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Deborah Honig: All right. I think we can get started. Good morning, everyone. Thanks for joining us. We have an update from Microbix to discuss the Fiscal Q1 2026 Results. A sequential improvement quarter-over-quarter, so starting to see a rebound in company progress after 2025, which we all know is a bit of a down year due to events outside the company's control, but things seem to be tracking in the right direction. So here to tell us more about that, I have Cameron Groome, CEO; Jim Currie, CFO; Ken Hughes, COO. We won't be working off a presentation today. We will be finalizing the presentation with the Q1 numbers. So you can expect to see that online either later today or tomorrow at the latest. And we will have a Q&A section. So feel free to enter questions in the Q&A box. And again, not working off a presentation, but we are going to talk about forward-looking statements. So if you'd like to know more about those, you can find them on the presentation on the company's website. With that all out of the way, I'll hand the mic over to Cameron, who I think is going to give us a little bit of a review on the quarter. Cameron Groome: Thank you. Good morning, Deborah. Thank you, Deborah and everyone. Deborah, you didn't want to spend 5 or 10 minutes reading through a detailed safe harbor statement. Deborah Honig: Yes, I would love to. Should I pull it up? Is everyone... Cameron Groome: Sure. Why don't we assume it's been read, and we'll refer to the one in the quarterly disclosure and leave it at that. Deborah Honig: Yes, everyone can go back to bed, my interpretation of it. Cameron Groome: Okay. Well, pleased to announce our results for the first quarter of fiscal 2026. That is just to remind everybody, the 3 months ended December 31, 2025, as we operate on a September 30 fiscal year. The results for Q1 reflect the start of our ongoing work to recover our sales above our engineered breakeven point following the disclosed setbacks with 2 large clients in the second half of fiscal 2025, as you were describing, Deborah. Our revenues came in for Q1 at $4.2 million for the quarter, and that's up 13% from the prior quarter and in line with our budget expectations. And that revenues, we recorded a controlled net loss for the quarter of $1.2 million, using up some of our substantial cash reserves. And we continue to view this as a tactical setback, not necessitating a change in the strategic direction of the corporation, whereby we're building our revenues with the test makers, with the PT/EQA providers, that's the proficiency testing and external quality assessment agencies that support the quality of lab testing and with the clinical labs themselves, and we have a growing portion of revenues that are more widely distributed, which is a positive for the business as we've seen what you can experience with customer concentration issues. I'll shortly ask Jim to go into some more detail about our Q1 results in terms of the composition of sales, our margins, our costs and our uses of cash, followed by Ken, who will touch on our operational progress. But first, I just want to highlight some of our recent disclosures. Across Q1 -- and just before I get into the disclosures, I'll just emphasize that our policy is to disclose things once they are signed, sealed and delivered. We do not typically disclose projects that are not either generating -- already generating revenues or have formal agreement associated with them. So that's our watermark or waterline there on which we surface and discuss things. So just when you see these news release disclosures that are often written as much to highlight our progress to potential clients and our reach and sophistication, these are things that are done, and I'll just want to reemphasize that. In across Q1, the September -- October 1 to December 31 period, you've seen us disclose some announced new clients and new client programs in the molecular pathology and point-of-care genetics testing field. So again, taking us continuing our moves to support oncology-related testing as well as genetics-related testing to add to our addressable markets and add to our long-standing expertise in the infectious disease space. So those programs announced in the fall as well as 2 further test maker relationships, one in the United States with Sekisui, supporting a point-of-care testing system and another with Seegene in Mexico beginning with support for cervical cancer screening program. So again, this is Microbix continuing to prove our growing thought leadership and our reach across the industry with each of those programs linked to immediate sales, as I referenced earlier. I'll have some further comments as well about client programs and what we've announced just since the new year. But let me first ask for Jim's comment and further color on our Q1 results. Jim, if you'd like to go ahead, that would be great. James Currie: Sure, Cameron. Thank you. Yes, Q1 was a sequential growth quarter. When compared to last year, we saw a rather significant decline in revenues of 30%. That, however, was a result of predominantly the lack of sales through our distributor in China. And that was -- the differential from quarter-to-quarter was over $2 million. So that's where we saw a rather significant decline in our antigen business, which was down 49% because of that lack of revenues. Now without that, lack of Chinese distributor revenues. The rest of our antigen business was actually up 5% for the quarter -- quarter-over-quarter. Antigen business -- sorry, the QAPs business was up at $1.9 million, a 15% improvement over last year. And so combined, we saw $4.2 million worth of revenue for the quarter. Gross margins, again, disappointing in comparison to last year as well as expectations. This is a result of the fact that we've got fewer products going through production with the lower sales, absorbing a similar level of fixed overheads. As we move towards our sort of breakeven point of in excess of $5.5 million, we'll start to see the margins improve as well as our profitability level. Operating expenses for the quarter were at or below expected levels as we continue to try and keep control of our costs during these quarters as we lead up to quarters with more significant revenues. On the -- Cameron talked about the cash flow consumption during the quarter. Most of that was a result of timing of receivables and collections of receivables. We finished Q4 with a fairly low level of receivables. And for the end of Q1, it was a high level. So -- and in fact, during January, we received payments of $3.3 million and our cash balance at the end of January was $10.6 million, so up $1.5 million from our closing at the end of December. So $3 million is not what we expect to see on an ongoing basis for the consumption of cash. From an inventory standpoint, inventory was still relatively level as we retain stock of predominantly finished goods to support our antigen business as well as the growth in our QAPs business. And that's about all I've got to cover off on the financial side for right now. Cameron Groome: Well, thank you, Jim. I'll take a few moments now to just discuss the disclosures we've made thus far in 2026. Now in January, we provided an update on our recombinant antigens program. And that's creating the ability to synthetically make the test ingredients, the antigens as well as our long-standing expertise in creating native antigens from actually culturing viruses and bacteria and so forth. The ability to make those ingredients is synthetically is very important. Our team, as we announced in January of 2025 and then updated in January of 2026, our team successfully onboarded these important technologies. And in January, what we announced was our first commercial product resulting from that, and that's the SARS-CoV-2 viral capsid antigen, which is now actively being used in our QAPs, in our own products, and that strengthens our supply chain, improves our margins and we'll ultimately be adding that product to our and other recombinant products to our catalog of test ingredients that we can sell more broadly. So very successful outcome on that program. Also earlier this month, February, we disclosed progress in our QAPs business as it relates to our PT/EQA clients. These are the proficiency testing and external quality assessment agencies that regularly challenge the clinical labs with programs to which they subscribe with our test patient sample mimetics, so that tests can be checked that a positive is a true positive and a negative is a true negative. The first program we disclosed was progress with our QAPs oriented towards molecular pathology. This is the combination of traditional pathology methods looking at cell type and confirmation with PCR or other molecular testing to look for genetic signatures and improve the accuracy of certain diagnoses, specifically related to cancers and infections that may cause granulation cyst that could look like cancer. That work was presented at Labquality Days in Finland, one of our PT/EQA important clients. Closer to home, we're also very proud to be permitted to disclose that the College of American Pathologists has joined the Microbix family of customers. The College of American Pathologists is the world's largest provider of PT/EQA programs to support the quality management in clinical labs, and we're now supporting the QAP on some important PT/EQA programs, again, adding to our -- demonstrating our thought leadership, adding to our relationships and frankly, our revenue. So thank you, and welcome to the College of American Pathologists. So that takes us up to date on some of our disclosures. And maybe I can now ask Ken to comment further about our operational progress. Ken? Kenneth Hughes: Right. Absolutely. Thanks, Cameron. On the operational side, as the group knows for the last couple of years, we've been building both capabilities and capacities at Microbix. And we continue to drive efficiencies in that regard to reduce production costs through operational excellence. We've been making more and more use of our electronic quality management system in this regard. We've been improving throughput in manufacturing and yields and also reducing the testing burden, which speaks directly into the associated costs. As Cameron said previously, we've added recombinant capabilities to our other classical and synthetic biology capabilities, and that's exemplified by the recent announcement of the SARS-CoV-2 antigen production and commercialization. The group will be unsurprised now to learn that there's a rich pipeline of recombinant products coming down the pike, and they will be used both for antigens themselves and for raw materials and supply chain for our QAPs production going forward, which again will secure supply chain and reduce costs and contribute to operational excellence. So really at the operational level, everything is going very well, and we think we're just going to continue to drive efficiencies, reduce costs, increase yields and then move on from there. So I really have to say about [ QAPs ] going very well. Cameron Groome: Thank you, Ken. Ken, I'd be remiss if I didn't also ask you to just provide a little bit in the way of updates with our -- about our therapeutics program, Kinlytic. Kinlytic is for resolving blood clots in venous catheters. And I know we have some important upcoming meetings, and I don't want to get too far ahead of our skis, but maybe just give a hint that that's continuing to progress. Kenneth Hughes: Absolutely. As we've discussed many times, the relationship with Sequel and their financial backers remains very strong with frequent constructive meetings. The work is proceeding at our drug substance, that's the purified urokinase molecule itself, contract manufacturer. It's also now proceeding at the drug product, which is the formulated and filled and finished the salable unit with our drug product contract manufacturer as well and in testing development. And in all cases, things are going very well. I said last time that Sequel and Microbix would be updating the U.S. FDA on progress with a formal submission in the new year, and that it was expected to be uncontroversial. Well, that's occurred, and it was as uncontroversial as expected. The FDA feedback was basically that they appreciated that we are updating production processes contemporary standards, looking to eliminate animal-based components and replace them with synthetic components, which is actually expected in those contemporary standards, and that's going very well. They also said that we should just carry on and continue to use the guidance they provided to us in our formal meeting in 2023. So that was great, uncontroversial, and we're just proceeding. The project as a whole is proceeding as expected. We're first going to address the USD 0.5 billion catheter clearance market, but now we're also looking at other geographies and catheter prophylaxis and looking at the logistics, the even more lucrative and bigger opportunities are related to pulmonary embolism, which includes peripheral arterial occlusive disease, deep vein thrombosis and stroke. So the relationship with Sequel remains good. The feedback from the FDA is constructive, and we're moving forward, as we said. So I have nothing negative to say on that project either. It's proceeding as it should and very well. Cameron Groome: Perfect. And we'll continue to provide updates as we move forward as well in our written disclosures. I'll just highlight there is some expanded disclosure in the management discussion and analysis in terms of forward-looking information as well as in our management information circular on some of the performance feedback measures that we institute internally. So while those can be mind-numbingly boring documents to read, I do encourage those that want to take a deeper cut. We do expend some effort on those to make sure you're getting full plane and true disclosure in a timely manner. So do have a look if you've got interest or bandwidth. Those are available both on our website and at sedarplus.ca. Thanks, Ken. Thanks, Jim. As everybody can see, the whole Microbix team has been really busy adding to our capabilities, our product offerings, our client projects and our client relationships. And this is really all targeted towards delivering value to not just our customers, but of course, our shareholders as well. And we very much thank everybody for taking the time this morning to join us and for reviewing our results for the first quarter of fiscal 2026. With that, it's probably a great time, Deborah, to move over to questions. And if I can ask you to moderate on reading the questions, and we'll focus on giving the answers. Deborah Honig: I'm here for it, Cameron. All right. So let's start with some investor questions. So was the sequential improvement at all due to seasonality? Cameron Groome: I don't -- I wouldn't say so, no. I think that is -- there's always some issue of order timing and where a product may get finished and released by QC and QA to ship to a client, but there's no specific seasonality in that quarter. Jim, would you want to expand or differ on that? James Currie: No. No, I would agree, Cameron. I don't think there was any seasonality that impacted between Q3, Q4 and Q1. Cameron Groome: Great. Okay. Thank you. Deborah Honig: And accounts receivable more than doubled versus Q4. Is there any unusual reason for that? Cameron Groome: Yes. I think a resumption in client orders and the flow, just the timing of orders, what we carried over quarter end was a higher balance of receivables from product that have been shipped, but invoices not yet collected. And that was reflected in the cash flow from operations figure reflected that increased flow of working capital into accounts receivable. But as Jim has indicated, those receivables have since been collected, moving our cash balances higher and our receivables figure lower. So just the normal business flow there and what was carried across a quarter end snapshot of the balance sheet. James Currie: Yes. Timing of shipments has an impact on it, typically, I guess, in Q4, the shipments were earlier in the quarter, and we collected a good portion of them during the quarter, whereas in the first quarter of this year, we had a fair number of shipments that went out in December and obviously weren't collected by December 31. Cameron Groome: Yes. And our vast majority of our sales are business to business. And we're -- normally, it's a very rare situation that we ever have a bad receivable, and I don't think I've ever recalled anything -- any provision annually in excess of maybe $50,000, Jim? James Currie: Yes. We've kept a provision of $35,000 for quite a while because we have next to no write-offs from our customers. Cameron Groome: It's not to say somebody doesn't push it out a little bit on the collection -- on the payment timing, particularly. Some clients have a regular habit of doing that, but they are all creditworthy. Deborah Honig: Okay. Great. And then OpEx in the quarter -- OpEx was low in the quarter. Is that a seasonal effect? Or should we see OpEx stable going forward? Cameron Groome: Take it away, Jim. James Currie: Yes. I mean, seasonality, I don't know whether you call it seasonality, but for some reason, Q1 always tends to be a lower spend level from an OpEx standpoint. Some of it's due to the fact that the -- for instance, from the sales and marketing front, not as much activity on the trade shows, et cetera, in the first quarter. We'll start to see that bump up in Q2 and Q3 as there's been a number of trade shows that have been attended and are being attended to in the next -- in the coming months. So that impacts us as well as our R&D spend. I think our R&D spend will go up. So I wouldn't expect the operating expenses to stay at the Q1 level, but they're not going to jump up dramatically throughout the year. I mean we've been pretty consistent recently with our operating expenses. Cameron Groome: Yes. And this is very much holding the line on the expense side as we build the revenue side of back up from some of those customer setbacks. Deborah Honig: And when will China purchases start for the next flu season? And are you seeing any signs of sales resuming there? Cameron Groome: China is not the most transparent market. We've certainly been pushing hard at our distributor to get a good handle on that. We've not seen sales in China resume too much of an extent as yet. We're continuing to be told that it's a flu incidence and inventory being consumed from tests that were built for last season, but we've not yet seen a resumption in draw of antigen sales into China. So it continues at a very low level right now. Deborah Honig: Okay. And -- what is the revenue potential with the College of American Pathologists? Cameron Groome: Well, that client will certainly start well -- is well into the 6 figures for 2026, and we would view that as a -- we would be targeting them to be a meaningful 7-figure account for Microbix. So it comes with each additional program that we support and the rollout of new programs across the potential base of about 22,000 pathologists and labs that the college supports. Now not every lab is testing for every pathogen. So it's always a subset of that potential pool. And we look at modeling those as we go forward and seeing what it can be. But it is meaningful for us, and that's why we disclosed it, of course. Deborah Honig: Got it. And when would you typically see China start buying again to the next flu season if they're going to? Cameron Groome: I think we'd see that over the late summer to early fall, we should see what's going on there. And we've been supporting on Chinese manufacturers on some of the childhood disease testing, but principally in the respiratory disease side of things. And some of the immunologic testing that happens in China, there's a lot of air pollution is an issue in China as is a large population in concentrated urban centers. So oftentimes, people can have low-level infections and you're really not going to get useful information out of PCR tests if somebody has a low-level infection, but that's really not the problem. So the immunologic tests are used looking for an acute phase antibody reaction indicative of an active walking pneumonia. And that's where we've been supporting testing in China. So it's really about the incidence of potential respiratory bacterial infections that we're supporting in China more than it is in relation to cold and flu. So the bad seasons, I think, are where our products get used more extensively and that form of testing is done more extensively. Deborah Honig: Understood. Was Sequel always aware that animal components would need to be replaced with synthetic? Or is that new information? Cameron Groome: No, we've all been aware of that from the very outset of the program, and that's felt not meat and potatoes work really to bring that up to contemporary standards. So this has always been on the -- completely well-known on the path for redevelopment and relaunch. So no surprises there. Kenneth Hughes: Yes. None whatsoever. Let's remember that the original urokinase, Kinlytic, abbokinase, as was, production process was developed in the 1970s. And then the last time it was updated by Abbott before it became Kinlytic was just at the turn of the millennium. So not much of updating has gone on in the last 2 decades. The expectation is to bring it up to contemporary standards. Animal-derived products can be replaced by plant-derived versions thereof and indeed growth factors from -- derived from pigs or cows can now be replaced with recombinant versions. This is standard fare. It also goes down to the downstream, the chromatography resins and the filters that you can use to clean up feedstock are so much better these days and the levels of purity can be much higher can be realized. This is entirely expected. It's been discussed with the FDA. It's not required to eliminate animal components, but we're asked to make best efforts, which is just contemporary standard. And this is going very well, and that's why we had an uncontroversial meeting with the FDA. We're just doing what we agreed to do, and we're proceeding forward. Cameron Groome: Yes. Well said. Deborah Honig: Would you expect any big QAPs customers will shift to commercial sales with any of your products this year? Cameron Groome: Repeat that to me? Deborah Honig: Would you expect that any big QAPs customers will shift to commercial sales with products? I think they're asking, are you expecting any large orders? Cameron Groome: Yes. We are certainly targeting large orders and large programs with different major multinationals. But again, that's aspirational. That's not forward-looking information. We will announce agreements again, when they're signed, sealed and delivered. We -- the fish may be on the line, but thank you. We'll announce it when it's been reeled into the boat and is in the cooler, not when it's on the line. Thank you. So yes, there are multiple large clients with significant projects that we're working on now. And when those reach a point at which we can make specific disclosures, we'll do so. Deborah Honig: And are any of the large orders expected for products that are commercial, not in development? Cameron Groome: Just thinking. Yes. Typically, they are -- they can be for an existing assay on an existing instrument platform and in which case you're replacing an incumbent supplier. They can be for a new assay on an existing instrument platform, in which case you're -- there is a large installed base of instruments, but the assay is new. And then there can be a new assay on a new instrument, in which case, of course, there isn't an installed base. So we're working across each of those categories in our efforts to secure new client programs as well as new clients. And you see some of that, for example, with Seegene, Mexico. Well, that is a support for an existing assay on an existing instrument, where they're penetrating new markets, in this case, Mexico and -- or you can have in the case of Sekisui in the United States, where it is support for a new assay on a new instrument in a new market. So each of these will accelerate and have a different shaped S-curve for adoption. But that's a little more granular than we're prepared to go and really investors have to rely either on the analysts or themselves to model out those expectations. That's a little more liability than we're willing to take on. Thank you. Deborah Honig: Last question here. So last webinar, you indicated a 30% increase in revenue off the 2025 low point for fiscal 2026. That seems affirm today and today's results were said on plan. Microbix also expected profitability in fiscal Q4, July to September quarter. Do you still expect profitability to be reached by Q4? Cameron Groome: I think we're targeting to get back into the $5.5 million to $6 million range, and that's our breakeven point there. I think profitability in Q4 may be a bit of a -- there won't be -- there shouldn't be a meaningful loss in Q4, but I don't think there'll be significant profitability based on the numbers we're looking at currently. Now that's things, again, that's based on orders we can reasonably anticipate at the present time, we could well exceed those numbers if some of the new business development projects that we're hunting land and begin to generate revenues in that -- in those final quarters. But again, we're setting annualized revenues at 30% above the Q3 low point. So in the $18.5 million to -- $18 million to $19 million range for the full year is a reasonable expectation, and that's the sort of budget targets and that will be distributed quarter-by-quarter based on order timing and when we actually ship product. And that's consistent with the forward-looking information that is in our management discussion and analysis that you should be relying on if you're looking for detailed information rather than the more off-the-cuff commentary I can give here. Deborah Honig: Congrats on the success with FDA and on the uncontroversial feedback. What is the timing for final FDA approval? Cameron Groome: Well, tough to know on FDA approval because the FDA can be faster or slower to review a file. What we're working to generate is the best possible supplemental Biologics Licensing Application or sBLA filing that we can generate. And there's some moving parts always on that based on the package that we can generate. So what we're doing now is the most robust modernization of the drug substance manufacturing, and then we'll be completing as another step of the formulated drug product, that's the final product in the vial. And then we'll be doing as many purity and potency assays on that as we can preparatory to an sBLA submission. And that certainly won't be in 2026, but I think we can look for that in the latter part of 2027, and that's remained a consistent target for us, but there's any number of moving parts to that equation. Kenneth Hughes: I would just add, yes, 2027 was the stated target at the beginning. It remains the same based on what's going on. We have parallel drug substance and drug product development. So the technical aspects are going expeditiously. We're at the mercy of the regulator. They can be very quick. But there is a market demand for urokinase. We have a monopolist that has difficulty supplying or servicing the market right now. And I think we've already told the group that the European regulators have already reached out to us to ask us not to forget about them and their market. So they want the urokinase product on the Kinlytic product on the market as well. So there is a driver there, but there is politics and there is capacity at the regulator. But right now, 2027 remains the goal. Deborah Honig: A follow-on question here. Has FDA confirmed the sBLA is okay given the replacement of animal products with synthetic? Cameron Groome: There's no -- sBLA has not been filed yet. So that happens at the end of the process. So what we're continuing to do is keep the FDA updated through the process. So this is a touch point, not an endpoint. Kenneth Hughes: The replacement of animal-derived components with either plant-derived or recombinant components is entirely expected and entirely uncontroversial. This is just part of the engineering of a process. It has no effect on the sBLA or the regulatory filing. It's just doing things according to contemporary standards. It's been discussed since day 1. It's not perceived to be in any way a controversial situation. Why would you use an animal component when a synthetic one is available? Cameron Groome: Exactly. Deborah Honig: So the filing path remains the same? Kenneth Hughes: Absolutely. Cameron Groome: Correct. Yes. Deborah Honig: And can China use the antigens they have in inventory? Or do they need new antigens for new strains? Cameron Groome: The antigens are designed to work across multiple strains. So inventory kept at minus 80 has a long shelf life. If the product however has been incorporated into a test, then it has a defined shelf life. And tests can either be -- ingredients have a long shelf life, finished tests have a defined shelf life and they either have to be sold or they risk expiring unused. Deborah Honig: Got it. And can you update us... Cameron Groome: Yes, go ahead. Deborah Honig: Sorry, go ahead. No, no, no, you go ahead. I'm switching gears. Cameron Groome: Yes, I was just going to say, it's always more challenging when you're once removed from the client relationships and working through a distributor to get that kind of detailed intelligence. And that's -- we have not, however, built boots on the ground sales infrastructure in China. That's something a little beyond our current aspirations. Deborah Honig: And can you update us on the NCIB for the quarter and looking forward? Cameron Groome: Absolutely. Well, we renewed the NCIB. This is the normal course issuer bid for those that don't speak financial. And that's otherwise known as the share buyback program. So we renewed that in early December. And under the normal course issuer bid renewal, we're allowed to buy back a certain number of shares every week and react to one block trade per week. But Jim, maybe I'll ask you to touch on the specifics of the renewal, what we're currently doing and what we've done so far this year. James Currie: Yes. Under the renewal -- to be honest, I can't remember the exact number. It's in excess of 20,000 shares per week that we can acquire, but we've... Cameron Groome: Per day, Jim. James Currie: Per day, sorry. Thank you. But we've chosen to currently repurchase at a level of 15,000 per day given our current situation. And we've -- since in Q1, we acquired about 700,000 shares at a cost of about $175,000. And through January and today, we've repurchased approximately 1 million shares to date. That is both the old NCIB through December 9 and the new one starting December 9, 2025. And our plan is to continue repurchasing at the 15,000 per day level unless we see a reason to change that. Cameron Groome: Yes. And this is really -- thank you, Jim. This is really striking a balance between more than offsetting any usage of -- for stock options, but over roughly a 250-day business day calendar year, repurchasing at 15,000 shares a day will result in the repurchase of about 3.75 million shares, well in excess of any option awards that are granted. So the company continuing to be in a net anti-dilutive position, but not burning through an excessive amount of our cash. Now, as we see landing large new client programs, we may get more aggressive on that and move up to the full daily repurchases as well as potentially blocks. But currently, we're moving between -- at a heightened level, last year, we were buying back 12,000 and change a day. So we are buying back more shares on a daily basis this year, and we have the potential to move up to that maximum. And I did pull up, but I'm not pretending this is from my memory either, but I did pull up the daily maximum is 20,339 that we would be able to buy back per day, and that's based on 1/4 of the average daily trading volume on the shares of the TSX for the most recently completed 6 months prior to the renewal, drives some mechanics of that. Deborah Honig: Great. I don't see any other questions. Cameron, do you want to give some final thoughts? Cameron Groome: Yes. I mean, for concluding thoughts, as Ken said, we continue to build the capabilities and capacity, but also we're continuing to demonstrate some real thought leadership within our industry and across our different customer categories. And we continue to add new client relationships in the PT/EQA provider space with the major test makers, test manufacturers and with individual clinical lab customers. So we're not only seeing an increase of revenues -- an increase of customers, but we're seeing an increase of touch points with those customers, and that's driving not only revenue growth, but dispersion of our revenues across a greater number of customers, which ideally reduces volatility going forward. So we're doing the right things for the right reasons. And I think you're seeing that reflected in the number of great customers that we're engaged with and as well as the financial results that we're going to be -- have reported and are going to be reporting. Deborah Honig: Well, it's good to see you making progress. Thank you all 3 for your time this morning. Thanks to the audience for your participation and your questions. As always, if anyone has any follow-up questions or would like a meeting with management, please feel free to reach out to myself. I'd be happy to set that up. And yes, thanks, everyone, for your time. James Currie: Thanks, everyone. Cameron Groome: Thank you. Kenneth Hughes: Thank you, Deborah. Cameron Groome: Thank you so much. Thanks, everybody. Thanks, Deborah. Kenneth Hughes: Take care, guys.
Tadeu Marroco: Good morning, everyone. I'm delighted to welcome you to our Full Year 2025 Results Presentation. With me this morning, Javed Iqbal, Interim CFO; and Victoria Buxton, Group Head of Investor Relations. I will begin with our transformation highlights. Javed will then take you through our financial results in more detail. Finally, I will return to talk more about our performance outlook and why we are confident in the pathway ahead given the clear momentum we are driving. We will then take your questions. With that, I would like to draw your attention to the disclaimers on Slides 2 and 3. So let's begin by looking at the positive transformation momentum we are driving. Starting with some key highlights. We added 4.7 million smokeless consumers, bringing our total to 34.1 million, mainly driven by our continued strong performance in Modern Oral. This marks our strongest growth acceleration to date and position us well for 2026. We delivered 2025 group results at the top end of guidance, driven by resilient delivery in combustibles and an excellent performance from Velo in all three regions. Our disciplined focus on quality growth continues to improve returns on more targeted investments with new category contributing now up 77% at constant rates. Alongside this, we remain committed to investing behind our premium innovation launches, supporting long-term value creation. We continue to deliver strong cash returns for shareholders. In addition to our progressive dividend, in December, we announced an increase to our share buyback to GBP 1.3 billion in 2026. Looking ahead, we are confident in returning to our midterm algorithm this year with accelerated momentum through the second half of 2025, positioning us well for continued delivery. I'm proud that we have delivered on all of our 2025 priorities. And I want to thank our teams around the world for driving these encouraging results. Our performance reflects the clear momentum we are driving as we continue to build a track record of delivery. I'd like to take a moment to highlight two areas from last years that stand out to me. First, the return to both revenue and profit growth in the U.S. for the first time since 2022, a significant milestone driven by stronger combustibles performance, a return to revenue growth in Vapour in the second half and Modern Oral. As a result, we grew 30 basis points of combustibles value share. Second, we are delivering quality growth in new categories, launching premium innovations in each category while delivering a return to double-digit revenue growth in second half and category contribution growth up 77% for the full year. The progress we made in 2025 reinforces my confidence in our future delivery. And with that, I will hand over to Javed to take you through our 2025 performance in more detail. Syed Iqbal: Thank you, Tadeu. And good morning, everyone. I'm pleased to share that we delivered results at the top end of guidance on a constant currency basis. The performance was driven by return to growth in the U.S., a robust performance in AME and the strength of Modern Oral globally. Our reported numbers reflect some adjusting items, including nearly GBP 1.6 billion, mainly related to the annual amortization of our U.S. acquired trademarks, a net credit of GBP 524 million following a change in the forecasted outlook for the Canadian combustible industry. We also recognized a gain of nearly GBP 900 million from the partial monetization of our ITC stake. To give you a clear view of our underlying performance, I will focus on constant currency adjusted and where applicable, adjusted for Canada metrics. You can find further detail on adjusting items and share data in the appendix. We delivered group results at the top end of guidance, supported by accelerated momentum through the second half. Group revenue increased by 2.1%. Adjusted profit rose 3.4%. Adjusted profit from operations grew 2.3% and adjusted diluted EPS was up 3.4%. Let's now turn to New Categories revenue grew by 7%, driven by outstanding growth in Modern Oral, which was up strongly by 48%, with heated products up 1%. This was partially offset by a nearly 9% decline in Vapour, mainly due to continued illicit pressures in the U.S. and Canada. Our second half use performance showed a clear improvement versus the mid-teens decline in H1, supported by early signs of strong enforcement activity in the U.S. We continue to deliver quality growth with gross profit up over GBP 200 million and category contribution reaching GBP 442 million. This reflects our disciplined approach to return on investment, targeted investments in high-value markets and increasing scale benefit across our portfolio. I am proud of the progress we are making. And I'm particularly pleased with our accelerated H2 momentum, where we returned to double-digit new category revenue growth. Now turning to combustible. Revenue grew 1% with volume decline more than offset by continued robust price/mix across markets. We delivered quality growth here, too. Both gross profit and category contribution increased 2.5% driven by a strong performance in the U.S., positive price/mix and continued productivity and simplification gains, which I will speak to shortly. Our performance highlights, the breadth of our global footprint, with strong delivery in the U.S. and AME, more than offsetting fiscal and regulatory headwinds in Bangladesh and Australia, which impacted total group revenue by around 1% and group adjusted profit from operations by around 2%. This resilience and increasing momentum in H2 reinforces our confidence in future delivery. Turning to our regions, starting with the U.S. In Combustibles, we delivered a 4.6% increase in revenue with our strengthened portfolio, sharper execution and enhanced revenue growth management, driving price/mix, including excise duty drawback. Value share increased 30 basis points with volume share down 10 basis points. In New Category, revenue grew nearly 20%, driven by the success of Velo Plus, which delivered over 300% growth. While Vapour revenue was down 3.4% for the full year, we are encouraged that Vuse returned to revenue growth in H2, supported by early signs of enforcement actions. Overall, U.S. revenue increased 5.5% and adjusted profit grew 5.9%, mostly driven by a strong combustible performance. Importantly, Velo Plus reached positive category contribution within its first year, underscoring the scalability of our Modern Oral business model. Tadeu will share more detail on the U.S. shortly. In AME, we delivered another robust performance. Revenue grew over 3% with Combustible up more than 2%, supported by strong delivery in Brazil, Turkey and Mexico with solid pricing. New Category revenue increased 4.3%, mainly driven by Modern Oral, which grew over 17%. We are the clear Modern Oral leaders in the region with over 60% volume share in top markets, selling at a premium and strongly outperforming peers, which Tadeu will expand on later. Growth was further supported by heated products with revenue up over 6%, driven by Italy, Germany and Ukraine. This was partially offset by competitive dynamics in Romania as we reallocated resources ahead of the glo Hilo launch. Vapour revenue declined more than 11%, mostly impacted by the lack of illicit enforcement in Canada and regulatory and excise changes in U.K., France and Poland. Adjusted operating profit grew by nearly 10%, driven by operating leverage and efficiency gains in Combustibles and scale benefit and resource allocation driving improved contribution across all three new categories. AME is a true multi-category region, delivering high-quality growth and demonstrating the resilience and balance of our portfolio. In APMEA, growth in key markets, including Pakistan, Nigeria and Indonesia was more than offset by fiscal and regulatory headwinds in Bangladesh and Australia. Total revenue declined 7.2% with Combustibles down 8.3%. New Category revenue was down 7.6%. Strong growth in Modern Oral was more than offset by heightened competitive activity in heated products in the value-for-money segment in South Korea and Japan, along the phaseout of our super-slim platform. Our Vapour performance reflects strategic decisions taken to reduce our footprint and reallocate resources away from markets where regulation and enforcement do not support a responsible competitive landscape. Adjusted profit was down 17.9%, mainly due to challenges in Bangladesh and Australia. As we continue to navigate headwinds into 2026, we expect our performance to stabilize for the full year, supported by Bangladesh as we lap last year's decline and with the drag from Australia becoming progressively less material year-on-year. Turning now to our group operating margin, which was broadly flat at 44%. We successfully offset inflationary and FX pressures through a strong U.S. performance, higher profitability in New Categories and continued cost savings. Transactional FX headwinds on adjusted profit of approximately 1% were primarily driven by Turkey, Japan and Nigeria. At current rate, operating margin expanded by close to 10 basis points. BAT has a strong track record of disciplined and cost savings, and we continue to build on that foundation. Since 2023, we have delivered GBP 1.2 billion in productivity savings. These efficiencies help us offset inflationary pressures and foreign exchange headwinds, while continue to fund innovations and growth in New Categories. In 2025 alone, we absorbed around GBP 300 million of inflationary cost increases in addition to transactional FX. Looking ahead, we remain focused on simplifying Combustibles and scaling new categories, targeting a further GBP 2 billion in productivity savings by 2030. In addition, we now expect our Fit2Win program to deliver GBP 600 million of annualized incremental savings by 2028. We expect around GBP 500 million of these savings to be delivered by 2027, with the remaining benefits realized by the end of 2028. We are committed to reinvesting these savings to support further sustainable growth initiatives. Fit2Win is a transformational project that is reinventing BAT. As outlined at our 2025 half year results, it is centered on optimizing processes and ways of working to create a leaner, faster and more data-driven organizations. Since half year, we have made strong progress. We have expanded the program to include organizational streamlining to sharpen our focus and improve speed of execution, allowing us to raise total annualized savings by a further GBP 100 million. To unlock these benefits, we now expect around GBP 600 million of associated costs over the next 2 years. As a structured time-bound program, GBP 500 million will be treated as adjusting, including around GBP 100 million of non-cash items. As previously guided, this spend is already underway with the majority of costs expected to be incurred this year and concluding in 2027. Bringing it all together, earnings per share increased by 3.4% as operating profit growth and lower share count was partly offset by net finance costs, our reduced share of ITC profits and tax. Our underlying tax rate was 24.5%. Our strong cash generation continues to enhance our financial flexibility. This has enabled us to announce a 2% increase in our dividend and increase our share buyback by GBP 200 million to GBP 1.3 billion for 2026. Alongside this, we continue to delever to 2.55x adjusted net debt to adjusted EBITDA at the end of 2025, and we remain on track to be within our 2x to 2.5x target range by year-end. While our 2025 cash delivery was impacted by the CCAA upfront payment and the prior year deferral of tax payments in the U.S., we remain on track to deliver more than GBP 50 billion in free cash flow by the end of 2030. And we continue to focus on our capital allocation priorities, which are investing in transformation, balancing, deleveraging with progressive dividends and sustainable share buybacks and selective bolt-on M&A to support our transformation. I am excited about the future and confident in our ability to deliver our midterm algorithm of 3% to 5% revenue growth, 4% to 6% adjusted profit from operations growth and 5% to 8% adjusted diluted EPS growth. Our return to this midterm algorithm in 2026 marks a major milestone in our transformation journey and reinforces the strength and resilience of our strategy. Our confidence is underpinned by continued growth in the U.S., robust multi-category delivery in AME, low double-digit New Category revenue growth led by Velo globally, a further improvement in New Category contribution and continued savings from our productivity programs. Although we still have more work to do, and it will take time to stabilize performance in APMEA, we will continue to invest in our premium innovations rollout. As a result, we expect 2026 to be at the lower end of these ranges and our profit performance to be second half weighted, driven by the phasing of New Category investment and as Fit2Win savings build through the year. And with that, I'll hand it back to Tadeu. Tadeu Marroco: Thank you, Javed. So moving on now to the positive transformation momentum we are driving. In 2023, when I became Chief Executive, I committed to sharpening our focus and execution guided by a refined strategy and ambition to become a predominantly smokeless business by 2035. And I'm proud to say that we have made significant progress across all three strategic pillars as we continue to build a track record of delivery. While there is still more to do, I'm confident that our focused investments and sharp execution are driving real momentum, as you can see from our 2025 results. Our progress underpins our confidence in sustainably delivering our midterm algorithm, while continuing to reward shareholders with strong cash returns. I'd now like to highlight five points that demonstrate this. First, we have successfully reset our U.S. business, returning to revenue and profit growth in 2025. While the U.S. macroeconomic environment remains dynamic, the pace of Combustibles industry volume decline started to moderate in 2025, down 7.4%. Against this backdrop, driven by the actions we have taken to strengthen our portfolio and sharpen execution, our U.S. Combustibles business delivered strong revenue and profit growth in 2025. Driving value from our Combustible business is essential to funding our transformation, and the U.S. is a key driver of this. In line with this strategy, we gained 30 basis points of total industry value share. I'm particularly encouraged that our financial performance accelerated in the second half. This positive momentum reinforces my confidence in the resilience of our U.S. Combustible business and our ability to deliver sustainable value going forward. Velo Plus is the fastest-growing Modern Oral brand in the largest Modern Oral value pool globally. Since launch at the end of 2024, it has already reached the #2 position in both volume and value share, gaining nearly 18 percentage points of volume share and nearly 14 points of value share. And we are pleased to -- that our share momentum has continued into the start of 2026. Velo Plu has more than doubled its consumer base and driven over 300% Modern Oral revenue growth, capturing around 70% of industry volume growth and 80% of industry value growth in December. All of this is underpinned by a consistent repurchase rate of around 70% throughout the year. Importantly, we achieved positive category contribution within the first 12 months of launch, fully aligned with Velo's global payback profile. The total U.S. Modern Oral category continues to grow strongly and has already overtaken the size of the legitimate Vapour category at over GBP 2 billion of revenue in 2025. Velo Plus is a great product. And these results demonstrate this in what remains a highly dynamic category. Its impressive. It's impressive success also highlights the broader strength of our U.S. capabilities and executional excellence from consumer insights and branding to enhanced digital analytics and distribution enabled by a rejuvenated Reynolds. Our performance was further enhanced by the successful launch of Grizzly Modern Oral in the summer, which achieved close to 2% volume share by year-end, taking our total volume share of U.S. Modern Oral to 25.8%. Through this momentum, I'm delighted to announce that at the end of the year, we reached global volume share leadership in Modern Oral, measured across the top Modern Oral markets, representing around 90% of total industry revenue. Second, we are premiumizing our new category portfolio. Velo is already the clear European leader around 6x larger than our nearest competitor. We continue to focus on consumer-led innovation to strengthen product satisfaction among adult consumers and extend Velo's success. At the start of this year, we began the nationwide rollout of our latest innovation, Velo Shift in Sweden, following a successful pilot with key retailers and online partners. Velo Shift is reshaping the Modern Oral experience, featuring a new comfort pouch design, five distinct sensory flavors and a differentiated hexagonal can that stands out on shelf. Trading at a premium to the core Velo range, Velo Shift is already driving incremental share in the channels where it has launched with further market rollouts planned through 2026. These results highlight not only the strength of Velo brand and innovation pipeline, but also the quality of our execution across European markets. We see premium Vapour Done Right as a highly attractive untapped segment for further value creation. Vuse Ultra is our most advanced Vapour device yet, driving meaningful performance improvement for Vuse in markets where we have launched, including value share gains of nearly 80 percentage points in Canada, close to 4 percentage points in Germany and above 2 percentage points in France. As Javed highlighted, we have made proactive strategic decision to focus our execution on the largest profit pools with more supportive regulation and enforcement. Vuse Ultra is central to this approach, and I'm encouraged by the strength of its early performance with further launch planned in the key markets in 2026. Our breakthrough innovation platform, glo Hilo, introduced our first showpiece device and is designed to establish glo in the premium segment. While still early days, we are starting to drive encouraging results in priority launch markets, Japan, Poland and Italy, with the majority of consumers new to glo coming from both premium Combustibles and the broader Heated Products category. We are also strengthening glo's overall brand equity across key consumer metrics. This consumer response is translating to early volume share momentum. We are encouraged by early trial to retention rates of around 50%, providing further confidence in the platform's potential. In 2026, our focus will be on accelerating trial among premium consumers across both Combustibles and Heated Products, supported by target online and in-person activations. We will continue to scale glo Hilo through additional market rollouts in the largest Heated Product profit pools where we can generate the strongest returns. Overall, we remain confident in the strength of this innovation platform and expect to progressively build share within the premium segment over time. As Javed highlighted, the Heated Products category remain highly competitive, and this has impacted our 2025 performance in the value for money segment where we are present with glo HYPER. Introducing glo Hilo into the premium space allow us to further differentiate our tier -- our portfolio. We see a clear opportunity to strengthen glo's overall performance across both premium and value for money segments. Central to this is the launch of our next-generation glo HYPER device from Q2. The new glo HYPER delivers a step change offering, quick starts, longer started session length, new connectivity and a replaceable battery. These innovations significantly improved the consumer experience, and we are also further enhancing the consumables range. Taken together, these upgrades create a much stronger proposition designed to reinforce our competitiveness in the value for money segment. Third, I'm proud of the strong progress we have made improving New Category profitability. Since 2021, we have driven a GBP 1.4 billion improvement in Category contribution with all three New Categories contributing to this momentum. Importantly, we have achieved this, while continuing to invest in our transformation to drive future sustainable growth. Our new categories are meaningfully contributing to group results as we benefit from increased scale, reflecting traction in established markets while continuing to invest in new market launches. This supported by more consistent and constructive regulatory frameworks, such as those in place for Modern Oral in 24 markets, up from just 4 markets in 2022. We have sequentially improved our performance each year. And through our quality growth approach, we remain committed to driving sustainable profitability improvement moving forward. Fourth, I'm encouraged by the signs of positive progress we are seeing in the regulation and enforcement of new categories, especially in the U.S. While the Vapour category continues to be impacted by the proliferation of illicit products, Vuse returned to revenue growth in the second half after 18 months of decline. This has been supported by increased state level enforcement with Vapour directory and enforcement legislation representing around 50% of tracked industry volume by year-end. In addition, Vuse performance in the second half benefited from a competitor exit, further strengthening our market position. Our recovery has also been supported by early signs of increased federal enforcement targeting borders and larger distributors, resulting in high levels of seizures and fines. Looking ahead, we are encouraged by the increased focus and funding directed towards strengthening the FDA's enforcement capabilities. We were also pleased to receive a favorable initial determination on our International Trade Commission complaint from the administrative law judge who has recommended a general exclusion order on imported illicit Vapour device. We expect a final determination from the ITC in the coming weeks, which will then be subject to a 60-day presidential review. With an estimated 7% of the U.S. Vapour industry value still illicit, we are hopeful the authorities will continue with enforcement initiatives in 2026. Reynolds continues to advocate for a level playing field so that adult nicotine consumers have access to high-quality compliant Vapour products. Over time, we believe Vuse is well positioned to benefit from strong enforcement at both the federal and state levels. In addition, the FDA has recently recognized the positive role that nicotine pouches can play in helping adult smokers who would otherwise continue to smoke to transition to less risk alternatives, reinforcing their role in tobacco harm reduction. We welcome the FDA's new pilot program to streamline the PMTA review process for nicotine pouches. This is an important step towards keeping underage appealing illicit products out of the market, while giving responsible manufacturers a more predictable path to PMTA authorization. We are confident in the strength of our science and portfolio, and we look forward to being able to complement our existing U.S. portfolio with Velo Max, a higher moisture Modern Oral product in 2026, and we have increased capacity to support our sustainable growth agenda. And the final point I would like to highlight is that our financial flexibility continues to strengthen, and we remain on track to generate more than GBP 50 billion of free cash flow by 2030. BAT is a highly cash-generative business, delivering at least 100% operating cash conversion annually since 2020, 100% of operating cash conversion, reflecting our strong cash discipline and clear focus on returns and enabling us to return GBP 34 billion of cash to shareholders over the same period. We remain committed to delivering sustainable shareholder returns with a 25-year track record of dividend growth and our sustainable share buyback program. I'm confident that we will sustainably deliver our midterm algorithm as we are firmly committed to growing revenue sustainably and improving profitability. To conclude, we are carrying momentum into 2026, underpinned by a robust innovation pipeline, strong strategic partnerships and confidence in our future fit capabilities. We are executing with discipline and delivering against our priorities. At the same time, we are enhancing financial flexibility, enabling continued investment in our transformation together with strong cash returns. I'm excited about the future for BAT and believe we are well positioned to deliver long-term sustainable growth and value for our stakeholders. Thank you for listening. We will now be joined on stage by Victoria for the question-and-answer session. Victoria Buxton: Thank you, Tadeu, and good morning, everyone. [Operator Instructions] Tadeu and Javed will be very happy to take your questions and I will now hand over to the conference call operator. Operator: Our first question is from Andrei Andon-Ionita from Jefferies. Andrei Andon-Ionita: First of all, two questions on Modern Oral, please. Number one, what are your expectations in terms of performance in the U.S. in fiscal '26 for Modern Oral specifically? And secondly, are these expectations underpinned by the FDA approving the European Velo product for sale in the U.S.? Or are they mainly driven by the existing Velo Plus product? And perhaps finally, in terms of profitability, could you tell us a bit more about how you expect New Categories profitability to evolve in fiscal '26? Tadeu Marroco: Okay, Andrei, thank you for the question. We have -- look, we have a very strong product with Velo Plus in the U.S. The levels of retention has been 70% throughout the year, which is really, really a very strong rate when you compare with other offers in the market. So basically, at the back of that, we believe that the product is competitive enough to continue growing in the U.S. market, has all the indications from that. Today, we still have a low level of awareness in the brand around 30%. And we are present now in 150-plus outlets, 1,000 outlets, which accounts for something like 93% of the total oral revenue. We are also seeing that the average daily consumption as new products start to be more satisfying for consumers in the U.S. is increasing. So it used to be around 2.8 pouch per day. Today is around 3.6 pouch per day. If you compare that with the European market, which is around 6 pouch per day, you see a lot of potential growth still in the U.S. and the Nordics is 12 pouch per day. So when you pull all this together, a strong product and the dynamics of the market evolving at the pace that it is in the U.S. So the expectation is that we will continue growing. That's why we are investing in capacity, like I mentioned during my presentation. We mentioned Velo Max, which is even higher moisture product that we have as part of the pilot that the FDA is running. We welcome the, first of all, that FDA is embracing nicotine pouch as a key category to address tobacco harm reduction in the U.S. because it's the lowest risk profile, if you want. There is no inhalation, there is no tobacco. There is no smelt that is much easier for consumers of cigarettes to convert into a much lower risk profile product. So they are put in place these pilots. We hope that for the next few months, we see our products, and we are cautious that other competitors will come with other products as well. And for us, there is no problem with that. But when I look outside the U.S. where everyone is free to compete, the leading brand outside the U.S. is Velo. Like we said, in Europe, our volumes in Velo are 6x higher than the second largest competitor. So what we want to see in the U.S. is a level playing field, because in a level playing field, we know that we can win. So that's the first question on Velo. In terms of profitability, we have made a very strong profitability to -- improvement in profitability when you compare that not long ago, back in 2023, we're just reaching breakeven in this category. And today, we have a 12% category contribution. Obviously, I always said that this will not be linear year-after-year because there will be years where we're going to reinvest back in the business at the back of exciting innovations. And 2026 is one of these years because as I said during my presentation, we have now premium innovation in every single of those categories. So we want to roll out glo Hilo. We want to roll out Velo Shift. We want to carry on rolling out Vuse Ultra. So we are not concerned about stipulating a specific pace of category growth year-on-year, because this will vary over time, but the trend is very clearly, the category will continue to grow. Operator: We'll now take our next question from Faham Baig from UBS. Mirza Faham Baig: The first one is on guidance for full year '26. You've guided for the lower end of the midterm targets. Could you maybe share factors that could result in the performance, whether in '26 or beyond that, getting you to the middle or even upper half of the range would be helpful. And then the second question is on heated tobacco. I guess it was a tough year in 2025 from a share perspective. How do you think about share progressing through 2026, particularly as competition in the category is intensifying? Tadeu Marroco: Okay. Thank you, Faham. Look, I'm going to start with the second one first, and then we address the guidance. Yes, we clearly see areas of improvement in our performance in Heated Products. What we saw throughout '26 is that the below WAP, which is basically where we were present until the launch of glo Hilo later in the year has been very competitive in some of the key markets. And that's the reason why I have just made the point today that we are coming with a revamped hyper product that we believe that together with revamped consumables, will strengthen our position in that particular segment. So we are very encouraged by what we have seen of the performance of this product and in initial tests that we have been doing. And we believe that this will support our performance moving forward. And obviously, glo Hilo will complement that, because it's the first attempt that we have done in the -- where 7% of the value of the category sits, which is the AWAP, the premium part of it, which is -- and we are extremely pleased with the performance. We are growing week-after-week with a level of retention of 50%. And this complemented by a revamped value for money proposition gives us the confidence that we can revert this trend and start growing from here. Now in terms of the guidance, I think that Javed can explain a bit more about 2026. I just want to call the attention that after 2 years of investing, resetting our business, the U.S. business, our innovations pipeline, BAT is ready to go back to the midterm algorithm that we have always had in the company around a 3% revenue, 5% revenue, leading to a 4% to 6% operating profit with a kick around 1% to 2% for EPS. That's the range of 5% to 8%. Obviously, our targets have incorporated the transactional FX. I always try to make this disclaimer about BAT's target. And -- but the profile of growth of this range will differ now from where we were, I would say, several years ago because the New Category will be even more prominent on that. Out of the 3% to 5%, we have mentioned before that Combustible, we expect to be delivering around 1% to 2%. And with the U.S. being in the medium term between 0% to 1% and the rest of the group, the international part, I would say, the other two regions above 2%. And in 2025, we have, despite all the difficulties that we face, mainly in the APMEA region, we were able to deliver 1%. And we said that Bangladesh and Australia had an impact of 1% at top line, which otherwise will be high end of this range. So I'm very confident that moving forward, we can comfortably be delivering within those range. And when you move to New Categories for the algorithm to work, we had to deliver double-digit New Category, hasn't been the case in 2025, basically because of the headwind we face in Vapour. There are a number of reasons for that, but mainly related to the illegal market in the U.S. that now we are seeing signs that the authorities, be federal or state level addressing. So we expect moving forward to have less of a drag and eventually even a tailwind coming from Vapour that will be supportive of the category for BAT. THP, we just spoke about, and we expect to accelerate our growth from now on with those offers. And obviously, Modern Oral, we have a leading brand now, and we expect to grow from strength-to-strength. So I'm very confident about being able to deliver the double-digit New Category revenue growth to deliver 1% to 2% on the Combustible side. This will flow through to the 4% to 6% in terms of increasing margins that is supported by all the productivity savings that we have already mapped out until 2030. And specifically in '26, I would like to Javed to comment about. Syed Iqbal: Thank you, Tadeu. I think on 2026, specifically, if I go region-by-region, and then we can look at overall. In case of APMEA, as I highlighted, that we expect Bangladesh to be not a big drag, but Australia still remain a meaningful drag, which is becoming smaller and smaller every year. So in 2026, Australia will still be a drag, but will be less meaningful in '27. Having said that, also, we will continue to invest in the rollout of premium innovations in APMEA as well, as you saw in terms of glo Hyper. So that where we'll be there as well. The other thing in that area is that in case of AME, we still face headwinds from the illicit environment in Vapour and also the regulation changes in Poland, which happened at the end of the year, which has made the legal Vapour out of the market, which is again a drag for us. Coming to U.S. You have to keep in mind that comparative from '24 to '25 versus '25 to '26 is very different. We are -- we had a very good performance in '25, so that comparatives changes. And also, we are assuming for now stable volumes in Vuse in U.S. So we are expecting that the enforcement level as we've seen so today will stop that decline, but we'll keep the volume overall stable. And lastly, also we highlighted in our pre-close trading update that we are exiting certain geographies, which are not adjusted, but they will have an impact on our numbers in 2026. So I hope this all gives you an idea why the lower end of 2026. But having said that, we are all very proud and confident in the business that we are entering the first year of our midterm algorithm. Operator: Our next question is from Rey Wium from Anchor Stockbrokers. Rey Wium: I just want to get back to -- I mean, it's quite interesting to listen to your optimism around the New Categories. And I just had a quick look at the numbers. Obviously, Modern Oral is doing exceptionally well. You have the opportunity for Vapour to at least stabilize and heated tobacco. I don't know whether the jury is still out there. But I don't know if you can just talk high-level stuff here to give us an idea how do you -- which of these categories give you or makes you the most excited in terms of the future growth in terms of that, I mean, especially now into 2026, you talk of a double-digit revenue growth? And then just a follow-up. Just on Australia, I mean, it's quite interesting because I sit in this market. I mean, the legal market is now down to like 3 billion, 6 billion or less. Now clearly, I mean, if I look at Japan, I mean, that's basically what Japan will consume in the space of 7 days. So I mean, I struggle to understand why do you say it will still be a drag. Is it not a time that you could consider to exit this market? So I'm just curious to hear your thoughts around that. Tadeu Marroco: Okay. On the New Categories, obviously, Modern oral is the exciting category out of the three. The pace of growth of Modern Oral around the world is very clear. And even in markets where there is no oral tradition, you take, for example, the U.K., when we launched Velo here 4 years ago, the incidence of nicotine and oral was zero. And today is around 3%. sporadically, it can go all the way to 4% in terms of use. And this is happening also in the likes of Poland. It's happening in emerging markets because it's very affordable and like Pakistan that is doing extremely well. South Africa doing extremely well, Kenya. So there is a massive potential, and we are very