We're moving from a period of measured ambition to one of accelerating ambition. And now I'm going to pass it over to Anna to take you through the financial details of the plan. Anna? Angela Cross: Our confidence in the plan that Venkat has outlined reflects three factors. First, we plan on realistic assumptions that put delivery in our control. Second, the plan includes a significant increase in discretionary investment to support our future growth. And in doing so, we are intentionally prioritizing sustainably higher, longer-term returns over stronger shorter-term RoTE. And third, that delivery is grounded in existing momentum. For example, target income CAGR of more than 5% compares to 7% delivered since '23, as you can see on the top row. Planned U.K. lending of more than 5% is in line with the momentum we've seen in '25. And we expect Investment Banking income to RWAs to increase by more than 40 basis points to greater than 7%, having increased 110 basis points in the last 2 years. Our planning assumption is for a low single-digit IB income CAGR, '25 to '28 versus 9% achieved so far, and I'll come back to this in more detail. The low 50s target cost-income ratio in '28 represents more of a step change. But we are confident in delivering this, underpinned by circa GBP 2 billion of gross cost efficiency savings over the next 3 years. This compares to GBP 1.7 billion achieved in the last 2. And I will also come back to this topic in more detail later. Stable income streams in the retail and corporate businesses will materially drive income growth in RoTE in the next 3 years. We expect modest cost growth, supported by planned efficiency savings and normalization of the elevated cost base in '25. This combination will deliver positive cost jaws in every year of the plan, yielding a low 50s group cost/income ratio by '28. So what drives income from here? As I said, in the past two years the group has delivered a 7% income CAGR. This mainly reflected management actions, but the environment has also been favorable, reflected in upgraded 2026 income guidance of circa GBP 31 billion. As a planning matter to '28, we do not assume similar tailwinds in rates or in Investment Banking wallet growth. So we expect income CAGR to moderate to more than 5% in the next 3 years. Most growth comes from group NII, excluding the IB and Head Office, which has grown 8% annually since '23. This reflects the U.K. lending CAGR target of greater than 5% and the stability of our deposit franchises, which underpins the structural hedge, but it also reflects progress outside of the U.K. in USCB, where balanced growth and NIM expansion supported 11% year-on-year NII growth in '25. In '26, we expect group NII to increase at least to at least GBP 13.5 billion, up from GBP 12.8 billion in '25 and for Barclays UK NII to increase to between GBP 8.1 billion and GBP 8.3 billion. Relative to our previous plan, the Investment Bank contributes relatively less against the flat wallet assumption. Over time, we do expect the mix of our income growth to pivot more towards asset-based NII and fees versus deposit income. That's why we remain very focused on diversifying sources of NII beyond deposit income by continuing to grow lending. But for the next 3 years, the structural hedge alone will deliver 50% of planned income growth. We have already locked in GBP 6.4 billion of gross structural hedge income in '26, and GBP 17 billion over the next 3 years. We plan to fully reinvest maturing hedges as we did throughout '25, and to assume a reinvestment rate of around 3.5%. This is below the current 7-year swap rate of 3.9%, which has become the most relevant proxy given the hedge duration. The average yield of maturing hedges remains below this level in '26, '27 and '28 at circa 1.5%, 2.1% and 2.7%, respectively. This will result in continued structural hedge income growth, including circa GBP 1 billion in '26. The increase in the average hedge duration to 3.5 years during '25 will reduce the quantum of maturing hedges to circa GBP 35 billion per year, from around GBP 50 billion in recent years. This slows the pace of structural hedge income growth, but therefore, prolongs the expected positive effect until at least '29. Also note, the higher proportion of equity hedge and longer duration of product hedges outside of BUK means it will attract circa 55% of growth in '26 versus 75% in '25. This change in mix is equivalent to circa GBP 200 million less income in Barclays UK in '26, which instead will occur in other businesses, including the Investment Bank. Two years ago, we set out a plan to increase the Investment Bank returns by improving RWA productivity and modestly growing costs. Since then, income to average RWAs has increased by 110 basis points to 6.6%, driven by a 9% income CAGR against flat RWAs. In Global Markets, we increased RWA productivity by 60 basis points and grew RWAs to take advantage of the environment. And in Investment Banking, we increased productivity by 150 basis points and released RWAs. Further capital productivity remains central to the Investment Bank's journey to higher returns with a target of greater than 7% RWA productivity by 2028, having absorbed the impact of Basel 3.1. In part, this will come from a continued review of the loan book, which is around 60% complete. Of the GBP 2.1 billion increase in income since '23, 2/3s came from Global Markets where we have built capacity. Financing income grew by GBP 0.6 billion in a strong industry wallet, and we achieved the '26 target 1 year early. This is particularly important, given our focus on stable sources of revenue within the Investment Bank. In our three focus businesses in Markets, we grew share by 150 basis points between '23 and half 1 '25, and income grew by GBP 0.4 billion. In Investment Banking, we have meaningfully improved RWA productivity, which was our main objective. Progress towards our secondary objective to add scale through fee share has been slower, although Banking fees grew in a market 30% larger than we had planned. Our objective now is to consolidate these gains. We will further deepen our relationships with our top 100 clients and markets and our three focused businesses and financing. And we will continue to build banker productivity, including in ECM and M&A, which are capital-light. In financial terms, given a flat wallet assumption, our plan does not, therefore, include material benefits from wallet growth to 2028. We expect proportionately more growth from the ICB, as we leverage the Treasury coverage model and the transaction banking investments outlined by Venkat. This builds on the circa 140% growth in deposits achieved in 2 years. And as a result, we expect the International Corporate Bank to be a larger part of the IB, leading to more stable income overall. Moving on to costs on Slide 66. We delivered positive cost jaws in each of the past 3 years and expect positive jaws in each of the next 3 years. This is a result of the income growth we've just discussed and modest cost growth to 2028. So what underpins this cost pathway? First, we don't expect around GBP 0.3 billion of one-off costs in '25 to repeat, being Motor Finance and around GBP 50 million of unrelated one-offs in Q4. Second, we expect circa GBP 2 billion of gross efficiency savings by '28 split roughly evenly across the years. This includes around GBP 0.2 billion of reduced Tesco Bank costs. We will deliver this by modernizing processes and platforms to increase efficiency as Venkat outlined. These savings will more than offset the effects of inflation and business growth over the next 3 years. We expect annual investment costs to increase by around GBP 0.8 billion by '28, including circa GBP 0.6 billion from the acquisition of Best Egg in Q2 '26. This will result in modest overall cost growth and a high 50s cost/income ratio in '26 with broadly stable costs thereafter to '28, supporting a low 50s cost/income ratio. The Barclays UK cost profile is an important part of this overall shape, so let me briefly cover the dynamics here. Barclays UK has been on a transformational journey for several years, reducing the cost-income ratio from high 60s in 2021. Dual running of Tesco Bank added circa GBP 400 million to costs in '25, including GBP 100 million integration costs. Other costs increased by circa GBP 200 million, net of efficiency savings. This was due to increased investment as well as the GBP 50 million one-off items I mentioned earlier. In '26, we expect a modest reduction in costs versus '25 and a low 50s cost-income ratio as we continue to integrate Tesco Bank and invest in the business. By '28, we expect larger gross and net efficiency savings, in line with the group. And for Tesco Bank costs to fall by circa GBP 200 million. As a result, we expect Barclays UK cost to fall in each of the next 3 years, contributing to a mid-40s cost/income ratio in '28. Our investments to date, organic and inorganic are delivering revenue growth across the group. Investment in the financing platform from '23 to '25 has, for example, supported 60% growth in Prime balances. And our investment in the mortgage broker platform has supported more than GBP 14 billion of mortgage applications since its launch. We have also realized GBP 100 million of funding synergies on Tesco and significant margin benefits through Kensington as both acquisitions support U.K. lending growth. We plan to double annual organic investment by '27, focused on technology change and fee growth. In addition, we expect operational costs of Best Egg of circa GBP 0.3 billion in '26 and GBP 0.4 billion in '28. This highlights the increased intensity of investment at this stage to support stronger fee growth and returns beyond '28. Cost discipline remains a key focus of our plan and is the lever that we have most control of. During '26, we expect a high 50s group cost income ratio improving again from 61% in '25. This reflects strong progress in the U.K. businesses in particular. And looking ahead, we expect further improvements to deliver a low 50s percent group cost/income ratio by '28. Turning now to impairment. The group has operated around the through-the-cycle target loan loss range of 50 to 60 basis points for the past decade, and this guidance remains appropriate. It reflects two offsetting factors. First, in Barclays UK, lower arrears and high credit card repayment rates have contributed to our loan loss rate consistently below the through-the-cycle expectations. Strong mortgage affordability criteria and credit card quality supports structurally lower impairment in the U.K. market. As a result, we now expect a lower through-the-cycle loan loss rate in Barclays UK of circa 30 basis points versus 35 basis points previously. Second, we expect a circa 500 basis points through-the-cycle loan loss rate in USCB. This is up from circa 400 basis points previously due to the changing portfolio mix. It will be higher in '26, at circa 550 basis points, reflecting post-acquisition stage migration of the General Motors portfolio and retention of some non-performing American Airlines balances. Both effects will diminish in '27 and will be more than offset by higher NIM. During the past 2 years, we have structurally improved Barclays profit signature. The Investment Bank and USCB now deliver double-digit returns, and we plan to drive these higher whilst continuing to allocate additional capital to our highest returning U.K. businesses. By '28, we expect capital generation to exceed 230 basis points, an improvement of more than 30% over the next 3 years. We continue to exercise disciplined capital allocation. First, by holding a prudent level of regulatory capital. As you have seen, we've been operating around the top of the 13% to 14% target range ahead of the expected regulatory developments that I discussed earlier. Second, we will distribute greater than GBP 15 billion to shareholders by '28, subject to regulatory and Board approval. And third, we will maintain capacity for selective investments to support structurally higher returns beyond '28. Given the strength of capital generation, this capacity does exceed the level of investment set out in the plan today. As we have done, we will exert considerable discipline over any investment, given the importance we place on shareholder distributions. We expect a progressive increase in our total payout in 2026. We are also evolving the mix of distribution to reflect the growing consistency of capital generation and to recognize feedback from shareholders. In addition to the move to quarterly buybacks announced in Q3, we plan to increase the dividend to GBP 2 billion in '26, from GBP 1.2 billion in recent years. While we continue to prefer share buybacks, we will review the mix of distributions periodically to reflect the level of our returns and the preferences of our shareholders. Bringing this together on the next slide. Operational progress during the past 2 years means we are confident in achieving our '26 targets and guidance. But momentum across the group also underpins our confidence in delivering the '28 targets outlined today. We are focused as ever on driving greater efficiency and operating leverage, protecting returns in a range of environments. And we will drive structurally higher and more sustainable returns beyond '28 by investing to support more diverse sources of income and fee growth. Over to Venkat for final remarks. Coimbatore Venkatakrishnan: All right. Thank you, Anna. So 2 years on since our Investor Update in February 2024. As we've discussed, we remain on track to deliver our goals. We are moving from a period of measured ambition to one of accelerating ambition. We aim for sustainably stronger returns, greater shareholder distributions and operational excellence. The targets which we have shared today are underpinned by structural improvements to the profit signature of the bank, which we have made in the last 2 years. And our drive to become a simpler, better and more balanced bank. We plan to continue this progress in the coming 3 years. And of course, our journey does not end in 2028. Our ultimate aim is to secure structurally higher and more resilient returns beyond 2028. So now I'll pause for 15 minutes for a break before Anna and I open for Q&A. What shall I say, 10:40 U.K. 10:40 London, please be back in the room. There's refreshments outside, restrooms outside, and we'll be back. [Break] Coimbatore Venkatakrishnan: All right. Thank you. Welcome back. So we will go to questions in the room. Coimbatore Venkatakrishnan: [Operator Instructions]. So I'll begin with the person who raised his hand first and who taught me a lot of what I know about analyzing banks. Kian? Just for that, he gets preference. Kian Abouhossein: Two questions. The first question is on the capital return of over GBP 15 billion. If you could just put this in context of capacity to support investment and growth. How should we think about this capacity that you're outlining? It looks like there's quite a bit of buffer. So we would like to understand that. And then secondly, you're one of the few CEOs who actually discusses ledgers and middle office integration, which is not a -- it's a hot topic, but a lot of CEOs... Coimbatore Venkatakrishnan: I began as a programmer, so that probably helps. Kian Abouhossein: That's probably, you are, yes. And probably because he came from the same organization that I'm from, which is a big focus. But trying to understand a little bit the investment phase, which has stepped up in '26 significantly. And you're going from GBP 1.1 billion to GBP 2.3 billion of investments. And just what the focus is and how should we think about post '28 basically in that respect? Coimbatore Venkatakrishnan: Anna, do you want to start on the capital and then we can come back to the other one. Angela Cross: Yes, sure. Thanks, Kian. So one of the hallmarks of this plan is the level of capital generation. We've talked about that. And really, when we talk about an improving profit signature, that's really what we