pleased with the fact that now we have 24 markets already that have passed legislation. The last one has actually been Argentina a few weeks ago. Portugal has just passed legislation as well. So we see clearly a lot of potential in this category, and we are obviously very pleased that we have a leading brand in this category. In terms of tobacco heating product, it is a GBP 9 billion revenue category in which BAT has just below GBP 1 billion. So there is a lot of white space for us. And it has been more and more competitive. But we have now a product that is being present in the value side of the category, if you want, on the premium side that has never been the case before. So with glo Hilo, we are tapping a very, very -- has been an untapped subcategory within the category for BAT. And we are extremely excited about this possibility of occupy some of that white space in a category that is still growing, not at the same rate of Modern Oral, obviously, but it still grows at a mid-single digit -- high single digit, so. And Vapour is a difficult category because of lack of enforcement and/or regulation. And that's the reason why we have -- there is actually difficult to compete with some of these illegal products or products that doesn't have concerns in terms of responsible way of doing Vapour. That's why we came with this campaign. Because you see a proliferation of device with thousands of puffs that have a very different negative risk profile than the ones that we sell. So there is no level playing field. And the reason why we are addressing a premium subcategory within Vapour with the likes of Vuse Ultra, is exactly a recognition of that. We are not really competing for volume. We are competing for value and offering consumers a responsible way to do Vapour. And obviously, the U.S. is the largest Vapour market. So all the attention is to the FDA that I think that has given some indications now that they understand that the root cause also of the problem is the lack of level playing field. And hopefully, we can see some of the pilots that they are doing now in nicotine pouch into Vapour in the future as well. So that's the New Categories. Australia. Look, Australia has, as you know, come with -- since the introduction of plain packaging in 2012 with a very misguided and illogical regulations year-after-year and increasing excise at much higher than inflation to a point today that the average price of cigarette legal market in the Australia is more than 20 -- equivalent of GBP 20, GBP 22 and whereas the illicit products is around GBP 6. So as a consequence of that, 65% of the combustible market now is illegal. They have, in essence, reduced the average price for consumers. And for the first time in many years, we see an uptick of incidence of smokers in Australia. Not just they decimated the tax collection, but also with this illogical regulation, they are seeing now incentivizing consumers to smoke a product that is much cheaper than the legal market and obviously carry on with all the criminality as we know, have seen in many different markets. Now the impact for us is that has always been a very important market for BAT. And -- but like Javed said, we'll come to a point that becomes insignificant. So the drag in '26 will not be the same as '25. It's still a drag, but it's not been the same. And from there on, if the government carries on doing that, which seems to be heading towards 100% illegality anyway. We don't even need to take this issue leave because the direction of travel has been very clear. If you add the Vapour category that has an incidence of 9% of adult consumer and is 100% illegal today, 85% of nicotine consumption in Australia today is illegal. So it's just a question of a couple of years and unless they decide to do something more reasonable. Operator: Our next question is from Pallav Mittal from Barclays. Pallav Mittal: So, two of them. Firstly, on the U.S. business, clearly, your price mix is pretty strong at 12% plus. Can you help us understand what percentage of your U.S. volume portfolio is right now benefiting from the excise duty drawback? And how much scope does it have to increase in the future given your global business? That's the first one. And then secondly, I appreciate all the commentary on your NGP guidance for 2026. But your low double-digit growth, it still -- I mean, seems like you're factoring a pretty sharp normalization versus what we can see in data, especially on nicotine pouches and the e-Vapour side of things. So can you just help us understand the moving parts for your low double-digit guidance for '26? Tadeu Marroco: Okay. Javed will cover your second question. On the duty drawback, this is a long-standing legislation in the U.S. to incentivize local manufacturing and promote export from the U.S. So obviously, what we are doing is exactly that. Reynolds has invested more than $200 million in terms of manufacturing over the last couple of years. We have generated more than 800 jobs, and we increased our purchase of leaf in the U.S. by 65%. And today, Reynolds is the #1 company in terms of volume of leaf purchase in the U.S. market. So we are not making disclosure specifically about the duty clawback impact. But one data point for you to consider is the fact that our revenue in Combustible would have been positive independent of the duty drawback. So it's important to mention that because at the end of the day, when you go back to what I was referring to in terms of the long-term algorithm, we expect the U.S. market in terms of combustible to be declining at rates around 6% to 7%. And this should be, given the elasticity and that still exist in the market, the possibility for Reynolds to get to a positive revenue around 0% to 1%. In the current years, it has been more than that because the company is doing extremely well in terms of the strength of the portfolio, but also the duty drawback is helping for those in that sense as well. But independent of the drawback, we are positive, and I feel very comfortable with the range that we have set ourselves for our long-term algorithm. Syed Iqbal: I think on the overall New Category revenue guidance of low double teens is one thing is one -- a couple of points. One, in the U.S., even as I explained in my presentation, that we had a negative number for the full year on Vuse. So what we are expecting in the Vuse numbers to be flattish. Because it will require a more meaningful and more stronger enforcement. And given a very complex and long supply chain, even those measures will take time to have a meaningful impact. So even the ITC regulation, which today was talking about, if it gets passed through, it will be much later in the year when we'll see some meaningful impact. And having said that, also, as I highlighted, the regulations, for example, in Poland and Europe, which has put a drag on the Vuse volume, because it has made the whole illegal business negative in that number, so that's not possible to enter that market. And also the highly competitive environment we see in the BWAP segment within the Heated Product portfolio, as we were talking about earlier, that competitiveness will continue to be there for the short term. So if you put all these together, that's why our guidance on the low end of the teens. But having said that, we are very confident in midterm that Velo will lead the charge of New Category revenue growth, being the fastest-growing brand in the fastest-growing nicotine category globally, including U.S. However said that, given all these points, that's why we have guided on this front as the low teens for now. Operator: Our next question is from Simon Hales from Citi. Simon Hales: So a couple for me. I wonder if I could just first come back to some of those comments you just made on the U.S. business on a go-forward basis. Javed, just back to the point in terms of the Vapour performance and the flat Vapour expectation for 2026. I'm still just trying to square that circle given you've had pretty strong exit rate momentum through the second half of the year. I appreciate enforcement actions in vapour aren't a straight upward line, but we're still probably going to annualize at least through the first half, some of the building enforcement we saw in 2025, and that should help the Vapour category, one would imagine or the legal Vapour category in the first half. So are you, therefore, expecting as we come into H2 of 2026 to see your Vuse business down year-on-year to get you back to that flat guidance for the year? That's the first point. And then secondly, on the U.S. today, you talked about 6% to 7% being the normal run rate of decline on Combustibles volumes. Is that something you expect to see in 2026? And could you also perhaps talk a little bit about what you're doing in discount at the moment, the performance of Doral last year and your plans on that brand going forward? Syed Iqbal: Okay. So if I take the first one. So I think one thing which I have to highlight further on the second half performance of 2025 of Vuse in U.S., other than the enforcement, there is also one item which will not see repetition was the delisting of competition product in which Vuse gained. So 63% of those consumers stayed within the closed systems. And in RCS system, Vuse gained more than their fair share of our category. So that is one thing, which is also boosting Vuse performance in the second half. So I wouldn't be reciprocating that second half into the full year of '26. Full year of '26 is more focused and will be more dependent upon the level of enforcement we see. And as also highlighted by Tadeu that although we have seen regulation covering 40% of the legal volume, but level of enforcement varies from state-to-state. So one, not having that one-off of the exit of a competition, which we gained more than fair share. And enforcement still seems to be early days. So that's why our guidance on the Vuse comment was made by me. Tadeu Marroco: Yes. On the volume side, my comment is more, I would say, hypothetical situation. It's not a 2026. What's happening in the U.S. market is before. If you go back to 2020, 54% of the nicotine users were using traditional nicotine products, combustible traditional oral. You go now to 2025, it is 34%. So the balance is happening -- what's happening is the transition of these consumers to either poly using or using solo users of becoming solo users of smokeless products, either Modern Oral or Vapour products. So obviously, the secular decline that was related to ADC and level of incidents reducing over time around 4% will not be coming back. That's my point. So even if you see a meaningful enforcement in Vapour in disposables that we know that has currently plays a role in terms of the level of decline of cigarettes, even if we see that, even if we see improvement in the macroeconomics in the U.S., it's very hard to imagine the market going back to 4% decline because of the dynamic of the poly users and solo users in New Categories that I was referring to. So my point is that in the long run, with a meaningful enforcement in disposable with macroeconomics is strengthening between 6% to 7%. I think that where we see today in the next couple of years in the scenario that we are seeing, I think that the performance in '25 around 7% to 8% is a more reasonable one to assume. So that's what I would assume. Now obviously, this is overall market. When you separate from the overall market, the deeper discount has a very different dynamic. We are seeing more activity there from competitors. And as a consequence, we saw the deeper discount growing by 10% in 2025 was even higher than the 7% that they grew in 2024. So we have been piloting Doral to your question. We have been always very mindful because despite the fact that the deeper discount is growing as opposed to the general market, the 95% of the value continues to be outside the deeper discount. So we are very mindful in terms of testing the product. In this case, it's Doral. We did pilots in Louisiana, in West Virginia. And what we are seeing in those pilots is suggesting that we'll be able to expand Doral for other states as well, taking into consideration the source of business, the potential down trades of our own brands. We are doing that with the value in mind. We are not doing that for the sake of market share. We want to expand Doral in the states where that makes sense from the value point of view. Operator: Our next question is from Richard Felton from Goldman Sachs. Richard Felton: Two, please. First one is on Vapour. So look, great news that the U.S. is starting to take some proper enforcement action against illicit Vapour. But your comments point to, I suppose, a challenging environment in markets ex U.S. So thinking about those ex U.S. markets, are you seeing any shifts in appetite from governments or regulators to start to enforce against that illicit segment a little bit more stringently? Or does that remain very challenging? Any comments on some of your top Vapour markets ex U.S. on that topic would be very helpful. And then the second one, sorry to come back on the duty drawback question. I appreciate you don't want to give us the exact numbers for 2025. But just sort of, I suppose, from a high-level perspective, thinking about duty drawback into 2026, is the tailwind going to be more or less than it was in 2025 at a similar level? Any high-level comments just to sort of help us triangulate on that would be very helpful. Tadeu Marroco: Okay, Richard. Look, Vapour is -- I don't think that there is a one size fits all here. There are -- we know based on our own experience that when we have geographies where we have retail license, we have proper regulation and proper enforcement. I would say, for example, France is one of the case. You just can sell Vapours in tobacconist stores. And if you are caught selling, for example, disposable now, you have a massive fine in euros. And this helps with the discipline in the market. And in the U.K., for example, despite the fact that we have been asking for a retail license, and we haven't seen the movement in that direction. There is a tobacco Vapour bill being discussed as we speak. And hopefully, they will address that. But the attempt to ban disposable has failed because the manufacturers that are not responsible, they try to circumvent in the case these regulations. So 50% of the market is illegal today in Vapour, and this is a demonstration of how difficult the governments find to either regulate, but more important to enforce regulation in some markets. We have -- as much as we can, and we have promoted this Vapour deserves better campaign, we have been very vocal about what are the measures that government should be taking into consideration to try to discipline that. And this, with no surprise, you will see us talking about retail license, hefty fines if they got caught, a more stringent discussion in terms of age verification when you buy the product and a negative lease to avoid things like sucralose in the liquids to sweet the liquids. So there is -- in our webcast and all that, there is a plenty of -- but there is still a lot of work to be done on that. And as a consequence, we are trying to -- as part of our resource allocation, return of investment mindset, the quality growth, which is not just about top line, but also bottom line, we have been focus on more important markets, the likes of France, like I said, the likes of Germany, the likes of Italy, which is standing out from others and then pulling back in markets like Malaysia, for example, and South Korea and so on and so forth. So that's the situation on Vapour and outside the U.S. In terms of duty drawback, look, I'm not giving guidance specifically for the drawback. There is -- we see that the benefits that we generate for the economy, for example, is the driver behind as much as we can start to grow employment and growing the activities in the farmers, domestic in the U.S. We carry on, obviously, this is not forever. This will be like you suggest, a peak. And in the meantime, we are strengthening our portfolio in Combustible. We are seeing the overall market decline being more supportive, which is also important for the future. And more important is us being able to create a strong position outside Combustible, because I understand the concern on the Combustible side, but overall nicotine in the U.S. is growing. It's growing value and is growing volume. So despite the fact that you see consistent decline in cigarettes, you see massive increase in the Modern Oral space, you see a strong increase still in Vapour, unfortunately, on the illegal side, but it's very encouraging the signs that the new administration is giving to address that. Because in untapping this potential there, there is not much concern about the direction of the cigarette, because what we want in essence, is exactly to migrate smokers out of cigarettes towards those products. But what is needed is a level playing field. Operator: Our next question from Bastien Agaud from Bank of America. Bastien Agaud: Bastien from Bank of America. I just have a quick one on the buyback. Your net debt is close to your target GBP 2.5 billion, and your free cash flow in '25 was quite strong. So my question is regarding the buyback, GBP 1.3 billion for 2026, what kind of margin do you have to potentially increase it at some point or another during the year? I understand that your debt is approximately 70% in dollar. So could be quite volatile on that. So -- but just to understand the moving parts on your buyback for full year '26. Syed Iqbal: I think, Bastien, thank you very much. We started a sustainable share buyback program in 2024, and we started it with GBP 700 million. And now we are at GBP 1.3 billion with an increase of GBP 200 million for 2026. We remain our focus on cash and also delever. We have to enter into the range of 2 to 2.5. And also, we want to make sure that we continue to deliver additional incremental dividend in sterling terms and continue our 25 years plus record on that front and continue a sustainable share buyback. What we want to ensure is to create more optionality for capital allocation in medium to long term for the business. So for now, I'm very comfortable with the increase we have done of GBP 200 million from GBP 1.1 billion to GBP 1.3 billion for 2026, and we keep on focusing on generating cash to bring us back into our range of 2 to 2.5 and continue a sustainable buyback. Operator: Our next question is from Damian McNeela from Deutsche Numis. Damian McNeela: First question is just on U.S. combustible and particularly on pricing. I was wondering if you could provide any more granularity on the pricing within the subsegments that you operate in and what the sort of outlook for '26 might be for pricing given the very strong year last year. And then the second question is on CapEx. You've indicated a step-up this year. I was just wondering whether that level of CapEx is what we should be expecting for outer years past 2026. Tadeu Marroco: Look, on the CapEx side, we are increasing at the back of investments mainly on the Modern Oral space. Most of the CapEx today is being reverted back to the New Categories and giving the space for us to continue growing. We don't have huge expectations to be much beyond the level that is currently. And this is suiting us well because at that level, we still can be very close to the 100% of operating conversion. It's not a limitation, but it's just a fact that with this level of CapEx, address the business needs at the same time, it puts us in a strong position to continue having high levels of operating cash conversion, which is very helpful for the financial flexibility and capital allocation that Javed was referring to. On the U.S. combustibles, look, I cannot be talking about pricing. And we -- what I can say to you is that the price elasticity is still very benign in the U.S. when you compare the price of cigarette vis-a-vis the average household income. And obviously, there is a dynamic that because of the specific tax that when we increase the price of a pack of cigarettes, the manufacturer have a higher benefit than the consumer perceive as a price increase, which is also helpful. And -- but what Reynolds has been doing is laddering some of our brands. We did that very successfully with Newport. We have launched Pall Mall Select as well, which is another laddering. And we have now Doral, like I said, in pilot phase that we probably will expect to roll out to more states. But I cannot speculate with you about future price. Operator: That was the last question today over the phone. With this, I'd like to hand the call back over to Victoria. Over to you. Victoria Buxton: Thank you very much, everybody, for your questions. I'm afraid that's all we have time for today. So if you put a question into the web, then the IR team will be delighted to answer the question as soon as we can. I'd now like to hand back to Tadeu today for closing remarks. Tadeu Marroco: Okay. Thank you all for listening today and for your questions. To close, I'm confident we have the right building blocks in place to deliver our midterm algorithm supported by delivering 2025 results at the top end of guidance. We will continue to reward our shareholders through strong cash returns, including our progressive dividend and sustainable share buyback and enabling us to deliver long-term growth and value creation. Thank you again for joining us. I look forward to see many of you at the CAGNY Conference next week, where we are presenting on the 18th of February.
Operator: Good day, and thank you for standing by. Welcome to the Calian Group First Quarter 2026 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 you for speaker today, Jennifer McCaughey, Director of Investor Relations. Please go ahead. Jennifer McCaughey: Thank you, Didi, and good morning, everyone. Thank you for joining us for Calian's Q1 2026 Conference Call. Presenting this morning are Patrick Houston, Chief Executive Officer; and Will Majic, VP Finance. They will present our Q1 results provides insight into our strategic initiatives and discuss our outlook for the remainder of the year. As noted on Slide 2, please be advised that certain information discussed today is forward-looking and subject to important risks and uncertainties. The results predicted in these statements may be materially different from actual results. As a reminder, all amounts are expressed in Canadian dollars, except as otherwise specified. With that, let me turn the call over to Patrick. Patrick Houston: Thank you, Jennifer, and good morning. Following a strong finish to FY '25, we carried that momentum into a record Q1. Revenue reached $208 million and adjusted EBITDA totaled $23 million, both new company highs for a first quarter. Revenue increased 12% year-over-year, including 6% organic growth. Adjusted EBITDA rose 28%, driving margins to 11%. Performance was fueled by robust demand across our Defense and Space segment and several businesses within Essential Industries, along with the contribution from recent acquisitions, margin expansion and strong operational execution by our team. Momentum behind our Defense and Solutions continues to build, driven by sustained activity in Europe and rising demand in Canada. These market signals and early wins make it clear that investing now is critical to ensuring we capture the expanding opportunity set in this fast-moving environment. Our Space Solutions are also experiencing renewed momentum, highlighted by the signing of 2 new antenna contracts this quarter totaling more than $35 million. We concluded the quarter with $171 million in new signings and a robust backlog of $1.4 billion, providing a strong foundation for continued growth and success in coming quarters. Let me spend a moment on our new structure we introduced this quarter. As you know, we simplified our operating model to better align with market demand and serve our customers more effectively. We moved from four segments to two: Defense and Space and Essential Industries, a change driven by clarity and focus. The new structure brings our capabilities together under a simpler, stronger model that reflects how customers think, buy and expect solutions to be delivered. It is designed to integrate the essential elements in one place, technology, expertise, delivery and customer insights. By aligning these strengths, we can develop integrated solutions faster, collaborate more effectively and scale our impact. This realignment is a deliberate step in our long-term growth strategy, reinforcing our core capabilities and enhancing our ability to deliver mission-critical solutions. It also provides greater transparency into how we operate and where we're directing our efforts. In the near term, our Defense and Space segment, representing approximately 2/3 of revenue will focus on developing differentiated solutions to meet growing demand and the needs of our customers in Europe, the United States and Canada. Our Essential Industries segment, representing roughly 1/3 of revenue is focused on margin expansion while benefiting from organic growth tailwinds in Health and Energy. With actions already in motion and teams executing against disciplined plans, early progress is evident. We expect margins to improve meaningfully throughout the year, exiting at double-digit levels. Taken together, these actions position us to accelerate profitable growth and strengthen the business for the long term. With a clear structure, sharper focus and disciplined execution, we're well positioned to capture emerging opportunities and deliver sustained value to customers and shareholders. Now a few words on our operations. Let me begin with Defense and Space. Our Defense Solutions continue to build momentum with sustained activity across Europe and solid progress on key initiatives in Canada. Growth is broad-based, spanning mission-critical areas, including health care, manufacturing, cybersecurity and military training. In Europe, FY '25 performance was strong, driven by the successful integration of Mabway and the execution of multiple NATO contracts. That momentum has carried into the first quarter as European governments facing heightened and immediate security requirements accelerate procurement decisions. At the same time, countries are actively diversifying, creating new opportunities for Canadian companies like Calian across manufacturing and defense supply chains. To capitalize on this demand, we expect to increase investment in the region, particularly in talent, infrastructure and technology. These investments are deliberate and targeted positioning us to scale responsibly, deepen customer relationships and establish long-term leadership in the European defense market. In Canada, we're seeing early but encouraging signs as activity levels increasing and broader plans are being developed. Our ongoing engagement with federal stakeholders continues to shape our understanding of future requirements. The forthcoming defense industrial plan is expected to mark a meaningful shift, positioning defense as a driver of economic growth while strengthening national security. Calian is well positioned to benefit across training, manufacturing and in-service support. In January, we announced that Calian will mobilize a significant amount of capital from multiple sources to accelerate the development and deployment of sovereign C5ISRT capabilities to Calian Ventures. This initiative brings together capital from ventures, co-development of new IP with Canadian small and medium-sized businesses, regional investment agencies and federal programs to accelerate capability development at scale. As demand increases, we're challenging ourselves to think differently, finding new ways to deliver greater value through cost efficiency, streamlined delivery and an innovative technology and service models. This mindset is central to strengthening our competitive position and improving outcomes for our customers. While the direction of travel in Canadian defense is clearly positive, the precise timing of opportunities remains difficult to predict with high certainty. We will continue to monitor developments and closely remain disciplined and agile as the landscape evolves. Turning now to our space solutions. The space industry continues to evolve at a remarkable pace, driven by the greater need for speed, commercialization and dual use. One of the most important shifts we're seeing is the growing role of ground infrastructure and the ability to deliver seamless connectivity no matter the constellation. As data volumes increase and constellations expand, operators are scaling global ground station networks and increasingly turning to ground station as-a-service models to gain flexibility, efficiency and speed to market. More broadly, the industry is maturing rapidly. satellites, ground systems and software are becoming more tightly integrated, all intensifying geopolitical and commercial competition. These forces are reshaping long-term strategies and accelerating innovation across the sector. We're seeing these trends clearly reflected in our own business. After a period of slower growth, our ground station activity has regained momentum. This quarter, we secured a contract of more than $30 million with a leading global space technology company to design and manufacture advanced ground stations for their next-generation satellite systems. We also won a contract from Germany's Federal Ministry of Defense, represented by the University of Federal Armed Forces in Munich to deliver an advanced full-service QV-band antenna ground station in support of scientific and modern military satellite communications. These wins highlight the increasing convergence of defense and space and reinforce the strategic rationale of our dedicated Defense and Space segment. Together, they underscore Calian's reputation as a trusted provider of mission-critical infrastructure in complex, high-consequence environments. Taken together, our progress across defense and space reflects the relevance of our capabilities and the scale we've developed in this market over the last decade. Our focus is to deliver for our customers in our existing relationships while seeking broader mandates where Calian can serve as prime vendor to deliver integrated solutions that customers will value for decades to come. Let me turn to Essential Industries. Revenues in our Essential Industries segment increased by nearly 20% in the quarter. The growth was driven by the strong performance of our AMS acquisition, which has meaningfully strengthened our position as we expand in the Arctic region. This addition provides a durable footprint and advances our broader strategic priorities. We also returned to organic growth, modest but an important inflection point for this business. The improvement was led by our U.S. commercial operations, which have rebounded and resumed growth following a challenging year. With a strengthened backlog in place, this business is well positioned for sustained momentum. Expanding and delivering differentiated solutions across critical industries, including health and energy is a core pillar of our strategy and will enhance the resilience and value of our overall portfolio. Looking ahead, we remain focused on margin expansion with the right mix of growth and operational discipline. We expect continued improvement in profitability. I'll now turn it over to Will to discuss Q1 results. Will? Will Majic: Thank you, Patrick. Q1 revenues increased 12% to $208 million and represents a record quarter. This growth was driven by both Defense and Space and Essential Industry segments. Acquisitive growth was 6% and was generated by the contribution of AMS completed in May 2025 and Infield Scientific, which closed in October 2025. We successfully built on the momentum from last quarter, achieving organic growth of 6%. This marks our second consecutive quarter of positive organic growth, signaling that the headwinds we previously faced are beginning to subside. With this progress, we are returning to the levels of organic growth we experienced in prior periods, which is a promising sign for our business. As those challenges recede, we are increasingly optimistic about our outlook and confident that we are moving beyond the difficulties of the past. This positive trajectory positions us well for continued growth and success in the quarters ahead. Q1 gross profit increased by 21% to $71 million as compared to $59 million for the same period last year and represents a record high. This increase reflects revenue growth, changes in mix and contributions from acquisitions. Similarly, gross margin increased from 31.8% to 34.1%. Q1 adjusted EBITDA increased 28% to $23 million, significantly outpacing revenue growth. This increase was driven by strong performance across our key businesses as well as the execution of cost optimization initiatives implemented at the end of last year. It was partially offset by a few onetime items. As a result, adjusted EBITDA margin reached 11%, up from 9.6% for the same period last year. With the implementation of our new operating structure, the allocation of shared services expenses in fiscal 2025 has changed from what we reported last year. As a result, fiscal 2025 will reflect higher shared services expenses. This increase does not represent higher overall costs, but rather reclassification driven by a new structure and updated cost allocation methodology. We've already begun analyzing these costs to identify opportunities to streamline processes and eliminate redundancies. Based on this work, we will implement targeted efficiency initiatives to optimize resource allocation and manage overall expenses. This disciplined phased approach is designed to build a more agile, cost-effective organization that supports our long-term strategic objectives. Turning now to cash flow and capital deployment. In Q1, we generated $7 million in cash flow from operations compared to $4 million last year, primarily due to higher profitability, partially offset by higher interest and income tax payments. Working capital efficiency was approximately 10%, up from 8.5% in the same period last year, primarily reflecting working capital acquired through recent acquisitions. Consistent with prior years, the first quarter saw a seasonal use of working capital, which we expect to reverse in the coming quarters as we converge towards our long-term target. Operating free cash flow increased 21% to $16 million, reflecting strong cash conversion at 69% of adjusted EBITDA. Turning to capital deployment. During the quarter, we used cash on hand and a portion of our credit facility to fund $2 million in capital expenditures and $18 million in acquisition-related payments, including earnouts. This included a $12 million acquisition of Info Scientific as well as the second year earn-out payment relating to our August 2023 acquisition of HPT with the remaining balance of this earnout to be paid over the coming quarters. This earnout reflects HPT's strong performance and successful integration into our operations. We also returned $3 million to shareholders through dividends. Looking ahead on M&A, our pipeline remains robust with multiple active discussions underway. We are optimistic about completing several strategic transactions in fiscal '26. And as we've outlined previously, acquisitions continue to be our top capital deployment priority. Let's take a look at the balance sheet and cash availability. As of December 31, 2025, we had drawn $165 million on our debt facility. During Q1, we drew an additional $34 million to pay for the acquisitions of Infield Scientific, earn-out payments and general operating purposes. We ended the quarter with net debt of $102 million, representing a net debt to adjusted EBITDA ratio of 1.2x. This is still well below our threshold of 2.5x. We have ample financial flexibility to support our growth strategy as the combination of the unused portion of our credit facility, our cash position and our accordion represent close to $250 million. Now let's turn to our fiscal '26 outlook. Our fiscal '26 outlook has not changed since last quarter. Over the next several years, we are targeting annual revenue growth of 10% to 15%, driven by a combination of organic expansion and strategic acquisitions. This is consistent with our historical 12% revenue CAGR over the past decade. As we execute on the strategy, our focus remains on expanding EBITDA, free cash flow and return on invested capital by prioritizing high-growth verticals, streamlining operations and deploying capital with discipline. As a result, we expect adjusted EBITDA growth to consistently outpace revenue growth in the midterm. We will balance this with investments to ensure our solutions continue to lead and ensure we can capitalize on upcoming opportunities. Our first quarter underscores this approach with revenue up 12% and adjusted EBITDA increasing by 28% -- for fiscal '26 based on our existing business, we anticipate double-digit growth in revenue and adjusted EBITDA compared to fiscal '25. This outlook is supported by sustained momentum in our Defense and Space and Essential Industry segments, cost optimization initiatives and the full year contributions from our recent AMS and Infield Scientific acquisitions. From a capital deployment perspective, we expect working capital usage to track in line with revenue growth. Capital expenditures are anticipated to remain in the $10 million range, supporting both ongoing operations and targeted growth investments. Our dividend policy remains unchanged with a target payout of 25% to 30% of operating free cash flow, reflecting our commitment to shareholders -- to shareholder return while maintaining financial flexibility. Consistent with our strategy, M&A will remain our primary use of cash as we continue to expand our capabilities and broaden our market reach. For the remainder of the year, we expect to pay earn-outs for AMS for about $5 million in Q2 and the residual balance of the HCT earn-out over the next few quarters. With improved support for our share price, we have temporarily paused our share repurchase program and redirected capital towards higher priority strategic initiatives. We remain open to resuming buybacks on an opportunistic basis, subject to market conditions and our overall capital allocation framework. This approach preserves flexibility and ensures capital is deployed where it can deliver the greatest long-term value. We remain focused on executing our strategy and driving value for our stakeholders. I will now turn the call back over to Patrick for closing remarks. Patrick? Patrick Houston: Thank you, Will. To close, Q1 reflects a strong start to the year and reinforces our confidence in Calian's strategy and execution. We delivered record first quarter results, strengthened our backlog and continue to invest deliberately in the areas where we see the most compelling long-term opportunities. Our simplified operating structure is already sharpening our focus and improving how we deploy capital, talent and capabilities across the organization. Momentum in defense and space is building. Our Essential Industries business are progressing as expected, and our balance sheet provides significant flexibility to pursue growth opportunities while maintaining discipline. While the external environment remains dynamic, the fundamentals of our business are strong. We're focused on executing well, scaling responsibly and creating long-term value for our customers, employees and shareholders. And with that, Didi, I'd like to open the call for questions. Operator: [Operator Instructions] And our first question comes from Nicholas Boychuk of ATB Cormark Capital Markets. Nicholas Boychuk: I'm hoping we can start the questions here just on the organic framework that happened this quarter and unpack a couple of the moving parts. So first, you noted that health care and learning were both doing particularly well. Are you able to share any color on the activity that's driving that? Like are we seeing a little bit more service usage from the Canadian Armed Forces and maybe a return to NATO learning spend? Patrick Houston: Yes, a few points on that. I think what we're seeing is, I mentioned in my comments, continued strength in Europe. I think that we saw that continue in Q1. I think the environment there is strong, and the team is doing a great job delivering. In Canada, I think we've started to see some signs of reversing what had been cuts that we saw this time last year. So I think that's been positive, and the team is doing a great job meeting it. So I think it's just been more activity on existing engagements we have. And certainly, we're getting ready to see further increases in the coming years. Nicholas Boychuk: Okay. That's good. And then there was a little bit of a disconnect in that same organic thread just related to the cybersecurity signings. So you mentioned in the PR and the MD&A that the organic growth that was driven this quarter wasn't necessarily tied to the essential industries, which I would interpret to include the cybersecurities yet in the backlog growth, you specifically called out $50 million worth of contract signings, which extremely exciting. Are you able to kind of make that connection for me? Is there a return that we're seeing in cybersecurity and we should be thinking a little bit more about that business growing this year? Or is that just a one-off contract maybe related to a defense contractor or defense business? Patrick Houston: No, great point, picking that up. We are seeing a return both on commercial and in defense. The signings in this quarter were strong. We ended the quarter with good backlog across both of those verticals. We weren't able to deliver this quarter. So I think that will come in the coming quarters, but I think it's a strong sign that we're seeing some momentum there. So I think it will be a strong year this year for cybersecurity. And it's good coming off of last year where there were some demand challenges and push out and some of that's starting to come back into reality here for us. Nicholas Boychuk: Great. And last one for me, just on the gross margin performance. I appreciate the comments that a lot of the changes were either related to mix or the layering of acquisitions. Anything you can share though on whether or not this was kind of a transitory quarter or if there's some permanence to that and that we should be thinking that the 34%-ish range is kind of where you expect it to be trending moving forward? Patrick Houston: Yes, good momentum this quarter. There is some seasonality to the business depending on deliveries of hardware and mix, as you mentioned. I think we are seeing -- to the extent the mix continues to improve longer term, it's a target we're trying to increase. But I'd say in the short term, between the low to mid-30s is where we should be. And I think it's something that we can -- we've been keeping it now at that level for several years, and I think we can continue to do that. Operator: And our next question comes from Stephanie Price of CIBC. Sam Schmidt: It's Sam Schmidt on for Stephanie Price.I wanted to ask about the Canadian military recruitment. The Canadian Arm Forces noted an increase in the number of applications they're receiving. How should we think about the opportunity for Calian here? Patrick Houston: Yes. I think lots of in the news about the renewed push from Canadian Armed Forces to increase. I think it's an important part of their strategy to recruit and retain more people. This entire environment has created a lot of momentum for them in terms of getting more applicants. And when we talk to the Canadian Arm Forces, they're excited about the possibility -- the biggest challenges they have right now is getting that people recruited in and trained as quickly as possible so that they can be operationally ready. I think that's for Italian one of the early opportunities for us is to really assist there. So I think we're still pretty early days. But I think in the coming years, if it can sustain its momentum, I think our ability to really be a great partner to GM force is to train those people and make them soldiers ready to act on that of Canada, I think, is a big opportunity. Sam Schmidt: That's helpful. And then just one more for me on the cost optimization initiatives. Can you speak to how those contributed to the margin expansion in the quarter? And how should we think about margins going forward as well as any color you can share between the segments? Patrick Houston: Yes, we did take some measures. I think we mentioned it in the Q4 call to try to return some of the profitability levels we thought we could in some of the commercial business I think you saw some of the benefits of that here in Q1. I feel there's more to do. I think you heard both and Will in my comments that we are working on continued increases in efficiencies and profitability in essential industries as well as on the corporate side. So I think there's more to come, but I think you saw some of the early returns here this quarter, and those are positive signs. Operator: And our next question comes from Rob Goff of Ventum Financial. Rob Goff: Thank you very much, and good morning. My question would be with respect to the defense industrial policy. Are there any things that we should be looking for within that policy release in terms of time lines or allocations of budgets? Patrick Houston: Yes, this has been something we've been -- well, not just us, the entire industry has been waiting for. I think it's going to come out here shortly or the indications we've received. I think it's an important position here for Canada. I think what you're going to see is time the link between this increase in defense spending in Canada and how that's going to affect the broader industry in Canada, GDP growth. So I think the linkage between those two things is going to be a lot stronger than maybe in previous plans. It's also going to set priorities for Canada and which technologies and solutions that they see as important to be sovereign. I think that's somewhere where Calian can really differentiate given our position. So we're anticipating this coming out shortly. I think it will help us target our investments towards places where the Canadian government and Canadian armed forces want to see momentum quickly, and our team is ready to act on that when it comes out. Rob Goff: And with the Maiden Canada focus, does it make you look perhaps longer at building up manufacturing capabilities? And is that any way related to your acquisition pipeline? Patrick Houston: Great point. I think we have a differentiated asset that we do have manufacturing really across Canada, both on the East and West Coast. I think it's a capability we've had, and we can certainly flex in this new world. To the extent we get strong demand signals, it is somewhere that we will invest in order to increase capacity. But right now, we have a lot of capacity that we can deploy quickly and we'll work with both -- can Air Forces, but also large primes that are looking to bring some of the manufacturing here in Canada in order to help differentiate their offering, we'll certainly look to partner with them. Operator: [Operator Instructions] And our next question comes from Paul Treiber of RBC Capital Markets. Paul Treiber: Just a question in regards to learning and training, specifically around new weapon systems. Have you seen a correlation between training spend and the procurement of new weapon systems in the past? And do you expect that to continue going forward? Patrick Houston: I think in the training environment, there's 2 things. I think there's a question we got earlier about just increased capacity. I think that's important. The other one is as we -- Canada is -- has spoken about procuring new technologies, new systems that really kind of modernize the -- can Armed forces. The introduction of these new technologies does drive capability training that is required, how do you operate with these new assets. I think Calian is differentiated there that we can bring in a multitude of different assets in order to train as effectively as possible. We're a bit agnostic from working with all of the partners. So I think that helps us differentiate there. So I think that will be long term. I think first, we need to procure these systems, deploy them and then the training will come from there. But I think it's just part of this longer investment in terms of modernizing -- can Armed Forces and increasing their capability. Paul Treiber: And secondly, just on the M&A environment, and you talked about the pipeline being quite robust. How are valuations tracking within the defense market at the businesses that you're looking at? And then how do you look at balancing the strategic value of those acquisitions versus the desire to maintain strong returns on capital? Patrick Houston: It's a great point. We're spending a lot of time looking at acquisitions, both in defense and space and in our central industries. I think there is an opportunity to consolidate some of these defense and space assets into ours and drive more synergy. Your point is valid on the valuation expectations from sellers and what they're looking at in this environment. I think it will challenge us to look at different deal structures that helps balance what's the forward opportunity and try to share that with the sellers. So I think you'll see us continue to work there, try to find the right deal structure for the right situation. But I'm confident that even in this environment, we can find good assets that we can buy and grow in the future. Paul Treiber: And then just lastly, just on the portfolio review. Obviously, there's been a lot of dislocation in public markets around the value of software. Does that have an impact on your portfolio review and buyer interest in those assets being noncore? Patrick Houston: I don't think so. I don't think that the assets we're reviewing in that space don't really play there. So I don't expect it to change the appetite on that. I mean, we continue to put effort towards that -- and we'll likely come to some conclusions here later this year on direction, but it's still something we're working on. Operator: And our next question comes from Michael Kypreos of Desjardins. Michael Kypreos: We've seen some reports lately that the recruitment of the Canadian Forces have already experienced a pretty significant step-up in activity. Have you seen any of this yet to flow through your health or learning businesses? Or it's a bit too early? Patrick Houston: Mike, It's probably a bit too early. I think what we've seen, and you heard me in our prepared comments that the activity levels have increased. I think you've seen that in the growth in or defense space business. So I think the overall activity both for new recruits and existing members across training and health care has increased. I think that will continue. Their ability to just continue to stay on track on their recruitment targets will be important and will drive continued growth in the future, but it's still pretty early days. Michael Kypreos: That's helpful. And maybe any way to frame the upside for Calian is some of these recruitment targets that are being put out in the media actually come through or achieved by the Canadian Sources? Patrick Houston: Yes, it's hard to try to draw like a one-to-one relationship there. I try to think about it more broadly. the investment that the Canadian government has talked about in -- can Air Forces is significant. It spans both people, new capabilities. And as I mentioned in the question on the defense industrial plan, things that they want to be done in Canada now. And I think that's the biggest shift and maybe the biggest opportunity for Calian. There are certainly all of the activities we do today. We've been doing them for decades, and we're a trusted partner. But really, the biggest opportunity, I think, for Calian is to move into new areas that use the same solutions and skills that we have, the trusted track record and trust we have from the Canadian Armed Forces to supplement what we're doing today and do that for the next decade. So that's probably our biggest opportunity. So I'd probably think of it more broadly than just more people in the short term. And I think that's the opportunity that the team is excited to tackle. And certainly, we're there to support and invest to make that happen. Operator: I'm showing no further questions at this time. I'd like to turn it back to Patrick Houston for closing remarks. Patrick Houston: Thank you, Didi. I'd like to thank each of you for attending the call today. We look forward to providing you an update on our next quarterly call in May. And with that, Didi, we can close the call. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.
Operator: Hello, everyone, and welcome to Yatra's Fiscal Third Quarter 2026 Financial Results Call period ended December 31, 2025. Today's call is hosted by Yatra's Co-Founder and Executive Chairman, Dhruv Shringi; and CEO, Siddhartha Gupta. The following discussion, including responses to your questions, reflects management's views as of today, February 12, 2026. The company does not take any obligation to update or revise the information. Before they begin their formal remarks, please be reminded that certain statements made on this call may constitute forward-looking statements, which are based on Yatra management's current expectations and beliefs and are subject to several risks and uncertainties that could cause actual results -- for a description of these risks, please refer to Yatra's filings with the SEC and the press release filed earlier this morning on the IR section of Yatra website. With that, let me turn the call over to Yatra's Co-Founder and Executive Chairman, Dhruv Shringi. Dhruv, please go ahead. Dhruv Shringi: Thank you, operator. Good morning, everyone. Thank you for joining us on [Technical Difficulty] third quarter and 9 months ended fiscal year 2026 earnings. Let me start by briefing you first on the events that happened during the quarter, and how it has impacted the industry, and then our CEO, Siddhartha Gupta, will brief you on the operational performance and the financial performance in greater detail. The third quarter, which is typically a strong period for leisure travel in India, witnessed healthy demand across [Technical Difficulty] limitations which led to operational challenges for the airlines and a spike in cancellations across the entire country. Market data indicates that domestic [Technical Difficulty] and recovered in the second half of the month, and we've seen those factors continue to rise in the month of January and thereon. But the key positive during the period was the divergence between domestic and international travel trends. While domestic travel experienced short-term headwinds in December, international travel remained strong with healthy year-on-year and sequential growth. This reinforces that outbound and long-haul travel is in a structural up cycle, benefiting organized travel platforms like Yatra with strong corporate and international travel franchises. Also, the recent union budget sends a clear message and positive signal about the government's long-term commitment to the travel and tourism sector. By positioning tourism as a strategic growth engine linked to the employment generation, foreign exchange earnings, and regional development, the policy framework shifts from episodic support to building a more structural and sustainable ecosystem for travel and hospitality in the country. Key measures such as rationalization of tax collection at source on overseas tour packages to a uniform 2% rate, lower upfront cost improved outbound segment. In addition, increased emphasis on domestic connectivity through infrastructure investments, including high-speed rail corridors, waterways and regional access, among the initiatives to enhance hospitality capabilities through a National Institute of Hospitality and large-scale skilling programs, expand the talent pipeline for the tourism sector. There is a growing demand for Indian organizations to help digitize travel procurement while using AI-driven platforms that offer end-to-end automation, self-booking tools and integrated expense management, prioritizing compliance and cost savings. AI and predictive analytics platforms make travel procurement by forecasting demand, optimizing costs, enforcing policies and ensuring risks are attended in real time. AI-enabled self-booking tools can perform real-time policy compliance checks, flag risks like disruption or itinerary analysis and personalize itineraries with safety insights. The generative AI shifts from reactive auditing to predictive spend, cutting administrative friction and enabling productivity boosts in procurement. Yatra through its corporate self-booking platform, supported by AI bot and its richer expense management solution is taking the lead in driving this shift in industry dynamics. Moving on more specifically to our business for the quarter. Our B2C business, as was predicted earlier by us, [Technical Difficulty] is now still growing profitably. Additionally, our corporate and MICE business [Technical Difficulty] was well on track to deliver our strongest third quarter yet. With the exception of the recent inflation [Technical Difficulty] about our operational performance in the quarter. We remain richly supported by our continued focus on scaling the Corporate Travel business. The steady growth in corporate bookings, along with the increasing contribution from higher-margin hotels and MICE segments, positions us well for sustained margin expansion and improved profitability over the long term. With this, let me now introduce you to Mr. Siddhartha Gupta, who recently joined us as our new CEO. Siddhartha brings with him a wealth of experience across the B2B SaaS industry, and in his last role, was the President of Mercer Consulting in India and was also heading their SaaS-based talent acquisition business globally. Prior to this, Siddhartha has also held leadership roles in large tech and SaaS companies like SAP and HP. With that, let me hand you over to Siddhartha. Sid, over to you. Siddhartha Gupta: Thank you so much, Dhruv. Operator, I hope I am loud and clear on the line. Thank you so much, Dhruv, for giving a preamble on our quarter performance and the industry trends. A very good morning to everyone on the call. Adding to Dhruv's comments, despite an industry-wide disruption in the airline sector during the quarter, Yatra continued to deliver in its Air Ticketing business, supported by seasonally strong B2C travel demand. Gross bookings in the Air Ticketing increased 22% year-on-year, supported by 14% growth in air passenger, which far exceeds the industry growth of about 1%. Take rates also improved from 6.2% to 7.1% on account of the quarter being more B2C focused. In the Hotels and Packages segment, overall performance during the quarter remained healthy. However, we did see some temporary impact in the MICE and the Corporate Events subsegment, with a few bookings getting deferred due to flight disruptions. Just to remind listeners, it was the disruption in the IndiGo Airlines schedule in India. This resulted in a modest onetime impact on the quarter, part of which we expect to roll over in quarter 4, supported by the continued strength in underlying Corporate Travel demand. Gross bookings in the segment grew 20% year-on-year, excluding the impact of deferment of the MICE business. Hotels would have grown over 30% on a stand-alone basis, supported by strong growth in our corporate business and in our affiliate business. While gross take rates moderately -- moderated slightly from 12.2% to 11.7% year-on-year on account of change in business mix, gross margins improved further from 9.7% to 10.2% year-on-year, reflecting prudent discounting in B2C and better margin realization from suppliers for corporate hotels. Our B2B to B2C mix was approximately 60-40 for the quarter versus the 9-month average of 65-35 in favor of B2B. Our Corporate Travel business continues its strong momentum. We onboarded 40 new corporate clients in this quarter, collectively adding an annual billing potential of INR 2.2 billion. As mentioned earlier, the disruption happened during the highly productive first 2 weeks of December, when Corporate Travel usually peaks before holidays. We saw deferment of MICE travel into Q4 and subsequently, few of the groups moved to Q1 of the next financial year as a direct result of uncertainty in the travel during that period. This disruption not only adversely impacted our operating performance, but also led to incremental working capital deployment where advances had already been paid to vendors for MICE Groups. These impacts were largely limited to the month of December, and the business is back on track. In the Corporate business, there's more to cheer. The early response to our expense management solution has been very, very encouraging, and we have onboarded 8 customers now on our expense management platform. Early traction proves that Yatra understands the pulse of what our corporate customers need. This solution has not only become a door opener to get new accounts, but also gives us a huge upsell potential in our existing accounts. A few thoughts on what you can expect from Yatra in quarters ahead. Our consumer-focused line of business has returned to growth path while improving margins. This was a result of sharp execution, coupled with successfully tapping into partnerships and affiliates for demand generation. In the near future, you should hear more on organic demand generation projects making impact, helping us further improve margins in this line of business. Our corporate value proposition still has a huge headroom for growth. Online penetration is around 23%, and we have laid a strong foundation for chasing this potential. We have sharpened our go-to-market by establishing separate teams to chase large and small and medium enterprises. Demand generation is amplified by a new inside sales team now, which has started augmenting the efforts of the team on ground. Early signals are very promising. Beyond new customer acquisition, our farming team have won multiyear renewals from some of our largest customers this quarter, proving that corporates want trusted partners who can deliver value to them. Needless to say that our success is closely tied to the speed at which we can deliver tech innovation. Our early investments in adding talent to our product and tech team have started showing results. You can expect us to further add gap between us and what's available in the market. Hope that gives you a flavor of where we're headed. At this moment, I would have paused and handed over to Anuj Sethi, who is our CFO, to brief you on the financial performance for the quarter under review. He has got caught up in a medical emergency. Hence, I'll take you through the financial performance as well, and then me and Dhruv will take the questions together. On the financial performance, for the third quarter of financial year '26, on a consolidated basis, our revenue from operations grew 10% year-on-year to INR 2,577 million or approximately $29 million, driven by steady demand across our key segments with robust growth from air ticketing business. In terms of segmental performance, our Air Ticketing passenger volume grew 13% year-on-year to 1,491,000. However, gross bookings grew 22% year-on-year to INR 16,931 million or $188 million. And Air adjusted margins rose 40% year-on-year to INR 1,195 million, or $13 million with adjusted margin percentage improving from 6.2% to 7.1%. Under Hotels and Packages segment, hotel room nights grew by 22% year-on-year to 508,000. Gross bookings increased 20% year-on-year to INR 4,306 million or close to $47 million, with adjusted margins expanded 15% year-on-year to INR 502 million or $6 million. On the liquidity front, cash and cash equivalent and term deposits stood at INR 2,042 million or $23 million as of 31st December 2025. Gross debt has marginally increased from INR 546 million as of 31st March 2025 to INR 583 million or $6 million as of 31st December 2025. With this, I would like to hand back to the moderator and open up for question-and-answer session. Operator: [Operator Instructions] First question comes from Scott Buck with H.C. Wainwright. Scott Buck: First, I'm curious, the revenue growth deceleration in the quarter, is any of that structural? Or you're viewing that all as just kind of the ebbs and flow of managing some of the macro challenges that are out there? Dhruv Shringi: Scott, this is largely seasonal in nature. Quarter 3, if you would recall, is one of the lowest quarters for business travel, given the holidays that we have for Christmas, New Year and for Diwali, Dussehra, which both happen in this quarter. So effectively, you lose 1 month out of the 3 in holidays. And then it got compounded this year with the flight disruptions that happened during the first 2 weeks of December. So it's not a structural shift. It's just a one-off, given the disruption that happened in the industry. Scott Buck: Okay. That's fair. Second, I just want to ask about the MICE business. Are you seeing some of the macro challenges out there, whether it's tariffs or anything else, having an impact on that business? I know there were some headwinds in the quarter. Dhruv Shringi: No, we haven't really seen any impact of that, especially things like tariff and all. We do, in fact, expect that given that there is a new trade deal which is in place between India and the EU and India and the U.S., we will see business travel scale up even further when it comes to travel between both Europe and the U.S. But we're not really seeing any headwinds per se on account of these. Sid, if you want to add something extra on that? Siddhartha Gupta: Yes. So this MICE as a segment has grown and has tremendous potential for us to grow into. This was a very fragmented market about 3 to 4 years back. And now over the last 2 years, Yatra has become one of the top 3 players operating in this space in India. And Indian economy is one of the fastest-growing economies. So there are multiple industries where corporates are traveling, not only outside India, but within India as well. And hence, there is a huge headroom for growth. What we've seen is that this entire segment is getting more formalized. So instead of very small players operating these events for corporates, now the corporates prefer doing business with large vendors like ourselves. So I think there's a huge potential, and we don't see any disruption in this space at all. Scott Buck: Great. That's helpful color. And then last one for me, guys. You continue to do a really nice job adding new corporate partners on the travel side. I'm curious how many of those kind of obvious or low-hanging fruit opportunities are still out there? And at some point, do you need to change or pivot the way you're pitching some of these customers to continue to bring on that Corporate Travel business? Dhruv Shringi: I think at this time, we have got a lot of headroom in this. Our initial mapping had suggested close to about 13,000 organizations that we could target as part of this. We are still just in excess of about 1,000. So I think there is a lot of headroom for growth for us in this sector. I think Siddhartha coming on board will also sharpen our focus on how we go to market. And maybe Siddhartha can elaborate a bit more around how he's gone ahead in the short period of time in augmenting the sales team and putting in some new things in place, which will help us drive further growth. Siddhartha? Siddhartha Gupta: Yes. So to add, I concur with Dhruv completely. We have barely scratched the surface. There is a huge headroom for growth because the offline Corporate Travel still is the majority market and the value proposition of Yatra from providing an online Corporate Travel platform, which caters for all uniqueness of every corporate customer has a huge headroom for growth. To give you a parallel, in my days at SAP or Hewlett-Packard, corporate India itself has more than 30,000 companies, which are potential customers to Yatra. We have just about crossed 1,300 right now. So there's a huge headroom for growth for us. From a go-to-market standpoint, we have commenced a very ambitious and aggressive go-to-market sharpening exercise at Yatra. We have divided our go-to-market into 3 pillars. One is -- so we've separated these teams out. One is the elite sales team, which looks at only large enterprises and tries to get us more inroads into large corporates where travel spends are very high. Then we've got a separate team, which is looking at small and medium enterprises, which operates through digitally creating demand and then through an inside sales, landing it into our kitty. And the third bit is we are already one of the larger players in India from a large enterprise automation. So we have a very large existing account base. So we have a team called key account managers, and it's headed by a very senior leader here in India. And the mandate there is to upsell and grow our existing relationships where we are introducing newer solutions like expense management and other solutions and especially international hotels and travel so that we are able to upsell into our existing customer set as well. So overall, we are sharpening the go-to-market, running a very strong cadence on a weekly basis to ensure that spikes remain healthy and conversions remain healthy as well. So you should see momentum pick up from here, and we expect our strategy of leaning more towards B2E to grow Yatra being very successfully executed over the next 3 to 4 quarters. Operator: [Operator Instructions] We have no further questions, so I'll hand back to the management team for any final remarks. Dhruv Shringi: Thank you, operator. Siddhartha Gupta: Dhruv, would you like to.... Dhruv Shringi: And thank you, everyone, who joined the call today. And as always, we remain committed to driving shareholder value and being able to address any questions that you might have. Siddhartha and I are always available. Please feel free to reach out to us through our IR firm, ICR, and they can direct you to us. We look forward to engaging with you and continuing to deliver on the strong results that we have done for the last few quarters. Thank you for your time today. Siddhartha Gupta: Thank you so much, everyone. Operator: Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.
Anna Tuominen: Good afternoon, ladies and gentlemen. My name is Anna Tuominen. I'm the IRO of Marimekko. Thank you for joining us today. We have the opportunity to hear our President and CEO, Tiina Alahuhta-Kasko, in a few minutes to go through Marimekko's Q4 and full year results from 2025. And after that, we have reserved some time for Q&A with Tiina and our CFO, Elina Anckar, answering your questions. You can type in your questions using the chat function already during the presentation and then we'll start going through them after we first heard Tiina's wise words. Tiina, please go ahead. Tiina Alahuhta-Kasko: Thank you so much, Anna, and good afternoon, everyone. It's my pleasure to share with you a few words about Marimekko's results in 2025. So let's get started with the fourth quarter of the year. As it pertains to our business development in the last quarter of the year, of course, the market situation continued to be challenging. But despite of that, our net sales grew from the comparison period's record level, fueled by our international sales and our operating profit margin was at a good level. Altogether, our net sales in the fourth quarter grew by 1% and totaled EUR 54.7 million. Our net sales were driven especially by increased retail and wholesale sales in the Asia Pacific region in spite of the globally uncertain market situation and the weak consumer confidence. In total, our international sales increased by 5%. Net sales in our home market in Finland were down by just 1% as retail sales declined in the environment that in Finland remained highly price sensitive and tactical. Then as it pertains to our profitability, our comparable operating profit totaled EUR 8.8 million, equaling to 16.1% of net sales. It was decreased by higher fixed costs, while then improved relative sales margin and increased net sales had a positive impact on profitability. Overall, our cash flow from operations strengthened and our financial position continued to be strong. Overall, as we now have entered to the 75th year of Marimekko's operations, our brand is as vibrant as ever. Then, of course, our strong financial position, paired with the sustained profitable growth and positive development of our business, they put us in a great position to continue scaling up the global brand -- Marimekko brand phenomenon growth also in the now started year. But let's have a closer look now behind the drivers in net sales and operating profit. So starting with the Q4 net sales, which increased by plus 1% to EUR 54.7 million and being boosted in particular by the increased retail and wholesale sales in the Asia Pacific region. Overall, the net sales in Finland were close to par to the comparison period as our retail sales declined in the highly price-sensitive and tactical operating environment. However, wholesale sales grew by 2% when the domestic nonrecurring promotional deliveries increased. In our second biggest market area, the Asia Pacific region, our net sales grew by 10% as retail sales in the region increased by a very strong 24% and wholesale sales by 9%. Internationally, overall, our retail sales also grew in all other market areas. And in total, our international retail sales grew very strongly, so plus 20%. And in total, our international net sales grew by 5%. Then when looking at the full year '25 performance, in total, our net sales increased by 4% to EUR 189.6 million, boosted especially by the growth of wholesale sales in the Asia Pacific region and in Europe as well as the increased retail sales in Scandinavia. The operating environment in Finland continued as challenging. And as estimated earlier, also the nonrecurring promotional deliveries in the domestic wholesale sales were considerably below the comparable year. But in spite of this, our net sales in Finland increased. Our retail sales in Finland were on par with the previous year's record level, while then wholesale sales increased by 1% and licensing income grew significantly. Then when we look at our second largest market area, the Asia Pacific region, that increased by 2% when both wholesale and retail sales grew. So while we had a good development in this core business of retail and wholesale in the Asia Pacific region, the net sales in that region was negatively impacted by the considerable decline in the licensing income in the region. Overall, when we look at the group net sales performance in the full year level, as estimated since the beginning of 2025, the licensing income was considerably lower than in the previous year. And that, of course, had a negative impact on the total net sales development as well. In total, sales grew by 7% with retail sales increasing in all and wholesale sales in almost all international market areas. So international sales, plus 7%. I think that's a good testament on us progressing well in our scaling journey despite the volatilities and uncertainties in the world economy and consumer confidence. Then when we look at our net sales breakdown per market area and by product line, no major differences or changes in the split by market area. So Finland continuing to be the strong home market and then Asia Pacific being the second largest market, but also solid kind of shares across Scandinavia, Europe and North America. When we look at the net sales split by product line, fashion is there the biggest product line. And actually on a full year level, we saw the strongest growth from the fashion product line, namely 12%. Our omnichannel store network also expanded in 2025. And today, 174 Marimekko stores around the world serve our customers. And our online store serves customers already also in 39 countries. Our brand sales in the full year amounted to EUR 385 million and 62% of our net sales came from the international markets. Then when we look into our profitability in the fourth quarter, our comparable operating profit margin -- profit was at a good level, amounting to 16.1% of net sales. Our operating profit was decreased by a higher fixed cost, while then the improved relative sales margin and increased net sales had a positive impact on our profitability. When we look at the drivers behind the fixed cost increase, they were due to, in particular, the higher marketing costs, but also due to increased personnel expenses. Then when we look at what is behind the increased personnel expenses, it is the general pay increases in different markets as well as the increased personnel costs in stores to support retail. The relative sales margin was improved by margins per product being at a good level as well as lower logistic costs than in the comparison period, while then the relative sales margin was weakened by higher discount. When we look at the situation cumulatively, our cumulative operating profit increased by 1%, and our comparable operating profit margin was at a good level, actually 17.1% of net sales, which I would say is a good outcome, especially in the volatility of the world situation. Our operating profit was, of course, boosted by the net sales growth, while then on the other hand, the higher fixed costs and weakened relative sales margin had a negative impact on the operating profit development. The fixed cost growth was attributable to, in particular, the increased personnel expenses, but also they were due to the investments in digital development. The reasons behind the personnel expenses increase were actually the same as in the fourth quarter. The relative sales margin was negatively affected then by especially higher discounts and as estimated by significantly lower licensing income. In addition, also unrealized exchange rate differences had a weakening impact on sales margin. while the relative sales margin was then supported by margins per product being at a good level. There were several key events that took place in the fourth and last quarter of the year that really show how we're progressing in scaling up the global Marimekko brand phenomenon and our growth. Let's have a look. First of all, at the end of October, we opened our historically first Paris flagship store. Paris is, of course, no doubt the most important fashion capital in the world whose impacts in brand awareness and positioning expand beyond Europe to also North America and Asia. This way, our presence in Paris supports the scaling of our brand phenomenon and long-term growth across channels and international markets. In the fourth quarter, also Marimekko store, originally opened in 2012, reopened as a flagship store in the same street in Hong Kong, which again allowed us to reinforce our brand awareness and positioning across the broader Asia region. Also, new Marimekko stores were opened in Tokyo and Bangkok along with 8 pop-up stores that delighted customers, mainly in Asia as well as a pop-up cafe, which all complement our omnichannel store network. We also progress and continue to invest in our digital business. We launched at the end of the fourth quarter, a new Marimekko app that really offers an inspiring shopping experience and a digital home for our renewed loyalty program. The app also allows people to peek behind the scenes into our printing factory, into our print archive. And this app really allows us to deepen the engagement of our loyal customers. So really much at the core of our D2C business. In the fourth quarter, we also hosted local collaborations, namely the JW Marriott Hotel in 9 places hosted Marimekko rooms as well as events as well as in Taichung in the Sundate Cafe, the experience was addressed in the Marimekko Prints. And these kind of creative brand experiences that really connect with the local culture and community, they really allow us to differentiate from the competitors and introduce our brand yet again to new audiences, in this case, in Asia. To close the year, the Field of Flowers touring exhibition that actually has been, during the course of the year, touring and visiting a total of 11 cities, especially in Asia, made stops in Shanghai and Sydney. The Field of Flowers exhibition showcases the newest Marimekko floral print design, production, and these touring exhibitions have also featured pop-up stores, where people have been able to buy a bit of the new designs to their homes. Sustainability is one of the key strategic success factors in our scale strategy, and we believe that determined efforts to develop sustainability support our long-term success. In 2025, we continued our progress in our sustainability work and actually achieved 3/4 of our very ambitious targets in our previous strategy, sustainability strategy term on the greenhouse gas emissions and water use reduction. Then moving on to the outlook of 2026. Just a few words in general to get started. Of course, there are significant uncertainties related to the development of the global economy, such as the tensions related to geopolitics and trade relations, and the rapid changes in the trade policies, as well as other uncertainties, are reflected in consumer confidence, purchasing power and behavior, and thus can have a weakening impact on Marimekko. In addition, also, possible disruptions in production and logistics chains, and changes in these chains caused by the uncertainties may also have a negative impact. But of course, as usual, we're always monitoring these situations and developments and will adjust our operations and plans accordingly if needed. A few words about seasonality. So due to the seasonal nature of our business, a major portion of our company's euro-denominated net sales and operating results are traditionally generated during the second half of the year. It's also good to remember that the timing between quarters of the non-recurring promotional deliveries in Finnish wholesale sales and their size typically vary on an annual basis. Licensing income in 2026, we forecast to be approximately at the level of the previous year. Then, continuing to the net sales development outlook for 2026, starting from Finland, our important home market. Despite the weak market situation, our net sales, in the domestic market, Finland, are expected to increase in 2026. Sales in our domestic market are impacted by the continued weak general economy and low consumer confidence, as well as the development of purchasing power and behavior. The operating environment continues to be tactical and price sensitive, which continues to have an impact on the business. What is good to note is that in 2026, the non-recurring promotional deliveries in wholesale sales are expected to grow from the comparable year, and they will be weighted in the second half of the year, as in 2025. What is also good to note is that the development of the domestic sales is estimated to be more muted in the first quarter of 2026. Then moving on to the international. Overall, international sales, we estimate to grow in 2026. When it comes to the Asia-Pacific region, our second largest market area, we expect our net sales to increase in 2026. However, it's good to note that due to timing reasons, the development of sales in the Asia-Pacific region is estimated to be more muted in the first quarter of the year. In 2026, the aim is to open approximately 10-15 new Marimekko stores and shop-in-shops, and most of the planned openings will be in Asia. When it comes to growth, investments, and costs, of course, we develop, as always, our business with a long-term view and aim to continue scaling our profitable growth in the upcoming years. Thus, our fixed costs are expected to be up on the previous year, so also the marketing expenses are expected to increase. When it comes to the tariffs in the U.S., maybe a few words about that. So the increased tariffs in the U.S. have a direct impact only on a small part of our business, as the entire North American market accounted for 6% of our net sales in 2025, and we as a company are taking diverse measures to minimize the negative impacts of the tariffs. Then the early commitments to product orders from partner suppliers, which is typical of our industry and partly further emphasized due to the different factors, weakens our company's ability to optimize our product orders and respond to rapid changes in demand and supply environment, and thus increases business risks. There are also uncertainties related to global production and logistics chains, but of course, we always work actively in various ways to ensure competitive and functioning production and logistics chains, to mitigate the increased costs and other negative impacts, and to avoid delays, and to enhance inventory management. When it comes to our financial guidance for 2026, we expect our net sales for 2026 to grow from the previous year, and our comparable operating profit margin is estimated to be approximately 16% to 19%. The development of consumer confidence and purchasing power in our main markets, in particular, cause significant volatility to the outlook for 2026, and this development is strongly impacted by rapid changes and uncertainties in geopolitics and global trade policy, among others. In addition, possible disruptions in global supply chains can cause volatility to the outlook. Then finally, a few words still about the proposal for dividend for 2025. Our board of directors is proposing to the AGM that a regular dividend of EUR 0.42 per share to be paid for 2025, and this is, of course, in line with our dividend policy, or actually higher than that. With these words, I would like to open up the Q&A. Thank you for listening. Anna Tuominen: Thank you, Tiina. And I would like to invite also our CFO, Elina Anckar, here for the Q&A. And just to remind you, you can still type in your questions using the chat function, and we'll go through them. But let's start with a couple of questions related to the events that you went through. There was a lot happening in Q4. So the Paris flagship store, has it met your expectations? Are you happy with the launch? Tiina Alahuhta-Kasko: So, of course, it's very early days still in Paris, as the opening took place at the end of October. I think that overall, as I mentioned in my presentation, taking the step to open a flagship store in Paris is a significant milestone in our scale journey, namely because of Paris being the fashion capital of the world, The store caters not only for the local consumer, and this way supports us, in our Europe strategy. Many of you, you might remember that, we are working on modernizing both our brand and our distribution network in Europe, but equally, Paris is a destination for tourists. So we see that, good, inspiring presence in Paris can also support our awareness and positioning efforts, more widely, including also in Asia and in North America. Anna Tuominen: What about the new Marimekko app? That was even more recent launched. But are you able to share some details on how that's developing? Can you see some impact on customer engagement or... Tiina Alahuhta-Kasko: So of course, the Marimekko app was launched even later at the end of the year. And we're very excited about the Marimekko app. We have a very strong technology team at Marimekko, and we work in various diverse ways how to advance further digitalization of Marimekko's business to even better serve our customers and to support our efficiencies. The app plays a really important role in our direct-to-consumer business as it allows us to have a deeper engagement with our loyal customers and also provide to them an even more personalized experience. So they're excited to continue on that journey. Anna Tuominen: Yes. A question related to sales, especially the Finnish sales. At least in Finland, one can see that there's been quite a lot of campaigns lately. Is this something that you consider necessary in this market environment? And the question -- and the person asking the question is asking also that assuming that fewer campaigns would result in higher profitability. Tiina Alahuhta-Kasko: So overall, if we look at the domestic market, like Finnish market sentiment over the course of the last couple of years. So of course, we know that the general economic situation in Finland has been quite gloomy and the consumer confidence has been very low. And all of these uncertainties have also reflected in general in the marketplace to highly tactical and price-sensitive behavior in the marketplace. So in order for us to be competitive, there are 2 things. We need to have commercial excellence so that we are relevant for the customers in the climate where we operate. And even more important is that we continuously invest into the desirability of our brands and the hype around it. So both are important to succeed in this kind of a more challenging market situation. Anna Tuominen: There needs to be a balance. Tiina Alahuhta-Kasko: Yes. Anna Tuominen: Another question related to sales, maybe for Elina, about the licensing income, especially licensing income in 2026, so this year. Is this level of licensing income that we saw in '25 and that you're guiding now for '26, is it sort of a new normal, or should this be viewed as particularly low level, or how should investors look at the licensing income going forward? Elina Anckar: Yes. Regarding licensing income, that is something that we actually give a market outlook every year. And for the year '26, we have said that the licensing income will be more or less in line with the '25 levels. But it's good to remember that when we look at backwards, years '23 and '24 were, like record high in terms of the licensing, but we will announce the outlook for the licensee fee every year. Anna Tuominen: There's also a couple of questions related to specifically marketing costs. So maybe I'll continue with the CFO. So you're guiding marketing costs to increase in '26. Is that in absolute terms or as a percentage of sales? And is there any way of giving a sort of guidance on how much they will increase? And what drives this kind of increase in '26? Elina Anckar: As Tiina has already talked about like the importance of us continuing like increasing the brand awareness and the brand loves and the hype and in overall like making sure that we do invest into the growth even if the market situations are a little bit tougher. So for that perspective and based on a very strong financial situation, we are increasing our financial spend. And we're talking about like euro values here in terms of like the spend. And if we look at backwards, year '26, we spent some 6% of the turnover to marketing and the year before, the same 6%. Tiina Alahuhta-Kasko: And maybe one addition to this is that when the market -- general market situation around the world is more challenging, it is also very much an opportunity for companies with a strong balance sheet and continued positive performance of our profitable growth and positive performance of our business to then invest into fueling our long-term growth. So we see that this also very much as an opportunity. Anna Tuominen: There actually was another question also related to this that why not adjust these fixed costs, especially marketing to be closer to the long-term target, but then you would lose the opportunity to invest in growth. Tiina Alahuhta-Kasko: Yes. We have a scale strategy. So we are all about building our long-term growth. Anna Tuominen: That was actually all the questions this time. So we would like to thank you for joining us, and we hope to see you next time as well. Tiina Alahuhta-Kasko: Thank you. Elina Anckar: Thank you.
Unknown Executive: Good afternoon, and welcome to Outokumpu's Fourth Quarter Results Webcast. I'm Johan, responsible for Investor Relations. We will begin with the presentation from our CEO, Kati ter Horst; and our CFO, Marc-Simon Schaar. After the presentation, you are welcome to ask questions over the line. With that, I'm pleased to hand over to you, Kati. Kati Horst: Thank you very much, Johan, and also very, very welcome from my side. We are here today in the studio in a very snowy beautiful Helsinki. So let's go then directly to the business and talk about the fourth quarter and also some comments, key comments on the full year. So if we look at the whole year as such, I think the comment there is that the stainless steel market did remain weak and was very much pressured by the uncertainty we saw in the markets and also the especially low-priced Asian imports coming to Europe. So our full year adjusted EBITDA then decreased to EUR 167 million, and the profitability improved very clearly in BA Americas and in Ferrochrome, but then they declined in business area Europe, if you compare year-on-year from 2024. Then the Q4 '25 profitability was impacted both by market weakness, but also the temporary challenges we've been having with the supply chain planning solution in the ERP rollout in business area Europe. We do expect more favorable market dynamics going forward, and I'll come back to that in a little while. Also I would like to remind you that we are advancing our EVOLVE growth strategy by investing in the pilot plant in the U.S., to develop this proprietary technology we've been talking about, which is aimed at producing low CO2 metals and first focus being on ferrochrome and high chromium content metal. CBAM and tariffs are now the 2 elements that we see changing the import picture both in North America and Europe. So on the left side, you see Europe. The Q4 figures include October and November. And you can see that the imports have come down. Same has happened in North America because of the tariffs. And this is something, especially now in Europe, that we do expect to continue this quarter. I wanted to give also a bit of a sense from the Q4 of the sentiment in different customer segments. So you basically see here our key customer segments and the colors are giving a bit of the sentiment. And you can see that the sentiment has been quite subdued. So either no change or even a little bit slightly negative on the automotive and heavy industry side. But now that we come to the beginning of '26, I think it is changing a little bit. So first, I would like to comment on Europe that we clearly see that CBAM and the expectation of the coming safeguards are supporting demand for European suppliers. It's not necessarily helping to increase the end customer use demand. And there, we don't see really clear signs of recovery yet. But demand for European producers, we do see supported by the policy instruments. Then on the Americas side, I would say that we now see some first signs on a market recovery or economic recovery, however you want to call it. And that was also reflected a bit in the clearly better PMI index that was published in January. It basically jumping to 52.6 points. And I think that is also what we see in our order books and the sentiment that we see being somewhat more positive than before in the Americas. There's one customer case here I wanted to share with you because it is basically an example of one of the product developments in Outokumpu that highlights how our innovative material development. In this case, the Lean Duplex Forta provides a solution for very challenging customer needs in the real life, and it also helps to support the energy transformation and sustainable products and minerals and metals. So the customer here is Metso, very much in the space of mining and minerals and metals. Then moving forward, commenting then a bit on the Q4 result more. So we have clearly here a situation where Europe was weak also for the whole year and where BA Americas and Ferrochrome had a very solid performance. The European weak financial performance very much based on the market weakness and the sustained pressure from the imports. And then as I said earlier, also in the Q4, some temporary challenges that we've been having with our supply chain solution in this ERP implementation. We have had significant improvement profitability in BA Americas. That has been driven very much by the higher volumes and lower cost. And then really in BA Ferrochrome, we've actually seen a third consecutive year of improvement. And we also do see the robust demand continuing for our low emission European Ferrochrome. And then maybe on the own measures, I could comment that we had the target to have EUR 60 million savings in short-term cost-saving measures. So we have reached EUR 63 million by the end of the year. We have also reached the targeted level of EUR 350 million on this 3-year run rate program that we've been running by the end of '25. And therefore, also that program is now closed. Then moving to sustainability and commenting on some of the key items there. So our solid sustainability performance continued in Q4. We were also present in the COP30 and had some really good interactions with some of our customers, but also different politicians, talking about energy, talking about carbon capture, and other important topics. On safety, we are on a world-class level in the process industry. We had a challenging Q3. And I was very happy to see that now in Q4, we are really back on track in our safety performance with a total recordable incident frequency rate of 1.4. If we then look at the recycled material content, actually, all the quarters in 2025 we were at the record high level of 97% of recycled material content. And of course, together with the actions we've taken in energy efficiency and optimizing our processes, this has really delivered continued emission reductions for Outokumpu. And this becomes a more important topic going forward. So the low EU ETS emission intensity that we have, coupled with the free allowances that we have going forward, is really supporting our competitiveness, and I come a bit back to that a little bit later. Our sustainability leadership was also recognized externally. Earlier in the year, in '25, we got again the EcoVadis Platinum. And then towards the end of the year, the CDP's A rating for the climate was received. Then a couple of words about how CBAM and the phaseout of the free allowances under the EU ETS are expected to impact our business. So when you look at the left side, CBAM basically impacts the top line, while then the discussion of the free allowances is a cost question to the industry and for the players. So both in stainless steel and in CBAM or both in stainless steel and ferrochrome, so the key importers to Europe have carbon intensity default values that are clearly higher than the European benchmark. And this is clearly expected then to shift demand more towards the European suppliers. So you can see here in the left and in the middle the black bar presenting the imports and then the green bar representing the European reference values. Further then, I would like to point out that Outokumpu has been one of the early movers in smart decarbonization, and that has now resulted in a very competitive position under the EU ETS. So we basically have available free allowances covering our needs until 2030. I have here then another example on how we can reduce carbon emissions through partnerships that actually create win-win business concepts in the ecosystem. So this is a partnership that we have announced as an MAU with Norsk e-Fuel where basically the concept is that the side stream of our ferrochrome production, the CO gas, we can deliver that to Norsk e-Fuel for the production of sustainable aviation fuel. The beef here for us is that we are really -- by selling the CO gas, we are really reducing quite substantially our emissions. And for them, it's a very cost-effective and good raw material for producing sustainable aviation fuel. So here, let's see how this continues going forward, but these are continuously the type of opportunities we are looking in partnerships. And then now I think I would like to hand over to Marc-Simon to talk more details about our financial position and the results. Marc-Simon Schaar: Thank you, Kati. Good morning, good afternoon, everyone, and thank you for joining us today. Despite the challenging market environment, our solid financial foundation positions us well for future growth. Let's take a closer look at our financials at the end of the year. During the fourth quarter, our strong liquidity increased to EUR 1.2 billion. With positive free cash flow and the dividend payment in October, our net debt increased slightly -- only slightly during the quarter. At the same time, we secured a new unsecured EUR 800 million sustainably linked RCF with a 4-year maturity and an option to extend until 2032. The new facility replaced 2 previous RCFs of the same amount, but with improved and more flexible terms. This once again demonstrates the strong and continued support from our lending partners. Now let's take a look at our fourth quarter profitability. Our fourth quarter group profitability of EUR 10 million was mainly impacted by lower deliveries and a lower pricing level in Europe. The decrease in stainless steel deliveries to 365,000 tonnes was driven by continued market weakness and challenges related to the new supply chain planning solution, as mentioned earlier. These negative impacts were partly offset by improved cost performance and higher electrification aid. Let's now take a closer look at the performance of our business areas in the fourth quarter, starting with business area Europe. Overall, the market conditions in Europe remained weak during the quarter. This was evident in manufacturing activity as the euro area PMI remained below 50 much for the second half of the year, indicating continued contraction in the sector. Against this backdrop, volumes were lower during the quarter. This reflected both the ongoing market weakness and a temporary impact from the implementation of the ERP rollout, which we expect to normalize going forward. The weaker pricing environment also weighed on spreads, namely our price net of raw material costs. And this impact was partly offset by improved cost performance, supported by higher fixed cost absorption as production activity increased. In response to the prolonged market weakness, we continued to take decisive restructuring actions to safeguard our cost competitiveness. These actions form part of the EUR 100 million restructuring program announced in connection of our Q2 2025 results, which runs through the end of 2027. As part of this program, we expect to realize cost savings of EUR 50 million this year with a primary focus on business area Europe and group functions. Looking ahead, we also expect demand for domestic producers in Europe to be supported by the introduction of CBAM from the beginning of this year. With that, let me now turn to business area Americas. Despite seasonally lower deliveries, business area Americas delivered another strong performance in the fourth quarter. Improved product mix and lower variable costs more than offset higher fixed costs related to the annual maintenance shutdown in the U.S. as well as lower gains from timing and hedging effects and the usual seasonal decline in deliveries in the Americas market. During the quarter, demand in the U.S. continued to shift from imports towards domestic producers following the tariffs imposed by the U.S. administration in July last year. However, underlying end-user demand remained weak. Similar to Europe, manufacturing activity was contracting with PMI levels below 50 throughout the quarter. On a more positive note, we have recently seen early signs of improving market activity in the U.S. In addition, the Mexican government implemented tariffs on Asian imports, supporting domestic producers such as ourselves in Mexico. Looking ahead, our focus in business area Americas remains on strengthening operational excellence to fully unlock the potential of our asset base while advancing our commercial strategy through an expanded product portfolio and a more differentiated go-to-market approach. With that, let's have a look to business area ferrochrome. We are very pleased that the strong financial and operational performance in business area ferrochrome continued during the quarter. Against the backdrop of ongoing supply constraints in Southern Africa and continued geopolitical tensions, demand for our low-emission European ferrochrome offering remained strong throughout the quarter. While total deliveries declined due to lower internal demand, external deliveries increased, underlying our strong market position. With the introduction of CBAM from the beginning of this year, we expect this positive trend in external demand to continue. Profitability in the fourth quarter benefited from higher prices, lower variable costs supported by the electrification aid and improved fixed cost absorption driven by higher production levels. Looking ahead, despite the termination of electrification aid and the increase in mining tax in Finland from the beginning of this year, we see our ferrochrome business as very well positioned for the future. Our strong strategic setup, the continued expansion of our product portfolio into higher-margin ferrochrome as part of our EVOLVE strategy, and improving mining efficiency through the expansion of the sub-level caving concept will support further value creation in the business. Examples of our product portfolio expansion include our move into medium and high-carbon ferrochrome as well as low titanium products during 2025 already. In addition, recent underground drilling confirms that our mineral reserves and resources provide sufficient ore availability well into the 2050s, offering long-term visibility without the need for any major additional investments. With that, let me turn to some final remarks on the group's overall financial position. Despite the low profitability in the fourth quarter, our free cash flow improved significantly compared to the third quarter, driven by a strong release in working capital. Our ability to release additional working capital was limited by temporary challenges related to the implementation of the ERP system. As a result of the dividend payment of EUR 61 million during the fourth quarter, net debt increased slightly to EUR 265 million. Given the current market environment, our primary financial focus remains on maintaining strong capital discipline with a particular emphasis on working capital efficiency. Now with that, I will hand it back over to you, Kati. Kati Horst: Thank you, Marc-Simon. So going forward, based on our EVOLVE growth strategy, our focus is clearly on cost competitiveness in our foundational sustainable stainless steel business, while we are then targeting transformative growth in Advanced Materials and low-carbon metals through the technology development. And on the next slide, just as a reminder, as communicated last summer during our Capital Markets Day, here you see the pillars of our EVOLVE growth strategy. So it's maximizing the value from sustainable stainless steel, both in Europe, Americas, growing profitably in Advanced Materials and alloys, then working on technology to create innovative materials and low carbon, of low CO2 metals. And this is exactly the USD 45 million investments we've done on the pilot line in the U.S., which is proceeding well. And then, of course, we continue to focus on total shareholder returns as well and keeping our balance sheet healthy at the same time that we want to keep the possibilities open to invest in growth. Then we would be moving here now to the dividend proposal from the Board of Directors. And the proposal is EUR 0.13 per share for the year 2025 and to be paid in 2 installments. And I think it's important to mention this is very much according to our dividend policy where we also say that we need to look at the company's financial performance in the cyclical market conditions while we maintain the financial flexibility to invest in transformative growth. You see here our dividend per share and earnings per share. And then if you look at over the 5 years and you include this proposal of EUR 0.13, we have actually paid over the 5 last years, about EUR 0.5 billion of dividends to our shareholders. Then we move to the outlook for the first quarter of 2026. And in the first quarter of 2026, the adjusted EBITDA improvement is expected to benefit mainly from the recovering stainless steel deliveries, the volumes, which are forecast to be 20% to 30% higher compared to the fourth quarter in 2025. And the change in deliveries mainly reflects the normal seasonality that we have in the market, but also the exceptionally low level of business in business area Europe in the comparative period, so fourth quarter, which was then impacted also by the challenges related to the supply chain planning tool in the ERP rollout during the fourth quarter. And then with the current raw material prices, some raw material related inventory and metal derivative gains are forecast to be realized in the first quarter. And then our outlook for Q4 2026. So our adjusted EBITDA is -- in the first quarter of '26 is expected to be higher compared to the fourth quarter of 2025. Then I would like to summarize a bit with this slide, some of the key messages from today. And I would start by saying that we do expect more favorable market dynamics going forward in 2026. So in Europe, this culminates very much currently to CBAM and the proposed safeguards as they are supporting demand for low emission stainless steel and ferrochrome, supporting European suppliers. In the Americas, we see a positive outcome of the -- potential positive outcome of USMCA negotiation would really support our business in Mexico and also create more capacity for us eventually to sell in the U.S. And like I said earlier, we see also first signs of economic and end-user demand recovery in the Americas. So being clearly more positive than in Q4. And then we expect this robust demand for our ferrochrome to continue also supported by the continued uncertainty on supply on the market. And if I look at all the business areas, we are very much working on the commercial strategies and the product portfolios, and I see that we have a lot of opportunities in that side. Ferrochrome is already now bringing 3 new products to the market. So this is the way to continue. And on the EVOLVE strategy, I mentioned the technology development. It is very important for us, and we will tell you more about that as we go forward. So I'm very optimistic about our future, our possibility to grow and improve our financial performance and resilience. And then I think this takes us to the Q&A that we are now ready for. So please, happy to hear your questions. Operator: [Operator Instructions] The next question comes from Tristan Gresser from BNP Paribas Exane. Tristan Gresser: The first one, I just wanted to ask about Americas. There was a strong performance in Q4. Any one-off tailwind that was in there that will not repeat into Q1? Or is the type of margins on EBITDA per ton that you've seen and done in Q4? Is that kind of a normalized level that you see for the coming quarters? Is there more of the price increase to flow through in Q1? Or that's all in the results we've seen in Q4? And now with the visibility you have and you flagged a bit of improvement as well on the demand side, do you think you can reach your EBITDA target for the division of EUR 150 million, EUR 200 million in 2026? And if not, if you can tell us why? Marc-Simon Schaar: Maybe I can start with taking your first part of your question, Tristan, on the performance and if there are any extraordinary items within the result. The answer is clear, no, and we can expect then this result to be an underlying result then also going forward plus then the market dynamics which we see now. We expect a seasonal uptick in demand over here. And while we're not giving any price outlook, I think given the current situation and then referring also maybe to the early signs of a market recovery explains, I think, a bit about how we think about the overall market and the dynamics coming with that one. Tristan Gresser: And regarding the EBITDA target of EUR 150 million to EUR 200 million, is that achievable for 2026? Kati Horst: Well, I would say, if the market recovery continues, then I think there are possibilities to go towards that, yes. Tristan Gresser: All right. That's clear. And then kind of a similar question around Europe. I mean, it's always a market that is a bit difficult to calibrate. How do you think about the margin improvement for 2026? I mean you went from negative EBITDA adjusted EBITDA in Q4. The market was tough. There was a bit of one-offs. But consensus has EBITDA per tonne for the Europe division going above EUR 150 per tonne by Q4 this year. Do you think that's feasible? And if you can talk a little bit about the market environment as well. We've seen prices going up. I guess, margins are going up at the moment as well. If you can discuss a bit your order books and the impact of CBAM, that will also be helpful. Marc-Simon Schaar: Yes. So maybe if I start and then Kati can chip in and add. I think in the fourth quarter, we have seen the lowest volumes driven by the weak market. Yes, we also had here the implementation of the supply chain solution, which I mentioned before. But what we do see and from preliminary data also in January is that CBAM is somehow supportive, as I mentioned before, expecting also a shift towards domestic producers in the European market over here. And as such, also seeing then a margin -- relative margin improvement here in Europe as well. Kati Horst: And let's just say, command, that needs to also happen. If you look at the overall volumes, demand in Europe and the price level. So yes, volumes need to increase and deliveries need to increase and prices need to increase. Tristan Gresser: Okay. That's clear. But you're confirming that margin improving at the moment. And just the CBAM and the safeguards, is that enough for you to go back to historical margin levels? Or do you think absent a more pronounced demand recovery that on the end user side that you're not necessarily seeing at the moment, it will be difficult to reach, let's say, historical margin level already this year without the demand? Marc-Simon Schaar: I think that certainly CBAM and then safeguards are supporting us here and what you just described. At the same time, yes, we see increased activities, but this is not coming really from an underlying demand in the end user segments. And to be clear, in order to get back to historical levels, we also need further demand from the market side as well, given also the capacity utilization we are currently running still being on the low side. Operator: The next question comes from Tom Zhang from Barclays. Tom Zhang: Two as well for me, please. So yes, maybe just on ferrochrome. I know a lot of the quarter-on-quarter improvement was from these electrification aid. But I think underlying, you also talked quite positively about the ferrochrome market, which I was a little bit surprised by because stainless volumes have not been very strong. There was still a lot of stainless imports and CBAM, I guess, will help, but it's only just coming in from January. Is there much of a step-up again into Q1 for the underlying ferrochrome business? And so as I kind of look at Q1, even without the power subsidies, do you think it's possible that ferrochrome earnings can remain fairly stable? Marc-Simon Schaar: I think maybe if I can take that. When it comes to Q4, yes, there was a positive element of then the electrification aid, as we mentioned before. What we have seen as an increase from the third quarter to the fourth quarter, I would say, approximately half or a bit more half of that improvement is coming from that electrification aid. And the rest is real underlying improvement, stronger performance. Coming to the market side, yes, stainless steel demand is lower, is weak. However, we're constantly also reporting that the demand for, again, our European low-emission ferrochrome is very solid. And as such, we saw an increase, not in internal demand, but in external demand. We're also expanding our product portfolio, as I mentioned before, so these are areas and topics together then also with improving our cost performance in ferrochrome with this new or continued expansion of our mining method, sublevel caving, that's all contributing positively. Now if we think about then Q1, certainly, the impact, which I mentioned to you before the electrification aid, but then also the impact from the mining tax in Finland then will have a negative impact in the fourth quarter compared to -- in the first quarter compared to the fourth quarter. However, we continue to improve on the mix side and also on the cost performance. So I would only bake half of the impact of electrification and mining tax into the forecast. Kati Horst: And maybe to add to that a bit that just as a reminder, so we're delivering now internally, externally about 400,000 tonnes of ferrochrome. We have a capacity of 500,000 tonnes. So we have capacity to increase also external deliveries. And maybe another aspect just to add that this portfolio development in ferrochrome, low titanium ferrochrome, medium carbon ferrochrome and now our latest test based on concentrate, more than 60% chrome content ferrochrome, they bring us also to other customer segments. So it's not only then stainless steel anymore being the customer, but there are other segments. So we see the outlook for ferrochrome quite positive. Tom Zhang: Okay. Okay. That make sense. I think in -- sorry, just following on from me quickly. I think in Q2, you guys had talked about a mining tax could be a sort of EUR 50 million hit. Is that still the right number to think about? Kati Horst: No, it's -- so I can be a bit more specific on that. So the mining tax increase now for this year. So last year, we paid about EUR 8 million. This year, we are paying EUR 21 million based on the current premises and volume estimates. So it's a EUR 13 million increase in mining tax. And what does continue in Finland, the parliament has asked the government to look at also at the hybrid model, which would be partly based on royalty and partly then based on the actual result. So that discussion should continue this year. And then the other item there was the electrification aid. So Outokumpu has been getting in total about EUR 20 million in the electrification aid. So if you put those together, then the impact, I think, right now is about EUR 30 million, EUR 35 million. Tom Zhang: Very clear. And then the second question was basically around, there's been a lot of headlines around ETS reform or potential extension of free allowances. As I understand, that would potentially mean CBAM also needs to be drawn out to adhere to WTO. Given your emissions are already well below international levels, you're covered for allowances out to 2030. Do you see the extension of free allowances as a bit of a risk for stainless? Or do you think it's kind of not too material? Kati Horst: No, I don't -- at least from our perspective, I don't see that as a big risk. Of course, there's a lot of discussions going on. If my understanding is correct, there will be some kind of a review now in the summer of the EU ETS system. But I think that's also about should it be extended to some other sectors where it's not now yet. So we will definitely hear more about the review and what is being reviewed in the summer. But I think it is -- I think European Commission is still quite determined to their emission reduction targets. And of course, EU ETS system also goes a bit hand-in-hand with CBAM. So we need to see also the effect in the CBAM going forward. But I think it's definitely a competitive advantage to have been an early mover in this area in the case of Outokumpu. Marc-Simon Schaar: And maybe to add also with smart decarbonization here as well. And I think Kati has mentioned one example, how we think about ecosystems and partnering and making the reduction in emissions as economically feasible. Operator: The next question comes from Anssi Raussi from SEB. Anssi Raussi: I have a couple of questions left. First about CBAM and safeguards in Europe, like how do you see the situation if you think about scrap value chain, like if the end user demand is declining due to these new regulations, even though it would be positive for your stainless side. But do you think that scrap suppliers would face some problems, for example? Marc-Simon Schaar: Well, Anssi, if I can take that question, then I think that -- well, overall, there is then a stronger demand for stainless steel scrap. And this is what we do see then in the market as well. But overall from -- I can only speak from an Outokumpu point of view that through our partnerships with our suppliers being very well covered and also going forward. Anssi Raussi: Okay. That's clear. And then about BA Europe, like what kind of delivery times you have right now? Because I think your contracts are so-called all-in price-based contracts. So how long it takes before we see this positive changes in market environment in your P&L? Marc-Simon Schaar: Maybe to start with, not all of our business is on effective pricing. So I would say around 30% of our business in Europe is based -- still based on base plus alloy surcharge and our U.S. business is completely on base plus alloy surcharge. Certainly, we have around 1/3 of our annual expected volumes under contract. These contracts being concluded by mid to end of last year. And as such, there is naturally a certain delay in here. But we should see a gradual improvement here from the first quarter in business area Europe. Operator: The next question comes from Dominic O'Kane from JPMorgan. Dominic O'Kane: I have 2 questions. So first, could you maybe provide us with an update on your current thinking for Tornio? And then second question is a related question. If we think about cash flow, you've had 2 successive years of negative calendar year free cash flow. You've done a good job on working capital management, but it may be that is going to be difficult to continue and replicate going forward. And so if I think about what you said at the Capital Markets Day, you didn't provide us with any forward-looking guidance for 2026 CapEx. So I just wonder if you could maybe just help us with those building blocks. Are you able to maybe give us an update on 2026 CapEx? And how should we think about the free cash flow potential in 2026? Kati Horst: So if I leave the cash flow question to Marc-Simon, I could maybe comment on Tornio. So you're referring to this potential investment in the annealing and pickling line in Tornio. We said in the fall when we were discussing the mining tax topic that is currently on hold. So now we know what the impact on the whole Kemi Tornio setup is cost-wise without this electrification aid and the mining tax. So what we are doing currently, we're updating the investment case and also, of course, looking at is there is there other ways? Are there other items we can take in so that this investment case basically reaches our hurdle of 15% of ARR for foundational investments. So the investment case is still valid and it's being reviewed now with new assumptions as some of the cost assumptions have changed, and we also have some other ideas what more we could do. So it's under review currently. Marc-Simon Schaar: Yes. And if I then continue on the cash flow question, first of all, during fourth quarter, as mentioned earlier, our ability to reduce working capital was. if I think about the first quarter, yes, business activities do increase, as we mentioned before, our volumes. Then we have also seen the nickel price increase, but expectation at the moment is that working capital will only increase moderately into the first quarter of this year. We do think then for the entire year, I mean, that pretty much depends also on how business activities and prices further develop that we, as a management team, are very committed in focusing on improving our working capital and particularly inventory efficiency now during this year and have dedicated programs in place. Coming back to your particular question around CapEx guidance for this year is around EUR 200 million. And then if we think about financial expenses, pretty much in line with what we have seen this year around, I would say, EUR 50 million. In terms of taxes, I would add or take similar levels as we had a cash out in this year according to our plan. And then we do have restructuring provisions here as well, which we should take into account and which we have been reporting earlier as well. Dominic O'Kane: Could I just ask on the EUR 200 million CapEx, does that include anything for Tornio? Kati Horst: No. So if we look at like a bigger investment on the AP line or we would look at more transformative investment in Avesta, no, it does not include that. And maybe as a reminder, we capped our CapEx this year also because of the financial performance cash flow to EUR 160 million -- and I think we arrived at EUR 145 million. So that was also how we were managing the cash. So I think EUR 200 million is more going on the ongoing initiatives, what we have, normal maintenance that we have. And then potentially other investments, they would probably not start in '26 yet impacting our CapEx, but later. Dominic O'Kane: But the announcement on the CapEx in the U.S. with new proprietary technology, the USD 45 million, that's being part of the EUR 200 million as well. Kati Horst: Correct. Operator: The next question comes from Maxime Kogge from ODDO BHF. Maxime Kogge: So my first question is on dividend because there have been some expectations on our side, on the sell side, that you would at least roll over the existing payout and you have cut it by half. So it's fair considering the other constraints you mentioned. But going forward, how should we think about your dividend payment ability? Is it fair to assume that as long as you have not been back to this ratio of net debt to EBITDA of 1, which is your long-term target, dividends are going to stay quite limited? Kati Horst: Well, I think our kind of target in the dividend area is, of course, to continue to deliver stable and growing dividend over time. We just have to maybe remember in what kind of cycle we have been and what kind of financial performance we have had -- so that consideration is there. And then the other consideration is, of course, the financial health. So our balance sheet and then also keeping this room for potential investments in transformative growth. So those are the aspects that we are considering in the dividend policy, and that's why the proposal now of the EUR 0.13 dividend per share. Maxime Kogge: All right. Second question is on the nickel price. So price of nickel has surged by 20% over the last 2 months. So when we ask a question to your main competitor, they were relatively dismissive of any impact since they procure most of the nickel needs from scrap. That's the same for you. But still, would you believe that there could be a positive price volume impact associated with higher nickel price in the sense that distributors in such phases of higher nickel prices tend to rush to buy material. And yes, would it apply in particular in the U.S. where the market is more geared towards distributors, plus you have this pass-through mechanism of the base plus alloy surcharge, which is working quite well unlike in Europe? Marc-Simon Schaar: Yes. To answer your question directly, with the higher nickel price, also we expect an improvement here on the price level and also within our margins. Maxime Kogge: Okay. But you don't see any volume impact associated with that, do you? Marc-Simon Schaar: We do need to see here really a recovery in the underlying demand, certainly with CBAM, as mentioned earlier, and then let's see safeguards coming in that there is a shift in -- from imports to domestic producers, but we definitely need to see how the economic activities are recovering. Maxime Kogge: Okay. Fair enough. And just last one is on your long-term EBITDA target. That's also in light of comments made by your main competitor around its own long-term target of EBITDA that it dropped from EUR 800 million to EUR 700 million to EUR 800 million, and that was despite a big acquisition made in between. As far as you're concerned, you have a very ambitious and very high long-term EBITDA target at EUR 750 million to EUR 850 million. That's an improvement over the existing EUR 500 million, EUR 600 million. I understand this target is based on the quite high base prices, plus you have the benefit of this new investment. So how comfortable are you with this target given the fact that prices remain quite depressed at this stage, plus consensus has expectations at a much lower level, including for '26 and '27? Marc-Simon Schaar: I think you mentioned yourself here the pricing environment right now, and this is -- and also the long-term target here as well. And this is how we should look at this as well. We also said this is then the target looking through the cycle here as well and having the improvements as we communicated during the Capital Markets Day through investments in the foundational business here, which is then building up here the improvements. And yes, we're still comfortable around this level. Operator: The next question comes from Bastian Synagowitz from Deutsche Bank. Bastian Synagowitz: I have 2 quick ones left as well, please. Maybe firstly, on Americas where you've been doing quite well. You mentioned the U.S. MCA agreement. I guess we don't know what the outcome will be, but could you briefly remind us on the sensitivity to your numbers in the current price and margin environment should the U.S. tariffs be dropped completely? That is my first question. Kati Horst: Yes. Maybe I'll start with that. I'm not so much talking about the whole USMCA for instance, with Canada, but more referring to the negotiations and the sentiment we have from the negotiations between Mexico and the U.S. So I think they've been constructive, quite positive. Of course, we don't know the outcome. But what was done in Mexico now as well, Mexico imposed 50% tariff for Asian imports as of beginning of the year. That is, I think, something what you have been also asking for. So that has happened. That gave us some opportunities for price increases. And it could also support then demand to a domestic supplier in Mexico, which we are the only one. But of course, there is a tariff now between U.S. -- from Mexico to U.S. of 50% for steel. And it doesn't take into account whether the steel has been melted in America or not. So that is, of course, an upside for us if we can also use the Mexican capacity for the needs of the U.S. market because the Mexican market currently is very weak. It can recover with some of the measures somewhat, but we would very much in this situation, want to use the capacity more for the U.S. demand as well. So therefore, if this tariff would become lower or disappear, of course, that would support our business clearly. Bastian Synagowitz: And could you maybe just give us like a quick understanding on what the sensitivity is if that 50% tariff would be dropped, just looking at the cross shipments from the U.S. into Mexico and vice versa? Kati Horst: Well, I think in the past, the shipments have not been so very high because the Mexican market was also doing well. So probably 10,000, 15,000 tonnes. But we have, of course, more capacity in Mexico. So should the Mexican market stay weak, which I, of course, don't hope and the tariff would not be there, it would give us opportunities to bring even bigger volumes to U.S. Bastian Synagowitz: Okay. Understood. Okay. Great. And could you just clarify the Mexican tariff, does that also cover at least part of your client sectors as well on the downstream side? Kati Horst: So yes, so there's a derivative list, and there are certain products then on the derivative list where there is no tariff that are made out of steel. I think refrigerators happens to be one of them. But it's a bit of -- it depends what is on the derivative list and what's not on the derivative list. But everything that's in the form of raw material as steel is tariff by 50%. Bastian Synagowitz: Okay. Got you. Thanks, Kati. Then lastly, are there any big items for us to keep in mind for 2026 on the maintenance side? I guess there's probably the usual, but I don't know, is there anything extraordinary here? And then also anything similar, any one-offs like the ERP, which you had last year, which we should just factor in? Kati Horst: No. No, nothing major. Operator: The next question comes from Igor Tubic from DNB Carnegie. Igor Tubic: I just have 2 follow-ups. You mentioned that the mix in Americas improved. I just wonder what we should expect in terms of Q1 for 2026, both for Americas and for Europe? And then also if you can comment anything about in what segments you saw an improvement, so to say, in the mix in Americas? Kati Horst: Well, I guess, we have to start by saying we don't guide on the PA level for the Q1, but you saw our guidance of improving volumes in stainless steel between 20% to 30%, so that goes both -- it's combined Europe and Americas. I think that is an answer on there. And then if we look at the -- I could maybe generally answer that if you look at the end user segments that are booming in Americas, data centers is one, electrification goes forward. But I think this is also very much about our own work. So we are digging deeper to different customer segments where we see opportunities for our product portfolio. So we are becoming more of a market maker in the segments where we want to grow. So this work, I'm also expecting to bring some results in the coming quarters. Marc-Simon Schaar: And maybe to come back a bit more on the first quarter, I think the best way really to look at our first quarter and the guidance is, as we said and stated in the guidance, it's the volume recovery. There are, of course, a couple of offsetting effects left and right that the major driver is really the volume recovery in the first quarter. Operator: The next question comes from Joni Sandvall from Nordea. Joni Sandvall: One quick left from me. Could you give -- I think this is a bit of -- you answered partly, but could you give any indication how your lead times have developed now under the CBAM game effective 1st of January. So have you seen increasing order books for yourself? And any indication of how lead times have developed after this? Marc-Simon Schaar: Yes. Lead times have developed. Lead times have improved. And right now, we're middle of February, and we have already started booking into the second quarter, April into May. Joni Sandvall: Okay. And maybe a quick one also just to confirm, was the ERP rollout completed already during the Q4? Marc-Simon Schaar: Well, it is a huge project in itself. We talked about the difficulty and the implications from the supply chain solution as part of the ERP program. And the aftercare will still continue into the first quarter of this year. But yes, we expect then by the end of the first quarter to have then a stable situation going forward. So being temporary. Operator: There are no more questions at this time. So I hand the conference back to the speakers. Kati Horst: Thank you very much for your active participation today. And I think this, in principle, concludes our session today. Like I said a while ago, I think we are really confident about our future going forward. So we will look at growing this company. We will gain the resilience, and we will work hard to improve our financial performance. So thank you very much for being with us today and talk to you then again in our -- when we talk about the Q1 results in the spring. Thank you very much. Marc-Simon Schaar: Thank you.