mean. It's this chart here that they've just brought up showing that sort of change to 230 basis points. And in the plan, what we've done is we've meaningfully increased the distribution to greater than GBP 15 billion, but we've also meaningfully, in fact, doubled the level of investment. But such as the level of capital generation within the plan, the level of generation actually surpasses both of those two increases. So what we've done here is we've deliberately created some capacity for us to be able to invest further if and only if we determine that is the right thing for us to do. And I'll just remind you of our very clear capital hierarchy here, specifically the importance of shareholder returns. So we're going to set a very, very high bar for any additional level of investment. And quite frankly, if we are unable to find such an investment, then the capital hierarchy will kick in, and we will distribute more than we have here in the plan, or alternatively, we will be investing more than we have here in the plan, and we would expect the momentum of the business in the outer years to be higher than we're presenting here. We have no inclination, no objective here to hold on to higher than required levels of capital. But what we're trying to do is create some capacity to underpin some of the meaningful opportunities for growth that we have, whilst meaningfully stepping up that level of distribution. Venkat? Coimbatore Venkatakrishnan: Yes. And I would say, I think if you look at our track record of investment, Anna spoke about the investment which we had made in our prime and financing business and both the quantum of investment and the payback. You saw the quantum of investment in even the mortgage broker application and the payback. We look to make investments where you would get the revenue realization fairly quickly. And you see that even of Kensington Mortgages and Tesco and God willing, Best Egg. So we are looking to do that. And we need to keep that capacity for that reason because opportunities will be there and needs will be there. I would say, Kian, on the second question about subledgers and the sort of the guts of the organization, it comes from both a philosophical place and from the actual reality of the business. The philosophical place is, as I said, for a long time in this industry, the businesses -- technology has revolved around the businesses. Now as you see not just in us, but across the industry, the depth and extent of technology-based services, products, and delivery, the businesses are revolving around technology. And what that means, especially if you're going to take advantage of the promise of new technologies like AI and cloud computing is that you've really got to, as I use the word, harmonize your processes and standardize your approaches. And especially when it comes to data platforms and to the way in which you construct and store your data, the way in which you do computing, the way in which you build models and the way in which you deliver. And if these things are not standard, you add huge complexity. And so we've got to unravel that complexity. And in large complex GSIFIs, that's a big task, and that's what we are trying to do. All right. Alvaro? Alvaro de Tejada: One of them is actually -- sorry, Alvaro Serrano from Morgan Stanley. One of them is kind of a follow-up to the second question maybe for you, Venkat. In one of the slides, you pointed out that 75% of the employees are in support functions, I think, yes, support functions. And obviously, one of the -- at least for me, the surprise of the plan is the cost element as you were referring to. During the plan, how is that number going to come down during the plan in 2028? And beyond that, how low do you think it can go because it's obviously one of the core pillars? And second, more -- maybe a more financial one on, again, maintaining the RWAs flat in the Investment Bank and one of the things coming out is ongoing RWA efficiencies. Is there anything -- maybe this one is for Anna, but is there anything you can point us to that is pretty mechanical around the way the business is done in Investment Banking, maybe less legacy LBO business, more sort of private credit capital-light businesses that we can gain conviction that mechanically the RWAs are going to be flat right now, pointing out to a proportion of contribution today versus 3 years out, something that will gain -- give us confidence that we can keep it flat. Coimbatore Venkatakrishnan: We're going to tag team on both these questions, Alvaro. So first of all, on the cost, just a definitional point. When we call support functions, there's a bit of a legal entity aspect of Barclays. This is what we call Barclays Execution Services. And this includes technology and operations, but it also includes compliance, risk, finance, HR and legal. And so it includes basically the non-revenue generating parts or direct revenue-generating parts of the business. So that's the first thing. The second thing, as I've said, and I'll have Anna chime in, we don't have an explicit target in terms of number of employees. What I've said is there will be productivity benefits from all these investments. We hope to harness this productivity benefit in improving the quality and delivery of services, whether that is to clients or whether that's internally, right? And there will be obviously a gross efficiency cost savings that we've outlined and investment in the group. But we are not outlining a particular people target. I think we are approaching this from something that creates efficiency in order to provide enablement. And then we'll see where we go. Anna? Angela Cross: Yes, sure. If I can just add to that. Our real focus from here on in is really on that technology efficiency. So the majority of cost out, if you like, the efficiency is going to be driven by change delivery, by platform modernization and the kinds of things that Venkat was talking about, about enabling products to market, if you like, much, much faster than we have done before. So that's where we see the sort of meaningful change, if you like, in the cost base. Shall I start on RWAs, or do you want to add? Coimbatore Venkatakrishnan: Yes, you do. But just one thing. It's no accident that the most digitally enabled part of the bank, which is the U.S. Consumer Bank, also has our lowest cost/income ratio, right? It's no accident. Go ahead. Angela Cross: Yes, sure. So on RWAs, I mean, this is not a new thing for the IB. They've been flat for 4 years. They were flat for 2 years before we started the last plan. And whilst we've made considerable progress, 110 basis points, we do think that there's more to go here. And I'd just call out -- so let me talk about a couple of whats. The first would be, if you remember when we did our Investment Banking deep dive, we talked about that review of the loan book being really good stewards of capital. We are 2/3 of the way through that review with 1/3 to go. And it might be helpful actually if we can bring up the slide that's got the relative revenues over RWAs, and you'll really see what's happening in Investment Banking. At the same time, so it's that bottom right-hand chart that I'm calling out there. So absolute levels of RWAs have been coming down in banking as we have reviewed that loan book. That's allowed us to be much more nimble in how we deploy RWAs across the Investment Bank and really deploying them at the moment, as you've seen, in markets just because the market opportunity has been there. The other thing I would call out is much of our growth that we're really leaning on from here on in, some of the things we talked about before, so M&A and ECM, but the International Corporate Bank is a really big part of this part of the plan. It's made tremendous progress in the last 2 years. And that again comes from the treasury coverage model that we talked about in our deep dive. We've increased our deposits by 140% here. And now we have the opportunity to really leverage that by deploying the technology that Venkat is talking about and really driving fee products from here. So we are confident in that trajectory. Venkat? Coimbatore Venkatakrishnan: Yes. I mean I'll just add to what Anna said. I mean structurally, it is the International Corporate Bank and Transaction Banking. It is the continued growth in our prime businesses, which revenue per unit RWA because of just the way the lending is structured is generally better. It is over a very long period of time, the way lending and banking has been changing from direct lending on individual credits to portfolio lending. But that's over a very long period of time. But it's the thing Anna said, it's corporate banking. It is an emphasis on fee businesses and also you know, at the right points of the cycle, intermediation. Yes, go ahead, please. Guy Stebbings: It's Guy Stebbings from BNP Paribas. The first question was on capital in terms of targets. You got the 13% to 14% target. I think you've talked sort of running at the top end of that range throughout this plan. And given this is the plan now to 2028, post Pillar 2A changes given the constructive tone from the regulator. I'm just wondering what do we need to see to sort of potentially move lower down in that range as sort of a formal way you're running from the business? Is it just getting that Pillar 2A change from the regulator? And presumably you've got pretty good visibility as to what you're expecting there. So if things do land as you expect, maybe you could help sort of frame that so we can think about what that means for capital return and RoTE targets. And then the second question was on the mortgage book in the U.K. You referred to the headwind in the first half of this year. Can I just check in terms of the definition of that headwind? Is that sort of a gross headwind? Because I'm mindful that with Kensington and the sort of flow of the book, you might be able to offset some of that as you have some higher LTV, higher-margin business coming through. So can you kind of frame the definition of that headwind? Angela Cross: Yes, sure, Guy. I'll take both of those. So on the first one, if you go back to the beginning of '25, what we said was that because we were carrying more Pillar 2 in advance of IRB implementation, you should expect us to operate at the top of the range or towards the top of the range. That's still what we're saying. It's no different to that. And I do expect there to be some Pillar 2 offset when we get through Basel 3.1 and IRB. I just don't know what they are right now. And what we are trying to do in every single part of this plan is put it in our control. We want our distribution plan to be underpinned by the things that we are doing and that it can't be put off course by the timing of regulatory change or the certainty of that change. So that's all we're saying here. So for us, in the short term, our planning assumption or actually throughout this plan, our planning assumption is that we will be at the top end of the range. And that's obviously -- you should reflect that in the way you think about our distributions, you should reflect that in the way that you calculate our RoTE. But once we get beyond that implementation and we have that clarity, we will, of course, review where we think we should be within that range. I mean we still think that the 13% to 14% range is the right range for Barclays. But at this point in time, we just don't have the regulatory clarity, and we want this plan in our control. So that's the reason for it. And on mortgages, I'm specifically talking about a gross impact, and it relates to the mortgages that were written at the very end of 2020 and beginning of 2021. So as you remember, as we were all coming out of COVID, there was that stamp duty holiday and the mortgage market was very substantial. Those mortgages were written at very wide spreads, like 160 basis points. That's quite meaningfully different from where we are now. So just as they refinance, you're going to see some relatively short-term pressure across the market as a whole. We think it will be gone by the end of half 1. And then beyond that, you're going to see the kind of progress that you've seen in our NII to date. But it is a gross impact. We're obviously enjoying very good levels of net lending, driven very much by Kensington and that broker platform. So it's a short-term hiatus, I would describe it as. Coimbatore Venkatakrishnan: If I may just underline one thing, whether it's capital or looking at our RoTE, there are potential tailwinds, right? We are planning prudently, but what Anna is referring to, whether it's the new capital rules and what relief we get, there are potential tailwinds. We are not banking. Sorry, go ahead. And I'll come back to the back in a minute. Benjamin Toms: Ben Toms from RBC. First one is on Private Bank and Wealth Management. What products are you currently missing from your premier banking proposition? And how easy is it for you to build those yourself? And then secondly, to continue on the U.K. loan book. U.K. retail banks continue to surprise to the upside on loan book growth relative to GDP. I think your guidance is for a 5% loan growth CAGR out to 2028. What's driving the growth in excess of GDP? And what's your outlook for volumes in the mortgage market for the next couple of years? Coimbatore Venkatakrishnan: Let me start on both. We've got a pretty big and complete product suite. There are a couple of gaps in the product suite that are missing, SIPPs, junior ISAs that are coming online. But if you put yourself at a higher level looking at it, starting at the self-directed end of the spectrum, what we've got is direct investment, what we used to call Smart Investor, which is your basically do-it-yourself investment buying stocks, bonds. Then you come to the next piece, which is planning and advice. And that is where we are doing some work, as I said, to create products, which we will talk to you about soon, which are clearly constructed, fairly priced, transparently built and cheaply distributed and -- sorry, efficiently distributed. And there, we are looking to grow in scale and we've got the basic product set. And then we've got our Private Bank, both domestically and internationally, was complete. So I would view it more as a scaling journey than as a completion of product capability. And that is our goal. And look, I think more broadly, the U.K. is a nation of savers. I think it needs to be more of a nation of investors. I think we're going to have a broader tailwind and support for this. I think it's an important role for banks to play, and you'll see us emphasize it. And then if I come to loan growth above GDP, let me begin and then Anna should fill in. We've said 5%, as you say, loan growth versus nominal GDP of 2%. Basically, there are parts of the business in corporate banking and business banking and even in parts of personal loans, where we were underrepresented in the last number of years. Tesco has given us the capability in personal loans, and you can see the increase. You're seeing the increase 18% growth in lending in the U.K. Corporate Bank. If you look at the U.K. Corporate Bank broadly, still loan to deposits is like 35%, 34%. So we have a lot to grow, right, versus what you might normally expect from somebody. Anna? Angela Cross: Yes. I mean, simply put, Ben, I think it's a combination of capability, increased capability. So we talked a lot about the mortgage platform. Actually, we're doing very similar things within the corporate banking environment, making it easier for that customer or client to engage with us and making that journey efficient, quick, giving them certainty, et cetera, that's making a really big difference. I think also the sort of broader product architecture that Venkat talked about, we see it in cards across multiple products. We obviously see it in our mortgage business. So we're just going to market with a much, much broader range and certainly, more of a step change than we've had sort of 2 or 3 years ago. What