Operator: Good morning, and thank you for standing by. Welcome to the Sphere Entertainment Co. Fourth Quarter and Year-end 2025 Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to Ari Danes, Investor Relations. Please go ahead. Ari Danes: Thank you. Good morning, and welcome to Sphere Entertainment's Fiscal 2025 Fourth Quarter and Year-End Earnings Conference Call. Today's call will begin with our Executive Chairman and CEO, Jim Dolan, will provide an update on the business; Robert Langer, our Executive Vice President, Chief Financial Officer and Treasurer, will then review our financial results for the period. After our prepared remarks, we will open up the call for questions. If you do not have a copy of today's earnings release, it is available in the Investors section of our corporate website. Please take note of the following. Today's discussion may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Please refer to the company's filings with the SEC for a discussion of risks and uncertainties. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call. On Pages 4 and 5 of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income, or AOI, a non-GAAP financial measure. And with that, I'll now turn the call over to Jim. James Dolan: Thank you, Ari, and good morning, everyone. This morning, we reported our fourth quarter financial results, which serve as continued validation of the business model behind Sphere. Our success in Las Vegas, including most recently, the Wizard of Oz is an important blueprint for our long-term vision, a global network of spear venues powered by our proprietary technology and immersive content. And we're now one step closer to realizing that vision. Last month, we announced that we will bring the second Sphere in the U.S. to National Harbor in Maryland, which is minutes from DCs. National Harbor is one of the top tourist destinations in the Mid-Atlantic with more than 15 million annual visitors. This 6,000-seat Sphere venue will be built with support from the Peterson Companies the land owner and developer of National Harbor. As well as the state of Maryland and Prince George's County. The project will utilize a combination of public and private funding. This includes approximately $200 million in state, local and private incentives. We are moving quickly to finalize agreements and secure necessary approvals and believe the venue could be open in 4 years or less. In Abu Dhabi, we have reached the final stages of preconstruction and expect to share additional updates in the near future, including details on the site location. We are also in active discussions with a significant number of domestic and international markets regarding large and smaller scale Spheres. We will update you on our progress over the course of the year. Moving beyond expansion. We continue to invest in immersive technology and experiential content to fortify Sphere's leadership position. As you've seen, the Wizard of Oz at Sphere has been both a critical and commercial success. With over 2.2 million tickets now sold and approximately $290 million in ticket sales. Later this year, we plan to release the Wizard of Oz 2.0, an enhanced version of the production with new scenes and new 4D effect. We are also on track to complete our next theater experience from The Edge later this year. In addition, we continue to have positive discussions with IP holders regarding new sphere experienced projects. So in summary, we are pleased with the momentum we're seeing across our business. Especially our progress towards a global network of spheres, which we believe positions the company for substantial long-term growth. With that, I will turn the call over to Robert, who will take you through our financial results. Robert Langer: Thank you, Jim, and good morning, everyone. For the December quarter, we generated total company revenues of $394.3 million and adjusted operating income of $128 million. Our Sphere segment generated revenues of $274.2 million, an increase of over 60% compared to the prior year period. This growth was mainly driven by higher revenues from the Sphere experience, which reflects higher per show revenues due to the impact of the Wizard of Oz as well as an increase in the number of performances. In addition to higher revenues from the Sphere experience, we also saw revenue growth in concert residencies, and Exosphere advertising and sponsorship. Overall revenue growth was only partially offset by the absence of a brand event held in the prior year quarter as well as other revenue decreases. Fourth quarter adjusted operating income for our Sphere segment was $89.4 million as compared to an adjusted operating loss of approximately $800,000 in the prior year quarter. This reflected the increase in revenues as well as lower SG&A expenses, partially offset by higher direct operating expenses. The increase in direct operating expenses includes higher expenses associated with the Sphere experience. This was mainly a result of higher per show expenses due to the impact of the Wizard of Oz as well as a higher number of Sphere experience performances. SG&A expenses for the December quarter were $104.1 million, a decrease of $14.9 million year-over-year. This includes the impact of $4.6 million, primarily related to executive management transition costs in the current year quarter as compared to $12.4 million of executive management transition costs and nonrecurring costs related to MSG Networks in the prior year period. It also includes the impact of the company's focus on driving cost efficiencies this year. Turning to MSG Networks. The segment generated $120.1 million in revenues and $38.6 million in the AOI in the December quarter. This compares to $139.3 million in revenues and $33.7 million in AOI in the prior year period. These results reflect an approximately 14.5% decrease in subscribers and the impact of lower affiliate rates as well as the impact of recent amendments to MSG Networks media rights agreements with MSG Sports and certain other professional teams. Turning to our balance sheet. As of December 31, our Sphere business had net debt of approximately $56 million. This reflected approximately $477 million of unrestricted cash and cash equivalents, $259 million in convertible debt and the $275 million term loan related to Sphere in Las Vegas. In January, the company refinanced the credit facility related to Sphere in Las Vegas. This refinancing extended the facility's maturity for a new 5-year term ending in January 2031 with an improvement in the borrowing rate and no change in the term loan balance. We also added a $275 million revolver, which is currently undrawn and will be available for general corporate purposes. At MSG Networks as of December 31, net debt was approximately $128 million. This included $159 million outstanding on the MSG Networks term loan, which, as a reminder, is that recoursed only to MSG Networks. And with that, we will now open the call for questions. Operator: [Operator Instructions]. Your first question comes from the line of Brandon Ross from LightShed. Brandon Ross: Jim, you mentioned in your prepared, you're in several discussions on new big and small Spheres. How many Sphere expansion projects, full-size versus smaller scale, do you expect to be able to begin in the next few years? And knowing you're capital light on most, how many projects can you guys handle managing at once? James Dolan: Well, it's a good question. I mean my initial answer is basically as many as we can get, assuming that they're all profitable and makes sense. I guess the limiting factor with it, Brandon, is that how much can the management team and the operation handle and we've decided the team to handle quite a few. So the -- over the next few years, I don't think you should be surprised by the 5 or 6 projects going on at once. Hopefully in the best markets. But if we can figure out how to do more and there's more opportunity, we're going to try and take advantage of it. Keeping in mind that we will separately finance them, right? So the resources will, I believe, will be there. Brandon Ross: Got it. And in the press reports about the capital Sphere, they said it was going to cost about $1 billion. have the elevated construction costs had any impact on your conversations at all with potential partners? James Dolan: Not on the conversations that the -- I mean, the model still very much holds up to support that level of investment. I'm hoping we bring it in for less. We're working on that right now. I mean, we're constantly working on -- there's new -- besides, there's an increase of cost, but there's also new construction methods, which help lower costs. And we're a company that likes to go out and try to do stuff. And so we're looking at some of those new construction methods and see what we can do to lower some of the costs along with it. But it's still -- the model still holds up. Operator: Your next question comes from the line of David Karnovsky from JPMorgan. David Karnovsky: Jim, just on National Harbor. Can you speak a bit more to how you settled on the location as optimal for the small-scale Sphere? Just any background on the process would be helpful. Thanks. James Dolan: Good. The interesting question that -- because I'd love to tell you that we plan this right up to every little nuance. But the fact is that Virginia and Maryland, we're in a competition that spin up the process of looking at the project, and we got a very good offer kind of really great location, and we took it. So the -- it's -- but that one even surprised us because of the dynamics involved with it. David Karnovsky: Okay. And then you noted for National Harbor, $200 million of funding against the $1 billion cost that you and Brandon were just discussing. And can you just help us bridge that financing gap? And then we haven't seen any mention of an operating partner. So is this a venue you potentially plan to run and consolidate in the financials? James Dolan: Hang on, David, can you restate that? Robert Langer: Yes. He just mentioned that the $200 million of government funding will be part of it, and we haven't -- we haven't mentioned we have an operating partner, how are we planning funding the rest? James Dolan: I think there's a lot of different ways that we can do it. I mean the -- I assure you we'll do it in a way that will be the least expensive. And -- but there is -- I mean, we could do this the -- practically just on stand-alone financing just on the projects itself because our lending institutions are bullish on our projects and they are willing to lend into them. But having partners also is -- there are advantages to that, particularly if they're in-market partners that they have. I mean we're right next to the MGM, right? I'm not saying they're going to be our partner, but they - but when we build the Sphere, as we've seen in Las Vegas, right, it affects the entire community, right? And the entire business community, and they benefit from it. And so working hand-in-hand with the rest of the community, probably a good act. So it's a long-winded answer to saying there's a lot of different sources. Operator: Your next question comes from the line of Stephen Laszczyk from Goldman Sachs. Stephen Laszczyk: Jim, curious if you could talk a little bit more about how ticket sales for WOZ are trending into what's usually a seasonally weaker period in Vegas over the winter? And then if there's anything you're seeing on the demand front from the show that's encouraging your thinking in one direction or the other on things like show count and pricing as we head into the spring and the summer? James Dolan: Well, with us today is Jen Koester who wasn't expected to answer a question, but this is really her area. So go for it, Jen. Jennifer Koester: Hey, Stephen. We've seen Las Vegas headwinds our way, but we've been resilient and experienced strong growth despite headwinds this past year, and we feel confident that we'll continue to do the same in the next year. In terms of ticket calendar and show calendar, we have been aggressively putting forward days where we have multiple shows, these side-by-side, and we continue to enhance that and grow revenue per day. So that's really been a lot of the strategy is demand forecasting based on visitor rates. We believe there will be a strong convention season next year, and we're putting together a show schedule that reflects that. James Dolan: And we talked about in our remarks, Wizards of Oz 2.0. I think -- I'm not even sure to be honest whether we need Wizard of Oz 2.0 with the demand that we're seeing. But we're going to do it anyway. And I think that will probably make that product get even more legs. And then we have product behind it that we think it's going to be maybe as good as Wizard of Oz. Stephen Laszczyk: Great. And then, Robert, maybe on the cost side, SG&A came in a bit heavier. In the fourth quarter, even adjusting for some of the management transition expenses. Just curious if there's anything more you can say on SG&A in the quarter and then perhaps the outlook for the expense line item in '26? Robert Langer: Of course, Stephen. Well, let me start by pointing out that we are extremely focused on managing our cost infrastructure as efficiently as possible. We have identified a number of fast saving opportunities in 2025 and brought the SG&A number meaningfully down versus the prior year. In regard to the fourth quarter SG&A numbers, you pointed out, they did include certain executive transition costs as well as expenses related to share-based awards, which are mark-to-market on our stock price. Adjusting for these items, our SG&A expenses in the quarter are actually quite similar to levels we saw for the rest of 2025. Looking to '26 and beyond, we will absolutely continue to look for further cost saving opportunities wherever it makes sense. But we will balance that with ensuring that we have an infrastructure in place that supports the global vision in growth for Sphere, which Jim laid out. So as you would expect, there will be quarter-over-quarter fluctuations for timing reasons, to market adjustments or other nonrecurring expenses like the one we saw in the most recent quarter. But overall, we will continue to focus much on -- very much on managing our SG&A line efficiently, and we believe that our business is poised for significant growth in the year ahead. Operator: Your next question comes from the line of Joe Stauff from Susquehanna. Joseph Stauff: Jim, you had mentioned that you'll complete the Edge later this year. Wondering if you or Jennifer can kind of talk about how we should think about when you might launch that? What's involved with that? James Dolan: Well, I suspect that, that will debut from The Edge sometime in the fourth quarter, that they could slip into the first quarter. I mean a lot of it depends on Wizard of Oz, right? That the -- I'm selling out the capacity, right. I'm not sure I want to disturb that model. And that's really what drives those decisions, is the desire to maximize revenue inside of the facility. But the -- I think that from the edge and other products that we're working on are all designed to do just that, maximize the use of the capacity and bring the highest return? Operator: Your next question comes from the line of Peter Supino from Wolfe Research. Logan Angress: This is Logan Angress on for Peter. Jim, in the context of a broader sphere franchise rollout, how do you think about the potential cannibalization or competition between spheres, for example, what a potential franchisee on the East Coast be concerned at all that they'd have to compete with the newly announced National Harbor Sphere for demand? James Dolan: I really don't see that. The -- we're trying to -- we're going as fast as we can. We think, right? And building more spears because we see great opportunity out in the worldwide and domestic marketplace. And, I mean Las Vegas, I mean, our total -- Jen, you would know. I mean, our total attendance this year is around 4 million, somewhere in that, right? I mean that the -- these markets rates can certainly handle that. And so I'm really not concerned. I think that will we have a lot of opportunity. I don't see one, especially when you take a look at Las Vegas because, I mean, Las Vegas, we have our customers come to see us right? But they also come for conventions, they for lots of other reasons. Then the same thing will be true with National Harbor. That's why we say I already have 15 million people who come annually. That the -- and so I don't really see one market disturbing the other. Operator: Your next question comes from the line of Ryan Sigdahl from Craig-Hallum Capital Group. Ryan Sigdahl: You mentioned positive discussions with other IP holders in your prepared remarks. I guess if you could elaborate on that, I guess, in the context of the success Wizard of Oz and really the longevity of demand and the strength there as it's continued now for a handful more months than the last time we spoke. So I guess the question is, what does that pipeline look like? Any additional details you can give from interested IP holders and how those conversations are going? James Dolan: We are in discussions with other IP holders. And there are some great products out there that we would like to develop while we develop some of our own IP. And so that's moving along. You do have to take into account that the -- right now, we have One Sphere, right, which is there is not -- I won't say completely sold out, but it's doing pretty well. So how much room do I have the -- so we watch the pacing on it, et cetera. But I will say one thing that every IP holder that we talk to is incredibly enthusiastic about taking their IP and putting it into this new medium. They all would like to do it. And there's just a question of what's the what's the payback for them, what's the value of it debt? And how much revenue can we build off of their IP. Operator: Your next question comes from the line of Peter Henderson from Bank of America. Peter Henderson: Can you provide an update on the residency pipeline through 2027? Just what you view as the sort of optimal number of residencies annually? James Dolan: Yes, we're pretty much booked the I mean I think there might be some slots available still in '27. I don't think there's hardly any left in '26. It might be a week at less than '26 somewhere. -- we're basically sticking to long weekends, right, taking advantage of how the Las Vegas market kind of runs and -- there's no shortage of artists who want to play. And we're focused on these days on we're bringing the artist rigs in the customers, right? And then we're running the wisdom of ours right now in tandem with those events. So we're looking for customers who want to come to see us twice on the weekends. And so far, that's going pretty well. Ari Danes: We have time for one last caller. Operator: Our final question comes from the line of David Joyce from Seaport Research Partners. David Joyce: You made a recent announcement that included the Delta having a new branded space within the sphere. Could you please update us on the rest of the sponsorship strategy, just the updates there and on the excess of your progress? James Dolan: That's a Jen question. Jennifer Koester: So we're off to a strong start in '26. If you looked at our performance at CES this year, our year-over-year growth was strong read advertisers like Google and Delta and Lenovo running every day during CES, we also held the second CES keynote at steer in a row. And then the other thing that we were particularly excited about, and I think it gives us some good projections on where we can go is that we debuted the first interactive game experience on the Exosphere in partnership with LEGO and Lucas' film, Star Wars. And we're going to continue to look for opportunities like that selectively that give us the opportunity to drive additional revenue as well as showcase our technology and innovation capabilities. We're making progress, as you mentioned, with our roster of official partners. You mentioned Delta. We also have recently announced Anheuser-Busch and we're in active conversations with a lot of other food chip brands in this regard. So we expect to have more announcements like this throughout the year. But overall, I think we're well positioned for growth in this area for the coming year. Operator: And that concludes our question-and-answer session. I will now turn the call back over to Ari Danes for closing remarks. Ari Danes: Thank you. We look forward to speaking with you on our next earnings call today. Have a good 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 West Fraser Q4 2025 Results Conference Call. [Operator Instructions]. This call is being recorded on February 12, 2026. During this conference call, West Fraser's representatives will be making certain statements about West Fraser's future financial and operational performance, business outlook and capital plans. These statements may constitute forward-looking information or forward-looking statements within the meaning of Canadian and United States securities laws. Such statements involve certain risks, uncertainties and assumptions, which may cause West Fraser's actual or future results and performance to be materially different from those expressed or implied in these statements. Additional information about these risk factors and assumptions is included both in the accompanying webcast presentation and in our 2025 annual MD&A and annual information form as updated in our quarterly MD&A which can be accessed on West Fraser's website or SEDAR+ for Canadian investors and EDGAR for United States investors. I would now like to turn the conference over to Mr. Sean McLaren, President and CEO. Thank you. Please go ahead. Sean McLaren: Thank you, Mina. Good morning, everyone, and thank you for joining our fourth quarter 2025 earnings call. I am Sean McLaren, President and CEO of West Fraser. And joining me on the call today are Chris Virostek, Executive Vice President and CFO, and Matt Tobin, Senior Vice President of Sales and Marketing; and other members of our leadership team. On the earnings call this morning, I will begin with a brief overview of West Fraser's Q4 and fiscal 2025 financial results and then pass the call to Chris for additional comments before I share some thoughts on our outlook and offer concluding remarks. West Fraser generated negative $79 million of adjusted EBITDA in the fourth quarter of 2025, an improvement from the negative $144 million reported in the prior quarter, which had included a $67 million out-of-period duty expense relating to the calendar 2023 duty year. Results remained soft across our business in Q4 as broader housing and repair and remodeling markets continued to face affordability pressures. For full year 2025, we generated $56 million of adjusted EBITDA -- down from the $673 million reported in 2024. The lumber segment had a challenging 2025 with the protracted down cycle in lumber among the toughest we've experienced in many years. During the year, we made meaningful progress high-grading our mill portfolio, which included a number of closures or curtailments of higher cost assets, but more importantly, the completion of the ramp-up of our Allendale OSB mill in South Carolina and the completion and commissioning of our new Henderson lumber mill in Texas. In terms of our balance sheet, we had more than $1.2 billion of available liquidity at year-end, which offers us the financial flexibility and strength to support a consistent capital allocation strategy through the cycle. With that high-level overview, I'll now turn the call to Chris for additional detail and comments. Christopher Virostek: Thank you, Sean. And a reminder that we report in U.S. dollars and all my references are to U.S. dollar amounts, unless otherwise indicated. The lumber segment posted adjusted EBITDA of negative $57 million in the fourth quarter compared to negative $123 million in the third quarter. The Q4 result is actually quite comparable with the prior quarter. If one excludes the $67 million export duty expense reported in the third quarter, which had related to the 2023 calendar year. While not included in our adjusted EBITDA, we reported $473 million of noncash restructuring and impairment charges in the lumber segment in the fourth quarter. This was related to a goodwill impairment of our U.S. lumber business as well as the closure of 2 of our sawmills. The North America EWP segment reported negative $24 million of adjusted EBITDA in the fourth quarter compared to negative $15 million in the third quarter. Not included in this EBITDA, you will also have seen that we reported a $239 million noncash restructuring and impairment charge in this segment in the fourth quarter, which was related to the indefinite curtailment of our OSB mill in High Level, Alberta. The Pulp & Paper segment reported negative $1 million of adjusted EBITDA in the fourth quarter compared to negative $6 million in the third quarter. Sequential improvement in this segment was largely owing to the major maintenance shutdown at the mill in the third quarter. In our Europe segment, adjusted EBITDA was $4 million in the fourth quarter versus $1 million in the third quarter as that business experienced a moderately improved business environment. In terms of our overall Q4 results, the sequential EBITDA improvement was supported by reduced SPF log costs, lower Southern Yellow Pine manufacturing costs and lower OSB labor costs as well as the absence of the $67 million out-of-period duty expense that we reported last quarter, partially offset by lower lumber and North American OSB prices. Our lumber business continued to benefit from the portfolio optimization actions we have taken in recent years. In some instances, we have been able to replace output from now closed mills with production from our more modern, larger scale and lower-cost mills, helping to enhance the overall cost structure of the operation. For instance, in the U.S. South, our Q4 2025 Southern Yellow Pine shipments were 6% lower quarter-over-quarter, while SYP unit manufacturing costs were also lower. Cash flow from operations was negative $172 million in the fourth quarter, with net debt at $131 million compared to a net cash position of $212 million reported last quarter. This change in our net debt is attributed to a normal seasonal build in working capital, $139 million of capital expenditures and $32 million of cash deployed towards share buybacks and dividends. With respect to our operational outlook for 2026, we have reiterated previously released guidance for the year, as shown on Slide 8 and as detailed further in our earnings release. Note that if and as the U.S. administration's tariffs and other policies evolve, we will evaluate the impact of the tariffs on our operations and determine revisions to our 2026 forecast as appropriate. With that financial overview, I will pass the call back to Sean. Sean McLaren: Thank you, Chris. Before I shift to concluding remarks, I'd like to make a few comments on our liquidity. As you can see on Slide 9, we had a healthy balance sheet and total liquidity exceeding $1.2 billion as we exited 2025. While our liquidity has trended lower over the last few years during this extended down cycle, our financial position remains strong, providing us with sufficient flexibility to navigate further economic challenges should they unfold. I think it's also important to reflect upon the history of attractive returns West Fraser has generated for our shareholders. As you can see in the figure at bottom of Slide 10, our shareholders have been rewarded for their patience as we have continued to execute on our plans to grow the business, optimize our portfolio through dispositions and/or closures of highly variable or uneconomic assets and return surplus capital through dividends and buybacks. With the total annualized return approaching 9% since the beginning of 2006, a which includes share price appreciation and reinvested dividends, we remain proud of what the West Fraser team has been able to accomplish. I'll now shift to our general outlook and add some concluding remarks. There's no avoiding the fact that we face difficult end markets in 2025, but we manage our business for the long run. We have not been resting waiting for a market recovery. We've been actively investing in and improving the business. And because of that, we remain optimistic about West Fraser's future. For our lumber assets in the U.S. South, we continue to refine and optimize our operations by removing costs and looking for additional margin opportunities. We are also ramping up our modernized Henderson mill, which we believe is positioned to be one of the best mills in our fleet once it achieves full operating rates. In Canada, the supply and demand for SPF products continues to show relative advantages compared to SYP as the U.S. South absorbs the new capacity introduced in the region in recent years. We continue to execute on our portfolio optimization strategy, which includes the reduction of higher cost capacity across our lumber platform. Since 2022, we have removed over 1.1 billion board feet of capacity through mill closures and permanent shift reductions, representing a 16% decrease in the company's lumber operating capacity. We've also reduced the number of shifts or hours of operations at various lumber mills across our platform as a means to manage cost. At the same time, we have invested nearly $1 billion of capital into our lumber business over the last 4 years, modernizing assets, adding flexibility to our production platform, removing costs, implementing margin expansion projects and making our mill safer for our employees. Specifically with the startup of Henderson, we are nearing completion of the major U.S. lumber investment we have made over the past number of years with our focus increasingly turned towards operationalizing the capital we have invested in the region. Taking such a proactive approach to portfolio management has further strengthened our cost position and competitiveness. In our North American EWP business, we have largely completed the ramp-up of our Allendale OSB mill, while more recently, we announced the planned indefinite curtailment of our high-level OSB mill this spring, which will remove 860 million square feet of currently uneconomic capacity in an effort to balance our production with customer demand. In conclusion, while we rise to meet the needs of our customers every day, we are also dealing with limited macro visibility. In response, we have been actively managing our portfolio to be low cost and diverse by both geography and product to mitigate uncertainties. We remain optimistic about our longer-term prospects and we'll continue to focus on operational excellence, creating a leading wood building products company that is resilient and sustainable through the cycle. And we will do all this while maintaining the type of financial strength that gives us the flexibility to be able to take advantage of growth opportunities as they arise. Thank you. And with that, we'll turn the call back to the operator for questions. Operator: [Operator Instructions]. And your first question comes from the line of Ben Isaacson from Scotiabank. Ben Isaacson: Just 2 questions for me. The first question, can you give a little bit of qualitative color as to how balanced or imbalanced margins were between SPF and SYP in Q4? And how does that look right now? Sean McLaren: Ben, we don't specifically call out our different segments, saying that as we saw through the quarter, you've seen -- you've watched the spreads start to close between the pricing between the products. So I think that's reflective of things kind of moving as customers adjust their needs and demand patterns depending on the end users of the products. Saying that, I think we're -- as we look to this year on both sides of the border, both products we're actively looking to make cost -- reducing costs, as you saw with both 100 Mile and Augusta in Q4. And we believe both those businesses are positioned to operate through the bottom of the cycle here. Robert Winslow: Great. And then I think you mentioned lower log costs for SPF, lower manufacturing for SYP and lower labor for OSB. Among those 3, how much of that is sustainable going forward versus a one-off for Q4? Sean McLaren: Ben, I'd say we've been very active in -- across all 3 segments on not only adjusting capacity on uneconomic assets, but modernizing assets through investment as well as reducing costs through flexible operating schedules. And I think the trends you are seeing in our cost structure are really the result of the work we've done over the last several years to lower cost. Operator: And your next question comes from the line of Ketan Mamtora from BMO Capital Markets. Ketan Mamtora: Maybe to start with, Sean, can you talk about sort of the M&A opportunities that you are seeing right now, given how depressed lumber prices have been for the last couple of years? Would that be an area of interest at this point, which certainly looks like bottom of the cycle? And related to that, any interest in growing outside of North America in lumber? Sean McLaren: Yes, I'll make a couple of comments here, and Chris, please add anything I miss. And I think we maybe talked about this a few times over the quarters. For us, it's really about how do we make the company stronger at the bottom of the cycle in the current conditions we're in. So asset quality is very important. And over the last number of years, we've actioned a few things, but not very many. And every one of those things has been designed to make us stronger at the bottom. We have a balance sheet to be able to react to anything of quality that presents itself saying that we typically, the stronger assets are going to wait for a better time to be available. So those would be the only comments that I would say on M&A. Chris, anything to add there? Christopher Virostek: No, that's a great point. Thanks, Sean. Sean McLaren: Yes. And then in terms of any outside of North America, of course, even though the macro environment in Europe continues to be slow, we are pleased with our team, pleased with our assets over in Europe, and they're performing well at the bottom of the market. We continue to work with them to look at how we make our European business stronger. And I think I would just leave it there. There would be nothing in front of us today that we would talk about. It would be the same conditions we would look at in North America, makes us stronger at the bottom of the cycle, and it's a good return and our team is ready to take it on. We've got the flexibility to be able to consider it. Ketan Mamtora: Understood. That's helpful. And then just one more from me. How should we think about ramp-up of the Henderson mill in the context of demand environment, which is quite muted? Sean McLaren: Yes. And I think -- so it's very early days in Henderson. The mill began commissioning at the end of Q4. So we're in the early stages of startup. And as a reminder, it replaces an existing mill. So that volume had been in the market, and we expect through this year to be ramping up to replace that volume. And I think we will continue to look at our customer needs as we move beyond that. And this just gives us another low-cost asset to be able to adjust our full platform with. Operator: And your next question comes from the line of Sean Steuart from TD Cowen. Sean Steuart: A question for Sean or for Matt. We've seen a good lift in North American lumber and OSB prices the past couple of months. Interested in your perspective on how much of that you would attribute to seasonal activity picking up in advance of the spring building season versus maybe the initial stages of the cyclical recovery as supply is rationalized in the market. Sean McLaren: Maybe, Matt, I'll hand that one over to you. Matt Tobin: Sure. I think what we've seen is just from what we hear from our customers is just a little bit more difficult to get what they're looking for at the time they're looking for it. And so just as I think supply shrinks and demand stays relatively steady over the last couple of quarters, just a little bit harder for our customer to get the product they're looking for when they're looking for it, and it's had an impact on pricing. And as far as spring, I would say, probably a little early to say today. I said, you usually see a bump in buying in the spring. But as you know, spring is usually defined by that warmer weather. And so just coming out of a couple of weeks of freeze in the U.S., I'd say, we're still a little early to see there. And once the weather turns, we'll have a better idea of what spring looks like. Sean Steuart: And Matt, any perspective on the relative strength we've seen for U.S. South pricing of late versus Canada? Matt Tobin: Like I said, I think from what we hear from our customers, it's a little harder for them to find the product they need when they need it. I think a lot of curtailment that Sean has talked about that we and the industry has taken that make it a little harder to find the product. And so just reflecting in the pricing based on that available supply. Sean Steuart: Okay. Chris, I wanted to follow up on the prior question around M&A. And I appreciate you guys aren't -- you don't want to tip your hand too much in terms of thing of what you'd be looking at or specific areas or products. But I know the priority here is sort of sustaining a balance sheet that's flexible. Can you give us any perspective on how thoughts are evolving around minimum liquidity thresholds or maximum leverage targets that the company might be comfortable with as acquisition opportunities are considered in the initial stages of an upturn? Christopher Virostek: Thanks, Sean. I think there's a lot of latent financial flexibility in the business on the leverage side. I think anything that we would consider on leverage would -- we'd have to see a very clear path to getting leverage metrics and interest burden to a level that's very manageable through the cycle. So I wouldn't say that we would rule out putting leverage on to do something. But there'd have to be a pretty clear path through that to a deleveraging quickly afterwards, through value creation, and that really translates to quality assets, right, is, as Sean said, things that make us better, generate cash flow, there's a synergy opportunity. And if we incur some leverage to do something, a path to quickly pay that down to metrics that are very durable through the cycle for us and maintain that flexibility for us. So it's not off the table, but have to be a very clear path. Sean Steuart: Okay. Understood. And then I guess just following on that, when you talk about anticipation of more opportunities on acquisitions coming to the table in the initial stages of an upturn. Is that you need to see that initial upturn to get comfortable that there will be a deleveraging path? Or is it in anticipation of more potential sellers looking to take advantage of a better valuation environment in the initial stages of an upturn. I'm just trying to sort of scale that up and how you think about the timing? Sean McLaren: Sean, maybe I'll jump in on that one. Again, you never know what might be available when. I think our comments around quality and every one of our assets gets pressure tested at the bottom of the market. So we have an opportunity to see what the level of quality is of an asset. And it's hard to say when those assets become available, whether it's in the early stages of recovery or whatever is happening. I think that is the criteria for us. So it's not -- I think we have a balance sheet that regardless of timing, we'll be able to consider and look at it. And it's just hard for us to predict when those opportunities may present themselves. I would say, for us, we are focused on operationalizing what we've invested inside West Fraser and ready if something presents itself that makes us stronger. Operator: And your next question comes from the line of Hamir Patel from CIBC Capital Markets. Hamir Patel: Sean, there's been a lot of discussion around potential housing measures, the Trump administration may implement to boost affordability. What do you think would be the most meaningful initiatives that they could bring about? And how soon could that translate into real-world incremental lumber demand? Sean McLaren: Well, first off, Hamir, we would like all of them. So it's hard to pick and choose which ones would be the best, but we are pleased to see the attention the administration is paying to housing affordability and the different ideas that are being talked about and the different measures that are being taken. Anything that allows homebuyers to be able to get into a single-family or multifamily home and improves demand, and that is good for our industry and obviously good for West Fraser. So hard to predict how quickly what will happen, when it will happen, how long it will take effect. I would say from our perspective, we're just pleased. It's being talked about quite a bit with the administration on both sides of the border, frankly. Hamir Patel: Fair enough. And Sean, it sounded like from your outlook, a bit more cautious on the demand outlook for the year ahead for OSB versus lumber. Can you speak to maybe what drives the difference there and maybe what you're hearing from your customers for growth on the R&R side? Sean McLaren: Yes. Maybe before I answer that, I might just ask Matt to maybe a few comments on the R&R side. Matt Tobin: Sure. I'd say kind of mixed from our customers. I mean, some projecting low growth, others flat. So I'd say we're seeing a mix of sentiment on the year, but I don't know, consensus on a shift from what we've seen recently in the R&R markets. Sean McLaren: And in terms of our outlook, Hamir, again, I think we would always take a cautious view because we really don't know, and we are going to manage our business to be competitive at the bottom of the market. And if it lasts, we're going to continue to look to take out -- remove cost and make ourselves more competitive. And I really think that's been our focus the last 3 years and will continue to be our focus. Hamir Patel: Fair enough. Thanks a lot. Operator: Thank you. That ends our question-and-answer session. I will now hand the call back to Sean McLaren for any closing remarks. Sean McLaren: Thank you, Mina. As always, Chris and I are available to respond to further questions as is Robert Winslow, our Director of Investor Relations and Corporate Development. Thank you for your participation today. Stay well, and we look forward to reporting on our progress next quarter. Operator: This concludes today's call. Thank you for participating. You may all disconnect.
Operator: Welcome to AB InBev's Full Year 2025 Earnings Conference Call and Webcast. Hosting the call today from AB InBev are Mr. Michel Doukeris, Chief Executive Officer; and Mr. Fernando Tennenbaum, Chief Financial Officer. [Operator Instructions] Today's webcast will be available for on-demand playback later today. [Operator Instructions] Some of the information provided during the conference call may contain statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. It is possible that AB InBev's actual results and financial condition may differ, possibly materially from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect AB InBev's future results, see risk factors in the company's latest annual report on Form 20-F filed with the Securities and Exchange Commission on March 12, 2025. AB InBev assumes no obligation to update or revise any forward-looking information provided during the conference call and shall not be liable for any action taken in reliance upon such information. It is now my pleasure to turn the floor over to Mr. Michel Doukeris. Sir, you may begin. Michel Doukeris: Thank you, and welcome, everyone, to our full year 2025 earnings call. It is a great pleasure to be speaking with you all today. Today, Fernando and I will take you through our operating highlights and provide you with an update on the progress we have made in executing our strategic priorities. After that, we'll be happy to answer your questions. Let's start with the key highlights for the year. In 2025, we executed our strategy with discipline, delivering another year of dollar-based EPS growth, continued margin expansion and solid free cash flow generation, even as we navigated a dynamic consumer environment. As we reflect on the year, we are encouraged with the consistency of our financial performance, the durability of our strategy and the resilience of our business. While near-term demand across many CPG categories was impacted by a constrained consumer environment and unseasonal weather, we continue to invest in our strategic priorities. We remain disciplined in our revenue management choices and delivered EBITDA growth within our outlook. We continue to make progress this year. We strengthened our operating model and increased our portfolio brand power. We also formed new long-term partnerships to extend the reach of our brands and deepen the connection to our consumers. The momentum of our growth priorities continued. Our mega brands and premium portfolio grew ahead of our overall business. The growth of our Beyond Beer and non-alcohol beer portfolios accelerated, increasing revenue by 23% and 34%, respectively. And BEES Marketplace GMV increased by 61% to now reach $3.5 billion. Solid free cash flow generation enabled us to increase the size of our share buyback program, pay an interim dividend and propose a final dividend that combined represents a 15% increase versus last year and further strengthened our balance sheet. We exit 2025 with improving momentum across many of our key markets, and we entered 2026 well positioned to engage consumers and accelerate growth. Turning to our operating performance. While our overall volumes for the year were below potential, momentum across many of our key markets accelerated through the fourth quarter with improved volume performance in December. The combination of our disciplined revenue management and portfolio of mega brands that command a premium price drove a revenue per hectoliter increase of 4.4% this year, resulting in top line growth of 2%. Our productivity initiatives more than offset transactional FX headwinds to drive an EBITDA increase of 4.9% with margin expansion of 101 basis points. The strength of our diversified geographic footprint enables us to navigate the current environment and deliver consistent profitable growth. Revenue increased in 65% of our markets this year, and we delivered EBITDA growth in 4 of our 5 operating regions. Our footprint also positions us well to capture a disproportionate share of future industry growth with a diversified mix of currencies. Around 70% of our EBITDA is generated in emerging and developing markets that are projected to account for more than 80% of the beer category volume growth through 2029. Now I will take a few minutes to walk you through the operational highlights for the year from our key regions, starting with North America. In the U.S., our business continues to build momentum, and we gained share in both beer and spirits in 2025. Our beer performance was led by Michelob Ultra and Busch Light, which were the top 2 volume share gainers in the industry. In Beyond Beer, our portfolio growth accelerated. Revenue increased in the high 30s, led by Cutwater, which grew revenue in the triple digits. While industry volumes were below trend in 2025, we are encouraged by the start to 2026. Beer industry volumes and revenues grew in January. And later this year, we look forward to celebrating the 150 years anniversary of Budweiser and activating the category at the FIFA World Cup. This past weekend also provided us a good opportunity to engage with our consumers in one of the most watched live sporting events in the U.S., the Super Bowl. We continue to invest behind our brands to fuel momentum, and the creativity and effectiveness of our marketing was once again recognized by consumers. Budweiser, Michelob Ultra and Bud Light were named as 3 of the top 10 ads according to the USA Today Ad Meter with Budweiser taking the top spot for the second year in a row. Now let's turn to Middle Americas. In Mexico, our business momentum continued, delivering a mid-single-digit top and bottom-line increase with our above core beer portfolio leading our growth. In Colombia, record high volumes and margin expansion drove double-digit EBITDA growth with revenue increasing across all price segments of our portfolio. In Brazil, our momentum improved in the fourth quarter as we gained market share and our volumes returned to growth in December as weather normalized. Our premium and super premium beer brands delivered high teens volume growth in 2025 and gained share to now lead the premium segment. In Europe, market share gains and premiumization partially offset the softer industry with performance driven by our mega brands and non-alcohol beer. In South Africa, our momentum continued with market share gains in beer and Beyond Beer and disciplined revenue and cost management driving mid-single-digit top and bottom-line growth. Now moving to APAC. In China, revenue declined by low teens with our volumes underperforming a more stable industry as we adjusted inventory levels and focus areas to better reflect the channel and geographic shift. In Q4, our market share trend improved to be flat versus last year, driven by improvements in Budweiser brand power and our in-home channel performance. As we move forward, we continue to focus on rebuilding momentum and reigniting growth. Now I would like to take a few minutes to reflect on the beer category and progress we have made in executing our strategy. Let's start with the category. Beer plays an important role in bringing people together and creating moments of celebration, and we believe beer has a long runway for future volume growth across our footprint, supported by favorable demographics, economic growth and opportunities to increase category penetration. According to IWSR, the beer and Beyond Beer category is forecast to continue to gain share of alcohol beverages in 2025 and has now gained more than 200 basis points since 2021. And looking ahead, beer is expected to grow volumes globally and continue to gain share of alcohol beverage. In 2025, we invested $7.4 billion in sales and marketing and have averaged more than $7 billion per year since 2021. Our marketing effectiveness continues to strengthen, and our mega brands and mega platform approach were key contributors to the brand power of our portfolio, reaching a record high in 2025. Our mega brands led our growth and have increased revenue at a CAGR of 10% since 2021 and now represent 57% of our total revenues. We are the leader in the premium beer segment globally and see significant headroom for category to continue to premiumize. Premium beer is forecast to grow volumes across all geographic clusters and at more than double the rate of the category overall. And the best example of premium execution in our portfolio is Corona. In 2025, Corona celebrated 100 years since its original launch and 2026 is off to a fast start with the brand sharing the golden moments at the Milan Cortina Winter Olympics. Since 2018, the volumes of Corona have doubled. And in 2025, volume increased by double digits in 30 markets. The quality, brand power and consumer preference for Corona has earned the right for a premium price point. Corona sells on average at a 20% premium to the nearest competitor. And in 2025, was again ranked as the most valuable beer brand in the world. We continue to lead the development of the category and expand occasions to meet consumer trends. Our balanced choice portfolio includes options for consumers seeking low carb, low calories, sugar-free, gluten-free and non-alcohol alternatives. This portfolio is growing ahead of the overall beer category and momentum continued in 2025. Led by Corona Cero globally and Michelob ULTRA Zero in the U.S., our non-alcohol beer portfolio delivered a 34% revenue increase, and we estimate to gaining share in 70% of our top 14 non-alcohol beer markets. While non-alcohol beer is currently a relatively small portion of our global beer volume, it is a key opportunity to develop new consumption occasions and increase participation, and we are investing and innovating to lead the growth. In Beyond Beer, the growth of our portfolio accelerated, increasing revenue by 23% in 2025. Our performance was led by Cutwater in the U.S., which grew revenue in the triple digits and was the #1 share gaining brand in the total spirits industry in the fourth quarter. After the successful rollout in Africa, our flavored beer Flying Fish is now expanding to Europe and the Americas. Beyond Beer now accounts for 3% of the total revenue of our business, and the category is projected to grow volumes at double the rate of the overall beer category. The strength of our brands, route-to-market capabilities and innovation pipeline gives us a strong right to win in this segment. Discipline and incremental innovation is a key enabler of our growth. In 2025, our innovations across packaging, brands and liquids contributed 11% of our total revenue. In the U.S., we led the industry innovation with 3 of the top 5 innovations of the year, with Michelob ULTRA Zero and Busch Light Apple, the top 2. In China, we launched a 1-liter can for Budweiser and a Corona full-open lid can to bring the iconic lime ritual into the in-home channel. In South Korea, we launched the country's first 4 Zero beer with great taste, zero alcohol, zero sugar, zero calories and zero gluten. And in Beyond Beer, we are expanding our winning propositions globally and innovating with flavor varieties to provide consumers with choice. Let's now turn to our second strategic pillar, digitize and monetize our ecosystem. In 2025, BEES captured $53 billion in gross merchandising value, a 12% increase versus last year. The growth of BEES Marketplace accelerated and delivered $3.5 billion of GMV this year, a 61% increase versus last year. The Marketplace on BEES has grown rapidly since we initially started developing the platform in 2021. We recognized early that many of our customers could benefit from a one-stop shop for their business and similarly, that many consumer goods partners could benefit from leveraging the breadth and efficiency of the digital connection we have with our customers. The marketplace has grown to $3.5 billion in GMV business from a standing start 5 years ago, and we continue to explore the opportunities to scale and enhance profitability. We are still early in the marketplace journey, but we are encouraged by the progress we have made and see a clear opportunity to continue the growth momentum while solving a pain point for our customers and partners. In DTC, our digital platforms continue to enable a one-to-one connection with our consumers and developing new consumption occasions. In 2025, we continue to grow our consumer base, now serving 12.3 million consumers, an 11% increase versus 2024. With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, optimize our business. Fernando Tennenbaum: Thank you, Michel. Good morning, good afternoon, everyone. I will take a few minutes to discuss the progress we have made on 4 key areas of focus in optimizing our business, improving margins, compounding dollar EPS and free cash flow growth, making disciplined capital allocation choices and advancing our sustainability priorities. Our EBITDA margin improved by 101 basis points this year with margin expansion across 4 of our 5 operating regions. While each year has unique dynamics, we are confident that the combination of our leadership advantages, disciplined revenue management, continued premiumization and efficient operating model creates an opportunity for further margin expansion over time. Moving on to EPS. This year, we delivered underlying profit growth of $350 million. Underlying EPS was $3.73 per share, a 6% increase versus last year's in dollars and a 9.4% increase in constant currency. Dollar-based EPS has now grown at a CAGR of 6.7% since 2021. EBITDA growth accounted for a $0.46 per share increase this year. Lower net interest expense from active debt management and continued deleveraging contributed $0.09 per share but was partially offset by a higher cost of hedging and FX movements. We maintained this level through a combination of EBITDA growth and margin expansion, reducing our net interest expense through deleveraging, and maintaining our disciplined resource allocation. Looking ahead, we are encouraged about the opportunities to grow from this base. With this solid cash generation, we continue to strengthen our balance sheet. We repurchased $2.7 billion of debt. And despite a $2.8 billion FX headwind on our net debt from a stronger euro, we reached a leverage ratio of 2.87x. In 2025, we improved our debt maturity profile while maintaining our weighted average coupon. Our bond portfolio remains well distributed with no relevant medium-term refinancing needs. We have no bonds maturing in 2026, a weighted average maturity of 13 years and no financial covenants. As we continue to deleverage, we have increased flexibility in our capital allocation choices. We have raised our dividend every year since 2021, including the payment of an interim dividend in 2025. We have completed $3.2 billion of share buybacks and are currently executing a further $6 billion program. For 2025, the Board has proposed a final dividend of EUR 1 per share. Combined with the interim dividend announced in October, this represents a total dividend increase of 15% year-over-year with the ambition to continue a progressive dividend over time. Now turning to sustainability. Our 2025 goals were set in 2018 to drive impact and efficiency across our value chain. As our business is closely tied to the natural environment and the local communities, we focus on areas that are relevant to us, water, agriculture, climate and packaging. We achieved our water and agriculture goals and made strong progress against our climate and packaging objectives over the past 8 years. We are proud of the progress made, and we'll continue building on our strong foundation in these areas. As we look ahead to 2026, we expect EBITDA to grow between 4% and 8% on an organic basis, in line with our medium-term outlook. As we continue to invest to execute our strategy while optimizing our resource allocation, we expect net CapEx to be between $3.5 billion and $4 billion, and we expect our normalized effective tax rate to be between 26% and 28%. With that, I would like to hand it back to Michel for some final comments. Michel Doukeris: Thanks, Fernando. Before opening for Q&A, I would like to take a moment to recap on our performance for the year. It's fair to say the operating environment in 2025 was dynamic. Despite this backdrop, the disciplined execution of our strategy delivered consistent financial results. EBITDA grew within our outlook. Underlying EPS increased by 6% in U.S. dollars, and we delivered another year of solid free cash flow generation. We strengthened our balance sheet and increased our capital allocation flexibility, enabling a progressive increase in our dividend and announcement of a larger share buyback program. While our volume performance was below our potential in 2025, we are encouraged with the momentum we saw as we exited the fourth quarter. Our volume trend improved in December, and we gained or maintained share in 80% of our markets in the quarter. The combination of our mega brands with an unparalleled lineup of mega platforms is a powerful opportunity to lead and grow the category. This past weekend, we kicked off an exciting calendar of events with both the Super Bowl and the opening of the Winter Olympics. And then the summer will bring FIFA World Cup in North America. With 104 games across 3 countries, each game is an opportunity to bring beer and sports together to create unforgettable moments for fans around the world. We entered 2026 with improving momentum, and we are well positioned to activate the category and engage consumers. With that, I'll hand it back to the operator for the Q&A. Operator: [Operator Instructions] Our first questions come from the line of Edward Mundy with Jefferies. Edward Mundy: Two questions, please. So last year, you wrote that beer is a passion point for consumers and a vibrant category globally. And this year, you're starting off with beer plays an important role in bringing people together and creating moments of celebration. I'd love to get a bit more context into this nuance. And to what extent can you, as industry leader, help to bring across a more balanced message around the positive attributes of moderate consumption and getting people together is my first question. And my follow-up, again, for Michel. You're sounding a little bit more optimistic about the prospects for 2026. How much of this owes to sort of consistent application and progress with your strategy? And how much of this owes to some very early green shoots that you might be seeing from a cyclical standpoint? Michel Doukeris: Thanks for the question. I think that on the first point, they are actually both right. Beer is a passion point for consumers, but beer always brings people together around moments of celebration and enjoyment. And I often say that we listen to a lot of things that are happening and everything gets better when people get together and drink a beer. So the world really needs a beer. And this is important as we get people to exchange ideas, to socialize, to enjoy moments as we saw this weekend with Super Bowl or during the Olympic Winter Games in Milan Cortina, everybody was enjoying the sessions and having the opportunity to be together with friends and drink a beer. So I'm extremely optimistic about the role that our product plays and how we can always enable memorable moments for our consumers. That's why we invest in the platforms that we invest on our brands, and we keep pushing the category forward with innovation. In terms of the tone for 2026, let's say, I think that 2025 was definitely a very complicated year with many dynamics impacting different markets, industry and consumer goods in general, right? And beer was not insulated from what happened last year. As we saw most of the impact for beer came on the second half of the year. But as we phased the year towards the end of the year, we saw momentum reaccelerating, especially in December. And this momentum is carrying on now early in January in majority of the markets. We have a very good year in terms of opportunities to activate and land our innovations. And I think that if you look forward during the summer, the World Cup always presents a unique opportunity for us and the fact that's going to happen in the Americas, 104 games plus across the world is going to be great. And in connection with our strategy, of course, despite of everything that happened last year, you've seen the numbers, we continue to invest on our strategy, always focusing on the long term. Our growth accelerators and growth drivers like balanced choices, premiumization, non-alcohol beer, Beyond Beer and BEES marketplace are all working as per plan. And therefore, the more the mix contribution of these initiatives and the more solid the execution behind our 3 pillars of this strategy becomes, the more optimism, of course, we build and continue to deliver our midterm outlook. That's why it's unchanged for 2026. Thank you for the question. Operator: Our next questions come from the line of Rob Ottenstein with Evercore... Robert Ottenstein: Michel, you've done a terrific job turning around the U.S. market, and it really looks like it's in the best position to grow in many, many years. Can you first maybe kind of give us a sense of the key elements of that turnaround and what you've learned from that? And then perhaps even more importantly, can you talk about other major markets around the world where you can apply those learnings, those strategies, tactics to put the markets on a better trajectory and maybe specify particular actions along that front that perhaps you started in '25 or plan to start in '26, so we can get a sense of how you can take what you've learned and the momentum in the U.S. and move it around the world. Michel Doukeris: Thanks for the question. So to start with, I think that the team is doing a great job in the U.S. So they are working really hard on things that we agreed and those things are turning the results around. I think that we have been in a long journey in the U.S. since 2008. We got a business that had structural disadvantage because the portfolio was concentrated in segments that were not growing. You remember that since 2017, when I arrived in the U.S., there was this idea of rebalancing our portfolio for growth and the idea that, of course, this rebalance will not happen overnight. So we continue to be very focused on this strategy, investing in the right segmentation and in the right brands, innovating in the segments where we had low or no participation. And the biggest learning, I think, for everybody in the U.S., including myself, is the power of consistency. So the U.S. is a market that moves on the long horizon. It doesn't move overnight. Investments, that's why we continue to heavy up our investments in the U.S. and hard work. And I'm very glad to see the team working very hard to execute this strategy and start harvesting some of the efforts that they are making over the last 3, 5 years in this market. So we are very focused. We are very consistent. We are investing, and we are working hard in getting this strategy to benefit our business and our wholesalers and our customers in the U.S. When you think about other markets, you know that we have a very large footprint. So every day is a different day. It's never boring. But if I would choose only one market at this moment where we are very focused in turning around is China. So China went from a big accommodation of the industry first re-accommodating. This industry plays different by region, as you know. So the east part of China suffered much more than the inland. The on-trade channels declined much more than the off-trade. And because our business had a very large footprint in the East and in the on-trade, we had to reorganize ourselves. So we took last year a huge effort to keep the business healthy, especially in inventories, cash flow for our wholesalers, while we start to reorganize towards off-trade and more inland distribution as well. I think the recipe for the China business is the same. It starts with right focus and moving at the speed that we need, which was not the case before. Execute with consistency. We have a great portfolio in China. invest on the right channels, which we are doing now and making sure that the team is working as hard and with the sense of urgency that we need. And I'm glad to see that quarter 4 share was stable, Budweiser was in a better place. And now in 2026, we need to continue to work on this direction so we can reignite growth there. Thanks for the question. Operator: Our next questions come from the line of Sanjeet Aujla with UBS. Sanjeet Aujla: Two from me, please. I'd like to follow up on China there, please. And maybe just a little bit more of an update on your commercial execution. How far or how much progress do you think you've made in terms of penetrating the off-trade channel? Are you now gaining share within that channel? And just tied to that, what are you seeing in the on-trade channel? Any signs of some of the anti-extravaganza measures in your key provinces starting to ease at all? That's my first question on China. And secondly, just on Brazil, it's been a tough year in Brazil from a category standpoint. You spoke about December returning to growth. Has that also continued into January? And just your -- the competitive dynamics in the market. I think you alluded to some share gains in Q4. It would be great to dig deeper into that. Michel Doukeris: Thanks for the questions. So I think that in China, the 2 questions. First, the off-trade in China is changing very quickly. So the biggest acceleration of all is this O2O channel, but it's a very sophisticated O2O channel because it's very dynamic. It serves different channels from the O2O. And this was a channel that we used to lead in China. We were lagging behind now, and we are accelerating big time gaining share of this channel. And then there is the large off-premise, which we had to adjust distribution, pack assortment, price and promotion. And this is evolving, but there is a lot of room there for us to improve. The on-trade is not improving, but I think that the good news is that it's not getting worse either. So I saw relative stabilization on the industry last year in China, which is a good signal. The industry was let's call it, minus 1%. I think that this opens an opportunity for this year to have a more positive outlook for the industry. Chinese New Year moved, right? So it's a little bit later, should help as well, another 2, 3 weeks of Chinese New Year loading in sales to consumers within 2026. So let's see. It's early to say. I was there in January. I liked what I saw in terms of industry consumption and our execution, but it's too early to call. And in terms of Brazil, I think that we discussed during the calls last year, there were actually 3 things playing into the dynamics of Brazil. One was part of the consumers under stress in disposable income because of the high inflation. There was a very abnormal weather. So we call them seasonal weather but was really cold and rainy through a big portion of the middle of the year in Brazil. And then as we kept running our revenue management agenda, there were like relative price gaps in Brazil hanging there for over a year. I think that during the year and especially at the end of the year, the weather improved a big time, and that was the biggest change in the dynamics in the market. But also, I think that the gaps in terms of relative start to close. And then the power of our brands and the level of our execution start to speak louder, and we ended the year with very good momentum. As we look at the beginning of the year, weather remains normal. Normal is good for us. And our brands continue to have very strong demand. So the beginning of the year has been so far positive. Thank you for the questions. Operator: Our next questions come from the line of Trevor Stirling with Bernstein. Trevor Stirling: One question for me, but probably a longer one. Fernando, I appreciate you're not going to give guidance on margins. But if I look at 2025, despite the problems in volumes in many regions, you still delivered 100 bps of margin expansion. As I look forward to 2026, as Michel has commented, the outlook for volumes is looking better than it has for probably quite a few years in terms of both momentum as you exit 2025 and the FIFA World Cup coming. So that's looking positive. COGS outlook to me looks similar to 2026, there's moving parts in different countries in Midwest premium, but probably similar, but albeit probably a little bit more pressure in the first half than the second half because of currency hedges. A&P, you're probably going to spend more because of all the activation but knowing you guys will be disciplined spend. Price/mix looks solid. That looks like a pretty good outlook for margins for 2026 as well. Am I reading things the wrong way? Fernando Tennenbaum: Trevor, so very comprehensive analysis. I think what you are saying and what we saw happening in 2025 is not anyhow different than what we've been discussing for a while. When we look at our business, when we look structurally our business, we continue to see opportunities to drive further margin expansion. And as you said very well, kind of every quarter, every year has its unique dynamics. But on a year where you see your cost dynamics more of a normal year, like 2025 was more of a normal year and 2026 as well and hopefully, going forward, we have to see more normal years by driving efficiency, by making sure that we continue to invest behind our brands, which command a premium with all these components, we continue to see further opportunities to expand margin, okay? So -- and then when you talk about the cost of goods sold, you are right because you have the FX curves kind of given what happened last year, we always hedge 1 year later. You know that there is going to be a little bit more pressure on the first half than on the second half. In terms of investment, this year is somehow different because we have the World Cup. So we have some more concentration of investments of sales and marketing in the second and third quarter. But overall, kind of business is healthy. We are excited with the opportunities, and we'll continue to invest behind it. But maybe even giving more high-level view, the fundamental drivers of our margin at the end of the day are the iconic mega brands, the unique global footprint, the meaningful leadership positions that we have, this very efficient operating model that we keep looking for further opportunities and the financial discipline and ownership culture. So I still believe we have room to further improve on that. Operator: Our next questions come from the line of Andrea Pistacchi. Andrea Pistacchi: I also have 2, please. And sorry about my voice, which is a bit low. First one is on Beyond Beer in the U.S., please. Now you referenced your capabilities and route-to-market advantage that clearly gives you a right to win in Beyond Beer. So focusing on the U.S., where your prepared cocktails are growing very strongly, and you've also launched Phorm Energy this year, again, leveraging your competitive advantages. So the question is, if you could share some thoughts maybe on what you think your Beyond Beer business could look like in the U.S. 3, 5 years from now, what the long-term or medium-term innovation pipeline looks like? Are you planning to bring new brands to market? Are you open to more M&A like the BeatBox deal? And ultimately, how large do you think -- what's the ambition? How large could Beyond Beer be in, say, 5 years' time in the U.S.? The second question actually is also on the U.S., a bit more specific on margins going to Trevor's point, I guess. So COGS inflation in the U.S. increased a bit in Q4. I think it will increase a bit further this year. So in light of that, can you share something on your revenue management strategy in the U.S. this year? And what are the levers do you have to protect to help margins in the U.S. this year? Michel Doukeris: Andrea, no issues with the voice. I think we are both on the same page here. So mine is a little bit under the weather as well. Thank you for the questions. U.S. Beyond Beer. So this is something that we've been discussing as well since 2017 as we start to rebalance our portfolio and invest in segments that we under-index. And definitely, these ready-to-drink beverages that source from other alcohol beverages and other occasions, they are a great opportunity for our business in the U.S., and we've been investing and building capabilities and brands in this segment. So today, this represents a little bit less than 3% of our business in the U.S., but it is growing very fast. And if you look at the brands that we are building, these brands today are ranking top 10, top 20 in the spirits industry in general in the U.S. and Cutwater specifically is ranking at the top of the fastest-growing brands in the industry for last year and the fastest one for the quarter 4. So I think that the headroom for growth is huge because they source from outside of the beer arena, and they are very incremental to our business. They are brands that we build from scratch. Therefore, they have still a lot of headroom for growth. As you said, we continue to complement this portfolio with BeatBox, for example, which is a different proposition for different occasions for different consumer cohorts, and our portfolio is getting stronger, but we still have a lot of headroom to grow in this area. Connecting this with the second point, they are also margin incremental. So as this mix continues to grow, as the mix of Michelob ULTRA continues to grow, this is all incremental to our margins. So we are managing our margins, not only from the cost productivity standpoint, but also from mix and revenue, as you said. And in terms of revenue, you all know we price in line with inflation. I think that COGS and the cost of goods sold will continue to fluctuate. That's why we hedge so we can have a more long-term perspective. And we'll continue to invest to accelerate the momentum of our business in the U.S. So we are moving in the right direction, still a lot that we need to continue to do. But so far, we are happy with the evolution, and we'll continue to execute in the way that we are executing so far. Operator: Our next questions come from the line of Mitch Collett with Deutsche Bank. Mitch, could you please check if you're self-muted. Mitchell Collett: Sorry, can you hear me now? Operator: We can hear you. Mitchell Collett: Okay. Apologies. So Michel, Fernando, I was just going to ask about your thoughts on phasing in 2026. Fernando, I think you've just given some of the components, but transactional FX, I guess, is more helpful in the second half. You've obviously got some phasing around your marketing and sales spend and some pretty uneven comps. So can you maybe just sort of tie that together and give us some thoughts on how we should think about phasing across 2026? And then my follow-up is on CapEx, which is still well below depreciation. And I think your guidance suggests that it will remain well below in '26. I know you've talked before about how you're using technology and AI and other tools to keep CapEx at a low level. Can you just comment on how you're doing that and how sustainable that level of CapEx is going forward? Fernando Tennenbaum: Mitch, so on the first question on phasing. So phasing, I think on the last question, we went over very well on that, but it's -- given what happened to the FX last year and kind of knowing that we hedge 1 year out, you know that last year, you had kind of -- you are going to have a bigger challenge in the first half of the year, especially in markets like Brazil and Mexico, where currency was really depreciated at the beginning of last year. And then you have kind of easier comps towards the second half of the year on cost of goods sold and transaction. So that is something definitely fair to say. And then of course, if you look at our financial filings like the 20-F, you look some of our exposures, you can get a good guess on how these things will behave kind of in the year of 2026. On sales and marketing, this is going to be somehow of a different year because since you have this World Cup, with a massive event in a lot of our markets, more towards Q2 and Q3. So one would expect some sales and marketing concentration. What is important to bear in mind is that even though kind of there are different dynamics in the year, we are going to manage the business to make sure we invest in the long term and create long-term value, not necessarily trying to cater to one quarter or another. But one would expect more concentration of sales and marketing investments in the second and the third quarter this year specifically. In terms of CapEx, it's not different than what we've been talking about. By looking at further efficiency opportunities, by looking on the role on technology, by kind of looking at every single different investment in our business, we are confident that we can kind of deliver the CapEx within the outlook for this year and still do everything that we need to do. We still have CapEx -- growth CapEx within this kind of envelope, anything that we need to support the business. So very comfortable with this level of CapEx. Operator: Our next questions come from the line of Gen Cross with BNP Paribas. Gen Cross: Just one question from me actually. It's actually on BEES marketplace. It looks like you've added over $1 billion in marketplace GMV in 2022. And interestingly, it looks like it's pretty much all driven by the 3P part of the business. I think, Michel, you mentioned looking at opportunities to scale and further increase profitability in marketplace. So I just wonder if you could give us some thoughts on the potential to scale marketplace further, particularly as the higher margin 3P part of the business becomes a bigger part of the mix. Michel Doukeris: Thanks for the question. So marketplace is a growth opportunity for us, as I've been highlighting over the last couple of years. and it's incremental to the beer business that we have. So it's a new revenue stream. And it's adjacent because actually, we built the technology product to serve better our customers. At the same time, we could increase this addressable market for our business by solving 2 pain points. One pain point is our customers. They were underserved by most of the CPGs because they are small, fragmented in distant areas. And on the other side, the CPGs need growth. They need to reach more customers. And the fact that we built this digital channel enables them to seamlessly reach a much broader and much more important base of customers. We always knew that the model would work. So we start testing and building the 1P. The 1P was using the capabilities that we have, the route to market, the trucks, the sales reps. But as we built the product and enhanced the technology, we always knew that the biggest opportunity is actually what we call 3P, which is touchless, right? So the app is downloaded by the bar owner. The bar owner sees an assortment that's much bigger than only the beer assortment or the products that we sell. They place the orders. The orders are then redirected to the different suppliers, and the suppliers take care of the delivery of these orders. And we, of course, in the middle, we are the product delivery and the marketplace for them to sell, to promote, to follow through with their sales team because the suite of products that this has is beyond only the app; we can also digitize our partners. And this is the part that is scaling fast and the most and is also the one that's the most profitable. The simple way to understand the opportunity is that on average on these retailers, beer accounts for 34% to 40% of what they sell. Therefore, there is a 1.5 to 2x addressable revenues that today we do not participate without the marketplace, and we can participate. And as you know, I think you were with us in Mexico, we are, in some cases, even increasing this addressable market because we are taking, for example, technology products like minutes for people to buy and operate their phones or paying their bills. So there is many incremental opportunities that can be built on top of that credit. We have partners today selling credit to these points of sales. So all of that builds on top of what the marketplace will directly build. So we are in early stage. It is scaling up at the pace that we want to scale up and it's becoming the business that we thought that could become. So very happy with the development, but a long way to go still. Thank you for the question. Operator: Our next questions come from the line of Sarah Simon with Morgan Stanley. Sarah Simon: I have 2 questions. First one was on Zero again. Your growth is extraordinarily high compared to peers. What do you think you're doing that they're not? And then the second one would be on RTDs. Your RTD business is obviously largely concentrated in the U.S. How are you thinking about that in the context of other markets and exporting it? Michel Doukeris: Thanks for the questions. I think I got both of them. If I didn't, please help me here at the end. So the non-alcohol beer, I think that we've been talking about that. We invested a lot in the technology. So making sure that we have superior products. And this investment was done in 2020, 2021, 2022. Many breakthroughs there. The liquids are fantastic. It's really great taste beer without alcohol, products that range from what we shared with you today in South Korea that is zero calorie and zero gluten and zero sugar, great taste to the fantastic Michelob ULTRA Zero in the U.S. that has only 29 calories, but it tastes delicious. So we invested first on the product and technology. Then we start to roll out this on our winning brands. So we have great brands across the globe. And every time that we put together a non-alcohol version of these brands, of course, consumers try and they choose the strong brands that we have. And then I think that the last point, we decided to invest and walk the talk. So just think about Olympic Games, a mega platform that we have globally that we sponsor with both Corona Cero and Michelob ULTRA Zero. So we got to get great product. We lined up the brands and innovation, and then we are investing behind that. And when we do all of together with our execution, which is superior execution, we can gain share quickly as we are gaining. We can expand categories, reach more consumers and get the growth that we are getting with this. So consumers are there. We are there for them, and we are gaining share in an accelerated way in this segment. In terms of RTD, actually, if you look at the numbers, RTD for us is bigger outside the U.S. than it is in the U.S. It's 3% of our global business, it's around 2 -- between 2% and 3% in the U.S. The most meaningful expansion that we are doing in this Beyond Beer space started last year, and we are rolling out this year is with Flying Fish, which is this beer liquid, but it's very different than beer. It's flavored. It has very different demographics that we reach with the product. It competes a lot outside of the beer space because of the taste profile, brings a lot of new consumers to the category because they are flavor seekers. They like sweetener liquids. They don't like too much the bitter. And then this is now going to 10 different countries. And in every country, we have a nice story to tell so far because this is fulfilling what the plans were and what we want to achieve. And then we also have Cutwater, which we are building in a very diligent way in the U.S., but we already started to expand to Canada, and there are some other markets coming in the lineup. And we have today a global portfolio, let's say, for Beyond beer that caters each of the segments within the Beyond Beer. So NUTRL, Brutal Fruit and Beats are also getting expanded globally to different countries. So there's more to come there. The opportunity is very big outside the U.S. and outside Africa, and we are just scratching the surface so far. So more to do. Thanks for the question. Operator: This was the final question. If your question has not been answered, please feel free to contact the Investor Relations team. I will now turn the floor back over to Mr. Michel Doukeris for closing remarks. Michel Doukeris: Thank you. Thank you, everyone, for the time today, for the ongoing partnership and support to the business. I hope you are all well, get some time to drink a beer. Cheers. Operator: Thank you. This does conclude today's earnings conference call and webcast. Please disconnect your lines at this time and have a wonderful day.
Operator: Good afternoon, ladies and gentlemen, and welcome to the Deutsche Borse AG Analyst and Investor Conference Call regarding the preliminary Q4 and full year results of 2025. [Operator Instructions] Let me open the floor to Mr. Jan Strecker. Jan Strecker: Welcome, ladies and gentlemen, and thank you for joining us today to review our financial results for the fourth quarter and the full year of 2025. Present on today's call are Stephan Leithner, our Chief Executive Officer; and Jens Schulte, our Chief Financial Officer. Stephan and Jens will take you through the presentation. And following their remarks, we will open the line for your questions. The presentation materials have been distributed via e-mail and are also available for download on our Investor Relations website. This call is being recorded, and a replay will be made available shortly after the conclusion of today's session. With that, let me now hand over to you, Stephan. Stephan Leithner: Thank you, Jan, and welcome, everyone. In 2025, we achieved record-breaking top and bottom line financial results, successfully executing our strategy and delivering on our guidance. This demonstrates the strength and resilience of our diversified business model. Net revenues without treasury results increased by a strong 9%, reaching the targeted level of EUR 5.2 billion. Importantly, we showed significant and operating leverage with EBITDA without treasury result growing even faster at 14%. This performance was underpinned by our very disciplined cost management with operating cost growth held at just 3%, right in line with our expectations. These record results confirm that we are on the right path, successfully executing our strategy despite headwinds in some areas. Our strong performance and confidence in our strategy directly translate into significant shareholder returns. We are proposing a 5% dividend increase to EUR 4.20 per share and will shortly launch a EUR 500 million share buyback program on an accelerated basis. In total, this delivers a record distribution of EUR 1.3 billion to our shareholders in 2026, a total payout of around 63%. The positive momentum of the full year was also visible in the fourth quarter performance. Q4 net revenues grew 7%, driving a 10% increase in EBITDA without treasury results. This was primarily fueled by outstanding double-digit net revenue growth in 2 areas: first, in the SimCorp Software Solutions, which was up 18% on a constant currency basis, driven by client wins and the continued expansion of our SaaS offering. Our performance in the Americas in this context was a standout with 47% annual recurring revenue growth. This was driven by major client wins, including a Tier 1 U.S. asset manager, which will bring all asset classes onto our platform with a full front-to-back coverage. This is a powerful validation of our SimCorp One platform and our strategy in this key market. The acceleration of our SaaS transformation at SimCorp is also a core driver of this success. SaaS net revenue grew 50% in the fourth quarter, what a number. This is the secular growth we are focused on, and it confirms we will have over half our clients on our SaaS platform by 2026. This performance puts us clearly ahead of our key competitors as I can proudly report. Altogether, 2025 was a year of strong execution for SimCorp, and we have delivered excellent results. Our strategic path is clear, and we are delivering on it. The second area that performed exceptionally well in the fourth quarter was our Security Services business, which grew net revenue without treasury results by an outstanding 17%, again, what a number. we achieved new all-time highs across custody, settlement and collateral management, which drove this exceptional result. The record-breaking activity was fueled by a confluence of powerful market trends, including continued strong fixed income issuance, which increased the overall amount of debt outstanding, equally as a second driver, persistently high equity market valuations. And thirdly, a significant uptick in retail investor activity and flows into Europe. Finally, and furthermore, a heightened demand for safe and efficient collateralization propelled our collateral management outstandings up by 28% to a new record of EUR 932 billion, demonstrating the essential role our infrastructure plays in a dynamic market environment. The future growth of our Security Services division is driven by 3 core strategic drivers as we also outlined at our Capital Markets Day. First, we are focused on business scaling by expanding our client footprint with direct plug-and-play infrastructure access and innovation with our Collateral Management as a Service platform. Second, we are leading the European capital market transformation by leveraging our unique position as a top CSD and ICSD to consolidate the fragmented post-trade landscape and capture new capital flows into Europe. And finally, a third trend and the most transformative, we are pioneering asset class expansion by driving the digitization of finance, building on our D7 digital issuance platform to create the trusted market infrastructure for tokenized securities, digital cash and institutional crypto assets. Our strong performance, as you can see on the second chart, gives us the power to execute our strategy and make decisive moves to solidify our leadership position for the long term. The slide highlights 2 examples of this in action that we are tackling this year. First, an update on our acquisition of Allfunds, a truly transformational step for our Fund Services business in our Leading the Transformation strategy. The strategic, commercial and financial rationale for this move is exceptionally compelling. With Allfunds, we are not just acquiring a business, we are building a European investment fund champion. This isn't just about getting bigger, it's about getting better and creating a fully integrated end-to-end service offering for the entire fund industry across different markets. This combination is powerful because our businesses are highly complementary. We are bringing together Clearstream's strengths in Central Europe with Allfunds' leadership in Southern Europe. This positions us at the heart of pan-European ecosystems, significantly reducing market fragmentation and establishing a harmonized global reaching business that plays a pivotal role in facilitating the investment of retail savings into productive capital. This is a significant step forward for European capital markets and also addresses the goals of the savings and investment unions that are so often talked about. From a financial perspective, this transaction is designed to create substantial long-term value. We have identified significant synergy potential, expecting to deliver annual cost savings of EUR 60 million in operating costs and EUR 30 million in capital expenditure. Approximately half of the run rate synergies will be realized in the current strategy cycle by year-end 2028. The acquisition is valued at EUR 5.3 billion, structured at EUR 8.80 per share. Initially, we proposed a balanced mix of cash and shares. However, we have since refined this financing structure to increase the cash component. This strategic adjustment allows us to fully utilize our debt capacity. Due to our strong financial performance, our credit rating metrics at year-end 2025 were all very well within the established thresholds, leaving room to increase the cash component. Speaking to you today on the analyst call here, the result is a transaction that delivers high single-digit cash EPS accretion from year 1 based on the run rate synergies while preserving our strong credit rating and maximizing immediate value for you as our shareholders. I would like to emphasize, however, beyond the financials, the partnership nature of this transaction, which, from my perspective, will make it so transformative and a unique opportunity. The compelling concept was developed through close dialogue with the Allfunds management team. The transaction has the unanimous support of the Allfunds Board of Directors. We have also already received irrevocable undertakings from Allfunds' largest shareholders. We are now proceeding with the U.K. scheme of arrangement process and obtaining the necessary regulatory approvals. We are highly confident in securing antitrust clearance because our businesses really are complementary. Clearstream mainly drives post-trade fund processing infrastructure, while Allfunds is a fund distribution platform. We also have a distinct geographical and client focus across the funds value chain, as I already outlined earlier. We anticipate completing the transaction in the first half of 2027. In closing, this is a landmark transaction. It strengthens our capability, accelerates our strategy and reinforces our commitment to building the future of capital markets infrastructure. We are creating a world-class player that will better serve clients and drive the evolution of the global funds industry. You hear my passion. I think this is a very strong story. Now let me expand on the second situation, for which I know many of you have been persistently looking for clarification. I recall many of our meetings around this. We are now taking full ownership of our data analytics and index champion ISS STOXX. As we announced overnight, we have reached an agreement with GA to acquire the remaining 20% minority stake held by our partner. The move creates clarity around this topic and is the natural and planned culmination of our successful partnership, which began with our joint investment in Axioma back in 2019 and continued through the strategic merger that formed the integrated ISS STOXX business in 2023. This buyout is a reaffirmation of our strategic vision and gives GA the necessary liquidity. It solidifies our ambition for ISS STOXX to be a leading go-to provider of mission-critical data analytics and indices for the buy side. While we acknowledge the headwinds resulting from a changed attitude towards certain products, particularly in the U.S., we feel strongly confirmed by clients about the underlying business logic. We remain confident in a return to stronger growth in the medium term as outlined during our Capital Markets Day last December. We also view the transformation through AI as a key opportunity, not a threat. ISS STOXX is uniquely positioned for this transformation to its unique historic databases. Our clients have a strong need for highly reliable regulation-proof quality data with an algorithm alone cannot provide. Our strategy is to use AI as a powerful augmentation tool, combining our trusted data and human experience to enhance our offerings and maintain our market leadership. Taking full ownership reduces complexity, allowing us to accelerate the execution of our strategy for this highly attractive business. For example, we'll benefit from lower governance costs and closer integration with our global system and processes. It will also be easier for us to promote closer cooperation between our index and data businesses in areas such as financial derivatives and software solutions. Similarly, we can leverage ISS STOXX's data handling and processing capability globally as well as analytics competence over time in other parts of the group. The agreement with General Atlantic included a contractual path for their exit, and the valuation is based on the peer group multiple as we had agreed at the outset of the partnership in 2019 and 2023. We will finance this using available cash and debt. The transaction is expected to have a low single-digit accretive effect on our cash EPS, obviously, already this year. Finally, let me be very clear on a critical point. Integrity and independence of ISS research are paramount. We are fully committed to maintaining the established noninterference policies, ensuring that the research provided by ISS continues to be objective and trusted by the market. Both the Allfunds acquisition and the minority buyout of ISS STOXX are clear, logical steps in the further development of our group. Let me turn to the strategy for a second again. Our strategy, Leading the Transformation, provides a clear road map for the future. So let me come to the outlook for 2026 within the growth trajectory of our strategy on Page 3. This is best summarized in 4 key messages. First and foremost, we start from a position of strength. We are on track and fully committed to our 2026 financial targets. And you heard me say that a year ago when it came to 2025, and we deliver. Specifically for 2026, this is EUR 5.7 billion in net revenue and EUR 3.1 billion in EBITDA without our treasury results. But let me be clear, we see these ambitious goals, not as a final destination, but as an important interim milestone in our journey as we have outlined already in London in December. Delivering on this plan demonstrates our credibility and provides the foundation for our next phase of growth. The second point is our ambition extends well beyond 2026. We are committed to delivering sustained growth, targeting a high 8% organic net revenue growth through 2028. This isn't just a number. It's a plan powered by durable sector growth drivers and our leadership in technology. Our unique position allows us to lead key market transformations, unlocking new growth vectors that will propel us forward. As a third element of the strategy, we are evolving our operating model to efficiently deliver this growth. Through our OneGroup model, we are building a more scalable and efficient organization. This is not just about cost control, it's about cultivating a culture of excellence. And obviously, we are not compromising our organic investment volume, which runs at around EUR 600 million per year. By holding our operating cost growth to a disciplined 3% growth rate, we will ensure that the revenue growth translates directly into enhanced profitability and operating leverage. And therefore, finally, our financial ambition. The payout from this strategy is very attractive. We will deliver strong structural top line growth and significant scale benefits. This bottom line performance gives us a powerful combination of strong investment capacity for organic growth and strategic M&A while delivering attractive and growing shareholder returns. In light of the recent market developments regarding artificial intelligence, let me also again reaffirm our clear position on the topic. We view AI not as a threat, but as a powerful engine for our growth. A thorough assessment confirmed our portfolio robustness, showing that less than 5% of our revenues are only potentially affected as AI cannot replace the regulated system-critical infrastructure and processes we operate. At the same time, our plans for scaling and limiting cost growth benefit greatly from AI. With over 75% of our infrastructure now cloud-based, we are strategically positioned to capitalize on this opportunity by developing AI at scale on a rapid, cost-effective and secure manner. We're already leveraging AI to enhance internal efficiency and are rolling out product embedded AI to boost client productivity. As a component of our Leading the Transformation strategy, AI is generating tangible value. In short, we are delivering on our current plan, and we have a clear path to sustained and profitable growth throughout 2028. We are evolving our operating model to support it, and this will all translate into strong returns for you, our shareholders. With that, I'll hand it over to Jens for a closer look at the financial and the segment details. Jens Schulte: Yes. Thank you very much, Stephan, and warm welcome, everyone, also from my side. So it's a pleasure to walk you through our financial results for 2025. As you've heard, the year was a record year for Deutsche Borse Group, and Slide #4 crystallizes the strong basis we have built. We delivered total net revenue of over EUR 6 billion and an EBITDA of more than EUR 3.5 billion. Without the treasury results, we achieved 9% top line growth and more importantly, 14% bottom line growth. The fact that our revenue growth is outpacing the growth of our operating costs demonstrates the increasing profitability we are generating across the group. It's a testament to the strength of our diversified portfolio, which allowed us to, a, deliver this performance despite cyclical headwinds in certain areas; and b, our disciplined approach to cost management with only 3% growth, fully in line with our guidance. This all translates into a strong cash EPS of EUR 11.65. Now let's zoom into the fourth quarter on Page #5, which was a strong finish to the year. We posted net revenue of EUR 1.6 billion and an EBITDA of almost EUR 900 million. This translates to a 7% top line growth without the treasury results, which corresponds to 9% on a constant currency basis and 10% bottom line growth, again showcasing that our profitability is growing faster than our revenue. The key takeaway for this quarter is the quality of our earnings. Our performance was driven by sustained double-digit secular growth in our Software Solutions and Security Service businesses. The structural momentum more than compensated for the weakness in areas such as equity derivatives, which were affected by modest market volatility. Our ability to balance performance across the portfolio is a core strength of our business model. On the cost side, total operating costs remained broadly stable as disciplined cost management and FX tailwinds offset inflation and targeted investments. Additionally, operating costs included exceptional effects from preparing for the potential IPO of ISS STOXX last year. Now that we have agreed to buy out the minorities, a lower double-digit million euro amount has become income state effective. Now let's take a closer look at our segments. First, let's start with Investment Management Solutions on Page #6. As we discussed at our Capital Markets Day, this segment is central to our buy-side strategy. In the fourth quarter, Software Solutions was clearly the growth engine, delivering 13% net revenue growth. As Stephan mentioned, we even achieved an impressive 18% net revenue growth on a constant currency basis. This reflects the increasing U.S. footprint. The growth resulted from our focused execution, including significant customer wins in North America and the continued success of our Software-as-a-Service transformation. It's encouraging to see that Axioma, our analytics offering, which is now part of the SimCorp One platform, has achieved the highest ARR growth since the acquisition in 2019. This achievement is a testament to the benefits of combining the 2 businesses as well as the revenue synergies we anticipated as part of the SimCorp acquisition. The strong performance offset the known challenges in the ESG and Index business, which continues to experience prolonged cycles due to the political uncertainty. Net revenue growth in ESG and Index was 4% at constant currency, which is not fully satisfactory, but within the expected growth range for this business, as discussed during the CMD. Our Index business benefited from robust licensing and achieved net revenue growth of 10%. The segment EBITDA is affected by the exceptional costs I just mentioned. After adjusting for these costs, EBITDA increased broadly in line with net revenue. The results in Trading & Clearing on Page #7 demonstrate our strength in secular growth areas and our leadership in European markets. The division achieved 3% growth without the treasury results, but the details are what tell the real story. We saw good performance where structural drivers are strongest. Commodities benefited from robust EU gas activity. Cash equities were fueled by ongoing inflows into Europe, and foreign exchange continued to expand its client base and geographic reach. Financial derivatives remained flat as expected, given the subdued volatility environment in equities. However, this was offset by our fixed income business. We made good progress on our fixed income road map, achieving a 7% year-over-year increase in net revenue without the treasury results. Our OTC Clearing and Repo businesses significantly propelled this growth with net revenue climbing by 14% and 44%, respectively. A key element of our strategy has been preparing for the EMEA 3.0 active account requirement, a major catalyst for growth in our OTC Clearing segment. Our strategic focus on converting our extensive client base into active participants yielded further results. We experienced a 31% increase in our outstanding notional, reaching EUR 44 trillion and capturing a 22% market share. This was accompanied by a surge in trading activity with our average daily IRS volumes growing by 97%. While we have successfully onboarded nearly 2,500 clients, our EU buy-side activation rate remains at 16%. This underscores a significant opportunity for future growth, and we anticipate gradually phasing in more active clients over the next 6 to 12 months. Our commodities business had another successful quarter with an 8% increase in net revenue. This growth was fueled by Europe's increased reliance on our global LNG supplies, which created price volatility and a heightened need for market participants to hedge against uncertainties in supply and demand. We also saw further momentum in the Clearing Services that our U.S. commodities business, Nodal, provides to Coinbase. Nodal Clear serves as the central counterparty for the Coinbase Derivatives Exchange, mitigating credit risk for market participants. Thanks to this partnership. The first ever 24/7 clearing for margin crypto futures are now available in the U.S. and plans are in place to integrate the stablecoin USDC as eligible collateral for futures trading. In cash equities, we benefited from strong demand for European equities and significant inflows into European ETFs. This reflects the broader investor rotation into European markets and growing interest in passive strategies. And finally, our foreign exchange business achieved net revenue growth across most product lines, supported by net new client wins and geographic expansion. Now turning to our post-trade businesses. We have Fund Services on Page 8. Net revenue without the treasury result increased by 3%. However, the underlying businesses of fund processing and fund distribution grew by a solid 7%. This growth is mainly fueled by structural trends, but was also influenced by some retrospective adjustments of volume-related costs. Generally, we are seeing new record levels of custody and settlement volumes as well as the continued increase in assets under distribution to more than EUR 760 billion. The performance is a direct result of our investments in our platform and our successful partnerships with global participants. These investments position us perfectly to capture the ongoing industry trend of outsourcing. We are seeing positive momentum across the board, supported by new client wins, portfolio growth and ongoing inflows into European assets. The other line item declined mainly due to exceptional effects in the fourth quarter of last year. And operating costs this quarter were influenced primarily by slightly higher investments and growth. However, the 2% growth in operating costs in Fund Services for the full year is in line with our expectations. It demonstrates our scaling momentum, which will be further fueled once the Allfunds acquisition is completed. Securities Services on Page #9 had an outstanding quarter, with net revenue without the treasury result growing by 17%. This performance highlights Clearstream's essential role in the European financial market infrastructure and its robust competitive position. Growth was broad-based and driven by record levels of assets under custody, strong settlement transactions and continued fixed income issuance. High equity market levels and increased retail participation also contributed to this growth. Our collateral management business reached an all-time high with outstanding balances increasing 28% to an average of EUR 932 billion. This robust growth nearly offset the impact of lower cash balances at year-end and U.S. dollar rate cuts on net interest income. As you can see on Page #10, our strong and consistent cash generation enables us to make investments such as Allfunds and the buyout of the ISS STOXX minorities while providing attractive and growing returns to our shareholders. Based on our performance in '25, we are proposing a dividend of EUR 4.20 per share. This represents a 5% year-over-year increase and a 38% payout ratio, which is at the upper end of our stated policy range. Furthermore, as we announced at our Capital Markets Day, we have refined our capital allocation policy to include regular annual buybacks. And I'm pleased to confirm that the previously announced EUR 500 million share buyback program will begin soon and is expected to last around 3 to 5 months. Our balanced approach of investing in organic and inorganic growth while increasing direct shareholder returns reflects our confidence in our future cash flow generation. On a side note, the 2 million shares we repurchased last year have been canceled and the shares outstanding now amount to 182.1 million. Finally, let me conclude with our outlook for fiscal year '26, which is outlined on Page 11 and reflects our confidence in the year ahead. We fully confirm the guidance we laid out as part of our Horizon '26 strategy, which has become an important interim step in our Leading the Transformation trajectory until '28. Our Leading the Transformation strategy presented at our Capital Markets Day in December sets a clear path for sustained growth through 2028 and beyond. The strategy is built on 4 key pillars: executing secular growth, driving market transformation, evolving our OneGroup operating model and refining our capital allocation. We are targeting an 8% compound annual growth rate in net revenue without the treasury result to reach EUR 6.5 billion by 2028. This will be driven by our leadership in secular trends, such as the growth of the buy side and our focus on key transformation themes like the evolution of European capital markets and the expansion of digital and alternative assets. A core component of the strategy is the evolution of our OneGroup operating model, which focuses on scalability and efficiency improvements, allowing for an increase in operating efficiency with the projected operating cost CAGR of only 3%. The resulting bottom line outperformance will support strong investment capacity and attractive shareholder returns. For '26, we expect to generate net revenue of EUR 5.7 billion and an EBITDA of EUR 3.1 billion in '26 without the treasury result. We are confident in our ability to achieve these targets due to our sustained business momentum, including recent client wins and continued momentum from secular growth trends. Furthermore, our strategic initiatives, particularly the deployment of AI will improve operational efficiency, supporting our EBITDA target while generating new revenue streams over time. Our targets also assume a normalization of market volatility and modest growth in equity derivatives. Additionally, we expect a treasury result of approximately EUR 0.7 billion, comprised of about EUR 0.5 billion in net interest income and EUR 0.2 billion in margin fees. The underlying assumptions for the NII are stable cash balances and euro interest rates as well as modestly declining U.S. interest rates. Regarding costs, we anticipate a moderate increase in overall operating expenses, consistent with our medium-term guidance of approximately 3%. This increase is not just passive cost inflation, it's disciplined investment in our key strategic initiatives that will fuel our future growth and drive operating leverage. We are fully on track to meet our medium-term goals and continue to lead the transformation of our industry. And that concludes our presentation. We look forward to your questions. Operator: [Operator Instructions] And the first question comes from Benjamin Goy from Deutsche Bank. Benjamin Goy: One question on Software Solutions, please. You mentioned another major client win in North America. Maybe you can give a bit more color on this client and more broadly, whether the business has reached a tipping point now in this market with major logos you can put on your RFPs and the integration of Axioma. How the dialogue has changed with U.S. clients over the last year or so? Stephan Leithner: Benjamin, thanks for your question. We are indeed very excited. I don't know how to frame that well because I gave you this West Coast largest pension fund last year type guidance. I think give us a bit more time for the press release, and we will be able to give you absolute clarity. But to the second part of your question, I think we have reached a positive tipping point in the spirit of the type of RFP participation and invitations we receive. We see a continued very strong pipeline in the U.S. market. But let me emphasize that this is a much broader pipeline than we historically have seen because of the Axioma integration. And as a second leg that it is equally fueled, and we talk a bit less about it by European momentum. I mean the quality of the names in Europe, Axioma was one of them as we had announced it, that really have such a strong and broad front-to-back character is something that, in fairness, we had not expected in that quality of dialogues that we are seeing now. Operator: And the next question comes from Arnaud Giblat from BNP Paribas. Arnaud Giblat: It's Arnaud Giblat from BNP. My question is on ISS. So I was wondering how the price of the acquisition was determined for the minorities. You mentioned peer multiples earlier on the call, but it seems to me that it's a small premium. And I'm just wondering how the headwinds you acknowledge for this business affected that price because the peers seem to be growing a bit faster. And also, was the timing of the minority of this buyout predetermined as part of the terms of the acquisitions made in 2019 and 2023? Stephan Leithner: No for the questions. As we have highlighted, there is a historic context in the basic agreements that we struck in 2019 and 2023. It is obviously, and that's why we put in the reference back to the peer group context. It's not arbitrary or negotiated in a narrow sense. There is an analytic basis on which we obviously will not provide more further details around, given that it's confidential between GA and us. But in summary, it's something that we feel very much is supported by the strength that we see in the business medium term, very confident and very excited. I think some of the valuation dynamics we see in the market is clearly a change from historic levels, but it doesn't change our belief in the fundamental quality of the business. Arnaud Giblat: And on the decision to do that today rather than in the future, was that predetermined as well? Stephan Leithner: No, there was a context. We have always said that around the dual track. And after 7 years, I alluded to that on a number of occasions. Certainly, there was already a long time horizon. So in that sense, yes, there were windows during which it became the possibility for GA to also have liquidity through the buyback. But again, that was not predetermined. That's why we did indeed look very seriously at the possibility of the dual track throughout the last year. Operator: And we have the next question from Enrico Bolzoni from JPMorgan. Okay, so he doesn't want to ask a question. Then we have the next question from Hubert Lam from Bank of America. Hubert Lam: Just one question on Allfunds. What gives you the confidence that you can pass the regulatory hurdles to get the Allfunds deal done, just given the possible antitrust situation around that? Stephan Leithner: Thanks, Hubert, for the question. The complementarity is really the sense of confidence that we have. The second element I would really want to emphasize is that this is a highly competitive market environment. I mean the platform and the size and quality makes the combined business very much a leader in many dimensions, but we are very much aware that and why the universe of intermediaries that are active there, including a number of platforms that are run by different asset managers as well as distribution groups. So it's a very competitive market in addition to the complementarity. If you put the 2 things together, we have done a lot of analysis, as we have also highlighted together with Allfunds in the run-up to the announcements, and that gives us a high degree of confidence. Operator: And the next question comes from Ian White from Autonomous Research. Ian White: Very simple one from my side, please. Very specifically, with respect to ISS' historical databases, why is AI unable to replicate those data sets? What are the moats there, please? Stephan Leithner: Good question, Ian. I think the substance of that moat is really driven around the enormous amounts of quality assurance that needs to happen, and that has been happening in the work that ISS has been doing over the many years. That is the anchor that really drives that distinctive sort of positioning of the data sets they have. I would add as a second element, the integration with a number of the qualitative data in recent years when it comes to sort of information that is supporting certain decisions and voting decisions, take again many of the ESG data and other, which is a pretty unique combination that ISS has there. Ian White: So just to clarify, is it fair to characterize those data sets then as essentially enriched or augmented by things that you couldn't scrape for free from company disclosures or the Internet? Is that a fair summary? Stephan Leithner: Yes, absolutely. But let me add to that. Quality assured means often error corrected. And I think that is what, in particular, for nothing worse than for models that learn of wrong and mistaken data, erroneous data. I think it's an area of shareholder voting where the topic of having a factually correct database is a critical part. Operator: And we have the next question from Tom Mills from Jefferies. Thomas Mills: I have one on Allfunds, please. Obviously, you've laid out what you expect to achieve from a cost synergy perspective. I'd certainly anticipate there should be some material revenue synergies that you should be able to exploit here as well. Can you maybe talk about what you see there and perhaps why you haven't set those out in detail? Stephan Leithner: Thanks a lot, Tom. It's much appreciated. I think the cost synergies, as you say, is something, which even though Allfunds is a public listed company, we have had a lot of joint efforts. I think we thought very conservatively about the synergy topic, as you can take from the revenue side. I think we'll see that much better once we have full access in the combination. Operator: And we have the next question from Michael Werner from UBS. Michael Werner: One question from me, please. I believe at the Capital Markets Day, you indicated that you expected Trading & Clearing revenues to grow by about 11% year-on-year in 2026, which is a bit above, I think, myself and the sell-side consensus number out there. And I think maybe some of this is coming from the opportunity from active accounts. A, can you confirm that? And then B, I believe when you talked about active accounts, and I might very well be wrong here at the Capital Markets Day, you talked about a phase-in period kind of midyear around May of this year. And then earlier, you talked about this opportunity still coming through in the next 6 to 12 months. So, A, was there any change in any of the timings? And B, when do you expect all of these active accounts to be activated? Stephan Leithner: Yes. Thanks very much, Mike, for the 2 questions. So on the Trading & Clearing revenue outlook for this year, I guess, comparing us to the consensus, there's been 2 major differences. One is maybe we estimate the EEX performance a little bit more strongly because we believe that the basic trajectory in that business is really, really super rock solid. And the second one is probably, as you indicate, slightly different assumptions on the uptick on the fixed income road map where we are confident to achieve it on a fee-based revenue basis and where there may be a little bit more caution on the market side. With respect to your active accounts question, basically, that has not changed. So active accounts, as you know, needs to be basically fulfilled until the middle of this year, so until June. So we do anticipate more significant activation rates by the mid of this year. But what we wanted to indicate on our tax today is also to say that, of course, this will not stop in the middle of the year, right? So this will be a phased ramp up and there may be some clients which start on a low basis just to test technicalities and figure out their flow routing and things like that. And then this should hopefully also expand further. That's essentially what we meant with our statement. Operator: The next question comes from Grace Dargan from Barclays. Grace Dargan: I just wanted to probe a little bit more around the synergies for ISS STOXX. Whether you have any target numbers, how you're thinking about that and whether there'd be any one-off costs to achieve that? And whether that's all captured in your existing revenue and cost guidance? Jens Schulte: Yes. Thanks very much, Grace, for the question. So we have not -- there are not top-down figures on potential ISS STOXX synergies. And as Stephan alluded to, we see several ways in how to benefit from that, by the way, also in the other direction. So I mean, we mentioned that we can see lower governance costs and also the business being more closely integrated on the back office. Also the other way around. This business has, for example, a strong footprint in the Philippines. So it's a very good far-shoring location. And we anticipate as part of our OneGroup topic that we explained that also other parts of the group will basically make use of that. And that's now much easier in a 100% consolidation scenario. But to your question, we haven't quantified that yet, so that's work that we're going to do over the next weeks and months. And then these figures are not yet included in our guidance or anything, yes. So it's basically the guidance has been set based on the structure so far, and there should be additional benefits in there. Operator: And we have one question from Ian White from Autonomous Research. Ian White: If I can maybe just ask a couple of follow-ups, if that's okay. I think following slightly on from Mike's question, can you provide us maybe a little bit more detail about how you're thinking of monetization of the short-term interest rate contracts and also the renegotiation potentially of the revenue share within the OTC clearing business? I'm assuming nothing has happened or nothing has changed on either of those fronts so far, but maybe a bit more detail around that would be interesting. And secondly, if I can maybe ask on the Kraken partnership and specifically the xStocks initiative. Have you kind of effectively entered into competition for trading in, in U.S. stocks there with the recent developments? And what do you anticipate in terms of additional securities that will be offered under that partnership and the prospects for building some liquidity in those markets, please? Jens Schulte: On the first part, Ian, happy to take that one. So on the various incentive programs that we have running within the fixed income road map, as you know, so that alludes to the -- I mean, to the STIR component of the FI ETD business, but also to the other components of our fixed income road map. We are actually reviewing those, as we said, within the first half of the year and then taking individual decisions. So far, I mean, with good market shares already achieved in most of the components, but we want to go further and we will figure out whether we further make use of these incentives or not. We haven't decided that yet. So it's going to come in through by the middle of the year. And on the second one, will you? Stephan Leithner: Happy to take it on. So I think, again, this is in an early phase. The xStocks dynamics will, for us is more relevant when it comes to the European parts. And what we can really do around the partnership with Kraken of tokenizations that bring not only xStocks on the 360X platforms, but then more importantly, the reverse direction, some of the different asset categories we have as we move to tokenization and leverage the Kraken sort of infrastructure there. Jens Schulte: I think we have one further question. Enrico redialed in and I think is ready to ask the question. Enrico? Enrico Bolzoni: Can you hear me? Jens Schulte: Yes, loud and clear. Enrico Bolzoni: Sorry, I was kicked out and thus rejoined. So perhaps I might have missed the question from my colleague. I'm going to ask it again, just in case. So going back to your stat, can you provide a bit of color perhaps on the competitive landscape? I would be very curious to know if, for example, you can break down the growth that you printed between its components of perhaps a bit of pricing, how much was due to new clients win? And in general, do you expect that competitors in the U.S. will react to your success and perhaps we should see a bit of pricing pressure coming forward? Jens Schulte: Enrico, this was the Software Solutions business, right, to make sure? Enrico Bolzoni: Yes, that's right. Stephan Leithner: I think again, we wouldn't have a detailed breakdown. But inherently, this is not a pricing type. I mean market works with a decent inflation protection type pricing structure. So it really is around market share wins. And secondly, to go back, it is very much about activation of clients, meaning in the SaaS period, you clearly reap the full benefits once the early transition is coming on stream. So therefore, it's a blend of the sign-up, the client upfront parts and then obviously even more important, the ARR components, which go live, the more sort of activation of components has happened. So that's the real driver from a market share context. Jens Schulte: I mean maybe only to build on what Stephan said. In terms of competitive dynamics, always keep in mind that the majority of this market is still outside third-party providers such as us, right? I mean the majority of the market is still captive solutions within clients. And so it's less that we try to snap away clients from our competitors. It's actually basically turning captive solutions into our solution. So there's plenty of growth in the market still. Enrico Bolzoni: That's very helpful. If I may add on this last point you made in light of the current debate on AI latest products that have been launched. Do you see any change so far in the client to perhaps... Stephan Leithner: I think let me be pretty... Enrico Bolzoni: Out of the change... Stephan Leithner: Well, Enrico, thanks for the question very much because I truly want to make that point in a very strong and passionate way. I think the power of SimCorp One is really the character of the front-to-back data handling, the ultimate truth type quality of a platform. I think we really see this as something where given the size and magnitude that we talk about in numbers in investment volumes, I mean, this is not something you play around as a retailer or even as a wealth investor. This is something where the biggest institutions of the world are handling their data where the certainty of quality and processing is really critical. And that's the confidence. That's the one true power. That's the unique asset for SimCorp different from a number of other providers who come at this from the front end rather than the middle and back office. So that power is one where AI capabilities come on top. So that's why we also look at it as an opportunity. We have in place with the biggest and most demanding clients, the base platform. That's why we look at this as an upside opportunity as we obviously work with AI-based modules going forward. Jan Strecker: Great. So there are no further questions in the pipeline. And therefore, we would like to conclude today's call. Thank you very much for your participation. If there's anything else, then please do feel free to reach out to us directly. Thank you. Operator: The recording has been stopped.