it isn't is price and what it isn't is risk. So you can imagine as CFO, I've got a very keen eye on those things. So if you think about our corporate lending, it's up by 18% year-on-year. We've got more than 1,000 new clients in 2 years. About half of those are driving some of that lending. But as I look at the risk profile, it's not changed since the beginning of the plan. And as I look at the portfolio margin, it's not changed since the beginning of the plan. So it's really technology, intention to lend and I would say, breadth of product. Coimbatore Venkatakrishnan: Go ahead, please. Tim Piechowski: Tim Piechowski with ACR. I think today in guidance, it's the first time you've pointed us to the 7-year swap rate from the 5-year swap rate on the hedge book. Could you talk about, is there a change in kind of the duration targeting there? And what gives you the confidence to make that change? You're looking at the deposit betas, et cetera? Angela Cross: Yes, sure. Thank you, Tim, for the question. So we actually extended the length of the hedge last year, taking it from roughly 3 years to 3.5 years, and that's why the 7-year swap rates becomes the most relevant rate. That really follows the observation of customer and client behavior because what we do is every single month, we are looking at how the deposit books perform across retail and corporate at a very, very granular level. And what we were observing was really that the customer and client lives were lengthening out, and we were getting more confidence around that. So it's purely a reflection of that change. Andrew Coombs: Andrew Coombs from Citi. So on the Investment Bank, If I look at your 2026 targets, previously, you had a greater than 12% return target. It's now circa 12%. A high 50s cost income is now circa 60%. I'm assuming the change is primarily due to FX, but perhaps you could firstly confirm that. And secondly, when I go back 2 years and think of the original plan, a lot of the revenue growth was assumed to come from market share gains, and you actually assumed a fairly flat wallet. Actually, what's materialized is a much better wallet than you expected, but flat market share. So perhaps you could also just talk to competitive dynamics and how that's played out versus what you thought 2 years ago and how that then fed through to your '28 assumptions as well? And then on the U.S. Consumer Bank, I just wanted to understand some of the moving parts because you talk about greater than 13% NIM for 2026 full year. But I think in your earlier commentary, you said 12.5% for Q1, 14% for the second half post the AA sale. So presumably it's the 14% you would argue we should be thinking about into the outer years. But then similarly, on the loan loss ratio charge, you're actually assuming that's coming down even as the exit NIM is higher. So perhaps you could just square the circle there. Angela Cross: Sure. Shall I start and then I'll hand to you on market shares, and then I'll take it back on. Okay. Thank you. So Andy, you are correct. The material moving part between the last plan and this plan is we previously planned on 1.27, we're now planning on 1.35, dollar rate. Now that has no impact on group capital, no impact on our ability to distribute. But in particular pockets of the bank, you see some concentrated effects. And the IB is one of those. You're going to see it in USCB as well. So that movement in FX is worth about 50 basis points. So all we're doing is we're just truing up our expectations. We're pleased with the progress that it's made so far. I'm not going to mark that plan to market every single passing quarter. It's just that as we're resetting targets, we felt like it was the appropriate thing to do. Venkat? Coimbatore Venkatakrishnan: Yes. And I think -- on the other side, what I would point to is, look, on the Investment Banking side, banking per se, as I said to you, we would like to see greater fee share. What you've seen so far is progress from the hires and the investments we've made, but -- and you've seen greater revenues, obviously, and excellent capital discipline. And as we make these investments, we hope to see the fee share. On markets, I would point you to the fact that in the 3 focus businesses, we've done what we said we would do, and we've done it a year early. And as well as the number of our top 5 clients among the top 100 clients for whom we are top 5, that has gone from 30 to 50 to 60. So there is structural progress being made in these elements. Angela Cross: Okay. Can we bring up the slide at the back of the deck, I think it's 95 or 96, please, on U.S. Consumer Bank, perhaps just to help this. There, 96, perfect. Thank you. So Andy, you're right. There's a lot going on in U.S. Consumer Bank in 2026, specifically being driven by the fact in Q2, we expect to exit the American Airlines partnership, and we'll also purchase Best Egg or complete the purchase of Best Egg in the same quarter. So firstly, that has a NIM impact. So I expect the NIM to go to around 12.5% in the first quarter. What's driving that? Well, it's just the accounting that I called out earlier. It's a movement between non-NII and NII. Then we've always said that because American Airlines was such a high-quality portfolio, the NIM on it is relatively low, but also the loan loss rate on it is relatively low. So taken together, it was a relatively low returning portfolio because it's super prime. So what happens when that leaves the portfolio is the NIM will go up further. And so you're right, in the second half of next year, I'm expecting, if you like, a clean run rate of NIM, which looks more like 14%. Now when I come to loan loss rates, that same impact is going to take us from 400 basis points to 500 basis points, but that will be more than offset by NIM. During '26, in isolation, what you're going to have is a couple of impairment effects. The first is, if you recall, when we buy something, we bring it all on at Stage 1. So it has to mature through Stage 2. So you get what we call stage migration. You're going to get that in the General Motors portfolio. So that's going to elevate impairments slightly. And then for a period of time, we're going to be holding on to some nonperforming loans from the AA portfolio that won't go with them on the sale. So those 2 things together are going to show a little bit of elevation during 2026. So that's why I'm guiding you to around 550 bps, but ongoing, 14% NIM and 500 bps loan loss rate. Coimbatore Venkatakrishnan: Nothing to add. Pui Mong: Sorry, I forgot that this was working. It's Perlie Mong from Bank of America. So thinking about the income guidance at the group level, so it's greater than 5% CAGR. And within that, obviously, Investment Bank is probably below and the Consumer Bank is above. And with the U.K. part also growing volumes greater than 5%. I'm just trying to think about what does it imply about margins. So in terms of product margin, that is, would you expect more of that growth -- income growth coming from the volume side? Or are we basically past the point where deposit margin is growing very substantially because of the hedge? And obviously, '26 will probably be a bit higher because of the more of the hedges coming through in '26. So in '27 and '28, how should we think about the margin piece? That's number one. And number two is that -- so it sounds like Investment Bank RWAs is going to stay relatively flat because you still expect that to come down to about 50% of the group by '28. So roughly speaking, it's not much more to the Investment Bank. And the cost guidance at a group level only modestly growing from now to '28. That suggests Investment Bank is not getting very much cost either. So I'm just trying to think about why you've decided to do that in the context that, obviously, the IB probably is one of the businesses that has performed above expectations in the last cycle. And increasingly, there are questions about with the U.S. peers investing more and putting more capital behind the IB, why would