Operator: Good day, and welcome to the SCI's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to SCI management. Please go ahead. Trey Bocage: Good morning. This is Trey Bocage. AVP of Treasury and Investor Relations. I'd like to welcome everyone to our fourth quarter earnings call. We will have some prepared remarks about the quarter from Tom and Eric in just a minute. But before that, let me go over our safe harbor language. Any comments made by our management team that state our plans, beliefs, expectations or projections for the future are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such statements. These risks and uncertainties include, but are not limited to, those factors identified in our earnings release and in our filings with the SEC that are available on our website. Today, we might also discuss certain non-GAAP financial measures. A reconciliation of these measures can be found in the tables at the end of our earnings release and on our website. I will now turn the call over to Tom Ryan, Chairman and CEO. Thomas Ryan: Thank you, Trey. Hello, everyone, and thank you for joining us today on the call. This morning, I'm going to begin my remarks with some high-level color on our business performance for the quarter, then provide some greater detail around our funeral and cemetery results. I will then close with some thoughts about our 2026 business and financial outlook. For the fourth quarter, we generated adjusted earnings per share of $1.14, which was an 8% increase compared to $1.06 in the prior year. We saw moderate increases in revenues and gross profit in both the funeral and cemetery segments driven by strength in comparable and noncomparable operations as well as slightly lower adjusted corporate, general and administrative expense which, when combined, resulted in $0.04 of earnings per share growth from operating income. Below the line, the favorable impact of a lower share count contributed an additional $0.04 of earnings per share growth. For the year, we generated adjusted earnings per share of $3.85, which was a 9% increase compared to $3.53 in the prior year. We saw solid increases in revenue, gross profit and comparable margin percentages in both the funeral and cemetery segments contributing $0.26 to adjusted earnings per share growth from operating income. Below the line, the favorable impact of a lower share count and slightly lower interest expense was somewhat negated by a higher effective tax rate, resulting in a net $0.06 favorable impact on earnings per share growth for the year. If the effective tax rate had remained constant, we would have had an additional $0.07 in earnings per share for the year resulting in $3.92 or 11% earnings per share growth over the prior year. Now let's take a deeper look into the funeral results for the quarter. Total comparable funeral revenues increased $3 million or just less than 1% over the prior year quarter as growth in core and non-funeral home revenue was somewhat negated by lower core general agency revenue. Comparable core funeral revenue increased by $6 million or just more than 1%, primarily due to a healthy 3.2% growth in the core average revenue per service. This core average growth was achieved despite a modest increase of 30 basis points in the core commission rate. The favorable impact from the average revenue per service growth was muted by a 1.9% decrease in core funeral services performed for the quarter. For the full year 2025, comparable funeral volume declined less than 1% as we believe the impact of the COVID pull-forward effect continues to diminish. Non-funeral home revenue increased by $3 million primarily due to a more than 11% increase in the average revenue per service. We expect this impressive growth in the average revenue per service to continue as older preneed contracts, that are maturing out of our backlog, have higher cumulative trust earnings and more recent preneed contracts written will mature with higher value in the backlog due to our operational decision to no longer deliver preneed merchandise at the time of sale. Non-funeral home preneed sales revenue increased over $2 million or more than 11%, as increased sales production with a higher percentage underwritten on insurance-funded preneed contracts generated more than an $8 million increase in general agency revenue. This was partially offset by a $6 million reduction in revenue recognized from merchandise deliveries in the prior year quarter. Core general agency and other revenue declined by $8 million or almost 13%, primarily due to a lower general agency commission rate versus the prior year quarter that was impacted by changes in product mix and higher cancellations resulting from the impact of our insurance partner transition. We believe the general agency commission rate to be stabilized now in the mid-30s percentage range moving forward. Funeral gross profit declined by almost $4 million, while the gross profit percentage declined by 70 basis points to just about 21%. A modest increase in revenue was more than offset by a $5 million increase in recognized selling compensation costs. While the cash rate expended for selling costs was flat versus the prior year, recognized selling costs increased for both the core and non-funeral home segments. For core, we have shifted our sales counselor compensation to more fixed versus variable, resulting in less being deferred for preneed trust sales production. On the SCI Direct front, our conversion from trust-funded products to insurance-funded products compels the immediate recognition of the general agency commission and the related selling costs. This has the effect of replacing high-margin merchandise revenues in the prior year with lower margin general agency commissions, therefore, putting downward pressure on SCI Direct's margins as we compare to the prior periods. The team managed fixed cost growth to less than 1% for the quarter, which had the effect of moderating the impact of the recognized selling cost increase. Preneed sales production increased by $29 million or about 11% over the fourth quarter of 2024. Core preneed funeral sales production increased by $25 million or 12%. Non-funeral home preneed sales production increased by over $4 million or 8% over the prior year quarter. We feel great about our momentum in both channels, now having had the time to work out the kinks of the insurance partner transition in the core segment. And as of the end of 2025, we have now rolled the insurance product into 100% of our SCI Direct locations. Now shifting to cemetery. Comparable cemetery revenue increased by $5 million or about 1%, primarily due to an $8 million increase in other revenue, slightly offset by a $3 million decline in core revenue. The core revenue decline was primarily due to a $3 million decline in atneed revenue. Total recognized preneed revenue was essentially flat as a $6 million increase in preneed merchandise and service revenue was offset by a $6 million decline in recognized preneed property revenue. Preneed merchandise and service sales production was up $15 million over the prior year number, growing the preneed sales backlog by over $9 million. Other revenue was higher by $8 million compared to the prior year quarter primarily from an increase in endowment care trust fund income. Comparable preneed cemetery sales production increased by $8 million or about 2%. Core sales accounted for a $13 million sales production increase powered by impressive velocity growth, which was slightly offset by a $5 million decline in large property sales, which was comparing against a very strong prior year large property sale quarter. For the full year 2025, preneed cemetery sales production grew by about 4%. We feel very good about the momentum our team carries into 2026. Cemetery gross profit in the quarter grew by $5 million or about 3% and the gross profit percentage increased by 70 basis points, generating an operating margin percentage over 36%. While recognized revenue growth was 1%, high-margin trust income was slightly offset by lesser margin core revenue declines. And when combined with our team managing fixed cost growth slightly higher than 1%, this resulted in gross profit growth and margin percentage expansion. Now let's shift to a discussion about our outlook for 2026. As you saw in our earnings release, we provided a normalized earnings per share range of $4.05 to $4.35 for 2026 or a midpoint of $4.20. The 2026 range is 5% to 13% growth with a 9% growth at the midpoint. Within our funeral segment, we expect flat to slightly down funeral volume compared to 2025 with the average revenue per case growing at inflationary rates, slight negated by the effect of a modest cremation mix increase. We do expect to see higher general agency revenue from increased preneed sales production as well as slightly higher selling costs recognized, not cash, from the effect of the shift to a higher percentage of fixed compensation that does not get deferred. Finally, we believe we can continue managing fixed costs slightly below inflationary levels with higher productivity, which all in should drive profit growth for the funeral segment, increasing the gross market percentage by 20 to 60 basis points. We expect preneed funeral production for both the core and SCI Direct businesses to grow in the low to mid-single-digit percentage range. For the cemetery segment, we anticipate that we can grow preneed cemetery sales production in the low to mid-single-digit percentage range, resulting in cemetery revenue growth of about 2% to 5%. This, combined with our continued focus on managing inflationary costs, should result in impressive segment profit dollar growth, expanding our gross margin percentages by 30 to 60 basis points as compared to 2025. Below the line, we expect a net favorable impact on earnings per share as the positive effect of a lower share count is slightly offset by higher interest expense and a slightly higher tax rate as compared to 2025. For our shareholders, know that we are laser-focused on growing your great company as best we can for the long term, growing revenues, leveraging our scale and deploying capital to its highest and best use. In conclusion, I want to acknowledge and thank the entire SCI team for their daily commitment to our customers, our communities and to one another. Your dedication is the foundation of our success. Thank you for making a difference every day. With that, operator, I will now turn it over to Eric. Eric Tanzberger: Thank you, Tom. Good morning, everybody. Thanks for joining us today. Before I begin, I'm going to continue Tom's last thought and I want to take a moment to really sincerely thank our more than 25,000 associates at SCI across our entire network. Your dedication, your compassion, your commitment to excellence truly make a difference each and every day. We are deeply grateful for the care you provide the families we are honored to serve and the positive impact you continue to have in the communities that we are lucky enough to serve. So today, I'm going to start by reviewing our cash flow results and capital investments for the fourth quarter followed by a recap of our full year performance in '25. After that, I'll provide an outlook for our 2026 cash flow and capital investments, and I'll conclude with an update on our overall very positive financial position. So in the fourth quarter, we generated strong adjusted operating cash flow of $213 million. This exceeded the high end of our most recent guidance range for the quarter. Compared to the prior year, neutralizing for an expected $21 million increase in cash taxes, our adjusted operating cash flow decreased $34 million. So breaking this down a little further, adjusted operating cash flow was positively impacted by higher adjusted operating income of $8 million, highlighting the strength in our underlying funeral and cemetery operations during the quarter. However, cash interest was higher by $24 million, primarily due to the timing of a lower interest in the prior year quarter due to the bond financing and reduction of our drawn bank credit facility that we completed in September of 2024. Additionally, during the quarter, with a net $18 million use of other working capital, primarily due to the timing of payroll funded in the current year quarter. For the year -- for the full year, we finished 2025 with impressive adjusted operating cash flow of $966 million. Compared to 2024, when you exclude cash taxes and special items in both years, 2025 cash provided by operating activities increased an impressive $108 million or 11%. So going back to the fourth quarter, we invested $174 million of capital into our funeral homes and cemeteries, new growth opportunities, business acquisitions and real estate, all of which resulted in our full year capital investment in these categories of $508 million. So in the quarter, we invested $107 million of maintenance capital back into our current businesses with $47 million allocated to high return in cemetery development projects, $51 million into our funeral and cemetery locations and $8 million into our digital strategy and other corporate investments. For the full year, we invested a total of $328 million in maintenance CapEx, slightly below prior year and ahead of the high end of our guidance range. We dedicated a portion of the strong cash flow from operations during the fourth quarter towards reinvestment into the maintenance of our funeral homes to improve the customer event experience and into cemetery development, creating new tiered options for our customers. We also invested $31 million of growth capital in the quarter towards the construction of new funeral homes, the expansion of existing funeral homes as well as the purchase of real estate for future new build and expansion opportunities. This brought total 2025 growth capital to $79 million, which is down about $25 million from 2024, which was anticipated. So turning to acquisitions. We invested $36 million into business acquisitions in the fourth quarter and in locations in North Carolina, Arizona, Florida and Canada. In total, we finished the year with $101 million of acquisition spend, which was in the middle of our annual guidance target of $75 million to $125 million. We are really thrilled about these high-quality funeral homes and cemeteries joining our company, and we're happy to welcome all of these new associates to our SCI family. So moving on to capital distributions. We returned $107 million of capital to shareholders in the quarter through $59 million of share repurchases and $48 million of dividends. We repurchased just under 1 million shares during the quarter at an average price of about $79 per share. For the year, we returned $645 million to shareholders through $461 million of share repurchases and $184 million of dividends, bringing the number of shares outstanding today to just under 140 million shares. Subsequent to year-end, we repurchased another 500,000 shares for about a $40 million investment at an average price of about $80 per share. So before we get into our 2026 outlook, I want to make a brief comment about our corporate G&A expense during the quarter. Corporate G&A expense increased $19 million over the prior year quarter to $34 million. This was primarily a result of the prior year quarter having benefited from the reduction of a legal reserve of about $20 million. So when you exclude this prior year impact, G&A expenses actually declined about $1 million quarter-over-quarter. And as we look forward to next year, 2026, I should say, we expect that corporate G&A expense will average around $40 million to $42 million per quarter with, again, a reminder that this rate could be impacted one way or the other by the timing of our accruals related to our short-term and long-term compensation plans. So shifting now to outlook for cash flow. As you saw disclosed in the press release, our 2026 adjusted operating cash flow guidance range consists of a $60 million range from about $1.0 billion to $1.06 billion. The midpoint of this range assumes the following: we expect our cash earnings at the midpoint of our EPS guidance range to grow about $70 million, reflecting growth in our underlying funeral and cemetery operations. Cash taxes are actually expected to decline by about $20 million, which will result in $120 million of cash taxes as the impact of higher expected earnings on cash taxes are being more than offset by an anticipated tax benefit from an investment in renewal energy projects. As we look beyond 2026, though, we anticipate returning to a normalized cash tax rate of about 24% to 25%, absent additional tax planning strategies or regulatory additional changes. From an effective tax rate perspective on our income statement, we expect 2026 to really trend in line with 2025, which is about a 25% to 26% effective tax rate. And then lastly, we expect a modest decrease in cash paid for interest this year due to higher average balances being more than offset by lower rates. So now let's talk about capital investment in 2026. We expect maintenance CapEx in 2026 to be about $325 million, which is generally in line and flat with the levels we incurred in 2025. Of this target spend, we expect to invest $135 million into improving our funeral homes and cemeteries, $165 million into cemetery development projects with high rates of return and $25 million into our digital strategy investments and other corporate investments. We expect to invest again an additional $75 million to $125 million towards acquisitions, which is in line with kind of the annual acquisition spend target we've had in the last couple of years. In addition to the maintenance CapEx and acquisition spend targets, we also plan to spend roughly $70 million to $80 million of growth capital on a new funeral home construction and real estate opportunities, which together drive low to mid-teen after-tax internal rates of return. Finally, as been our strategy for many years, we continue -- we plan to continue returning capital to our shareholders through dividends and our share repurchase program in a very consistent and disciplined manner, absent other higher return investment opportunities. So in closing, I'd like to provide some commentary about our current liquidity and our financial position. I'd first like to note that in November, we entered into a new $2.5 billion bank credit facility, which consists of a funded $750 million term loan and a $1.7 billion revolving credit facility, both now maturing in November of 2030. This transaction increased our liquidity by over $350 million and our current liquidity today is about $1.7 billion. Our leverage ended 2025 generally in line with prior year-end just above 3.65x, which is at the lower end of our long-term net debt-to-EBITDA leverage target range of 3.5x to 4x. So our strong balance sheet, this enhanced liquidity position that I just mentioned, and consistent and predictable cash flows continue to support our capital deployment program, which gives us remarkable flexibility as we enter 2026 to invest opportunistically for the long-term benefit of SCI, our associates and our shareholders. So with that, operator, this concludes our prepared remarks. And so I'm now going to turn it back to you to open the call for questions. Operator: [Operator Instructions] Our first question comes from Joanna Gajuk from Bank of America. Joanna Gajuk: So first, on the cemetery preneed sales production, it sounds like you expect low to mid-single-digit growth for '26. So can you kind of break down your assumptions in there for the large sales versus the core? I mean, it sounds like in Q4 large sales declined year-over-year because of the comp, but it sounds like the number must have been good. So if you can give us a sense of the magnitude of the amount for the year for '25 and then what you assume for '26, I guess? Thomas Ryan: Sure, Joanna. Thank you. So on that, you're right. In the fourth quarter, we're slightly down comparing against a tougher number. I think for the year, we're slightly up around 2% or so on the large sales, maybe 3% for year-over-year. And as we think about next year, I'd tell you, I feel very confident about the momentum we carry into 2026. We feel really good about our start and both on the large sale and on the core sales. So I think, again, as you think about large sales, it's always really hard to predict, as you can imagine. But think of that as being slightly lower, so maybe a 2% to 3% increase there and then maybe a more robust increase as you think about the core customer. But as you well know, large sales are tough to predict. It could be -- that's the piece that can be a little bit volatile to the upside. And in times of stress, maybe something that isn't there. Joanna Gajuk: If I may, in the, I guess, current period, any indications, how things are tracking so far this year, specifically in your [ Brookfield ] location and maybe elsewhere? If you can comment any disruption to the sales process and such because of the -- some winter storms in some of the markets? Thomas Ryan: Yes. We continue to see very positive trends on both preneed cemetery sales and on funeral sales. We've had a real focus. Our sales team is really focused around 3 things this year, and this plays a little bit into something we've talked about. We've shifted more compensation to fix from variable that we talked a little bit about in my comments. And that was a strategic decision to focus on people power, focus on retention of our key employees by giving them the stability of that higher guaranteed pay. So the 4 things we're working on are people power or call it, people retention. We believe if we can increase the number of preneed seminars that are out there, it's going to increase the number of good leads. And then once we have those leads, a real focus on the lead to sale rate, which is really the conversion of the leads. And then finally, really focused big time on large sales, making sure we have the inventory, making sure they have the presentations right, that we're finding people that could be customers in this category. So those 4 things really drive our sales, and we're laser-focused. Jay has got everybody laser-focused on those things, and we're seeing great results. We're seeing both at the high end and at the core level on funeral and cemetery. Joanna Gajuk: Any color on [ Brookfield ] activity so far? Thomas Ryan: Well, again, I don't want to give percentages, but as you think about January, two things to keep in mind. One is funeral volume last year was pretty strong. So we're comparing against a pretty tough number. We've not seen -- it's been a bit sluggish when you think about volume. But on the sales side, we're seeing tremendous out-of-the-gate results, both on funeral and cemetery, particularly cemetery. But again, one month is not a year make. So we're excited about it. We love -- I think the team is focused on the right things, and we feel very good about our opportunities for 2026. Joanna Gajuk: Great. [indiscernible], last one, I guess, staying on the cemetery side. Can you talk a little bit more about the opportunities to grow cementery for cremation customers? So you noted the shift to cremation is slowing down, but 65% of services are cremations. And I guess you kind of talk last time about opportunities to grow cemetery, I guess, sales for the cremation customers. So can you give us an update of where things stand and kind of what are your goals for this year? Thomas Ryan: Sure, Joanna. We actually have piloted in a few markets now in the process of rolling out to more a specific focus on that cremation consumer. And some of that is putting videos into our locations that can show the opportunities to the cremation customer and just making it more visible to our visitors and to the clients that we're serving. So, yes, we're doing a lot of things as it relates to media and the like to create that awareness and hopefully drive some opportunities in that market. I'd say early days, we feel very good about it. And it's going to take a while to roll it out to the entire network, but we're in the beginnings of doing that now and are excited about the results to come. Operator: Up next, we have A.J. Rice with UBS. Albert Rice: First of all, just on the comments that Eric made on G&A. You explained the 4Q's impact, but I think your 4Q of '24 the comp, but 4Q of '25, you're only at about $34 million. I think we had been thinking you'd be more like $38 million to $40 million based on the third quarter call. What drove the better performance on G&A? Eric Tanzberger: Two things, really, A.J. The first one is that we have short-term and long-term ICP accruals, and this is primarily a long-term situation, an LTIP situation. And just to remind you, we have some performance units that get compared to the S&P MidCap 400. And that's going to move quarter-to-quarter, which is what I was trying to say during my conference call remarks. Sometimes you have a $2 million, $3 million, $4 million headwind and sometimes you have a $2 million, $3 million, $4 million tailwind. And that's what occurred during the fourth quarter. Absent that kind of volatility on LTIP, you should see a $40-ish million, $42 million-ish per quarter G&A expense as we move forward. That's kind of the middle-of-the-road expectations as we move forward. The other thing that can move it that you kind of have seen us talk about in the last few quarters, sometimes you have some positives and negatives related to some of the insurance being self-insured. This primarily could be Workers' Comp, sometimes general liabilities, sometimes auto liability, sometimes even the health care accruals. Generally, those aren't moving as much as we've seen kind of the LTIP accruals move in. But any of those at any point in time can do that, and we'll explain that to you. But in terms of modeling, I think I'm pretty comfortable with that $40 million to $42 million a quarter right now. Albert Rice: Okay. When you think about the changeover toward more insurance, you've got -- you've called out commission normalization and then you also talk about the impact of SCI Direct. Are we pretty much going to have more straightforward going forward? And what are the implications on the commission run rate? It sounds like it's a little lower in the back half of '25. Do we have to annualize that in the first half of '26 or something else? And then SCI Direct go forward from here. It sounds like the restructuring of that is done, and we should have more normalized trends, but I just want to make sure of that. Thomas Ryan: Yes, that's correct, A.J. Answering the SCI Direct piece, we are 100% implemented in having the insurance product in those markets. There will still be some trust sales because some people aren't insurable. But I would say over 90% of the sales are going to be insurance and therefore, generate a commission and generate the associated selling costs. So as we think about SCI Direct, it's going to trend in a positive direction year-over-year and it's been a while since that's happened. So we're excited about it. On the other commission front, as you think about selling costs and you look at the -- what we talked about, when you looked at funeral, remember, we had 11% preneed sales production growth. So part of our selling cost increase is the fact that we're selling a lot more that's driving that cost up. We also saw a slight bit of transition to a fixed cost plan that I mentioned before as opposed to variable. And so as you think about the trust product that we sell, not the insurance, less is getting deferred and more is getting recognized. No cash increase, just the type of compensation that occurs. And yes, I think as you think about SCI Direct, like I said, positive from here as you think about trend-wise. Albert Rice: Okay. And you also called out, I think this may be the second straight quarter of the improvement in velocity you're seeing in the cemetery production area. Can you just maybe drill down a little bit more about what you're seeing there and what's driving that and what might implications of that be? Thomas Ryan: Yes. I think, A.J., a lot of that's back to those 4 metrics or particularly the first 3. Having one, the aim to try to have higher retention of our good people and getting them quality leads and then really focusing on the training to take that lead and convert it to a sale. And so as I think about our success in being able to do that and focusing on those types of things, we're seeing, again, trends that we really like. And so we are seeing velocity drive our success as we think about the core cemetery sales. So I just attribute that to focus. You mentioned the cremation consumer before. We are seeing a higher lift of people, cremation consumers choosing to buy into our cemeteries. So all those cumulatively bode very well as we think about cemetery production going forward. Operator: Our next question comes from Tobey Sommer with Truist. Tobey Sommer: I was wondering if you could talk about the drivers of lower than inflation expense growth. That's pretty impressive, particularly if you think that your ability to achieve that has legs. Thomas Ryan: Sure. Some of the things that are happening within the current year 2025 is our focus on the products that we sell. And the things that we're selling, the types of products we sell, who we're buying from. And so our supply chain team, led by Michael Johnson, have done a lot of great things as we think about the products that we retail to consumers and how we price those and how, again, we're -- what types of products we're buying and selling. So we've seen on that really on the merchandising cost side, some enhancements as we think about it. The other thing that I think is probably the most powerful and it gets back to kind of labor efficiency. So we utilize -- we empower our operators really to proactively managing staffing levels and giving them the tools to do it as you think about overtime, part-time roles, they're using metrics. They've got daily dashboards. And so what it allows us to do with those labor efficiency metrics is manage that and then, as a team, we're taking best practices and sharing those across the entire portfolio. So think of it that way, and then at the very top, we've got a cross-functional margin improvement committee that's been in place for a number of years now that really focus on dissemination of these best practices. So we think we've got a pretty good grip as we think about volumes aren't as high as we thought they were. We're going to manage the variable cost, particularly around staffing. So really a testament to our great operations management team and how they're utilizing those tools to manage costs effectively. Tobey Sommer: So would you say that you think that this sort of spread could be achieved beyond 2026 or take it one year at a time at this stage? Thomas Ryan: I think it's kind of a one year at a time. And I do believe that's true, but it kind of gets back to volume, right? If we begin to see volumes ticking up, it becomes a little more complicated as you think about staffing costs, you're going to see some rises in that because, again, these are variable costs. But at the same time, I think it really allows us in the challenging volume periods to manage costs as low as you see us do it. But I'd expect those to trend back up as volumes begin to increase as we anticipate over the coming years. Tobey Sommer: If I could sneak one more in from an acquisition perspective, you closed out the year and right down the fairway for your total capital deployed. When you look at the pipeline, is there any change in the composition such that something might be a little bit bigger this year? Eric Tanzberger: I think we're seeing a similar type pipeline, Tobey. I think we're very excited about it. As I've said before, it's generally going to be more of larger independent type transactions that are both funeral and cemetery. And the best that we could do in those situations were places that we already exist and already have local scale. And that's the best of both opportunities for our company as well as those independent funeral homes that are decided to join our company, and we can continue the great service and the way they're treating their consumer in those markets that we are already in and guarantee that really, but the pipeline is good. The pipeline is healthy. We're very busy. I think I've been saying that for a couple of quarters now. And I think I'm going to still say the same thing. I think it's pretty good and pretty busy, and we're excited about it. Operator: Our next question comes from Tomohiko Sano with JPMorgan Chase. Tomohiko Sano: This is Tomo from JPMorgan. Could you talk about the plans for developing selling premium cemetery inventory and your outlook for recognition rates? And could you talk about how do you view price elasticity as well, please? Eric Tanzberger: We're going to deploy capital, which is the first part of your question, similar to last year, which our metric right now is about $165 million of very high returning opportunities. As you're describing as you saw Memorial Oaks during your tour, we're going to invest in tiered type inventory at each of our cemeteries that are going to give offerings all the way to the higher end in terms of families that want like private estates and such, then you go all the way down to the semiprivate areas, and then you get to some of the initial more lower-tier type offerings. I think that it continues, coupled with our sales force, to be the best value opportunity that we can get and the highest return opportunities we can get for that type of capital. In terms of the cemeteries themselves, there's relatively high barriers to entry. We're very lucky to have this 35,000 acres that we had that were built over many, many decades by really the founder of this company over a long period of time where metropolitan areas have grown around these cemeteries, but yet we still have a tremendous amount of capacity and years left within these cemeteries. What you saw in Memorial Oaks, which Houston has now grown out and surrounded, still has many years left, many decades left in terms of inventory. For those of you all on the call have been to Rose Hills, that's a similar situation where L.A. has grown around it and many years left in that. So we're very lucky to have it. We have good barriers to entry. We're going to price it based on the tiering effect and type the value proposition that exists that we've always had. We feel that there's a lot of opportunity with a strong cemetery consumer, especially as the demographics over the long term turn our way over a period of time. Tomohiko Sano: Very helpful. Just one follow-up on the M&A pipeline in 2026. Could you talk about prioritization for expansion, especially what drove the recent acquisition in locations of North Carolina, Arizona, Florida and Canada? And are you continuing to target these locations or more broader-based M&A? Eric Tanzberger: No. It's going to continue to be, as I said, we want to be in markets that we already exist in as the first stack ranking because we already have -- we carry the national scale anywhere that we're buying. But when we already have that local scale, it can really make 2 plus 2 equal 5, so to speak, when we have these larger really nice independents joining our company. So we'll continue -- you know, we have a broad base across the United States. We also have a wonderful business in Canada really from anchored in the West all the way over to the East, especially in Toronto. And you'll continue to -- for us to develop very long-term relationships with a valuable pipeline that we have with those relationships and as those individual businesses and their owners and their families kind of raise their hand and are interested in discussing the next step and discussing liquidity event, we have the advantage of having tremendous liquidity and speed and really making it a win-win situation with our independent partners. Operator: Our next question comes from Parker Snure with Raymond James. Parker Snure: Just wanted to drill down on the GA revenue in the funeral segment a little bit more. With your core preneed funeral production up 12%, but the GA commissions were down just a bit. Maybe just talk us through some of the drivers there. I know there were some comments on the commission rate. I know you previously made some comments on a flex product that comes in with lower commission, maybe just drill down on some of the dynamics driving that. Thomas Ryan: Sure, Parker. I'll take that. So as you think about the timing of all this, the fourth quarter of 2024, we're relatively new into the new contract with our new insurance partner. And so at the time, we're really hesitant to talk about what we think the rate is going to be because there are so many factors that play into that. Any kind of new plan is going to have new pricing, new learning, new forms, new processes, new rules. So there's just a lot of change management engaging in there. So the two things I mentioned on the call, Parker, were product. And so as you think about that, you rightly pointed out that we opened up the flex product in the mid part of 2025 that we didn't offer at the end of '24. So some of this is we're offering a flex product with a dramatically lower commission rate than the traditional insurance. That's a little piece. Another one is kind of what we call early payoffs. You try to predict who's going to sign up for these things and then pay off within a year with the early payoff rates slightly higher, and that again would drive it down. The other factor is, if someone pays a single pay upfront versus a multi-pay over time, there's different commission rates there. So we're trying to predict how many people are going to buy a single pay, how many people are going to buy a multi-pay. So those are the 3 things that kind of impacted the product piece. And then the other thing we mentioned was cancellation rate. And again, two things there. One is you've got cancellation rate from the old insurance provider in that business. And we saw an increase of older contracts from the previous supplier that, again, kind of happens from time to time it isn't as predictable. And I don't think that's going to continue at those rates. And then finally, we're seeing a slightly higher cancellation rate than we used to experience with the previous insurance provider. I would attribute that to, again, the new plan learning. We're learning how -- what are the points where customers are frustrated with processes, rules, forms. And so I think we'll get better at that as time goes on. So we came out and said, let's look for kind of a mid-30s type of percentage rate going forward. We think that's probably a fair way to think about it as you model '26, '27. Hopefully, we'll get a little better over time at some of these things like cancellation. But we're very comfortable that now we're in a place that we understand it and we should try to improve from here. Parker Snure: Okay. Great. That's super helpful. And yes, just a follow-up on that. On the -- it sounds like there was almost like a bad debt accrual for the cancellation rate. Maybe if you could just help us like give us a number for the magnitude of that? And is that expected to be a onetime item? Or is that going to be kind of an ongoing accrual that's constantly flowing through the numbers? Thomas Ryan: Well, I think it's -- like you said, the cancellation rate experience we're having is a little higher than we thought, which requires us under -- when you're making estimations to catch up. So maybe think about 200 bps as being the impact of catching up this quarter, which again, we've factored into going forward, what we think about 2026. So as you model, I'd just go back to that kind of mid-30s and that would encompass any catch-up that we think we need to have. And like I said, I hope operationally over time, and I believe this is true, we're going to get better at this because there's typically a reason. And again, this gets back to new products, forms, processes, people, us getting used to them. So I expect this over a period of time to get better. It's just the part of change management that's tough. But look, at the end of the day, we've got a better product for our customers. We're generating higher commission rates. So we're very, very pleased with our partnership and expect it to continue to trend to the positive. Parker Snure: Yes, absolutely. Understood. And then just if I can squeeze in one more. On the perpetual care trust, that was up $8 million year-over-year. I think for the full year, it's up about $16 million. Maybe just help us with what is expected in your guidance for 2026 for perpetual care trust revenue? And maybe just remind us on the accounting treatment of how that portfolio is accounted for. Eric Tanzberger: Yes. We had a great year across all the trust funds, as you saw Parker, at a 15% return. We normally expect and model kind of about half that, kind of about a 7%-ish type market return in the trust funds. That's true for the internal care funds just like it's true for the MST funds. The internal care fund is really split into two components. One is a prudent person approach, which is the same 60% equity, 30% fixed income, 10% alternatives type mix that you would expect from that type of portfolio. There's still though a few states in the internal care fund, which don't follow that method and primarily are invested in fixed income securities. When that occurs, when there are gains or losses from those portfolios, that flow through that particular line. The issue was not during the fourth quarter of '25, but in the fourth quarter of '24, we had a liquidation related to a portfolio manager and that created a $4 million, $5 million, $6 million loss that came through. So it's not that the portfolio looks so much better than last year is that last year was pressured by that particular event in the internal care funds. Operator: Our next question comes from Scott Schneeberger with Oppenheimer. Scott Schneeberger: I have probably a total of three questions. I'm going to ask the first two upfront. We heard a lot about the flu in the fourth quarter, certainly carryover into the first quarter. But funeral volumes were pretty light in the fourth quarter. Just kind of curious what you're seeing on the flu front. And then the second part of the question is, the guide for 2026 on funeral volumes flat to slightly down. When are we going to see that? I mean that's kind of in the trend, but is there a conservatism in there? Or is that the trend? I was thinking we might be seeing that start to improve a bit. So just thoughts on those. Thomas Ryan: You bet, Scott. So as it relates to flu, you're correct, we did hear about the cases. I think as it relates to creating funeral volume that we're not seeing any of that. We're not hearing any of that. And as we think about trends in volume, it's probably good to take a step back for a second. So we know that the COVID impact occurred. We knew that we're going to have the COVID pull-forward effect, and we've modeled that. And we think we've got a little bit of diminishment there, but less year-over-year. The other thing just to point out that we don't talk about as much, but you'll recall us talking about it during COVID, was the term excess deaths. And what did that mean? And we said that was kind of the ripple effect of COVID. We saw increases in drug overdose, suicide, traffic fatalities, murders, lack of cancer screenings. And so we couldn't explain this excess volume that has occurred even beyond COVID. And I think as you look at the statistics now, and this is a positive for us as a society, I think goodness, right, drug overdose down, suicide down, traffic fatalities down, murders down, cancer screenings back to levels, and you're seeing deaths from cancers trend down. So as you look at the national data and again, it's not perfect, as a country, volumes were down in 2024. Preliminary '25, they're down. So I think what we're going through is a little bit of a trying to normalize out of this strange period. The other thing that we do is we go back and look at the CAGR of the 2019 numbers. So if you go back and look at pre-COVID and you said, let's expect volumes to increase 1% over the next few years. If you do that and look at our current volumes, you'd be very pleased about where we stand. As you think about market share, as you think about demographics. So it's very confusing, and I understand why it is. It's frustrating for us sometimes too. And look, we're paranoid. We're going to fight for volume for market share. Are there markets we could do better as we think of cremation pricing, maybe, and we're doing that every day and trying to fix it. But I think if you really take a step back and do the compounded impact of '19, you feel very good about the volumes that we're experiencing today. We still believe the demographics of this business, just the pure aging of society is going to have an impact, and it's just challenging to understand exactly when you're going to be able to see that. It isn't being clouded by some of these other trends. But again, we're going to manage our costs. We're ready to take care of that. On the good news front, so as I think about '26, yes, we think it's probably going to be flat to slightly down. January is a little soft, as we mentioned earlier, but we'd expect it to trend back towards flat. I think as you get out to '27, '28, '29, we expect to see funeral volumes increase is the way our models are working. So we think we're close. We're poised and ready to do it. I'd say on the positive front, on the cemetery side, we're seeing a lot of great things in our sales activity, both in large sales and in core. So still feeling good about '26. Volumes could be slightly down to flat, like we said. Scott Schneeberger: Great. Appreciate that color, Tom. And then the last question, it kind of dovetails off all that. The guide for 2026 EPS is growth of 5% to 13%. That certainly encompasses your 8% to 12% midpoint kind of in the bottom half of that. It feels about right, but just curious what has you concerned that could put you at the lower end? What are the drivers that could put you up at the higher end or above? Thomas Ryan: Yes. So I think at the lower end right now, I think we think that would be continued soft funeral volumes. If we saw volumes that came in at down and down, let's say, 200 basis points or something, that's tough to overcome. If we get flat, I think we feel very good about the higher end because, again, what we're seeing in our -- through the windshield is a lot of sales activity and feeling really, really good about it. I think we feel good about SCI Direct trending the other direction. I think we feel good about our arms around the expense category. So to me, the part that would put you challenging to the lower end would be a continued year-over-year decline in volumes. And again, we're going to do everything we can to push you towards the higher end of that EPS guidance. But that's probably the most difficult one for us to overcome if it's not there. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to SCI management for any closing remarks. Thomas Ryan: We want to thank everybody for being on the call today. We look forward to speaking to you again soon. I guess next call will be at the end of April. So everybody be safe out there. Thanks again. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good afternoon, ladies and gentlemen, and welcome to the Deutsche Borse AG Analyst and Investor Conference Call regarding the preliminary Q4 and full year results of 2025. [Operator Instructions] Let me open the floor to Mr. Jan Strecker. Jan Strecker: Welcome, ladies and gentlemen, and thank you for joining us today to review our financial results for the fourth quarter and the full year of 2025. Present on today's call are Stephan Leithner, our Chief Executive Officer; and Jens Schulte, our Chief Financial Officer. Stephan and Jens will take you through the presentation. And following their remarks, we will open the line for your questions. The presentation materials have been distributed via e-mail and are also available for download on our Investor Relations website. This call is being recorded, and a replay will be made available shortly after the conclusion of today's session. With that, let me now hand over to you, Stephan. Stephan Leithner: Thank you, Jan, and welcome, everyone. In 2025, we achieved record-breaking top and bottom line financial results, successfully executing our strategy and delivering on our guidance. This demonstrates the strength and resilience of our diversified business model. Net revenues without treasury results increased by a strong 9%, reaching the targeted level of EUR 5.2 billion. Importantly, we showed significant and operating leverage with EBITDA without treasury result growing even faster at 14%. This performance was underpinned by our very disciplined cost management with operating cost growth held at just 3%, right in line with our expectations. These record results confirm that we are on the right path, successfully executing our strategy despite headwinds in some areas. Our strong performance and confidence in our strategy directly translate into significant shareholder returns. We are proposing a 5% dividend increase to EUR 4.20 per share and will shortly launch a EUR 500 million share buyback program on an accelerated basis. In total, this delivers a record distribution of EUR 1.3 billion to our shareholders in 2026, a total payout of around 63%. The positive momentum of the full year was also visible in the fourth quarter performance. Q4 net revenues grew 7%, driving a 10% increase in EBITDA without treasury results. This was primarily fueled by outstanding double-digit net revenue growth in 2 areas: first, in the SimCorp Software Solutions, which was up 18% on a constant currency basis, driven by client wins and the continued expansion of our SaaS offering. Our performance in the Americas in this context was a standout with 47% annual recurring revenue growth. This was driven by major client wins, including a Tier 1 U.S. asset manager, which will bring all asset classes onto our platform with a full front-to-back coverage. This is a powerful validation of our SimCorp One platform and our strategy in this key market. The acceleration of our SaaS transformation at SimCorp is also a core driver of this success. SaaS net revenue grew 50% in the fourth quarter, what a number. This is the secular growth we are focused on, and it confirms we will have over half our clients on our SaaS platform by 2026. This performance puts us clearly ahead of our key competitors as I can proudly report. Altogether, 2025 was a year of strong execution for SimCorp, and we have delivered excellent results. Our strategic path is clear, and we are delivering on it. The second area that performed exceptionally well in the fourth quarter was our Security Services business, which grew net revenue without treasury results by an outstanding 17%, again, what a number. we achieved new all-time highs across custody, settlement and collateral management, which drove this exceptional result. The record-breaking activity was fueled by a confluence of powerful market trends, including continued strong fixed income issuance, which increased the overall amount of debt outstanding, equally as a second driver, persistently high equity market valuations. And thirdly, a significant uptick in retail investor activity and flows into Europe. Finally, and furthermore, a heightened demand for safe and efficient collateralization propelled our collateral management outstandings up by 28% to a new record of EUR 932 billion, demonstrating the essential role our infrastructure plays in a dynamic market environment. The future growth of our Security Services division is driven by 3 core strategic drivers as we also outlined at our Capital Markets Day. First, we are focused on business scaling by expanding our client footprint with direct plug-and-play infrastructure access and innovation with our Collateral Management as a Service platform. Second, we are leading the European capital market transformation by leveraging our unique position as a top CSD and ICSD to consolidate the fragmented post-trade landscape and capture new capital flows into Europe. And finally, a third trend and the most transformative, we are pioneering asset class expansion by driving the digitization of finance, building on our D7 digital issuance platform to create the trusted market infrastructure for tokenized securities, digital cash and institutional crypto assets. Our strong performance, as you can see on the second chart, gives us the power to execute our strategy and make decisive moves to solidify our leadership position for the long term. The slide highlights 2 examples of this in action that we are tackling this year. First, an update on our acquisition of Allfunds, a truly transformational step for our Fund Services business in our Leading the Transformation strategy. The strategic, commercial and financial rationale for this move is exceptionally compelling. With Allfunds, we are not just acquiring a business, we are building a European investment fund champion. This isn't just about getting bigger, it's about getting better and creating a fully integrated end-to-end service offering for the entire fund industry across different markets. This combination is powerful because our businesses are highly complementary. We are bringing together Clearstream's strengths in Central Europe with Allfunds' leadership in Southern Europe. This positions us at the heart of pan-European ecosystems, significantly reducing market fragmentation and establishing a harmonized global reaching business that plays a pivotal role in facilitating the investment of retail savings into productive capital. This is a significant step forward for European capital markets and also addresses the goals of the savings and investment unions that are so often talked about. From a financial perspective, this transaction is designed to create substantial long-term value. We have identified significant synergy potential, expecting to deliver annual cost savings of EUR 60 million in operating costs and EUR 30 million in capital expenditure. Approximately half of the run rate synergies will be realized in the current strategy cycle by year-end 2028. The acquisition is valued at EUR 5.3 billion, structured at EUR 8.80 per share. Initially, we proposed a balanced mix of cash and shares. However, we have since refined this financing structure to increase the cash component. This strategic adjustment allows us to fully utilize our debt capacity. Due to our strong financial performance, our credit rating metrics at year-end 2025 were all very well within the established thresholds, leaving room to increase the cash component. Speaking to you today on the analyst call here, the result is a transaction that delivers high single-digit cash EPS accretion from year 1 based on the run rate synergies while preserving our strong credit rating and maximizing immediate value for you as our shareholders. I would like to emphasize, however, beyond the financials, the partnership nature of this transaction, which, from my perspective, will make it so transformative and a unique opportunity. The compelling concept was developed through close dialogue with the Allfunds management team. The transaction has the unanimous support of the Allfunds Board of Directors. We have also already received irrevocable undertakings from Allfunds' largest shareholders. We are now proceeding with the U.K. scheme of arrangement process and obtaining the necessary regulatory approvals. We are highly confident in securing antitrust clearance because our businesses really are complementary. Clearstream mainly drives post-trade fund processing infrastructure, while Allfunds is a fund distribution platform. We also have a distinct geographical and client focus across the funds value chain, as I already outlined earlier. We anticipate completing the transaction in the first half of 2027. In closing, this is a landmark transaction. It strengthens our capability, accelerates our strategy and reinforces our commitment to building the future of capital markets infrastructure. We are creating a world-class player that will better serve clients and drive the evolution of the global funds industry. You hear my passion. I think this is a very strong story. Now let me expand on the second situation, for which I know many of you have been persistently looking for clarification. I recall many of our meetings around this. We are now taking full ownership of our data analytics and index champion ISS STOXX. As we announced overnight, we have reached an agreement with GA to acquire the remaining 20% minority stake held by our partner. The move creates clarity around this topic and is the natural and planned culmination of our successful partnership, which began with our joint investment in Axioma back in 2019 and continued through the strategic merger that formed the integrated ISS STOXX business in 2023. This buyout is a reaffirmation of our strategic vision and gives GA the necessary liquidity. It solidifies our ambition for ISS STOXX to be a leading go-to provider of mission-critical data analytics and indices for the buy side. While we acknowledge the headwinds resulting from a changed attitude towards certain products, particularly in the U.S., we feel strongly confirmed by clients about the underlying business logic. We remain confident in a return to stronger growth in the medium term as outlined during our Capital Markets Day last December. We also view the transformation through AI as a key opportunity, not a threat. ISS STOXX is uniquely positioned for this transformation to its unique historic databases. Our clients have a strong need for highly reliable regulation-proof quality data with an algorithm alone cannot provide. Our strategy is to use AI as a powerful augmentation tool, combining our trusted data and human experience to enhance our offerings and maintain our market leadership. Taking full ownership reduces complexity, allowing us to accelerate the execution of our strategy for this highly attractive business. For example, we'll benefit from lower governance costs and closer integration with our global system and processes. It will also be easier for us to promote closer cooperation between our index and data businesses in areas such as financial derivatives and software solutions. Similarly, we can leverage ISS STOXX's data handling and processing capability globally as well as analytics competence over time in other parts of the group. The agreement with General Atlantic included a contractual path for their exit, and the valuation is based on the peer group multiple as we had agreed at the outset of the partnership in 2019 and 2023. We will finance this using available cash and debt. The transaction is expected to have a low single-digit accretive effect on our cash EPS, obviously, already this year. Finally, let me be very clear on a critical point. Integrity and independence of ISS research are paramount. We are fully committed to maintaining the established noninterference policies, ensuring that the research provided by ISS continues to be objective and trusted by the market. Both the Allfunds acquisition and the minority buyout of ISS STOXX are clear, logical steps in the further development of our group. Let me turn to the strategy for a second again. Our strategy, Leading the Transformation, provides a clear road map for the future. So let me come to the outlook for 2026 within the growth trajectory of our strategy on Page 3. This is best summarized in 4 key messages. First and foremost, we start from a position of strength. We are on track and fully committed to our 2026 financial targets. And you heard me say that a year ago when it came to 2025, and we deliver. Specifically for 2026, this is EUR 5.7 billion in net revenue and EUR 3.1 billion in EBITDA without our treasury results. But let me be clear, we see these ambitious goals, not as a final destination, but as an important interim milestone in our journey as we have outlined already in London in December. Delivering on this plan demonstrates our credibility and provides the foundation for our next phase of growth. The second point is our ambition extends well beyond 2026. We are committed to delivering sustained growth, targeting a high 8% organic net revenue growth through 2028. This isn't just a number. It's a plan powered by durable sector growth drivers and our leadership in technology. Our unique position allows us to lead key market transformations, unlocking new growth vectors that will propel us forward. As a third element of the strategy, we are evolving our operating model to efficiently deliver this growth. Through our OneGroup model, we are building a more scalable and efficient organization. This is not just about cost control, it's about cultivating a culture of excellence. And obviously, we are not compromising our organic investment volume, which runs at around EUR 600 million per year. By holding our operating cost growth to a disciplined 3% growth rate, we will ensure that the revenue growth translates directly into enhanced profitability and operating leverage. And therefore, finally, our financial ambition. The payout from this strategy is very attractive. We will deliver strong structural top line growth and significant scale benefits. This bottom line performance gives us a powerful combination of strong investment capacity for organic growth and strategic M&A while delivering attractive and growing shareholder returns. In light of the recent market developments regarding artificial intelligence, let me also again reaffirm our clear position on the topic. We view AI not as a threat, but as a powerful engine for our growth. A thorough assessment confirmed our portfolio robustness, showing that less than 5% of our revenues are only potentially affected as AI cannot replace the regulated system-critical infrastructure and processes we operate. At the same time, our plans for scaling and limiting cost growth benefit greatly from AI. With over 75% of our infrastructure now cloud-based, we are strategically positioned to capitalize on this opportunity by developing AI at scale on a rapid, cost-effective and secure manner. We're already leveraging AI to enhance internal efficiency and are rolling out product embedded AI to boost client productivity. As a component of our Leading the Transformation strategy, AI is generating tangible value. In short, we are delivering on our current plan, and we have a clear path to sustained and profitable growth throughout 2028. We are evolving our operating model to support it, and this will all translate into strong returns for you, our shareholders. With that, I'll hand it over to Jens for a closer look at the financial and the segment details. Jens Schulte: Yes. Thank you very much, Stephan, and warm welcome, everyone, also from my side. So it's a pleasure to walk you through our financial results for 2025. As you've heard, the year was a record year for Deutsche Borse Group, and Slide #4 crystallizes the strong basis we have built. We delivered total net revenue of over EUR 6 billion and an EBITDA of more than EUR 3.5 billion. Without the treasury results, we achieved 9% top line growth and more importantly, 14% bottom line growth. The fact that our revenue growth is outpacing the growth of our operating costs demonstrates the increasing profitability we are generating across the group. It's a testament to the strength of our diversified portfolio, which allowed us to, a, deliver this performance despite cyclical headwinds in certain areas; and b, our disciplined approach to cost management with only 3% growth, fully in line with our guidance. This all translates into a strong cash EPS of EUR 11.65. Now let's zoom into the fourth quarter on Page #5, which was a strong finish to the year. We posted net revenue of EUR 1.6 billion and an EBITDA of almost EUR 900 million. This translates to a 7% top line growth without the treasury results, which corresponds to 9% on a constant currency basis and 10% bottom line growth, again showcasing that our profitability is growing faster than our revenue. The key takeaway for this quarter is the quality of our earnings. Our performance was driven by sustained double-digit secular growth in our Software Solutions and Security Service businesses. The structural momentum more than compensated for the weakness in areas such as equity derivatives, which were affected by modest market volatility. Our ability to balance performance across the portfolio is a core strength of our business model. On the cost side, total operating costs remained broadly stable as disciplined cost management and FX tailwinds offset inflation and targeted investments. Additionally, operating costs included exceptional effects from preparing for the potential IPO of ISS STOXX last year. Now that we have agreed to buy out the minorities, a lower double-digit million euro amount has become income state effective. Now let's take a closer look at our segments. First, let's start with Investment Management Solutions on Page #6. As we discussed at our Capital Markets Day, this segment is central to our buy-side strategy. In the fourth quarter, Software Solutions was clearly the growth engine, delivering 13% net revenue growth. As Stephan mentioned, we even achieved an impressive 18% net revenue growth on a constant currency basis. This reflects the increasing U.S. footprint. The growth resulted from our focused execution, including significant customer wins in North America and the continued success of our Software-as-a-Service transformation. It's encouraging to see that Axioma, our analytics offering, which is now part of the SimCorp One platform, has achieved the highest ARR growth since the acquisition in 2019. This achievement is a testament to the benefits of combining the 2 businesses as well as the revenue synergies we anticipated as part of the SimCorp acquisition. The strong performance offset the known challenges in the ESG and Index business, which continues to experience prolonged cycles due to the political uncertainty. Net revenue growth in ESG and Index was 4% at constant currency, which is not fully satisfactory, but within the expected growth range for this business, as discussed during the CMD. Our Index business benefited from robust licensing and achieved net revenue growth of 10%. The segment EBITDA is affected by the exceptional costs I just mentioned. After adjusting for these costs, EBITDA increased broadly in line with net revenue. The results in Trading & Clearing on Page #7 demonstrate our strength in secular growth areas and our leadership in European markets. The division achieved 3% growth without the treasury results, but the details are what tell the real story. We saw good performance where structural drivers are strongest. Commodities benefited from robust EU gas activity. Cash equities were fueled by ongoing inflows into Europe, and foreign exchange continued to expand its client base and geographic reach. Financial derivatives remained flat as expected, given the subdued volatility environment in equities. However, this was offset by our fixed income business. We made good progress on our fixed income road map, achieving a 7% year-over-year increase in net revenue without the treasury results. Our OTC Clearing and Repo businesses significantly propelled this growth with net revenue climbing by 14% and 44%, respectively. A key element of our strategy has been preparing for the EMEA 3.0 active account requirement, a major catalyst for growth in our OTC Clearing segment. Our strategic focus on converting our extensive client base into active participants yielded further results. We experienced a 31% increase in our outstanding notional, reaching EUR 44 trillion and capturing a 22% market share. This was accompanied by a surge in trading activity with our average daily IRS volumes growing by 97%. While we have successfully onboarded nearly 2,500 clients, our EU buy-side activation rate remains at 16%. This underscores a significant opportunity for future growth, and we anticipate gradually phasing in more active clients over the next 6 to 12 months. Our commodities business had another successful quarter with an 8% increase in net revenue. This growth was fueled by Europe's increased reliance on our global LNG supplies, which created price volatility and a heightened need for market participants to hedge against uncertainties in supply and demand. We also saw further momentum in the Clearing Services that our U.S. commodities business, Nodal, provides to Coinbase. Nodal Clear serves as the central counterparty for the Coinbase Derivatives Exchange, mitigating credit risk for market participants. Thanks to this partnership. The first ever 24/7 clearing for margin crypto futures are now available in the U.S. and plans are in place to integrate the stablecoin USDC as eligible collateral for futures trading. In cash equities, we benefited from strong demand for European equities and significant inflows into European ETFs. This reflects the broader investor rotation into European markets and growing interest in passive strategies. And finally, our foreign exchange business achieved net revenue growth across most product lines, supported by net new client wins and geographic expansion. Now turning to our post-trade businesses. We have Fund Services on Page 8. Net revenue without the treasury result increased by 3%. However, the underlying businesses of fund processing and fund distribution grew by a solid 7%. This growth is mainly fueled by structural trends, but was also influenced by some retrospective adjustments of volume-related costs. Generally, we are seeing new record levels of custody and settlement volumes as well as the continued increase in assets under distribution to more than EUR 760 billion. The performance is a direct result of our investments in our platform and our successful partnerships with global participants. These investments position us perfectly to capture the ongoing industry trend of outsourcing. We are seeing positive momentum across the board, supported by new client wins, portfolio growth and ongoing inflows into European assets. The other line item declined mainly due to exceptional effects in the fourth quarter of last year. And operating costs this quarter were influenced primarily by slightly higher investments and growth. However, the 2% growth in operating costs in Fund Services for the full year is in line with our expectations. It demonstrates our scaling momentum, which will be further fueled once the Allfunds acquisition is completed. Securities Services on Page #9 had an outstanding quarter, with net revenue without the treasury result growing by 17%. This performance highlights Clearstream's essential role in the European financial market infrastructure and its robust competitive position. Growth was broad-based and driven by record levels of assets under custody, strong settlement transactions and continued fixed income issuance. High equity market levels and increased retail participation also contributed to this growth. Our collateral management business reached an all-time high with outstanding balances increasing 28% to an average of EUR 932 billion. This robust growth nearly offset the impact of lower cash balances at year-end and U.S. dollar rate cuts on net interest income. As you can see on Page #10, our strong and consistent cash generation enables us to make investments such as Allfunds and the buyout of the ISS STOXX minorities while providing attractive and growing returns to our shareholders. Based on our performance in '25, we are proposing a dividend of EUR 4.20 per share. This represents a 5% year-over-year increase and a 38% payout ratio, which is at the upper end of our stated policy range. Furthermore, as we announced at our Capital Markets Day, we have refined our capital allocation policy to include regular annual buybacks. And I'm pleased to confirm that the previously announced EUR 500 million share buyback program will begin soon and is expected to last around 3 to 5 months. Our balanced approach of investing in organic and inorganic growth while increasing direct shareholder returns reflects our confidence in our future cash flow generation. On a side note, the 2 million shares we repurchased last year have been canceled and the shares outstanding now amount to 182.1 million. Finally, let me conclude with our outlook for fiscal year '26, which is outlined on Page 11 and reflects our confidence in the year ahead. We fully confirm the guidance we laid out as part of our Horizon '26 strategy, which has become an important interim step in our Leading the Transformation trajectory until '28. Our Leading the Transformation strategy presented at our Capital Markets Day in December sets a clear path for sustained growth through 2028 and beyond. The strategy is built on 4 key pillars: executing secular growth, driving market transformation, evolving our OneGroup operating model and refining our capital allocation. We are targeting an 8% compound annual growth rate in net revenue without the treasury result to reach EUR 6.5 billion by 2028. This will be driven by our leadership in secular trends, such as the growth of the buy side and our focus on key transformation themes like the evolution of European capital markets and the expansion of digital and alternative assets. A core component of the strategy is the evolution of our OneGroup operating model, which focuses on scalability and efficiency improvements, allowing for an increase in operating efficiency with the projected operating cost CAGR of only 3%. The resulting bottom line outperformance will support strong investment capacity and attractive shareholder returns. For '26, we expect to generate net revenue of EUR 5.7 billion and an EBITDA of EUR 3.1 billion in '26 without the treasury result. We are confident in our ability to achieve these targets due to our sustained business momentum, including recent client wins and continued momentum from secular growth trends. Furthermore, our strategic initiatives, particularly the deployment of AI will improve operational efficiency, supporting our EBITDA target while generating new revenue streams over time. Our targets also assume a normalization of market volatility and modest growth in equity derivatives. Additionally, we expect a treasury result of approximately EUR 0.7 billion, comprised of about EUR 0.5 billion in net interest income and EUR 0.2 billion in margin fees. The underlying assumptions for the NII are stable cash balances and euro interest rates as well as modestly declining U.S. interest rates. Regarding costs, we anticipate a moderate increase in overall operating expenses, consistent with our medium-term guidance of approximately 3%. This increase is not just passive cost inflation, it's disciplined investment in our key strategic initiatives that will fuel our future growth and drive operating leverage. We are fully on track to meet our medium-term goals and continue to lead the transformation of our industry. And that concludes our presentation. We look forward to your questions. Operator: [Operator Instructions] And the first question comes from Benjamin Goy from Deutsche Bank. Benjamin Goy: One question on Software Solutions, please. You mentioned another major client win in North America. Maybe you can give a bit more color on this client and more broadly, whether the business has reached a tipping point now in this market with major logos you can put on your RFPs and the integration of Axioma. How the dialogue has changed with U.S. clients over the last year or so? Stephan Leithner: Benjamin, thanks for your question. We are indeed very excited. I don't know how to frame that well because I gave you this West Coast largest pension fund last year type guidance. I think give us a bit more time for the press release, and we will be able to give you absolute clarity. But to the second part of your question, I think we have reached a positive tipping point in the spirit of the type of RFP participation and invitations we receive. We see a continued very strong pipeline in the U.S. market. But let me emphasize that this is a much broader pipeline than we historically have seen because of the Axioma integration. And as a second leg that it is equally fueled, and we talk a bit less about it by European momentum. I mean the quality of the names in Europe, Axioma was one of them as we had announced it, that really have such a strong and broad front-to-back character is something that, in fairness, we had not expected in that quality of dialogues that we are seeing now. Operator: And the next question comes from Arnaud Giblat from BNP Paribas. Arnaud Giblat: It's Arnaud Giblat from BNP. My question is on ISS. So I was wondering how the price of the acquisition was determined for the minorities. You mentioned peer multiples earlier on the call, but it seems to me that it's a small premium. And I'm just wondering how the headwinds you acknowledge for this business affected that price because the peers seem to be growing a bit faster. And also, was the timing of the minority of this buyout predetermined as part of the terms of the acquisitions made in 2019 and 2023? Stephan Leithner: No for the questions. As we have highlighted, there is a historic context in the basic agreements that we struck in 2019 and 2023. It is obviously, and that's why we put in the reference back to the peer group context. It's not arbitrary or negotiated in a narrow sense. There is an analytic basis on which we obviously will not provide more further details around, given that it's confidential between GA and us. But in summary, it's something that we feel very much is supported by the strength that we see in the business medium term, very confident and very excited. I think some of the valuation dynamics we see in the market is clearly a change from historic levels, but it doesn't change our belief in the fundamental quality of the business. Arnaud Giblat: And on the decision to do that today rather than in the future, was that predetermined as well? Stephan Leithner: No, there was a context. We have always said that around the dual track. And after 7 years, I alluded to that on a number of occasions. Certainly, there was already a long time horizon. So in that sense, yes, there were windows during which it became the possibility for GA to also have liquidity through the buyback. But again, that was not predetermined. That's why we did indeed look very seriously at the possibility of the dual track throughout the last year. Operator: And we have the next question from Enrico Bolzoni from JPMorgan. Okay, so he doesn't want to ask a question. Then we have the next question from Hubert Lam from Bank of America. Hubert Lam: Just one question on Allfunds. What gives you the confidence that you can pass the regulatory hurdles to get the Allfunds deal done, just given the possible antitrust situation around that? Stephan Leithner: Thanks, Hubert, for the question. The complementarity is really the sense of confidence that we have. The second element I would really want to emphasize is that this is a highly competitive market environment. I mean the platform and the size and quality makes the combined business very much a leader in many dimensions, but we are very much aware that and why the universe of intermediaries that are active there, including a number of platforms that are run by different asset managers as well as distribution groups. So it's a very competitive market in addition to the complementarity. If you put the 2 things together, we have done a lot of analysis, as we have also highlighted together with Allfunds in the run-up to the announcements, and that gives us a high degree of confidence. Operator: And the next question comes from Ian White from Autonomous Research. Ian White: Very simple one from my side, please. Very specifically, with respect to ISS' historical databases, why is AI unable to replicate those data sets? What are the moats there, please? Stephan Leithner: Good question, Ian. I think the substance of that moat is really driven around the enormous amounts of quality assurance that needs to happen, and that has been happening in the work that ISS has been doing over the many years. That is the anchor that really drives that distinctive sort of positioning of the data sets they have. I would add as a second element, the integration with a number of the qualitative data in recent years when it comes to sort of information that is supporting certain decisions and voting decisions, take again many of the ESG data and other, which is a pretty unique combination that ISS has there. Ian White: So just to clarify, is it fair to characterize those data sets then as essentially enriched or augmented by things that you couldn't scrape for free from company disclosures or the Internet? Is that a fair summary? Stephan Leithner: Yes, absolutely. But let me add to that. Quality assured means often error corrected. And I think that is what, in particular, for nothing worse than for models that learn of wrong and mistaken data, erroneous data. I think it's an area of shareholder voting where the topic of having a factually correct database is a critical part. Operator: And we have the next question from Tom Mills from Jefferies. Thomas Mills: I have one on Allfunds, please. Obviously, you've laid out what you expect to achieve from a cost synergy perspective. I'd certainly anticipate there should be some material revenue synergies that you should be able to exploit here as well. Can you maybe talk about what you see there and perhaps why you haven't set those out in detail? Stephan Leithner: Thanks a lot, Tom. It's much appreciated. I think the cost synergies, as you say, is something, which even though Allfunds is a public listed company, we have had a lot of joint efforts. I think we thought very conservatively about the synergy topic, as you can take from the revenue side. I think we'll see that much better once we have full access in the combination. Operator: And we have the next question from Michael Werner from UBS. Michael Werner: One question from me, please. I believe at the Capital Markets Day, you indicated that you expected Trading & Clearing revenues to grow by about 11% year-on-year in 2026, which is a bit above, I think, myself and the sell-side consensus number out there. And I think maybe some of this is coming from the opportunity from active accounts. A, can you confirm that? And then B, I believe when you talked about active accounts, and I might very well be wrong here at the Capital Markets Day, you talked about a phase-in period kind of midyear around May of this year. And then earlier, you talked about this opportunity still coming through in the next 6 to 12 months. So, A, was there any change in any of the timings? And B, when do you expect all of these active accounts to be activated? Stephan Leithner: Yes. Thanks very much, Mike, for the 2 questions. So on the Trading & Clearing revenue outlook for this year, I guess, comparing us to the consensus, there's been 2 major differences. One is maybe we estimate the EEX performance a little bit more strongly because we believe that the basic trajectory in that business is really, really super rock solid. And the second one is probably, as you indicate, slightly different assumptions on the uptick on the fixed income road map where we are confident to achieve it on a fee-based revenue basis and where there may be a little bit more caution on the market side. With respect to your active accounts question, basically, that has not changed. So active accounts, as you know, needs to be basically fulfilled until the middle of this year, so until June. So we do anticipate more significant activation rates by the mid of this year. But what we wanted to indicate on our tax today is also to say that, of course, this will not stop in the middle of the year, right? So this will be a phased ramp up and there may be some clients which start on a low basis just to test technicalities and figure out their flow routing and things like that. And then this should hopefully also expand further. That's essentially what we meant with our statement. Operator: The next question comes from Grace Dargan from Barclays. Grace Dargan: I just wanted to probe a little bit more around the synergies for ISS STOXX. Whether you have any target numbers, how you're thinking about that and whether there'd be any one-off costs to achieve that? And whether that's all captured in your existing revenue and cost guidance? Jens Schulte: Yes. Thanks very much, Grace, for the question. So we have not -- there are not top-down figures on potential ISS STOXX synergies. And as Stephan alluded to, we see several ways in how to benefit from that, by the way, also in the other direction. So I mean, we mentioned that we can see lower governance costs and also the business being more closely integrated on the back office. Also the other way around. This business has, for example, a strong footprint in the Philippines. So it's a very good far-shoring location. And we anticipate as part of our OneGroup topic that we explained that also other parts of the group will basically make use of that. And that's now much easier in a 100% consolidation scenario. But to your question, we haven't quantified that yet, so that's work that we're going to do over the next weeks and months. And then these figures are not yet included in our guidance or anything, yes. So it's basically the guidance has been set based on the structure so far, and there should be additional benefits in there. Operator: And we have one question from Ian White from Autonomous Research. Ian White: If I can maybe just ask a couple of follow-ups, if that's okay. I think following slightly on from Mike's question, can you provide us maybe a little bit more detail about how you're thinking of monetization of the short-term interest rate contracts and also the renegotiation potentially of the revenue share within the OTC clearing business? I'm assuming nothing has happened or nothing has changed on either of those fronts so far, but maybe a bit more detail around that would be interesting. And secondly, if I can maybe ask on the Kraken partnership and specifically the xStocks initiative. Have you kind of effectively entered into competition for trading in, in U.S. stocks there with the recent developments? And what do you anticipate in terms of additional securities that will be offered under that partnership and the prospects for building some liquidity in those markets, please? Jens Schulte: On the first part, Ian, happy to take that one. So on the various incentive programs that we have running within the fixed income road map, as you know, so that alludes to the -- I mean, to the STIR component of the FI ETD business, but also to the other components of our fixed income road map. We are actually reviewing those, as we said, within the first half of the year and then taking individual decisions. So far, I mean, with good market shares already achieved in most of the components, but we want to go further and we will figure out whether we further make use of these incentives or not. We haven't decided that yet. So it's going to come in through by the middle of the year. And on the second one, will you? Stephan Leithner: Happy to take it on. So I think, again, this is in an early phase. The xStocks dynamics will, for us is more relevant when it comes to the European parts. And what we can really do around the partnership with Kraken of tokenizations that bring not only xStocks on the 360X platforms, but then more importantly, the reverse direction, some of the different asset categories we have as we move to tokenization and leverage the Kraken sort of infrastructure there. Jens Schulte: I think we have one further question. Enrico redialed in and I think is ready to ask the question. Enrico? Enrico Bolzoni: Can you hear me? Jens Schulte: Yes, loud and clear. Enrico Bolzoni: Sorry, I was kicked out and thus rejoined. So perhaps I might have missed the question from my colleague. I'm going to ask it again, just in case. So going back to your stat, can you provide a bit of color perhaps on the competitive landscape? I would be very curious to know if, for example, you can break down the growth that you printed between its components of perhaps a bit of pricing, how much was due to new clients win? And in general, do you expect that competitors in the U.S. will react to your success and perhaps we should see a bit of pricing pressure coming forward? Jens Schulte: Enrico, this was the Software Solutions business, right, to make sure? Enrico Bolzoni: Yes, that's right. Stephan Leithner: I think again, we wouldn't have a detailed breakdown. But inherently, this is not a pricing type. I mean market works with a decent inflation protection type pricing structure. So it really is around market share wins. And secondly, to go back, it is very much about activation of clients, meaning in the SaaS period, you clearly reap the full benefits once the early transition is coming on stream. So therefore, it's a blend of the sign-up, the client upfront parts and then obviously even more important, the ARR components, which go live, the more sort of activation of components has happened. So that's the real driver from a market share context. Jens Schulte: I mean maybe only to build on what Stephan said. In terms of competitive dynamics, always keep in mind that the majority of this market is still outside third-party providers such as us, right? I mean the majority of the market is still captive solutions within clients. And so it's less that we try to snap away clients from our competitors. It's actually basically turning captive solutions into our solution. So there's plenty of growth in the market still. Enrico Bolzoni: That's very helpful. If I may add on this last point you made in light of the current debate on AI latest products that have been launched. Do you see any change so far in the client to perhaps... Stephan Leithner: I think let me be pretty... Enrico Bolzoni: Out of the change... Stephan Leithner: Well, Enrico, thanks for the question very much because I truly want to make that point in a very strong and passionate way. I think the power of SimCorp One is really the character of the front-to-back data handling, the ultimate truth type quality of a platform. I think we really see this as something where given the size and magnitude that we talk about in numbers in investment volumes, I mean, this is not something you play around as a retailer or even as a wealth investor. This is something where the biggest institutions of the world are handling their data where the certainty of quality and processing is really critical. And that's the confidence. That's the one true power. That's the unique asset for SimCorp different from a number of other providers who come at this from the front end rather than the middle and back office. So that power is one where AI capabilities come on top. So that's why we also look at it as an opportunity. We have in place with the biggest and most demanding clients, the base platform. That's why we look at this as an upside opportunity as we obviously work with AI-based modules going forward. Jan Strecker: Great. So there are no further questions in the pipeline. And therefore, we would like to conclude today's call. Thank you very much for your participation. If there's anything else, then please do feel free to reach out to us directly. Thank you. Operator: The recording has been stopped.
Operator: Thank you for standing by. This is the conference operator. Welcome to WildBrain's Fiscal 2026 Second Quarter Earnings Conference Call. [Operator Instructions] This conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Kathleen Persaud, VP of Investor Relations. Please go ahead. Kathleen Persaud: Thank you, operator, and thank you, everyone, for joining us today for WildBrain's Second Quarter 2026 Earnings Call. Joining me today are Josh Scherba, our President and CEO; and Nick Gawne, our CFO. Before we begin, please note the matters discussed on this call include forward-looking statements under applicable securities laws, which reflect WildBrain's current expectations of future events. Such statements are based on a number of factors and assumptions that management believes are reasonable at the time they are made and information currently available. However, many of these factors and assumptions are subject to risks and uncertainties beyond WildBrain's control, which could cause actual results and events to differ materially from those that are disclosed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, changes in general economic, business and political conditions. WildBrain undertakes no obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law. Please note that all currency numbers are in Canadian dollars, unless otherwise stated. After our remarks, we will open the call for questions. I will now turn the call over to our President and CEO, Josh Scherba. Josh Scherba: Thank you for joining us today. The second quarter of fiscal 2026 reflects a period of continued execution of WildBrain's flywheel strategy while unlocking a transformational opportunity for the company. During the quarter, we continued to see strong performance for our owned IP and WildBrain CPLG, our global licensing agency, as well as strong engagement on our digital platforms and positive reception for new premium content launches. During the quarter, we also announced the sale of our interest in Peanuts for $630 million, which will eliminate our debt and leaves us with material cash proceeds to invest in our business. This represents a significant inflection point and opportunity for WildBrain. As we move through this transition, our focus is on ensuring the business is positioned effectively for the go-forward operating structure with clear priorities around capital allocation, cost discipline and long-term value creation. Before delving into greater detail on the path ahead for WildBrain, I'd like to take a few minutes to look back at another successful quarter. Our global licensing business continued to perform well in the second quarter, reflecting the enduring strength of our core brands and the depth of our global licensing platform. We saw continued momentum across Strawberry Shortcake and Teletubbies, supported by active partner engagement and expanding retail programs. MGA Entertainment recently launched its LOL Surprise Strawberry Shortcake Dolls, a collaboration that brings Strawberry Shortcake to a new generation of consumers. The collection sold out in just 12 days, underscoring the strength of the brand and its appeal to leading global toy partners and consumers. Strawberry Shortcake continues to benefit from rising engagement across digital and social platforms, which remains an important driver of licensing demand. Just last week, we announced a refreshed CG Version of the Classic Strawberry Shortcake with a vibrant slate of new original content launching across WildBrain's digital network this year. This includes a hybrid live action and animated baking show and other short-form animated episodes. Early fan response to the refreshed Strawberry Shortcake look has been encouraging, with fans on our socials expressing excitement for the new design and commenting they're eager to see more. This creative evolution underpins a broad content rollout, reaching today's fans where they're watching and strengthens the foundation for continued licensing and franchise growth. Strawberry Shortcake's growth is being led primarily by the U.S. market, which is creating a halo effect that is already seeing incremental opportunities across additional regions and categories. The playbook is clear. We are broadening and deepening the content road map, building on recent wins to reach new fans while continuing to engage and activate audiences we've already reached. This consistent and expanding content strategy keeps Strawberry Shortcake top of mind with consumers and reinforces confidence among existing licensing partners. It is also creating opportunities with new partners globally with momentum building toward multiple territory launches coming over the -- launches over the coming 12 months. Teletubbies also delivered steady performance during the quarter, with particular strength in collectibles and lifestyle categories. We've previously highlighted our collaboration with Pop Mart, which continues to drive meaningful fan engagement and retail momentum, demonstrating the brand's ability to resonate with young adult consumers and expand into new high-value categories. Teletubbies and CASETiFY recently took home the award for Most Vibrant Energy IP at the China Licensing Expo, highlighting the cultural resonance and enduring affinity for Teletubbies that we will build on and grow over time. Engagement across YouTube and social platforms remained healthy, supporting our longer-term plans as we build toward the brand's 30th anniversary in 2027. YouTube watch time for the brand was up 11% year-over-year in the quarter, and we're developing new content in partnership with a major Chinese platform to further support growth in one of the largest licensing markets in the world. Across the portfolio, we continue to see broad-based interest from partners. Our focus remains on disciplined dealmaking, category diversification and nurturing long-term growth of our franchises. By building high-quality franchises that generate repeatable and growing profits over time, strong U.S. engagement provides a foundation for scaling these brands and unlocking additional growth opportunities internationally. WildBrain CPLG delivered a strong quarter with growth in both owned and third-party brands and across all territories. CPLG remains a highly differentiated licensing platform, continuing to attract new partners while expanding existing relationships. During the quarter, we announced an expanded licensing partnership with Dr. Seuss Enterprises, broadening global programs for The Cat in the Hat and How the Grinch Stole Christmas, reflecting sustained retailer demand for evergreen multigenerational franchises. CPLG's global footprint and deep retail expertise continue to create tangible commercial opportunities for both our own and partner brands, underscoring a unique WildBrain advantage, the ability to translate creative momentum into scalable global retail programs. This momentum was further supported by the LOL Surprise collaboration for Strawberry Shortcake mentioned earlier, highlighting the strength of CPLG's ability to activate brands across high-impact categories and partners. Overall, the quarter highlights the strength of CPLG's infrastructure and its ability to convert brand momentum into meaningful commercial outcomes across regions and categories. Turning to content creation and audience engagement. Our premium and digital offerings continue to resonate with audiences globally. Our content recently received 6 Children's and Family Emmy nominations, 3 Annie Award nominations and 5 Kidscreen Award nominations. This reflects a deliberate evolution in our creative ambition from preproduction with House of Cool to premium feature filmmaking with Peanuts as we continue to raise the bar on delivering what audiences want. In January, our live-action young adult figure skating series, Finding Her Edge launched on Netflix to massive success, rising quickly to the top 10 in 81 countries, including the U.S. and Canada. The series performed strongly enough to be renewed for a second season within a week of its premier. The [ renewal ] reflects positive audience engagement and reinforces our ability to develop premium internationally relevant family content for global platforms. Another live action series, Season 2 of Yo Gabba GabbaLand premiered on Apple TV+ in late January, featuring an expanded lineup of special guest stars and the signature music that defines the franchise. The new season builds on the brand's strong creative momentum and continued appeal with kids and families globally. The brand is also gaining momentum in the consumer products licensing space as we finalize a number of deals that we'll be announcing shortly. Our capabilities in premium content highlighted by the upcoming Peanuts feature positioned us well for where we see the industry headed, be it for premium feature films or high-quality episodic storytelling. Across audience engagement, our digital network on YouTube, FAST and social media continue to play an important role in maintaining brand visibility and supporting franchise momentum. This quarter was marked by strong engagement across platforms. The Teletubbies YouTube channel drew its highest ever quarterly watch time. Our overall FAST viewership grew an impressive 46% in calendar year 2025 to 24 billion minutes. We also launched several new YouTube channels, including a Peanuts relaunch. These platforms remain central to how kids and families discover content today. While monetization across parts of the digital ecosystem continues to evolve, we are well positioned to capture long-term value supported by a strengthened commercial engine, upgraded technology and tools and expanded capabilities across YouTube, FAST and Media Solutions. On the advertising side, we continue to see opportunity as [ dollar ] shift from linear kids networks to digital. WildBrain is one of the few scaled brand-safe options for advertisers who need to reach kids and families. Our direct sales team is packaging inventory across YouTube and FAST in a COPPA compliant way that programmatic can't replicate. We believe we're well positioned to capture demand that has limited places to go. With our premium content, scaled distribution footprint and deep compliance expertise, we see meaningful runway to grow this business over time for years to come. Looking at the path ahead now, the sale of our 41% interest in Peanuts fundamentally reshapes WildBrain's financial profile, eliminating all of our debt and significantly improving our balance sheet flexibility. At the same time, it changes the scale and composition of our earnings base as we move toward a more focused and streamlined operating structure. Importantly, we retain a long-term relationship with Peanuts and Sony through exclusive service agreements across content production, global content sales and licensing in EMEA and APAC. With a strong balance sheet and a clear strategic focus, WildBrain is repositioned to make the investments and strategic actions needed to unlock the significant profit potential across its portfolio as we transition toward a business increasingly weighted to wholly owned franchises and digital platforms. Let me talk about why we're so confident in the path ahead. WildBrain has a unique set of assets, globally recognized brands, a scaled digital platform, deep licensing expertise and a proven content engine. And just as importantly, a brand-building playbook that we know works. We demonstrated that playbook with Peanuts, increasing the brand's value through disciplined stewardship, global monetization and thoughtful capital allocation. Now, we are continuing to apply those same capabilities to a portfolio that is increasingly weighted toward wholly owned WildBrain IP. Historically, our capital allocation priorities were shaped by debt service costs. Going forward, that changes. With a debt-free balance sheet, our focus shifts toward reinvesting in growth, activating wholly owned franchises, expanding licensing and digital monetization and modernizing our infrastructure and systems. These investments will allow us to operate more efficiently, make better data-driven decisions and ultimately drive higher performance across the organization at a lower cost. At the same time, we remain disciplined, reducing costs where appropriate, improving operating leverage and returning capital to shareholders when appropriate, including through stock buybacks. Taken together, this positions WildBrain as a more focused, more flexible and more scalable business, one that is well equipped to create long-term value for shareholders. With that, I'll turn it over to Nick to walk through the financial results for the quarter and provide an update on our outlook for fiscal 2026. Nick Gawne: Thanks, Josh. Before we get into the results, just a quick note on presentation. Under IFRS, following the closure of our Canadian television broadcasting business and the announced sale of our interest in Peanuts, both businesses are now reported as discontinued operations, included in the results related to our 41% ownership in Peanuts are certain consolidation benefits that arise from fully consolidating the brand, which no longer continue following the sale. For example, where we were content producer, distributor and owner of Peanuts, we capitalized certain production cost of sales to be amortized against future revenue streams. This reduced our content creation cost of sales. This treatment will be discontinued. So for comparison purposes, the benefit we took from this accounting has been recorded in discontinued operations. By contrast, the business we transact with Peanuts, which was previously eliminated from consolidated revenue and cost of sales, is now shown as continuing operations. By way of example, when we generate revenues from Peanuts as a service provider for content production or as a licensing agent, these revenues are now shown as continuing, having previously been eliminated. Please refer to our MD&A for further information. As we go through the discussion today, I'll be clear about whether we're referring to continuing versus discontinued operations. Revenue from continuing operations in the second quarter was $72 million, up 11% year-over-year. Drilling down to the segment revenue for continuing operations, global licensing revenue in the quarter was $27 million, up 24%, driven by growth in both our franchises and our global licensing agency. Revenue for content creation and audience engagement in the quarter was $45 million, up 4%. Revenue was driven by higher production revenues, offset by softer audience engagement revenues across distribution, YouTube and FAST. Despite lower revenues, engagement levels remained strong, supporting ongoing brand awareness and long-term franchise growth. Staying with continuing operations, gross margin percentage in the second quarter was 50% compared to 48% in the prior year, driven by a mix shift towards higher-margin licensing revenue. SG&A was $21 million, an increase of 8%, driven by higher variable compensation and the impact of foreign exchange. Absent these movements, SG&A was flat as we continue to offset increases in our licensing cost base with savings in corporate costs. Adjusted EBITDA was $15 million, up 30%. Net loss in the quarter was $20 million compared to net loss of $86 million in the prior period. Turning to discontinued operations. Revenue was $132 million, up 83% year-over-year. The increase was driven by the timing of recognition of the Peanuts library renewal with Apple TV. Adjusted EBITDA from discontinued operations was $23 million, up 54% for the same reason. Free cash flow on a consolidated basis was positive $15 million. Our leverage at the end of the quarter was 4.88x, well within our covenant requirements. Proceeds from the sale of WildBrain's stake in Peanuts will be used to repay the company's outstanding debt in full. As a reminder, we paused guidance in December following the announcement of the Peanuts transaction as we accelerate a transformational agenda that is reshaping our growth profile and positioning us for durable high-quality returns. Over the past 12 months, we have undertaken a series of strategic moves, including the exit from our television business, the simplification of our share structure, the anticipated sale of our interest in Peanuts and its associated full repayment of debt. Those moves materially strengthen the balance sheet and enable management to sharpen our focus on high-growth opportunities. With debt eliminated and strong free cash flow from continuing operations, we are prime to invest meaningfully in structural and technology initiatives intended to reduce SG&A and improve scalability from calendar '27 and beyond. These foundational technology investments will modernize how the business operates with a focus on automation, data and scalability and will improve efficiency and performance across the enterprise. This supports sustainable margin expansion over the medium term. In parallel, we intend to resegment our financial reporting disclosures to better reflect how our business operates and how we engage with partners and customers and to provide investors with greater transparency into the underlying economics of the business. Given the timing in early stage of the infrastructure and technology investments, we are maintaining a pause on fiscal '26 guidance. We expect to learn more about the scale of our transformation opportunities in the coming months and anticipate resuming financial guidance for fiscal 2027. We've done the heavy lifting to reset the business, strengthen the balance sheet and sharpen our focus. Once the Peanuts transaction is complete, WildBrain enters its next phase, positioned to deploy capital more effectively, improve performance across the organization and drive durable value creation. That phase will be characterized by high growth and strong free cash flow generation. I'll turn it back to Josh to close this out. Josh Scherba: To wrap things up, the second quarter reflects a company in transition, but one that is executing well against its priorities. We're seeing strong momentum in global licensing, continued engagement across our digital platforms and positive validation of our premium content strategy. The announced Peanuts transaction and expected execution in calendar Q1 is a pivotal step that meaningfully strengthens our balance sheet and gives us greater flexibility to invest in our highest return growth opportunities. While fiscal 2026 is a transition year, we believe the actions we're taking now, simplifying the business, sharpening focus and reallocating capital, position WildBrain well for improved profitability and sustainable EBITDA growth beyond this year. With that, we appreciate your continued support and interest in WildBrain, and we're happy to take your questions. Operator: [Operator Instructions] And the first question will come from Drew McReynolds from RBC. Drew McReynolds: I guess maybe for you, Nick, just with respect to the timing of closing, I think that was expected for calendar Q1. Obviously, we're midway through. Any kind of more specific timing you can provide? Or yes, any update there would be great. Nick Gawne: Yes. We're still aiming to close in calendar Q1 this year. I can't really give any more update than that, but we're obviously working diligently towards that close date. Drew McReynolds: Okay. And so obviously, with all the moving parts, fully understand just pausing guidance until the end of fiscal 2027. I'm just wondering, at the 30,000-foot view, just some of the puts and takes about Q2 here for the continuing business like what -- is this kind of the profile we generally can model kind of going through the end of fiscal 2026 and into 2027? Or are there kind of obvious costs or revenues that kind of come in and out relative to what you just reported for Q2? Nick Gawne: Yes. I think the profile we see in the first half, definitely where within the continued operations where licensing growth is being seen in the licensing side of the business, which is higher margin. We'll continue to see that for the year and that kind of profile and mix through the year. Josh Scherba: And I would just add, I mean, this is a moment where we're really -- we're taking a beat to really look forward to '27 and '28. We've got some really strong underlying growth, as we've talked about in our core brands and what we're doing in global licensing as well as our content slate. So there's lots of excitement around. And we look forward as the dust settles to be able to update you more thoroughly. Drew McReynolds: Sure. No, understood. I think I asked this each quarter to you, Josh, just any kind of notable evolution in the global content environment just overall? Josh Scherba: Well, I think for us, we're excited about how our slate is shaping up. We had a really nice win here with Finding Her Edge, live-action, young-adult drama that launched in January and already has its second season pickup. Overall, I think there were some trends last year on an industry level. I think it was 6 of the top 10 box office performers were animated. Netflix, of course, had a huge win with KPop Demon Hunters. So it certainly continues to show the appetite for animated family entertainment. We think we're really well positioned on the feature side, given we're in production on a Peanuts feature that we think looks great. And we think there's going to be more opportunity in that space as we move forward. So as there's kind of been this evolution out of a high volume of episodic content and into more premium spectacle content for the streamers, that was really the rationale for us making the House of Cool acquisition a few years ago. And now as we're seeing that trend become a reality, we think we're really well positioned. And I would say, too, that we're -- in terms of our slate for '27, rough math, we're around 75% green-lit at this point, which is above where we typically are at this time of year. Drew McReynolds: Okay. Fabulous. And maybe just a last one for me for now. When you announced the sale of Peanuts transaction, you obviously provided some kind of updates on Strawberry Shortcake and Teletubbies kind of revenue performance and what some of that kind of growth looked like dating back, I can't remember the time frames. Obviously, in your prepared remarks, you have a lot of qualitative comments that point to kind of continued momentum. Are you kind of just comfortable in saying that you can sustain generally the growth of these 2 pieces of IP? Or can you kind of put it in some quantitative sense at a 30,000-foot view? Or should we just kind of wait until you can put that and roll it into formal guidance for fiscal 2027? Josh Scherba: Yes. So what I would say in terms of the rollout of Strawberry and Teletubbies, Strawberry specifically right now is -- it's essentially a U.S. property. The vast majority of our revenue is coming from there, and it's on a really good trajectory in the U.S., and we expect some growth to continue. But ultimately, there's a lot of untapped potential in the rest of the world. And we're excited about that as we move into '27 and '28. I think we've talked about -- I think we talked about retail numbers last quarter and somewhere around USD 200 million in the trailing 12 months. We think the opportunity is -- we could size it at 4x that. And we have a path and an opportunity, we think, to grow it to that level. And Teletubbies is earlier stage, geographically, very different profile. The leading territory currently is China, and we see other opportunities throughout Southeast Asia and Korea. And also an overall plan to bring it back to make it be a really relevant brand for toddlers once again. I mean, [indiscernible], it was a $1 billion retail brand, and we're approximately going to be at around $100 million in the trailing 12 months. So significant room for upside in both IP. And I would also mention that there's -- now that we have some capital to invest elsewhere, we will be looking at some of our other IP as well. DeGrassi and Inspector Gadget would be 2 examples of properties we spend a lot of time talking about, and we think Warren Reboots at some time here in the future. Operator: And the next question will come from David McFadgen from ATB Cormark. David McFadgen: So I just want to get an update, like when you closed the Peanut acquisition, has it changed in terms of your outlook for the cash? Like it's about $40 million? Nick Gawne: No, we're still seeing kind of plus $40 million of proceeds from the transaction and after full repayment of debt and transaction fees. So we're still very positive about the number. David McFadgen: Okay. And so when I read through your MD&A, you talked about the potential for reducing SG&A. Can you give us any idea how much you think you might be able to bring it down to? Nick Gawne: Yes. We're just at a stage where I think it's important to note that underlying SG&A over the past couple of years is broadly flat. We've had some FX differences. Now within continuing operations, our SG&A is split between U.K. and Canada. And the GBP has strengthened in the quarter, which is driving up some of our SG&A, and we've got a bit more variable comp in that. But our underlying cost base is pretty flat. We're not ready to quant the size and return of the investments quite yet. We've done some of the work, but we need to close that transaction. We need to kind of dig into what these technology projects can yield for us. And so I think when we're ready to resume guidance, we'll be able to kind of unpeel the onion on some of those opportunities a bit better. David McFadgen: Okay. So post the Peanut transaction, you have about $40 million in cash, no debt. So when we look at the company, we always say, okay, what's the capacity -- financial capacity for acquisitions. And that would obviously take into consideration a leverage target that you might feel comfortable going up to if there was a certain acquisition that was really attractive to you. So I was just wondering, I would imagine with that kind of a balance sheet, you'd probably be in the mode to look at acquisitions. So I was just kind of wondering what kind of acquisition capacity do you think you would have if something really interesting [indiscernible]? Josh Scherba: Well, yes, we will certainly have some capacity, and we are going to be on the lookout for things that make sense for our core business model. So things that represent opportunity to leverage our licensing business would be a natural fit. But we also have use of this capital internally, as we've talked about, investing in our own IP as well as infrastructure. And we've also discussed the opportunity for share buybacks depending on the trading level of the company. So yes, there is going to be flexibility moving forward. I don't want to put a target on it specifically, but you can do the math on generally the flexibility we're going to have should the right opportunity present itself. David McFadgen: Okay. I mean, clearly, you've left for several years with very high leverage. And I think you guys are making the right moves to have some flexibility now. Maybe I'll ask in another way, like would you be comfortable going up to, say, 1.5x leverage or 2x? Or any comment there? Josh Scherba: Yes, 2x would certainly be comfortable. We're also going to be in a position, as Nick mentioned in his comments, that we're going to be a cash-generative business. So we feel some leverage would be appropriate and a 2x level, it certainly would feel comfortable, should the right opportunity present itself. Operator: [Operator Instructions] The next question will come from Tim Casey from BMO. Tim Casey: I mean I realize you're not giving guidance, but can you talk a little bit about the cadence of quarters within the new construct of the company, given that you -- this quarter, you generated $15 million of free cash flow and $15 million of EBITDA. What -- like -- how does Q2 fit into the seasonality of the business? And the second question is, you've mentioned one of the things you want to do is invest internally. You talked about modernizing facilities. Can you rank that for us in terms of your capital allocation priorities? And give us some sort of quantum of how much you're going to spend? And is it a kind of a onetime sort of upgrade? Or is it -- are you moving more to a sustained internal investment that is going to be recurring as you pursue growth opportunities that you weren't able to given your previous financial constraints? Nick Gawne: So maybe if I could take the second question first. I think we're seeing the kind of infrastructure and technology investments of more of a onetime opportunity -- rather than a kind of a continual loading on the cost base. I think where we have clear opportunities for our brands, which are very high margin, you can see the margin in the MD&A of the licensing business at 90%. Clearly, there are opportunities there, but those opportunities are effectively paid for by the revenue they're going to create. So from a cost base perspective, it's more of a kind of onetime opportunity to renovate the house, so to speak. When we think about kind of quarterly cadence of earnings, traditionally in this business, it's been kind of Q1, Q2, so July to December weighted as those are the big kind of licensing periods with some mix -- with some kind of noise caused by revenue recognition arising from content distribution. So as that content distribution business gets smaller as a percentage of our revenues and licensing gets bigger, we do become more first half weighted from an EBITDA perspective -- revenue and EBITDA perspective. Now production always -- production isn't seasonal. Production is kind of -- it depends when you kick off production and when you finish production. But generally, that we do have some kind of -- we will have more seasonality than we've seen before because of our weighting towards licensing. From a cash perspective -- from a free cash perspective, we always have to look at it over a year because of the working capital challenges. Production is really kind of -- is a business where the disconnect between EBITDA and cash coming in the door is more extreme than many. So in any given year, we think we can generate a really strong percentage -- a really strong free cash flow conversion, EBITDA free cash flow conversion. Some years, that will be better. In other years, it will be worse. Some years, it will be over 100% due to the timing of production in previous years. So the net-net is a bit more seasonal than we used to be, a bit more first half than we used to be. But again, working capital kind of makes us look at cash over like a trailing 12-month or a 12-month period. Operator: And ladies and gentlemen, this concludes the question-and-answer session and today's conference call. You may disconnect your lines at this time. Thank you for participating, and have a pleasant day.
Unknown Executive: Good afternoon, and welcome to Outokumpu's Fourth Quarter Results Webcast. I'm Johan, responsible for Investor Relations. We will begin with the presentation from our CEO, Kati ter Horst; and our CFO, Marc-Simon Schaar. After the presentation, you are welcome to ask questions over the line. With that, I'm pleased to hand over to you, Kati. Kati Horst: Thank you very much, Johan, and also very, very welcome from my side. We are here today in the studio in a very snowy beautiful Helsinki. So let's go then directly to the business and talk about the fourth quarter and also some comments, key comments on the full year. So if we look at the whole year as such, I think the comment there is that the stainless steel market did remain weak and was very much pressured by the uncertainty we saw in the markets and also the especially low-priced Asian imports coming to Europe. So our full year adjusted EBITDA then decreased to EUR 167 million, and the profitability improved very clearly in BA Americas and in Ferrochrome, but then they declined in business area Europe, if you compare year-on-year from 2024. Then the Q4 '25 profitability was impacted both by market weakness, but also the temporary challenges we've been having with the supply chain planning solution in the ERP rollout in business area Europe. We do expect more favorable market dynamics going forward, and I'll come back to that in a little while. Also I would like to remind you that we are advancing our EVOLVE growth strategy by investing in the pilot plant in the U.S., to develop this proprietary technology we've been talking about, which is aimed at producing low CO2 metals and first focus being on ferrochrome and high chromium content metal. CBAM and tariffs are now the 2 elements that we see changing the import picture both in North America and Europe. So on the left side, you see Europe. The Q4 figures include October and November. And you can see that the imports have come down. Same has happened in North America because of the tariffs. And this is something, especially now in Europe, that we do expect to continue this quarter. I wanted to give also a bit of a sense from the Q4 of the sentiment in different customer segments. So you basically see here our key customer segments and the colors are giving a bit of the sentiment. And you can see that the sentiment has been quite subdued. So either no change or even a little bit slightly negative on the automotive and heavy industry side. But now that we come to the beginning of '26, I think it is changing a little bit. So first, I would like to comment on Europe that we clearly see that CBAM and the expectation of the coming safeguards are supporting demand for European suppliers. It's not necessarily helping to increase the end customer use demand. And there, we don't see really clear signs of recovery yet. But demand for European producers, we do see supported by the policy instruments. Then on the Americas side, I would say that we now see some first signs on a market recovery or economic recovery, however you want to call it. And that was also reflected a bit in the clearly better PMI index that was published in January. It basically jumping to 52.6 points. And I think that is also what we see in our order books and the sentiment that we see being somewhat more positive than before in the Americas. There's one customer case here I wanted to share with you because it is basically an example of one of the product developments in Outokumpu that highlights how our innovative material development. In this case, the Lean Duplex Forta provides a solution for very challenging customer needs in the real life, and it also helps to support the energy transformation and sustainable products and minerals and metals. So the customer here is Metso, very much in the space of mining and minerals and metals. Then moving forward, commenting then a bit on the Q4 result more. So we have clearly here a situation where Europe was weak also for the whole year and where BA Americas and Ferrochrome had a very solid performance. The European weak financial performance very much based on the market weakness and the sustained pressure from the imports. And then as I said earlier, also in the Q4, some temporary challenges that we've been having with our supply chain solution in this ERP implementation. We have had significant improvement profitability in BA Americas. That has been driven very much by the higher volumes and lower cost. And then really in BA Ferrochrome, we've actually seen a third consecutive year of improvement. And we also do see the robust demand continuing for our low emission European Ferrochrome. And then maybe on the own measures, I could comment that we had the target to have EUR 60 million savings in short-term cost-saving measures. So we have reached EUR 63 million by the end of the year. We have also reached the targeted level of EUR 350 million on this 3-year run rate program that we've been running by the end of '25. And therefore, also that program is now closed. Then moving to sustainability and commenting on some of the key items there. So our solid sustainability performance continued in Q4. We were also present in the COP30 and had some really good interactions with some of our customers, but also different politicians, talking about energy, talking about carbon capture, and other important topics. On safety, we are on a world-class level in the process industry. We had a challenging Q3. And I was very happy to see that now in Q4, we are really back on track in our safety performance with a total recordable incident frequency rate of 1.4. If we then look at the recycled material content, actually, all the quarters in 2025 we were at the record high level of 97% of recycled material content. And of course, together with the actions we've taken in energy efficiency and optimizing our processes, this has really delivered continued emission reductions for Outokumpu. And this becomes a more important topic going forward. So the low EU ETS emission intensity that we have, coupled with the free allowances that we have going forward, is really supporting our competitiveness, and I come a bit back to that a little bit later. Our sustainability leadership was also recognized externally. Earlier in the year, in '25, we got again the EcoVadis Platinum. And then towards the end of the year, the CDP's A rating for the climate was received. Then a couple of words about how CBAM and the phaseout of the free allowances under the EU ETS are expected to impact our business. So when you look at the left side, CBAM basically impacts the top line, while then the discussion of the free allowances is a cost question to the industry and for the players. So both in stainless steel and in CBAM or both in stainless steel and ferrochrome, so the key importers to Europe have carbon intensity default values that are clearly higher than the European benchmark. And this is clearly expected then to shift demand more towards the European suppliers. So you can see here in the left and in the middle the black bar presenting the imports and then the green bar representing the European reference values. Further then, I would like to point out that Outokumpu has been one of the early movers in smart decarbonization, and that has now resulted in a very competitive position under the EU ETS. So we basically have available free allowances covering our needs until 2030. I have here then another example on how we can reduce carbon emissions through partnerships that actually create win-win business concepts in the ecosystem. So this is a partnership that we have announced as an MAU with Norsk e-Fuel where basically the concept is that the side stream of our ferrochrome production, the CO gas, we can deliver that to Norsk e-Fuel for the production of sustainable aviation fuel. The beef here for us is that we are really -- by selling the CO gas, we are really reducing quite substantially our emissions. And for them, it's a very cost-effective and good raw material for producing sustainable aviation fuel. So here, let's see how this continues going forward, but these are continuously the type of opportunities we are looking in partnerships. And then now I think I would like to hand over to Marc-Simon to talk more details about our financial position and the results. Marc-Simon Schaar: Thank you, Kati. Good morning, good afternoon, everyone, and thank you for joining us today. Despite the challenging market environment, our solid financial foundation positions us well for future growth. Let's take a closer look at our financials at the end of the year. During the fourth quarter, our strong liquidity increased to EUR 1.2 billion. With positive free cash flow and the dividend payment in October, our net debt increased slightly -- only slightly during the quarter. At the same time, we secured a new unsecured EUR 800 million sustainably linked RCF with a 4-year maturity and an option to extend until 2032. The new facility replaced 2 previous RCFs of the same amount, but with improved and more flexible terms. This once again demonstrates the strong and continued support from our lending partners. Now let's take a look at our fourth quarter profitability. Our fourth quarter group profitability of EUR 10 million was mainly impacted by lower deliveries and a lower pricing level in Europe. The decrease in stainless steel deliveries to 365,000 tonnes was driven by continued market weakness and challenges related to the new supply chain planning solution, as mentioned earlier. These negative impacts were partly offset by improved cost performance and higher electrification aid. Let's now take a closer look at the performance of our business areas in the fourth quarter, starting with business area Europe. Overall, the market conditions in Europe remained weak during the quarter. This was evident in manufacturing activity as the euro area PMI remained below 50 much for the second half of the year, indicating continued contraction in the sector. Against this backdrop, volumes were lower during the quarter. This reflected both the ongoing market weakness and a temporary impact from the implementation of the ERP rollout, which we expect to normalize going forward. The weaker pricing environment also weighed on spreads, namely our price net of raw material costs. And this impact was partly offset by improved cost performance, supported by higher fixed cost absorption as production activity increased. In response to the prolonged market weakness, we continued to take decisive restructuring actions to safeguard our cost competitiveness. These actions form part of the EUR 100 million restructuring program announced in connection of our Q2 2025 results, which runs through the end of 2027. As part of this program, we expect to realize cost savings of EUR 50 million this year with a primary focus on business area Europe and group functions. Looking ahead, we also expect demand for domestic producers in Europe to be supported by the introduction of CBAM from the beginning of this year. With that, let me now turn to business area Americas. Despite seasonally lower deliveries, business area Americas delivered another strong performance in the fourth quarter. Improved product mix and lower variable costs more than offset higher fixed costs related to the annual maintenance shutdown in the U.S. as well as lower gains from timing and hedging effects and the usual seasonal decline in deliveries in the Americas market. During the quarter, demand in the U.S. continued to shift from imports towards domestic producers following the tariffs imposed by the U.S. administration in July last year. However, underlying end-user demand remained weak. Similar to Europe, manufacturing activity was contracting with PMI levels below 50 throughout the quarter. On a more positive note, we have recently seen early signs of improving market activity in the U.S. In addition, the Mexican government implemented tariffs on Asian imports, supporting domestic producers such as ourselves in Mexico. Looking ahead, our focus in business area Americas remains on strengthening operational excellence to fully unlock the potential of our asset base while advancing our commercial strategy through an expanded product portfolio and a more differentiated go-to-market approach. With that, let's have a look to business area ferrochrome. We are very pleased that the strong financial and operational performance in business area ferrochrome continued during the quarter. Against the backdrop of ongoing supply constraints in Southern Africa and continued geopolitical tensions, demand for our low-emission European ferrochrome offering remained strong throughout the quarter. While total deliveries declined due to lower internal demand, external deliveries increased, underlying our strong market position. With the introduction of CBAM from the beginning of this year, we expect this positive trend in external demand to continue. Profitability in the fourth quarter benefited from higher prices, lower variable costs supported by the electrification aid and improved fixed cost absorption driven by higher production levels. Looking ahead, despite the termination of electrification aid and the increase in mining tax in Finland from the beginning of this year, we see our ferrochrome business as very well positioned for the future. Our strong strategic setup, the continued expansion of our product portfolio into higher-margin ferrochrome as part of our EVOLVE strategy, and improving mining efficiency through the expansion of the sub-level caving concept will support further value creation in the business. Examples of our product portfolio expansion include our move into medium and high-carbon ferrochrome as well as low titanium products during 2025 already. In addition, recent underground drilling confirms that our mineral reserves and resources provide sufficient ore availability well into the 2050s, offering long-term visibility without the need for any major additional investments. With that, let me turn to some final remarks on the group's overall financial position. Despite the low profitability in the fourth quarter, our free cash flow improved significantly compared to the third quarter, driven by a strong release in working capital. Our ability to release additional working capital was limited by temporary challenges related to the implementation of the ERP system. As a result of the dividend payment of EUR 61 million during the fourth quarter, net debt increased slightly to EUR 265 million. Given the current market environment, our primary financial focus remains on maintaining strong capital discipline with a particular emphasis on working capital efficiency. Now with that, I will hand it back over to you, Kati. Kati Horst: Thank you, Marc-Simon. So going forward, based on our EVOLVE growth strategy, our focus is clearly on cost competitiveness in our foundational sustainable stainless steel business, while we are then targeting transformative growth in Advanced Materials and low-carbon metals through the technology development. And on the next slide, just as a reminder, as communicated last summer during our Capital Markets Day, here you see the pillars of our EVOLVE growth strategy. So it's maximizing the value from sustainable stainless steel, both in Europe, Americas, growing profitably in Advanced Materials and alloys, then working on technology to create innovative materials and low carbon, of low CO2 metals. And this is exactly the USD 45 million investments we've done on the pilot line in the U.S., which is proceeding well. And then, of course, we continue to focus on total shareholder returns as well and keeping our balance sheet healthy at the same time that we want to keep the possibilities open to invest in growth. Then we would be moving here now to the dividend proposal from the Board of Directors. And the proposal is EUR 0.13 per share for the year 2025 and to be paid in 2 installments. And I think it's important to mention this is very much according to our dividend policy where we also say that we need to look at the company's financial performance in the cyclical market conditions while we maintain the financial flexibility to invest in transformative growth. You see here our dividend per share and earnings per share. And then if you look at over the 5 years and you include this proposal of EUR 0.13, we have actually paid over the 5 last years, about EUR 0.5 billion of dividends to our shareholders. Then we move to the outlook for the first quarter of 2026. And in the first quarter of 2026, the adjusted EBITDA improvement is expected to benefit mainly from the recovering stainless steel deliveries, the volumes, which are forecast to be 20% to 30% higher compared to the fourth quarter in 2025. And the change in deliveries mainly reflects the normal seasonality that we have in the market, but also the exceptionally low level of business in business area Europe in the comparative period, so fourth quarter, which was then impacted also by the challenges related to the supply chain planning tool in the ERP rollout during the fourth quarter. And then with the current raw material prices, some raw material related inventory and metal derivative gains are forecast to be realized in the first quarter. And then our outlook for Q4 2026. So our adjusted EBITDA is -- in the first quarter of '26 is expected to be higher compared to the fourth quarter of 2025. Then I would like to summarize a bit with this slide, some of the key messages from today. And I would start by saying that we do expect more favorable market dynamics going forward in 2026. So in Europe, this culminates very much currently to CBAM and the proposed safeguards as they are supporting demand for low emission stainless steel and ferrochrome, supporting European suppliers. In the Americas, we see a positive outcome of the -- potential positive outcome of USMCA negotiation would really support our business in Mexico and also create more capacity for us eventually to sell in the U.S. And like I said earlier, we see also first signs of economic and end-user demand recovery in the Americas. So being clearly more positive than in Q4. And then we expect this robust demand for our ferrochrome to continue also supported by the continued uncertainty on supply on the market. And if I look at all the business areas, we are very much working on the commercial strategies and the product portfolios, and I see that we have a lot of opportunities in that side. Ferrochrome is already now bringing 3 new products to the market. So this is the way to continue. And on the EVOLVE strategy, I mentioned the technology development. It is very important for us, and we will tell you more about that as we go forward. So I'm very optimistic about our future, our possibility to grow and improve our financial performance and resilience. And then I think this takes us to the Q&A that we are now ready for. So please, happy to hear your questions. Operator: [Operator Instructions] The next question comes from Tristan Gresser from BNP Paribas Exane. Tristan Gresser: The first one, I just wanted to ask about Americas. There was a strong performance in Q4. Any one-off tailwind that was in there that will not repeat into Q1? Or is the type of margins on EBITDA per ton that you've seen and done in Q4? Is that kind of a normalized level that you see for the coming quarters? Is there more of the price increase to flow through in Q1? Or that's all in the results we've seen in Q4? And now with the visibility you have and you flagged a bit of improvement as well on the demand side, do you think you can reach your EBITDA target for the division of EUR 150 million, EUR 200 million in 2026? And if not, if you can tell us why? Marc-Simon Schaar: Maybe I can start with taking your first part of your question, Tristan, on the performance and if there are any extraordinary items within the result. The answer is clear, no, and we can expect then this result to be an underlying result then also going forward plus then the market dynamics which we see now. We expect a seasonal uptick in demand over here. And while we're not giving any price outlook, I think given the current situation and then referring also maybe to the early signs of a market recovery explains, I think, a bit about how we think about the overall market and the dynamics coming with that one. Tristan Gresser: And regarding the EBITDA target of EUR 150 million to EUR 200 million, is that achievable for 2026? Kati Horst: Well, I would say, if the market recovery continues, then I think there are possibilities to go towards that, yes. Tristan Gresser: All right. That's clear. And then kind of a similar question around Europe. I mean, it's always a market that is a bit difficult to calibrate. How do you think about the margin improvement for 2026? I mean you went from negative EBITDA adjusted EBITDA in Q4. The market was tough. There was a bit of one-offs. But consensus has EBITDA per tonne for the Europe division going above EUR 150 per tonne by Q4 this year. Do you think that's feasible? And if you can talk a little bit about the market environment as well. We've seen prices going up. I guess, margins are going up at the moment as well. If you can discuss a bit your order books and the impact of CBAM, that will also be helpful. Marc-Simon Schaar: Yes. So maybe if I start and then Kati can chip in and add. I think in the fourth quarter, we have seen the lowest volumes driven by the weak market. Yes, we also had here the implementation of the supply chain solution, which I mentioned before. But what we do see and from preliminary data also in January is that CBAM is somehow supportive, as I mentioned before, expecting also a shift towards domestic producers in the European market over here. And as such, also seeing then a margin -- relative margin improvement here in Europe as well. Kati Horst: And let's just say, command, that needs to also happen. If you look at the overall volumes, demand in Europe and the price level. So yes, volumes need to increase and deliveries need to increase and prices need to increase. Tristan Gresser: Okay. That's clear. But you're confirming that margin improving at the moment. And just the CBAM and the safeguards, is that enough for you to go back to historical margin levels? Or do you think absent a more pronounced demand recovery that on the end user side that you're not necessarily seeing at the moment, it will be difficult to reach, let's say, historical margin level already this year without the demand? Marc-Simon Schaar: I think that certainly CBAM and then safeguards are supporting us here and what you just described. At the same time, yes, we see increased activities, but this is not coming really from an underlying demand in the end user segments. And to be clear, in order to get back to historical levels, we also need further demand from the market side as well, given also the capacity utilization we are currently running still being on the low side. Operator: The next question comes from Tom Zhang from Barclays. Tom Zhang: Two as well for me, please. So yes, maybe just on ferrochrome. I know a lot of the quarter-on-quarter improvement was from these electrification aid. But I think underlying, you also talked quite positively about the ferrochrome market, which I was a little bit surprised by because stainless volumes have not been very strong. There was still a lot of stainless imports and CBAM, I guess, will help, but it's only just coming in from January. Is there much of a step-up again into Q1 for the underlying ferrochrome business? And so as I kind of look at Q1, even without the power subsidies, do you think it's possible that ferrochrome earnings can remain fairly stable? Marc-Simon Schaar: I think maybe if I can take that. When it comes to Q4, yes, there was a positive element of then the electrification aid, as we mentioned before. What we have seen as an increase from the third quarter to the fourth quarter, I would say, approximately half or a bit more half of that improvement is coming from that electrification aid. And the rest is real underlying improvement, stronger performance. Coming to the market side, yes, stainless steel demand is lower, is weak. However, we're constantly also reporting that the demand for, again, our European low-emission ferrochrome is very solid. And as such, we saw an increase, not in internal demand, but in external demand. We're also expanding our product portfolio, as I mentioned before, so these are areas and topics together then also with improving our cost performance in ferrochrome with this new or continued expansion of our mining method, sublevel caving, that's all contributing positively. Now if we think about then Q1, certainly, the impact, which I mentioned to you before the electrification aid, but then also the impact from the mining tax in Finland then will have a negative impact in the fourth quarter compared to -- in the first quarter compared to the fourth quarter. However, we continue to improve on the mix side and also on the cost performance. So I would only bake half of the impact of electrification and mining tax into the forecast. Kati Horst: And maybe to add to that a bit that just as a reminder, so we're delivering now internally, externally about 400,000 tonnes of ferrochrome. We have a capacity of 500,000 tonnes. So we have capacity to increase also external deliveries. And maybe another aspect just to add that this portfolio development in ferrochrome, low titanium ferrochrome, medium carbon ferrochrome and now our latest test based on concentrate, more than 60% chrome content ferrochrome, they bring us also to other customer segments. So it's not only then stainless steel anymore being the customer, but there are other segments. So we see the outlook for ferrochrome quite positive. Tom Zhang: Okay. Okay. That make sense. I think in -- sorry, just following on from me quickly. I think in Q2, you guys had talked about a mining tax could be a sort of EUR 50 million hit. Is that still the right number to think about? Kati Horst: No, it's -- so I can be a bit more specific on that. So the mining tax increase now for this year. So last year, we paid about EUR 8 million. This year, we are paying EUR 21 million based on the current premises and volume estimates. So it's a EUR 13 million increase in mining tax. And what does continue in Finland, the parliament has asked the government to look at also at the hybrid model, which would be partly based on royalty and partly then based on the actual result. So that discussion should continue this year. And then the other item there was the electrification aid. So Outokumpu has been getting in total about EUR 20 million in the electrification aid. So if you put those together, then the impact, I think, right now is about EUR 30 million, EUR 35 million. Tom Zhang: Very clear. And then the second question was basically around, there's been a lot of headlines around ETS reform or potential extension of free allowances. As I understand, that would potentially mean CBAM also needs to be drawn out to adhere to WTO. Given your emissions are already well below international levels, you're covered for allowances out to 2030. Do you see the extension of free allowances as a bit of a risk for stainless? Or do you think it's kind of not too material? Kati Horst: No, I don't -- at least from our perspective, I don't see that as a big risk. Of course, there's a lot of discussions going on. If my understanding is correct, there will be some kind of a review now in the summer of the EU ETS system. But I think that's also about should it be extended to some other sectors where it's not now yet. So we will definitely hear more about the review and what is being reviewed in the summer. But I think it is -- I think European Commission is still quite determined to their emission reduction targets. And of course, EU ETS system also goes a bit hand-in-hand with CBAM. So we need to see also the effect in the CBAM going forward. But I think it's definitely a competitive advantage to have been an early mover in this area in the case of Outokumpu. Marc-Simon Schaar: And maybe to add also with smart decarbonization here as well. And I think Kati has mentioned one example, how we think about ecosystems and partnering and making the reduction in emissions as economically feasible. Operator: The next question comes from Anssi Raussi from SEB. Anssi Raussi: I have a couple of questions left. First about CBAM and safeguards in Europe, like how do you see the situation if you think about scrap value chain, like if the end user demand is declining due to these new regulations, even though it would be positive for your stainless side. But do you think that scrap suppliers would face some problems, for example? Marc-Simon Schaar: Well, Anssi, if I can take that question, then I think that -- well, overall, there is then a stronger demand for stainless steel scrap. And this is what we do see then in the market as well. But overall from -- I can only speak from an Outokumpu point of view that through our partnerships with our suppliers being very well covered and also going forward. Anssi Raussi: Okay. That's clear. And then about BA Europe, like what kind of delivery times you have right now? Because I think your contracts are so-called all-in price-based contracts. So how long it takes before we see this positive changes in market environment in your P&L? Marc-Simon Schaar: Maybe to start with, not all of our business is on effective pricing. So I would say around 30% of our business in Europe is based -- still based on base plus alloy surcharge and our U.S. business is completely on base plus alloy surcharge. Certainly, we have around 1/3 of our annual expected volumes under contract. These contracts being concluded by mid to end of last year. And as such, there is naturally a certain delay in here. But we should see a gradual improvement here from the first quarter in business area Europe. Operator: The next question comes from Dominic O'Kane from JPMorgan. Dominic O'Kane: I have 2 questions. So first, could you maybe provide us with an update on your current thinking for Tornio? And then second question is a related question. If we think about cash flow, you've had 2 successive years of negative calendar year free cash flow. You've done a good job on working capital management, but it may be that is going to be difficult to continue and replicate going forward. And so if I think about what you said at the Capital Markets Day, you didn't provide us with any forward-looking guidance for 2026 CapEx. So I just wonder if you could maybe just help us with those building blocks. Are you able to maybe give us an update on 2026 CapEx? And how should we think about the free cash flow potential in 2026? Kati Horst: So if I leave the cash flow question to Marc-Simon, I could maybe comment on Tornio. So you're referring to this potential investment in the annealing and pickling line in Tornio. We said in the fall when we were discussing the mining tax topic that is currently on hold. So now we know what the impact on the whole Kemi Tornio setup is cost-wise without this electrification aid and the mining tax. So what we are doing currently, we're updating the investment case and also, of course, looking at is there is there other ways? Are there other items we can take in so that this investment case basically reaches our hurdle of 15% of ARR for foundational investments. So the investment case is still valid and it's being reviewed now with new assumptions as some of the cost assumptions have changed, and we also have some other ideas what more we could do. So it's under review currently. Marc-Simon Schaar: Yes. And if I then continue on the cash flow question, first of all, during fourth quarter, as mentioned earlier, our ability to reduce working capital was. if I think about the first quarter, yes, business activities do increase, as we mentioned before, our volumes. Then we have also seen the nickel price increase, but expectation at the moment is that working capital will only increase moderately into the first quarter of this year. We do think then for the entire year, I mean, that pretty much depends also on how business activities and prices further develop that we, as a management team, are very committed in focusing on improving our working capital and particularly inventory efficiency now during this year and have dedicated programs in place. Coming back to your particular question around CapEx guidance for this year is around EUR 200 million. And then if we think about financial expenses, pretty much in line with what we have seen this year around, I would say, EUR 50 million. In terms of taxes, I would add or take similar levels as we had a cash out in this year according to our plan. And then we do have restructuring provisions here as well, which we should take into account and which we have been reporting earlier as well. Dominic O'Kane: Could I just ask on the EUR 200 million CapEx, does that include anything for Tornio? Kati Horst: No. So if we look at like a bigger investment on the AP line or we would look at more transformative investment in Avesta, no, it does not include that. And maybe as a reminder, we capped our CapEx this year also because of the financial performance cash flow to EUR 160 million -- and I think we arrived at EUR 145 million. So that was also how we were managing the cash. So I think EUR 200 million is more going on the ongoing initiatives, what we have, normal maintenance that we have. And then potentially other investments, they would probably not start in '26 yet impacting our CapEx, but later. Dominic O'Kane: But the announcement on the CapEx in the U.S. with new proprietary technology, the USD 45 million, that's being part of the EUR 200 million as well. Kati Horst: Correct. Operator: The next question comes from Maxime Kogge from ODDO BHF. Maxime Kogge: So my first question is on dividend because there have been some expectations on our side, on the sell side, that you would at least roll over the existing payout and you have cut it by half. So it's fair considering the other constraints you mentioned. But going forward, how should we think about your dividend payment ability? Is it fair to assume that as long as you have not been back to this ratio of net debt to EBITDA of 1, which is your long-term target, dividends are going to stay quite limited? Kati Horst: Well, I think our kind of target in the dividend area is, of course, to continue to deliver stable and growing dividend over time. We just have to maybe remember in what kind of cycle we have been and what kind of financial performance we have had -- so that consideration is there. And then the other consideration is, of course, the financial health. So our balance sheet and then also keeping this room for potential investments in transformative growth. So those are the aspects that we are considering in the dividend policy, and that's why the proposal now of the EUR 0.13 dividend per share. Maxime Kogge: All right. Second question is on the nickel price. So price of nickel has surged by 20% over the last 2 months. So when we ask a question to your main competitor, they were relatively dismissive of any impact since they procure most of the nickel needs from scrap. That's the same for you. But still, would you believe that there could be a positive price volume impact associated with higher nickel price in the sense that distributors in such phases of higher nickel prices tend to rush to buy material. And yes, would it apply in particular in the U.S. where the market is more geared towards distributors, plus you have this pass-through mechanism of the base plus alloy surcharge, which is working quite well unlike in Europe? Marc-Simon Schaar: Yes. To answer your question directly, with the higher nickel price, also we expect an improvement here on the price level and also within our margins. Maxime Kogge: Okay. But you don't see any volume impact associated with that, do you? Marc-Simon Schaar: We do need to see here really a recovery in the underlying demand, certainly with CBAM, as mentioned earlier, and then let's see safeguards coming in that there is a shift in -- from imports to domestic producers, but we definitely need to see how the economic activities are recovering. Maxime Kogge: Okay. Fair enough. And just last one is on your long-term EBITDA target. That's also in light of comments made by your main competitor around its own long-term target of EBITDA that it dropped from EUR 800 million to EUR 700 million to EUR 800 million, and that was despite a big acquisition made in between. As far as you're concerned, you have a very ambitious and very high long-term EBITDA target at EUR 750 million to EUR 850 million. That's an improvement over the existing EUR 500 million, EUR 600 million. I understand this target is based on the quite high base prices, plus you have the benefit of this new investment. So how comfortable are you with this target given the fact that prices remain quite depressed at this stage, plus consensus has expectations at a much lower level, including for '26 and '27? Marc-Simon Schaar: I think you mentioned yourself here the pricing environment right now, and this is -- and also the long-term target here as well. And this is how we should look at this as well. We also said this is then the target looking through the cycle here as well and having the improvements as we communicated during the Capital Markets Day through investments in the foundational business here, which is then building up here the improvements. And yes, we're still comfortable around this level. Operator: The next question comes from Bastian Synagowitz from Deutsche Bank. Bastian Synagowitz: I have 2 quick ones left as well, please. Maybe firstly, on Americas where you've been doing quite well. You mentioned the U.S. MCA agreement. I guess we don't know what the outcome will be, but could you briefly remind us on the sensitivity to your numbers in the current price and margin environment should the U.S. tariffs be dropped completely? That is my first question. Kati Horst: Yes. Maybe I'll start with that. I'm not so much talking about the whole USMCA for instance, with Canada, but more referring to the negotiations and the sentiment we have from the negotiations between Mexico and the U.S. So I think they've been constructive, quite positive. Of course, we don't know the outcome. But what was done in Mexico now as well, Mexico imposed 50% tariff for Asian imports as of beginning of the year. That is, I think, something what you have been also asking for. So that has happened. That gave us some opportunities for price increases. And it could also support then demand to a domestic supplier in Mexico, which we are the only one. But of course, there is a tariff now between U.S. -- from Mexico to U.S. of 50% for steel. And it doesn't take into account whether the steel has been melted in America or not. So that is, of course, an upside for us if we can also use the Mexican capacity for the needs of the U.S. market because the Mexican market currently is very weak. It can recover with some of the measures somewhat, but we would very much in this situation, want to use the capacity more for the U.S. demand as well. So therefore, if this tariff would become lower or disappear, of course, that would support our business clearly. Bastian Synagowitz: And could you maybe just give us like a quick understanding on what the sensitivity is if that 50% tariff would be dropped, just looking at the cross shipments from the U.S. into Mexico and vice versa? Kati Horst: Well, I think in the past, the shipments have not been so very high because the Mexican market was also doing well. So probably 10,000, 15,000 tonnes. But we have, of course, more capacity in Mexico. So should the Mexican market stay weak, which I, of course, don't hope and the tariff would not be there, it would give us opportunities to bring even bigger volumes to U.S. Bastian Synagowitz: Okay. Understood. Okay. Great. And could you just clarify the Mexican tariff, does that also cover at least part of your client sectors as well on the downstream side? Kati Horst: So yes, so there's a derivative list, and there are certain products then on the derivative list where there is no tariff that are made out of steel. I think refrigerators happens to be one of them. But it's a bit of -- it depends what is on the derivative list and what's not on the derivative list. But everything that's in the form of raw material as steel is tariff by 50%. Bastian Synagowitz: Okay. Got you. Thanks, Kati. Then lastly, are there any big items for us to keep in mind for 2026 on the maintenance side? I guess there's probably the usual, but I don't know, is there anything extraordinary here? And then also anything similar, any one-offs like the ERP, which you had last year, which we should just factor in? Kati Horst: No. No, nothing major. Operator: The next question comes from Igor Tubic from DNB Carnegie. Igor Tubic: I just have 2 follow-ups. You mentioned that the mix in Americas improved. I just wonder what we should expect in terms of Q1 for 2026, both for Americas and for Europe? And then also if you can comment anything about in what segments you saw an improvement, so to say, in the mix in Americas? Kati Horst: Well, I guess, we have to start by saying we don't guide on the PA level for the Q1, but you saw our guidance of improving volumes in stainless steel between 20% to 30%, so that goes both -- it's combined Europe and Americas. I think that is an answer on there. And then if we look at the -- I could maybe generally answer that if you look at the end user segments that are booming in Americas, data centers is one, electrification goes forward. But I think this is also very much about our own work. So we are digging deeper to different customer segments where we see opportunities for our product portfolio. So we are becoming more of a market maker in the segments where we want to grow. So this work, I'm also expecting to bring some results in the coming quarters. Marc-Simon Schaar: And maybe to come back a bit more on the first quarter, I think the best way really to look at our first quarter and the guidance is, as we said and stated in the guidance, it's the volume recovery. There are, of course, a couple of offsetting effects left and right that the major driver is really the volume recovery in the first quarter. Operator: The next question comes from Joni Sandvall from Nordea. Joni Sandvall: One quick left from me. Could you give -- I think this is a bit of -- you answered partly, but could you give any indication how your lead times have developed now under the CBAM game effective 1st of January. So have you seen increasing order books for yourself? And any indication of how lead times have developed after this? Marc-Simon Schaar: Yes. Lead times have developed. Lead times have improved. And right now, we're middle of February, and we have already started booking into the second quarter, April into May. Joni Sandvall: Okay. And maybe a quick one also just to confirm, was the ERP rollout completed already during the Q4? Marc-Simon Schaar: Well, it is a huge project in itself. We talked about the difficulty and the implications from the supply chain solution as part of the ERP program. And the aftercare will still continue into the first quarter of this year. But yes, we expect then by the end of the first quarter to have then a stable situation going forward. So being temporary. Operator: There are no more questions at this time. So I hand the conference back to the speakers. Kati Horst: Thank you very much for your active participation today. And I think this, in principle, concludes our session today. Like I said a while ago, I think we are really confident about our future going forward. So we will look at growing this company. We will gain the resilience, and we will work hard to improve our financial performance. So thank you very much for being with us today and talk to you then again in our -- when we talk about the Q1 results in the spring. Thank you very much. Marc-Simon Schaar: Thank you.