you choose not to do something? Coimbatore Venkatakrishnan: I'll let Anna take the first question, and she can start the second, and I might come in. Angela Cross: There we go, the plan. Thank you, Perlie. There's a lot in your question. Let me try and unpack it a bit. So how do we think about product margin in the U.K. is, I think, your question. So look, there's a bit more to go here. And you can see that from the -- can we go to the structural hedge slide, please? Thank you. Okay. So we are assuming that we are going to be reinvesting the structural hedge at 3.5%. The maturing yield over the next 3 years is materially below that. So 1.5%, 2.1%, 2.7%. So you're going to have a considerable hedge tailwind across at least this plan, probably beyond. And everything that we've done around the tenure of the hedge and extending it from 3% to 3.5% is only going to increase that momentum for longer. So that remains there as, if you like, an underpin for product margins. Then if you think about lending more and particularly within our credit card business, all of the volume that we've written over the last 2 years coming to maturity from its promotional balances, that will start to increase the interest-earning lending in the credit card book. So we expect those things to continue. Now what we're not doing here is planning for any expansion of product margin really, though, because what we've said implicitly is that the growth that we're seeing in lending and some of the margin pressure that we're seeing in the U.K. market pretty much broadly offset. That's our planning assumption. Now it may turn out differently to that, but we are not assuming that product margins either as a totality, if you like, Perlie, get either better or worse, if that makes sense. You just continue with that hedge grinding in the background, products is broadly awash. That's how we think about it or that's how we planned for it. In terms of the Investment Bank, look, what we're trying to do here is construct a plan that is carefully constructed, okay? We're trying to put as much of it within our control as possible. So we're planning on a flat wallet. We're not materially expecting any market share change in markets. We expect some in Investment Banking. The pressure here in the plan is coming more from Transaction Banking, but that's where we're directing our investment. But don't conflate careful planning and lack of ambition. Because what we will do, of course, if the opportunity presents itself, then we will monetize it as we have done to date. Venkat? Coimbatore Venkatakrishnan: I will emphasize that last point. I must say it's nice to be getting a question about why we shouldn't be bigger in the Investment Bank. But I think we've targeted -- we've been very clear to you over the last couple of years about where we are roughly targeting the IB as a percentage of the group. I think what you should expect us to do is exactly what Anna said, which is we're making a plan based on an assumption of a wallet. If there is opportunity, we've done it in the last number of years, which is we take advantage of it. Yes. Sorry, let's start, Chris. Chris Hallam: Chris Hallam from Goldman Sachs. Just a question on the Investment Bank to begin with. Are you able to give any color on perhaps how much leverage exposure is tied up in the Investment Bank? I know we talk about RWAs, but as we shift towards the growth you're seeing in the financing businesses, how relevant that metric is. And when you talk about flat market share in Global Markets, is that a conservative assumption or not given, I guess, the dereg story we're seeing building in the U.S. and also the ambitions one of your European peers has in FICC, specifically in the United States? And then the second question is more broadly on AI. I think or I assume behind the scenes going through all the planning, you've looked at a lot of the opportunity set in that area. It feels as though more generally, there's a narrative that the technologies are becoming more impactful, but perhaps the speed at which you can get them into the enterprise is taking longer than people had expected and maybe slightly at a higher -- slightly higher cost. Is that a fair narrative or one that you would agree with when you think about the work you've done behind the scenes on this topic? Coimbatore Venkatakrishnan: You want to go with the first one? Angela Cross: Yes, sure. So thanks, Chris, for the question. I mean we don't talk about return on leverage balance sheet a lot with this community, but you can imagine we're very focused on it in the background. And there are -- you're right, there are 2 big parts of the bank where leverage is deployed probably most extensively. One of them is obviously retail mortgages. The other one is financing within the Investment Bank. It's very high RoTE business because it's essentially secured lending, but it does consume leverage balance sheet. That's why we have the AT1 strategy that we have. And we're always thinking about what are those returns on the leverage balance sheet versus the cost of those AT1s. That's how we think about it in the background. We have deployed more leverage in the business over the last few years, but so have our U.S. peers. And our perception to date certainly is that they have not been leverage constrained in the way that they have addressed that. And despite that, we've grown the balances by 60%. So it's a business, of course, we're focused on the returns across many lenses, but we're happy with where it's going. Coimbatore Venkatakrishnan: Yes. I'd also say one of the things about the bank and the way we're building the bank is that we have lots of options and lots of opportunities. So just as you have 2 areas which consume leverage, you've also got the U.S. cards business, which helps you offset that because it's capital dense, relatively speaking. And what we are doing on the personal and unsecured side in the U.K., which is also relatively more capital dense. So I spoke on one of the slides about balancing product, income type mix, all these factors are coming in to create the portfolio which we have. Angela Cross: Yes, sure. I think back to you on AI. Coimbatore Venkatakrishnan: Back to me on AI. Yes. So you're right that I think what people are finding is that it's not just sort of enabling a particular type of model or a particular capability on everybody's computers and then get to work. So you have human adoption and then you have, more importantly, the ability to get it to work in the system. To get it to work in the system requires 2 things or 3 things. One is the basic infrastructure, then adding the capability and then the third, the willingness to reengineer your processes. That is what we are trying to convey in the slides we spoke about on technology. So the basic infrastructure is about both data and computing. Then on top of that, you build the model capability, which exists in some of the computing platforms, but which you might put on your own. And then the third is the commitment to reengineer processes, and you've got to really do it end-to-end. So whether it is that BARXBot, whether it is what we are trying to do in credit risk, whether it is what we are trying to do in U.S. cards in the U.S. Consumer Bank and customer service, you can't leave pieces of this undone, okay? And that's the deep organizational commitment. So we recognize it. That's what we are finding behind the scenes, as you said, but we're trying to pick the right projects that will have the biggest impact on the bank and see it through from beginning to end. Yes. Mike Holton: So another question on the income planning assumptions. Coimbatore Venkatakrishnan: Sorry, can you introduce yourself? Mike Holton: Sorry. Yes, Mike Holton from BNY Newton. There are some that you talked about that do seem relatively conservative. Now whether they will be or not, we'll see over the planning period. But to the extent that they are and revenues are better, income is better than you're planning, should we expect as investors for that to flow to the bottom line? So profits are better, RoTE is better? Or over the course of the plan, would you invest that away, maybe make additional accelerated investments in the business such that you still hit or maybe beat your plan by a little bit, but you improve the sustainability perhaps of the profitability, pull some investments forward. So beyond '28, you're set up even better. Angela Cross: Do you want me to start? Okay. So Mike, the first thing I would say is that our targets that we've given you have very deliberately got a greater than sign in front of them. So we're balancing a few things here. The first is that, as I've said a few times, we want to put this within our control, the delivery of the plan. That's really, really important to us and particularly the delivery of the distributions of the plan. So that's number one. Number two, we are balancing here the longer-term growth of the firm. So Venkat has talked a lot about the additional investments that we have and will continue to make. I mean between Venkat and I, it would be relatively easy for us to optimize the returns of the firm across a short-term horizon. That is not what this is about. We are really balancing here, investing more in the business, and that means that the RoTE in the shorter term are probably a bit lower than they would otherwise be. But we think it's really, really important to create a Barclays for 2 years' time when we're standing up maybe during the next phase of the plan, the third phase of the Trilogy, where we're talking about '28 and beyond. We want that momentum to continue. So that's why we've -- not so much on the income forecast, but when I was talking before about the capital capacity of the plan, that's exactly what I was driving at, our ability to flex our investment pathway if we feel that's the right thing to do. But every time we are doing that, we are considering what is the returns on that investment relative to either the business as it stands now. So is it going to enhance those returns further? Or how does it look like versus the returns of a buyback? So we're thinking about all of those things as we deploy that. Coimbatore Venkatakrishnan: Yes. I mean it's going to be -- we've presented a plan to you that is based on prudent financial planning in the way Anna has said, but we want to create a deep infrastructure for this bank, make it, as we said, returns in different environments, produce strong returns in every -- through different environments and sustainably higher returns in the long run, which is a combination of investment and shareholder return, right? Sorry, going to the back and then I'll come here. James Frederick Invine: It's James Invine from Rothschild & Co. Redburn. I've got 2, please. Anna, can you talk about your thoughts on kind of deposit volumes and spreads in Barclays U.K., please? So we saw a pickup in volumes after a few quarters of kind of flat to slightly down. And I think as well, your U.K. net interest income guidance kind of implicitly assumes quite a bit of deposit pressure. So is that migration? Is it product spread pressure? And then, Venkat, just back on the Investment Bank, I mean it sounds like you're very theoretically open to putting more investment in there. But what actually has to happen? So the revenue on risk-weighted assets has gone up. You're talking about a 13% plus RoTE. How much higher do those numbers have to go before you think you'll give this business another GBP 20 billion of risk-weighted assets or something? Angela Cross: Okay. So on U.K. deposits, you can see that the deposits are up quarter-on-quarter by around, I think, GBP 3 billion if we go to the slide. What we continue to see, though, James, is we do continue to see some competitive pressure in the U.K. and specifically that move towards fixed or time deposits. Now seasonally, I would expect some concentration of that in Q1, Q2 just because of the ISA season in the U.K. We always see that. And it feels like as a market, we're well primed to see that. But we are pleased with that deposit progress. What does that underpin? Well, I think just continued improvements in the business. I would say that we've deployed our multi-brands in deposits this year. We don't really talk about that. We talk about it a lot in assets, but we are going to market with a much more sophisticated product architecture in deposits because we are now deploying the Tesco brand here. So that's really helping us. But we are not assuming from here that there is any real easing in that deposit environment. It may happen, it may not. But as I say, we're trying not to make significant market assumptions. Venkat? Coimbatore Venkatakrishnan: Yes. So on the Investment Bank, first of all, investment comes in different ways. Investment comes in people, investment comes in technology, particularly in the markets business, and then investment can come in RWAs. What we've spoken about on the balancing side is basically Investment Bank RWAs as a percentage of the group, where we've set a target of around 50% seems right. We've also indicated flexibility around that number if there's a little opportunity, but 50% seems right. We have been investing heavily on technology and people. And we've spoken about it, whether it's bankers, whether it's trading capability and of course, electronic trading capability. We spoke a little earlier about the investments we've made in prime. So there's been and continues to be tremendous investment in technology and capability. Some of this or a lot of it is going towards things that are relatively capital-light and relatively high in fees. So we are prioritizing stable income. We are prioritizing corporate banking. And of course, electronic trading, which helps with our intermediation. And on the capital side, as I've said, there's a balancing act, and it's about 50% is where we would aim to target. And to get there right now, IB RWAs have to be relatively flat. Angela Cross: Venkat, on the left-hand side, you've got Chris, Jonathan and Amit who are being incredibly patient. So... Coimbatore Venkatakrishnan: All right. In that order, Chris. Christopher Cant: It's Chris Cant from Autonomous. If I could just ask one point of detail and then on the IB again. So your effective tax rate has been quite difficult to predict over the last couple of planning periods. If you could just fill that gap in our models, I think that would be appreciated by all. And then on the Investment Banking side of the equation in terms of stable market shares, I guess one obvious development that's probably coming down the tracks at you in the next 12 months is this regulatory change in the U.S. So are you seeing at the moment any change in the competitive environment? And do you make any allowance in the plan for a potential contraction in product margins as some of your U.S. competitors get more capital capacity, some of which is likely to be deployed into the IB? Angela Cross: Okay. I'll start with the tax rate. So Chris, I'm not going to give you a tax forecast. But I recognize that quarter-by-quarter tax can be a bit lumpy because it relates not only to the changing shape of the business, but also things that may have happened in the past. So I would encourage you to look at it over a sort of full year basis, maybe for the last couple of years and start from there. Always, if we've got significant tax impacts, we typically call them out for you. So start with that. Coimbatore Venkatakrishnan: And Chris, just to clarify, by regulatory change, do you mean capital regulations in the U.S.? Or do you mean individual banks that might be under regulatory structures now that might lift? Christopher Cant: More the former. Coimbatore Venkatakrishnan: The former. Right. Look, U.S. capital regulation is very likely diverging from what's there in the U.K. and what's there in Europe. We have operated this investment bank through multiple capital regimes in different locations, and we adapt. The question is then how do we adapt? I said earlier in our presentation that the secret sauce of our Investment Bank is the synergies, our strength in fixed income and structured financing and the nimbleness of our approach with our clients and deepening the way in which we engage with clients. So we'll see what comes out. We will see whether we are at a relative advantage or disadvantage in certain things. But the most important thing is to keep investing in the infrastructure, the people, the products so that -- and the client relationships so that we can manage it through different points in the market cycle, through different differences in capital regimes. This has always been a very competitive business, and we expect it to continue to be so. Jonathan and then Amit, yes. Jonathan Richard Pierce: It's Jonathan Pierce from Jefferies. If I can take it up a level, if that's okay, a couple of questions. I'm really trying to triangulate the capital generation targets on Slide 71 with the RoTE and the distribution expectations. I mean greater than 230 basis points on circa GBP 400 billion of RWA is obviously getting you to an attributable profit number of over GBP 9 billion. So putting to one side, that's quite a bit ahead of consensus, even if we assume 3% RWA growth, which if the Investment Bank is pretty flat, is quite a lot. That's only going to take us down to about GBP 8 billion of free capital generation, which is obviously huge in the context of the GBP 15 billion plus over the 3 years. So can I just firstly ask do you recognize those numbers? Are these distributions going to be really quite back-end loaded such that when you are stood here in 2 years' time, the next 3 years of distributions are going to be markedly above the greater than GBP 15 billion that you've talked about today. Secondly, connected, the RoTE on that 230 basis points plus, if we use consensus TNAV would be closer to 15%, maybe a little above 15%. I just wonder if you can talk to TNAV growth over the next few years. It would be great if you can reference consensus, but maybe some of the things that are harder for us to model like the own credit unwind, the pension surplus, maybe even the cash flow hedge reserve moves to a positive. How should we be thinking about TNAV 2 or 3 years forward, please, particularly versus consensus? Angela Cross: Thanks, Jonathan. I guess both of those are for me. So let me just start with capital. So I'm not going to comment on your math, Jonathan. Where I agree with you is that the organization is generating a lot of capital, and we expect that to continue. And so when we give you a distribution target of greater than GBP 15 billion, I would concentrate on 2 things within that slide. One is the greater than sign. And the second is this point that we are making that beyond the investment that we've got in the plan, so beyond the doubling of investment and beyond the level of distributions, there is an element of capital creation here that we are holding for additional investment if we think that is the right thing to do. Now if we don't, then we will, of course, return that to shareholders. That's what our capital hierarchy says. It says first, be well capitalized, then deliver it to shareholders, then invest it to meaningfully improve the returns of the group. So that capital hierarchy remains. We have no desire to hold on to excess levels of capital. So your thought process is as ours is. But as I say, I will leave the math to you. In terms of the sort of -- in terms of the RoTE point, we've given you a RoTE target, which is greater than. So again, I'm not going to comment on the math that you've given me. Last time I looked at it, TNAV was broadly -- our expectations of TNAV and consensus TNAV were broadly similar. I think the difference here is probably in the greater than sign simplistically put. Coimbatore Venkatakrishnan: Amit? Amit Goel: Maybe one [Technical Difficulty] again, just say, for example, looking at BUK profitability targets, so '28, greater than 20%, similar to '26, greater than 20% despite a mid-40s cost income versus the low 50s, further progression in terms of the income from the hedge. I mean I guess just wondering why isn't that number, say, greater than 25% or higher, you don't want to show a number like that. So just curious on that. That's the first question. The second, again, just on the IB, just on IB fees, again, this comes back to the market share point. So I understand the flat wallet assumption going into '28. But again, when I look at the trajectory, I think last time we were thinking that there had been investment in '23 and so forth, which should drive market share gains. We saw gains into '24. I think we went from about 3% to 3.3% -- sorry, into '25 or '24, but that's come back down now to around 3% again. So just wondering what's going to create the reacceleration back to the 3.5%, and what gives the conviction on that piece? Coimbatore Venkatakrishnan: Do you want to take BUK and then I'll come back to the IB. And that's Amit Goel, by the way, from Mediobanca. No, it's okay. Angela Cross: You did a good job with that. Coimbatore Venkatakrishnan: I know. I won't say anything. Angela Cross: So a couple of things just to call out, Amit, just to help you. Firstly, again, I'm going to lean on the greater than. The second thing is that although this is not true for the group, for BUK, it is true. We are expecting some impairment normalization within that business. So as we said, it's been running relatively low because we've been recalibrating these impairment models that are consistently overpredicting impairment in the U.K. So we've been running pretty low in BUK. We do expect that to normalize up to around 30 basis points. That's not true of the group. The group is running in totality where I expect it to be. So that's not flattering the group, but I think it is flattering BUK right now. So if you take that plus just lean on the greater than number, then that should hopefully explain. Venkat? Coimbatore Venkatakrishnan: Yes. So I'll begin with an answer on fees, similar to one I often give on markets. So when we have quarter-by-quarter or annual returns and results in markets, people will always ask, why are you better in this or why are you worse than that? Some of it has to do with where we are relatively -- where are our relative strengths and then how do the markets evolve to either give -- play to your relative strengths or not. And you've got to look at it over a long period of time. On Investment Banking fees, as I said, we made the investment in bankers. And debt capital markets is relatively strong. It's equity capital markets and M&A, where we need to do more catching up. And leveraged finance is obviously reasonably strong. So when you then look at that, some of it has to do with the pattern of deals in the last year versus the year before. They were larger, more lumpy deals. Sometimes if you're lucky to be in them, you're good. Otherwise, you're not. So '24 was a helpful year, '25, less helpful. But over the long run, we expect to get that market share simply by having the right bankers and the right product, and we look at this over a longer period. So I will give that kind of answer to you. Right. Anybody else? Going once. All right. Well, listen, thank you very much. Let me say that over the last couple of years, Anna and I have really appreciated the engagement from all of you and your organizations as we've been on this journey. We appreciate your candid feedback, supportive and encouraging. We welcome the opportunity to continue these conversations with you. Some of it will be on the road and one-on-ones. And I want to really thank all my colleagues who have helped put this together, Marina, starting with you and your team and the Investor Relations team. So please go easy on them. And then thank you. If you have a minute or 2, there are refreshments outside, and you can linger or you can run back to your computers. I'll leave that to you. Thank you. Angela Cross: Thank you.