Operator: Good day, and thank you for standing by. Welcome to the Acadian Timber Fourth Quarter 2025 Analyst Conference Call and Webcast. [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, Susan Wood, Chief Financial Officer. Ma'am, please go ahead. Susan Wood: Thank you, operator. Good afternoon, everyone, and welcome to Acadian Timber's Fourth Quarter Conference Call. With me on the call today is Adam Sheparski, Acadian's President and Chief Executive Officer. Before discussing Acadian's results, I will first remind everyone that in discussing our fourth quarter and full year financial and operating performance, the outlook for 2026 and in responding to your questions, we may make forward-looking statements. These statements are subject to known and unknown risks, and future results may differ materially. For further information on our known risk factors, I encourage you to review our news release and MD&A, which are available on SEDAR and on our website at acadiantimber.com. I'll begin by outlining the financial and operational highlights for our fourth quarter ended December 31, 2025. Adam will then comment on our operational activities and financial results for the full year as well as our outlook for the remainder of 2026. Acadian delivered solid fourth quarter results with overall freehold timber sales volumes, excluding biomass, 21% higher than the fourth quarter of 2024. Increased freehold sales volumes were partially offset by a decrease in our weighted average selling price in large part due to changes in product mix, hauling distances and fuel adjustment surcharges and lower timber services activity. Sales for the fourth quarter were $22 million, an increase from $20.2 million in the prior year period. Favorable weather conditions contributed to increased volumes across both of our operating regions. In New Brunswick, a favorable shift in customer mix resulted in more harvesting on our freehold timberlands and less on Crown-licensed timberlands, which increased freehold sales and reduced timber services revenue. Contractor availability improved in New Brunswick. However, limited trucking capacity continued to be a significant challenge in Maine. Softwood sawlog pricing decreased 2% year-over-year, with a higher value product mix offset by shorter hauling distances. Hardwood sawlog pricing declined 10%, reflecting a lower value product mix and ongoing weakness in lumber markets. Softwood pulpwood pricing was consistent with the prior year period, while hardwood pulpwood pricing decreased 12% due to shorter hauling distances and lower fuel adjustment surcharges. Biomass sales volumes were 12% higher than Q4 2024, while pricing decreased 12% as a greater proportion of sales were made roadside rather than delivered. Overall, our weighted average selling price, excluding biomass, decreased 6% year-over-year. Operating costs and expenses were $17.7 million during the fourth quarter compared to $17 million during the fourth quarter of 2024. The increase was primarily due to higher sales volumes and higher land management costs, partially offset by lower timber services activity. In New Brunswick, weighted average variable cost decreased due to a higher proportion of softwood versus hardwood products, lower harvesting costs associated with the harvesting method used, shorter hauling distances and reduced fuel adjustment costs. In Maine, cost of sales per cubic meter increased as compared to the prior year period due to lower production levels. Adjusted EBITDA for the fourth quarter was $5.2 million, up from $3.7 million in the prior year period, and adjusted EBITDA margin improved to 23% compared to 18% in Q4 2024. Our net income for the fourth quarter was $39.7 million or $2.18 per share compared to $5.6 million or $0.32 per share in the same period of 2024. The increase in net income was largely due to the impact of higher gains on noncash fair value adjustments in 2025 compared to 2024, partially offset by lower operating income and higher income tax expense. Acadian generated $1.9 million of free cash flow and declared dividends of $5.3 million to our shareholders during the fourth quarter or $0.29 per share. I'll now move into the fourth quarter results for our New Brunswick operations. Sales for New Brunswick Timberlands were $19 million, up from $17.2 million in the prior year period. Sales volume, excluding biomass, increased 23%, driven by increased contractor availability and a favorable shift in customer mix, which shifted harvesting volumes from Crown-licensed timberlands to our freehold timberlands. Favorable weather conditions further supported higher sales volumes. With regard to softwood sawlogs, demand was strong and volumes increased 54% compared to Q4 2024, largely due to the favorable shift in customer mix noted earlier. Pricing was consistent with the prior year period, supported by modest improvement in softwood lumber markets and a higher value product mix, partially offset by shorter hauling distances. Hardwood sawlog demand and pricing were negatively affected by weakness in end-use markets. Sales volumes declined 23% and pricing decreased 12% year-over-year, reflecting both market conditions and a lower value product mix. Softwood pulpwood demand was also steady, volumes increased 21% in New Brunswick and pricing was consistent year-over-year. Hardwood pulpwood volumes decreased 18% as compared to Q4 2024 with demand impacted by tariff uncertainty. Pricing decreased 13% due to shorter hauling distances and lower fuel adjustment surcharges. Overall, New Brunswick's weighted average selling price, excluding biomass, decreased 6% as compared to Q4 2024. Operating costs and expenses were $13.6 million during the fourth quarter compared to $13.4 million in the prior year period. Higher costs associated with increased freehold sales volumes were offset by lower timber services activity and reduced weighted average variable costs. Weighted average variable costs, excluding biomass, decreased 15% compared to the fourth quarter of 2024 due to a higher proportion of softwood products, lower harvesting costs associated with the harvesting method used, shorter hauling distances and lower fuel adjustment cost. New Brunswick generated $5.5 million of adjusted EBITDA for the fourth quarter, up from $4.2 million in the prior year period. Adjusted EBITDA margin improved to 29% compared to 24% last year. Switching over to Maine. Sales during the fourth quarter totaled $3 million, consistent with Q4 of last year. Sales volume, excluding biomass, increased 5% compared to the same volume -- same period of 2024, supported by more favorable weather conditions. However, deliveries were hindered by limited trucking capacity. Softwood sawlog volumes increased 12%, although pricing decreased 12% in U.S. and Canadian dollar terms. Pricing was impacted by the incurrence of stumpage sales, which did not occur in the fourth quarter of 2024 and increased roadside sales, partially offset by a higher value product mix. Excluding stumpage sales, softwood sawlog pricing increased 6%. Hardwood sawlog volumes were negligible during the fourth quarter of the year. Softwood pulpwood volumes were also negligible in Maine due to the extended shutdown of a major softwood pulpwood customer. Hardwood pulpwood volumes were consistent with the prior year period, though pricing decreased 6% due to lower demand. Overall, the weighted average selling price in Maine, excluding biomass, decreased 8% compared to the fourth quarter of 2024, primarily due to stumpage sales. Excluding stumpage sales, the weighted average selling price, excluding biomass, increased 3%. Operating costs and expenses for the fourth quarter were $3.8 million compared to $3.3 million during the same period in 2024 as a result of higher average operating costs and expenses per cubic meter produced. Adjusted EBITDA for the quarter was negative $53,000 compared to negative $223,000 and adjusted EBITDA margin was negative 2% compared to negative 7% in the prior year period. Lower operating income was offset by higher gains on sale of timberlands and other fixed assets. With respect to Acadian's financial position at the end of the quarter, they remain strong, ending with a net liquidity position of $17.4 million, including a cash balance of $4.8 million and our revolving credit facilities, which remain undrawn. With that, I will turn the call over to Adam. Adam Sheparski: Thank you, Susan, and good afternoon, everyone. As always, health and safety remain Acadian's top priority. I'm pleased to report that we had no recordable safety incidents during the fourth quarter. As we have said many times, we believe that emphasizing and achieving an excellent safety record is a leading indicator of success in the broader business and incident reduction continues to be a primary focus. 2025 was another busy year for Acadian. As part of our year-end review, I want to again highlight the meaningful steps we took to address the ongoing challenge of limited contractor availability in Maine by establishing our own internal logging operations. In January, we purchased several pieces of harvesting equipment and hired equipment operators. Then in February, we acquired additional logging and related assets, including harvesting, trucking and road working equipment and related real estate. These assets, combined with an established workforce, constituted an operational logging business, which has operated on the Acadian land base for many years. As part of the transition, some operations are and will continue to be performed by external contractors in Maine, including a significant portion of our trucking. During 2025, we experienced a shortfall in external trucking capacity, which impacted our ability to meet delivery demands. To address this, we are actively expanding our contractor network, working with our customers to align on solutions and exploring options within our internal operations to ensure greater reliability moving forward. Our strategic transition in Maine from contractor-based logging to internal logging operations has temporarily reduced production volumes. During 2025, production volumes were below anticipated long-term levels and operating cost per cubic meter of timberland produced remained elevated relative to long-term targets by approximately 30% as of the fourth quarter. The shift to a more fixed cost structure has also changed our historical cost patterns, making costs less directly tied to revenue, which is more noticeable during periods of lower sales volumes. To support long-term improvement, we are investing in operator training and optimizing equipment utilization to enhance efficiency, build long-term capabilities and ensure sustained cost improvements. We expanded the operational workforce in the third quarter and production levels notably improved in the fourth quarter and have continued to improve since. Turning to our operating and financial results for the year. Acadian's 2025 revenues for timber sales and services were $87 million compared to $91.6 million in 2024. In 2024, carbon credit sales contributed an additional $24.6 million to total sales, while no carbon credit sales occurred in 2025. Adjusted EBITDA totaled $15.8 million compared to $38.9 million during 2024. And adjusted EBITDA margin was 18% compared to 33% in the prior year. Overall, we achieved solid results from our timber operations in 2025 despite a multitude of challenges and amid a high level of economic uncertainty. We are very pleased with the performance of our New Brunswick operations, which delivered increased sales and sales volumes, lower variable costs and higher adjusted EBITDA as compared to 2024. New Brunswick's steady operations helped to offset the operational challenges in Maine. Overall, demand for our timber products was mixed but generally stable. Despite the heightened economic uncertainty, underscoring the resilience of Northeast regional log markets, timber pricing softened modestly but remained relatively stable over the year. Timber sales volume, excluding biomass, was consistent year-over-year, but was offset by a decrease in our weighted average selling price and lower timber services activity. New Brunswick benefited from increased contractor capacity and delivered a 10% increase in sales volumes, excluding biomass. In contrast, Maine sales volumes declined 40%, reflecting unfavorable weather in the first half of the year, limited trucking capacity and the short-term productivity impacts of our operational transition. Our weighted average selling price for 2025 was 4% lower than 2024. Softwood sawlog pricing was consistent year-over-year, supported by modest improvements in end-use markets. Softwood pulpwood demand started a low early in the year, which contributed to a 5% decrease in pricing year-over-year, but improved in the second half of the year. Weakness in hardwood lumber markets put downward pressure on hardwood sawlog prices and combined with the lower value product mix, resulted in a 7% decrease in pricing from 2024. However, demand for Acadian's hardwood sawlogs remained stable. Hardwood pulpwood demand softened due to tariff-related uncertainty and shorter hauling distances contributed to a pricing decrease of 3%. Operating costs and expenses related to timber sales and services were relatively consistent with lower average cost in New Brunswick, offset by higher average costs in Maine. Now turning to our outlook for the remainder of 2026. Near-term pressures on end-use markets have continued with trade policy developments adding further complexity for forest products companies on both sides of the border. The escalation of U.S. duties on Canadian softwood lumber along with tariffs on select wood-based products poses a potential risk to Canadian exporters and may dampen cross-border demand. That said, macroeconomic indicators remain supportive. North American interest rates are easing and the outlook for U.S. housing starts is steady at approximately 1.38 million starts in 2026 compared to 1.35 million in 2025. We remain confident that the stability of the northeastern forestry sector, combined with long-term demand for new homes and repair and remodel activity will support the long-term demand for our products. On the operations side, we maintained sufficient contractor availability in New Brunswick through 2025, and we expect this to continue into 2026. As I mentioned earlier, production from our internal harvesting operations in Maine improved during the fourth quarter of 2025, and we expect this momentum to continue through the winter, supporting further progress towards our targeted cost structure. We do expect production levels to ease somewhat in the second and third quarters of 2026, reflecting the usual spring slowdown and lower productivity of the harvest stands planned for the warmer months. Demand for Acadian sawlogs continues to be driven by regional supply and demand and is expected to remain stable in the near term, while pricing may remain challenged until end-use markets improve. Demand and pricing for softwood pulpwood and hardwood pulpwood is expected to remain at reduced levels in the near term. With respect to voluntary carbon credits, demand and pricing are expected to remain stable. Registration of the next batch of credits for our ongoing project in Maine was delayed in 2025 as a result of transitioning our project to version 2.1 of the ACR's Improved Forest Management protocol. However, we are expecting registration in the near term, which is expected to be approximately 400,000 credits. While the updated protocol may result in slightly fewer total credits than originally expected, all credits generated will be carbon removal credits, which are generally more attractive to customers and expected to command higher pricing. Beyond our current project, we are also evaluating future opportunities to develop additional projects for the remaining 900,000 acres under either the Canadian compliance protocol that was finalized in 2024 or voluntary programs similar to our current project. We also expect to remain active in our real estate business in 2026 as we begin selling residential lots and continue pursuing investments and partnerships in renewable energy in both Maine and New Brunswick. In closing, our priorities for 2026 remain clear. We will lead with the highest standards of safety and environmental stewardship. We will stay focused on achieving the best possible margins across our product lines, and we will keep pushing targeted improvements throughout the business to strengthen cash flow and support long-term value. A key focus for 2026 will be improving productivity in our internal harvesting operations in Maine, while keeping a close eye on costs. We will also continue working closely with our contractors in both New Brunswick and Maine to meet our harvesting goals and ensure we are meeting the delivery and demands of our customers. As always, our work is grounded in sustainable forestry practices. That commitment will continue to guide us as we strengthen the business and deliver long-term value for our shareholders. With that, we are now available to take your questions. Operator? Operator: First question will come from the line of Matthew McKellar with RBC Capital Markets. Matthew McKellar: First, I'd just like to ask about the transition to internal harvesting operations. Certainly positive to hear you say that production has continued to improve in Q1. Two questions there. First, how are you thinking about a target for harvest volumes in Maine this year? And then second, you noted that operating costs per cubic meter about 30% above the long-term target. Aside from higher harvest volumes, and I think you talked a bit about optimizing equipment utilization as well, but are there other important levers we should be thinking about for reducing your operating costs? Adam Sheparski: Thanks, Matthew. Starting with your first question regarding volumes, how we see it. I think the easiest way to address that is to look at our allowable volumes on an annual basis as we disclosed in our AIF, call that 240,000 cubic meters. Probably about 10% less than that just as we have some marketability issues with softwood pulpwood is really what it comes down to. So I would take approximately 10% off of that to give you a volume for the rest of the year. For 2026, that's our target. We believe we can achieve that. Regarding the second question on the 30% cost levers. Most of our levers are internally generated through the internal logging operations. It's a very fixed cost structure that we are operating in right now. Even some of the things that you would think would be quite variable like fuel where over the last 12 months, we've realized it's actually quite fixed in a lot of the equipment, believe it or not. And productivity is just going to be so crucial to achieving that 30%. But most of, if not all of that 30% is under our control as far as productivity is concerned. Matthew McKellar: Okay. That's helpful. Next for me, could you maybe just talk a little bit about how U.S. tariffs on cabinets and vanities have affected your business, if at all, maybe especially on the hardwood side? And with that, how are you thinking about risk to maybe volumes and pricing if those tariffs end up stepping higher into '27? Adam Sheparski: Yes. Great question. It is a tariff duties have really been causing a lot of noise in the news in particular. Hardwood is an interesting one for Acadian. Hardwood timber, in particular, is probably more important of a conversation than hardwood lumber, especially in our region. Hardwood timber volumes across the region or the supply of hardwood timber logs, in particular, is expected to continue to decrease. So more or less supporting our volumes moving forward. I think where we find ourselves right now is these end-use markets, which are probably being driven by cabinets, as you say, a number of things crossing the border, home starts, for instance, less hardwood floors, less cabinets. That's keeping the price of end-use markets for hardwood lumber, the pricing down. So it's hard for us to push through pricing. Volume isn't the problem for Acadian for hardwood sawlogs. It's being able to push that pricing through to our customers and keep them running, to be frank. And so that's what we're remaining focused on is those hardwood lumber markets and pushing through as many price increases as we possibly can as those hopefully will improve over the next near to midterm. Matthew McKellar: Great. That's helpful. If I could just sneak one last one in. You've got trucking constraints and certainly, this wouldn't be a near-term solution by any means, but it's been interesting to see a couple of large forest products companies trial autonomous trucking in Quebec this last December. Is that something you see kind of on the horizon as an opportunity for Acadian over the next few years? How are you potentially thinking about that one? Adam Sheparski: Yes, it's a great question. We've been talking about it internally. And literally, that's all we've been doing is talking about it. We've been talking a lot about AI and data, especially as it relates to inventory, which is really, really neat. And some of the information that's coming out and some of the data that we're receiving has been really interesting to consume. Nothing obviously to report. On the trucking side, there probably is some availability for us in the future when those systems get refined because we do have a significant amount of off-road hauling that happens on our roads that are restricted. So there is potentially something there. We are keeping an eye on it, but certainly haven't done anything in that regard as of yet. But I would say the off-road availability to Acadian, which you locally, you probably don't realize, but locally is a very big benefit to us to allow us to do hauling a lot longer than a lot of our friends here in New Brunswick and would lend itself to an autonomous driving vehicle as well. Operator: And I would like to hand the conference back over to Adam Sheparski for closing remarks. Adam Sheparski: Thanks, operator. On behalf of the Board and management of Acadian, I would like to thank all of our shareholders for their ongoing support. Thank you. Stay safe, and we look forward to you joining us for our virtual AGM and first quarter of 2026 conference call, both of which are on May 7. Goodbye. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and welcome to our 2025 year-end and fourth quarter results for Russel Metals. Today's call will be hosted by Mr. Martin Juravsky, Executive Vice President and Chief Financial Officer; and Mr. John Reid, President and Chief Executive Officer of Russel Metals Inc. [Operator Instructions] I will now turn the meeting over to Mr. Martin Juravsky. Please go ahead, Mr. Juravsky. Thank you. Martin Juravsky: Great. Thank you, operator. Good morning, everyone. I plan on providing an overview of the full year and Q4 2025 results. And if you want to follow along, I'll be using the PowerPoint slides that are on our website and just go to the Investor Relations section, and it's located in the conference call submenu. If you go to Page 3, you can read our cautionary statement on forward-looking information. So before I go into detail on the fourth quarter, I want to provide a little context. I view Q4 and even full year 2025 as continuations of a broader game plan that has been unfolding over several years. And if you go to Page 5, you'll get a bit of a snapshot of the significant changes over the last several years, including 2025. On the left graph, you see that we generated about $2.2 billion of cash flow since 2020. This has been asset sales such as the OCTG line pipe monetizations back in '21 and '23 and then the cash flow from operations. The right graph shows how we've deployed that $2.2 billion of capital. In the orange section, it shows about $1 billion of reinvestments through both internal investment initiatives as well as acquisitions. And this capital has really materially reshaped the portfolio. For example, we closed 3 acquisitions over the past 16 months being Samuel, Tampa Bay and most recently, the Kloeckner operations. For the Samuel and Tampa Bay acquisitions in 2024, we've started to see the contributions from those acquisitions. When we acquired the Samuel branches in October -- and excuse me, in August of 2024, we had a plan to reduce the footprint, gain efficiencies and also repatriate redundant capital. When the sale of the Delta property in BC is completed in the coming couple of months, we'll have reduced the initial capital by almost 50% and the implied purchase price multiple will be close to 4x average EBITDA. Going forward, we are now positioning the Western Canadian business for new investments, and we see some interesting new opportunities that are expected to unfold in 2026 and 2027. When we acquired Tampa Bay Steel in December of 2024, it was a very, very good stand-alone business with strong value-added and nonferrous components in its product mix. Equally important, it provided us with a literal and figurative beachhead to further grow into the Florida market. And if we jump forward from that acquisition to 2025, Tampa Bay was a really nice and steady contributor to our results. And it also allowed us to look at Kloeckner Metals, where we picked up 7 new branches in the U.S. in total, including 2 in Florida that complement the Tampa Bay presence in that market. And I'll talk more about Kloeckner acquisition in a minute, but the geography is exceptionally good fit for us. In the blue bar, it shows we returned about $900 million to shareholders by both dividends and NCIB. In the past, the approach was skewed to dividends only. But since 2022, we have taken a more balanced and flexible approach by also using the NCIB. And lastly, in the green, we reduced our leverage by over $300 million since 2020 at the same time that we grew and derisked our business. The result is that our credit profile has changed significantly, and we are now rated investment grade by both S&P and DBRS. On Page 6, the summary shows how the previously mentioned portfolio changes and initiatives have enhanced our EBITDA generation profile. We've talked a lot in the past about changing our profile to raise the cycle floor, raise the cycle ceiling and a result, raise the cycle average. In addition, we focused on reducing the volatility through the cycle where possible. This chart shows each of those elements. One, just by way of background of the way the chart is set up, the continuity takes out the quarter-to-quarter noise as it's sometimes hard to see trends when looking at individual quarters due to seasonal factors. All the data on this chart shows trailing 12-month periods at the various points in time. And I want to show 2 periods of time being both pre-COVID and post-COVID. The pre-COVID period is the 3 years between 2017 and 2019, then excluded the COVID period of 2020 to '22. Those years were so unusual and not really all that meaningful in looking for medium-term trends. and the right chart reflects the most recent 3-year period being 2023 to 2025. Takeaways are really threefold: One, the pre-COVID period shows an average EBITDA of $270 million versus the post-COVID chart. The average EBITDA is $354 million for a 30% increase. Also, the chart on the right doesn't fully reflect the impact of the acquisitions that were completed in 2024 and 2025. The point being that our average cycle EBITDA is now substantially higher than the past. If we look at the circled areas, it shows the peak to trough range in the last cycle had a variance of $167 million in the 2017 to 2019 period versus a much lower variance of $127 million on the right chart for the most recent 3-year period. The point being that we have raised the cycle average EBITDA and also reduced the cycle volatility. Lastly, if we look at the chart on the right, it shows the arrow being the sequential improvement in trend over -- of the trailing 12-month period over the last 4 quarters, including the most recent quarter. If we go to Page 7, there's a snapshot of our 2025 results. For 2025, revenues are up 9%, gross margins are up 90 basis points. EBITDA dollars are up 13%. This improvement is a function of the 2024 acquisitions making contributions as well as the impact from some of the recent CapEx initiatives and generally improved market conditions on average in 2025 versus 2024. On the middle row of the diagram, our 2025 CapEx was $74 million. This number is below our expected multiyear run rate as some projects were completed, and we are still scoping out some potential new opportunities that should be initiated this year, particularly related to some interesting initiatives in Western Canada as well as opportunities that will emerge from the Kloeckner locations. Capital deployed is now about $1.8 billion, and it grew from $1.3 billion at the end of 2023 and $1.6 billion at the end of 2024. At the same time that we are deploying incremental capital in targeted areas, we are also repatriating capital where the returns are not adequate. As I mentioned earlier, in September, we announced the closure of a branch in Delta BC and the sale of the related real estate. This will release over $40 million of capital that was not generating an appropriate return and was part of the broader initiatives in Western Canada that emerged as part of the Samuel's acquisition. When that real estate sale closes in the coming couple of months, we'll have reduced over $100 million of capital in Western Canada and thereby reduce the cost of the Samuel acquisition substantially from the original $225 million purchase price. We generated strong return on invested capital. Our return was 15% in 2025 and averaged 18% per year on average over the past 3 years. These levels compare well against our industry peers and against our stated target of 15% or more over the cycle. We grew in strategic ways. Our U.S. platform represented 44% of 2025 revenues compared to 30% in 2019. Once we take into account the Kloeckner acquisition, our U.S. platform will be over 50% of total revenues. Also, we'll have about 11% -- at about 11% of our revenues as specialty metals such as stainless and aluminum in 2025 versus much lower thresholds in previous years. On the last row of the diagram, returning capital to shareholders. We have balanced approach. In 2025, we returned $86 million via share buybacks, $96 million via dividends for a total of about $182 million of capital returned to shareholders. And in spite of all the reinvestments that we've done, the acquisitions, returning capital to shareholders, we still have maintained a very strong capital structure as it's critical in a cyclical industry. As a result, we've got really strong liquidity, flexible bank covenants, no financial covenants in our term debt and our maturities are extended to 2029 for bank debt and 2030 for our term debt. We go to market conditions on Page 8. On top chart, we saw sheet and plate prices exhibit increases in many categories over the past couple of months. Current hot-rolled coil and plate prices are up around $70 or $80 per ton since late November as demand is solid early in the new year and supply chain inventories are reasonable. On the bottom chart, we've shown aluminum and stainless prices as those are now bigger percentages of our product mix. As shown on the chart, those products don't exhibit as much volatility as carbon as they have different supply and demand dynamics and aluminum, in particular, has been an upward trend over the past 6 months. On the right charts, supply chain inventories in both Canada and the U.S. as measured by months on hand in the yellow lines remains reasonable and within the normal range. On Page 9, a snapshot of our historical results, starting on the top left on the various charts. Revenues were consistent at around $1.1 billion for each of the past several quarters. And if we look on an annual basis, which are the green bars, we had a nice uplift of revenues in 2025 versus 2024 with the contributions from the recent acquisitions. EBITDA of $69 million was down from Q3 2025 due to the typical seasonal decline in volumes, but was higher than Q4 of 2024. EBITDA margins of 6.3% for the quarter and 7.3% for the full year 2025 were up over the comparable periods of 2024. Earnings per share was $0.55 in Q4 just a little over $3 for full year 2025, which were both up versus the comparable periods of 2024. I mentioned earlier, our return on invested capital, 15% for the year, and our 3-year average was 18%. Both of these are industry-leading figures. And as mentioned earlier, on our capital structure, we're in really, really good shape. Going to more detailed financial results on Page 10, income statement perspective. I covered some of these items already, so I'm not going to go into too much detail. Revenues were up 6% from Q3 -- excuse me, down 6% from Q3, but up 5% from Q4 of last year. And I'll talk more about volumes later, but it was a reasonably good shipping quarter in spite of the typical seasonal dynamic. Our margins were flat in Q4 versus Q3, and that was frankly better than I expected. the pickup in margins late in fourth quarter helped the Q4 average and it sets the stage for a small pickup on a same-store basis in margins in Q1 2026 versus Q4 of 2025. There was a little bit of clutter in noise in the quarter, which are included in the results. Some were positive and some were negative. The mark-to-market on our stock-based comp was a $3 million expense in Q4 versus a $2 million recovery in Q3. There was $2 million of operating losses at a couple of our locations in Western Canada that are in transition with some major pieces of equipment moving around, and those can be and were disruptive to the operations. The good news is those are now largely complete. There's about $1 million of costs related to the Kloeckner transaction. And a couple of items that were positive one-off items. There was a $2 million recovery of the tariff that was charged by the Canadian government for our inventory in transit that was expensed in Q3, and we recovered that back in Q4. And we actually had a small about $1 million gain on the sale of various pieces of equipment. From a cash flow perspective, in Q4, we generated $53 million in cash and working capital, which typically does happen in Q4 due to the seasonal nature. This is likely to go the other way in Q1 as we'll have a seasonal pickup in activity, we'll experience some higher prices that impact working capital, and we'll make our annual payments of variable compensation in Q1. The Kloeckner acquisition closed and the estimated purchase price is now USD 95 million or CAD 130 million, and this is down from the previous announced level due to refinement of the closing working capital amount. That being said, I suspect that the level of capital required to operate the former Kloeckner branches under our watch will go up somewhat from the capital deployed at the December 31 closing date. That being said, to put the $95 million purchase price into context, you'll see from our financial statement disclosure that the Kloeckner branches generated around USD 550 million of revenues in 2025 and around USD 30 million of adjusted EBITDA in 2025. So I suspect this transaction will turn into a very economically attractive situation. Share buybacks were $25 million in Q4 and the cumulative share buybacks since August of 2022 or 14% of our shares outstanding for $326 million or a little under $38 per share. Our quarterly dividend of $0.43 per share was paid in December, and we have just declared a $0.43 per share dividend that will be payable in March. Our CapEx, I'll talk more about this later, $14 million was down a bit, but we still have a meaningful pipeline of projects, and we should average closer to $100 million per year for a few years. Balance sheet perspective, I mentioned this a few times already. We remain in a strong position, only $184 million of net debt. Lastly, our book value per share remains around $29 per share. Some of the recent decline in book value was due to the strength in the Canadian dollar, both in the Q4 as well as full year 2025, which had a negative impact on the FX translation in our OCI account. On Page 11, there's an EBITDA variance analysis between Q3 and Q4. Starting on the left and looking at service centers. The service centers as a whole was flat quarter-over-quarter. There are some positives and some negatives. Volumes had a negative impact, but that was again the seasonal factor. The margin impact was a slight positive with most of the pickup in margin occurring at the end of Q4, so it didn't really have much of an impact in Q4. We also did have a favorable variance in service center costs, operating costs as Q3 had more nonrecurring items in them, including the $4 million cost that we recorded to wind down the Delta branch. And as I mentioned earlier, this branch wind down is mostly complete and the sale of the real estate should occur in the coming months, and we expect to recognize a meaningful gain on the sale at that time. Energy field stores down $4 million versus Q3 due to seasonality. Steel distributors had a really solid quarter and it was up $1 million from Q3. But that being said, it did benefit from the $2 million tariff recovery that I mentioned earlier. In the other bucket, there was a reduction in corporate expenses that was a positive variance, but it was more than offset by the negative variances from the mark-to-market on stock-based comp and the seasonal dynamic where our Thunder Bay terminal operation turns down somewhat in Q4 and then also into Q1. On Page 12, segmented P&L information. Service centers, I'll go through this in more detail on the next page, but it was a flat quarter versus Q3, which is pretty good for what is typically a down quarter in Q4 versus Q3. Energy field stores revenues and margins were both down from Q3, but they were within our typical range. Distributors revenues were down, but gross margin was up and EBIT was up. Page 13, deeper dive on the metrics for the Service Center business. Top right graph is tons shipped. Q4 was down a bit from Q3 due to seasonality, but up over Q4 of last year and expect Q1 to exhibit a typical seasonal pickup, notwithstanding some weather-related factors that have impacted pretty much all of our operating regions, both Canada and the U.S. over the past number of weeks. On the bottom left and right graphs, we have revenue, cost of goods sold and margins per ton. Our price realizations, cost of goods sold, gross margin per ton were pretty much flat in Q4 versus Q3, but there was a slight pickup at the end of fourth quarter that resulted in the end of year gross margins being higher than the Q4 average, which should lead to higher Q4, Q1 versus Q4 margins as measured on a same-store basis. Page 14, inventory turns. Overall, our inventory turns declined from 3.8 in Q3 to 3.5 in Q4. That is pretty consistent, though, with the normal seasonal factors that occur in Q4. On Page 15, the impact of inventory turns on inventory dollars. Total inventory was up $111 million, but most of the increase, around $96 million related to the Kloeckner inventory that came with the acquisition that closed on December 31. If you go to Page 16, capital structure. I may sound a little bit like a broker record, but our liquidity is strong, and it gives us a lot of flexibility. As I said earlier, we recently obtained a credit rating upgrade from S&P, and so we are now investment grade by both S&P and DBRS. Since last quarter, our net debt was reduced by $41 million prior to the Kloeckner closing on December 31, and our liquidity increased from $600 million to $653 million. The far right column on the table shows the impact of the Kloeckner acquisition that did close on the last day of the year as we ended the year with net debt to invested capital of 10% after that transaction closed and over $500 million of liquidity. Page 17, a bit of an update on our capital allocation priorities, which really haven't changed all that much over the last little while. They remain pretty consistent. Starting point for investment opportunities, we do see average returns over the cycle greater than 15%. We continue to focus on all the various initiatives. And when we look at facility modernizations and value-added equipment in particular, our multiyear CapEx pipeline is approximately $200 million at this point. In terms of acquisitions, we are always looking at M&A opportunities and the types of acquisitions that are being considered are similar in nature and scope to what we've done over the last few years. But that being said, our very near-term focus is on integrating the Kloeckner acquisition that only closed a few weeks ago. For returning capital to shareholders, as I said before, our approach is to be flexible. Over the last 2 years, we've returned an average of a little over $100 million to shareholders via the NCIB, while our average annual run rate for our dividend is currently a little under $100 million per year. Page 18, a little bit of a context to our reinvestment program, and I've mentioned this a couple of times already. If we look at 2025, it was a little bit of a down year from what our expectation was as we invested $74 million in CapEx, which was down from $90 million in 2024. I expect the 2026 CapEx to be closer to that $100 million mark as our multiyear pipeline, as I said earlier, is about $200 million, and that includes a number of opportunities that we'll pursue at the former Kloeckner branches. Page 19 is a deeper dive on returning capital to shareholders. Top left graph is dividends, and we show our longer-term dividend profile with the most recent dividend declaration of $0.43 per share that will be payable in March. We'll continue to regularly revisit the appropriate dividend level, taking into account capital structure, earnings profile and the like as was done when we listed the dividend in May of 2023, May of 2024 and most recently in May of 2025. Bottom left graph, we show our NCIB activity since we put it in place in August of 2022. It is not a fixed approach to the program. It is opportunistic way buy back shares, and we have been more aggressive at certain price points than others. In Q4, we acquired around 600,000 shares at an average price of around $40. On the bottom right graph, the impact of the NCIB has been a gradual reduction in our share count and result in a 14% reduction in our shares outstanding since we initiated it. On the top right graph, the aggregation of dividends and NCIB over the past few years shows a fairly balanced approach, but it isn't fixed and it isn't the same in any particular quarter. That being said, and in closing, folks, on behalf of John and other members of the management team, I really want to express our appreciation and thanks to everyone on the Russel team for their contributions. A lot was accomplished in 2025 with much more opportunity ahead. And as an example, I've talked about before, we are in the early days of operating the former Kloeckner branches, but we see significant opportunities that will be pursued over time, and we really appreciate everybody's efforts and contribution to realizing on those opportunities. So operator, that concludes my introductory remarks. Can you please open the line for any questions? Operator: [Operator Instructions] The first question comes from James McGarragle at RBC Capital Markets. James McGarragle: I just wanted to ask a question on the return on invested capital. So returns have been really solid in the context of a very weak backdrop, but kind of trended down the past couple of years. So any confidence here that 2025 was a trough and that 2026 should start to show improvement in that metric? Martin Juravsky: Yes. Well, I guess as a starting point, James, if we kind of compare to the return on invested capital that we realized in '21 and '22 and '23, frankly, that was buoyed not just for us, but for everybody in the industry by some really unusual market activities. So when we look at 2024 and 2025, where we generate around a 15% return in both of those years, both of those years were extremely volatile and involved a lot of challenges, a lot of navigation. So we're actually quite proud of those levels of returns in what were frankly difficult markets. And that's just not looking at it relative to our internal expectations is also relevant in comparison to what we look at when we compare ourselves to other public companies. So it's hard to say what's a peak, what's a trough because we actually look -- our frame of reference is trying to look through the cycle on average because sometimes we get impacted by market conditions that we have no influence over and the test is how we navigate through them. And we navigated through 2024 and 2025 exceptionally well and to have generated 15% returns in each of those years. That's a pretty high level compared to some of our public competitors. James McGarragle: Yes. I appreciate the color there. And can you just give us an update on how you're thinking about volumes? I mean PMIs came in really strong in January. There was some indication that might have been potentially front running of some tariffs. But can you just kind of give us an update on what your customers are saying? And if that PMI reading is kind of consistent with some of the conversations that you're having with your customers early in the year so far? John Reid: Yes. Thanks, James. The PMI rating is very consistent with what we're hearing in both Canada and the U.S. from our customers. So we're seeing an uptick. I think another reference point you can use is mill capacity utilization rates are now creeping towards 80%, which anything above 80% really gives pricing control. And so you can see the mill pricing is moving up, mill lead times are moving out, which would indicate demand is also moving strong, which would correlate with the index that you're referring to for the purchasing managers. So we're pretty bullish on what we're seeing in Q1 that's out there right now with a lot of optimism around basically all of our end markets with the exception primarily of ag is still languishing. But everything else is running extremely well. Equipment manufacturing is good. Obviously, you've seen robust things for data centers that are out there, solar, wind. We're participating in all of those. You're seeing some [indiscernible] from the government that are coming in where projects are -- there's a lot been announced. You're seeing some projects move forward. So that's adding to the robustness that's out there. Energy has a lot of positive things going on with it. So overall, we're pretty optimistic going into Q1. Operator: The next question comes from Michael Tupholme at TD Cowen. Michael Tupholme: Maybe just to pick up on the last line of questioning there. Is it possible to elaborate a little further in terms of any differences from a demand perspective in Canada versus the U.S.? It certainly sounds strong in general, but just geographically, wondering if you're seeing any differences. John Reid: It's definitely a little stronger in the U.S. right now. And so we've seen the U.S. kind of lead that and is moving forward quicker. As we see the tariff dynamics continue to unfold, it's obviously impacted some of the end use in Canada. But overall, we're seeing upticks on both sides. On a percentage basis, the U.S. is probably up a little bit more. But again, we're growing in both markets. So again, we feel good in both areas right now. Michael Tupholme: That's helpful. And then just in terms of some of the comments you made, Marty, earlier in the call about expectations for sequential improvement in service centers margins as we move into the first quarter on the back of the higher pricing you've seen. Can you provide any further detail around sort of order of magnitude, like, I guess, margins -- gross margins in service centers were relatively consistent Q3, Q4. You talked about some of the sort of the dynamics as you move through the various quarters there. But I guess, just any help in terms of sort of to what extent we should expect to see an improvement in Q1? Martin Juravsky: So it's a good question, Mike, and let me break it down into 2 pieces, one on same-store and one overall. So if you look on a same-store basis, where we saw a little bit of an uptick was in December versus the Q4 average. And it really was a continuation of margins were basically flatlined through probably the previous -- before December, probably the previous 3, 4, 5 months. And so December was a little bit of a pickup. So that's why December was a little bit higher than the Q4 average. It wasn't a step function change. I'd measure it by probably 25 or 50 basis points higher in December than it would have been in the previous couple of months. And so that kind of looks on a same-store basis. The qualifier in all that, though, is when we look at our overall results, though because on December 31 is where we picked up the Kloeckner branches. And so the Kloeckner branches will be included in our Q1 results, whereas they weren't included in our Q4 and the Kloeckner branches, as we've talked about before, different product mix, different earnings profile. The economics of that transaction look pretty good, but the margin profile is below the margin profile of the rest of our business. So what we'll probably do in Q1, Mike, is have some sort of disclosure that distinguishes between same-store data and overall data because there will be some margin dilution because of the meaningful contribution from those Kloeckner operations. And that is separate apart from my earlier comments about on an apples-to-apples basis, there was a margin pickup at the end of Q4. Michael Tupholme: Okay. That's helpful. We'll look forward to that disclosure. So overall, when you layer in Kloeckner, we should actually expect down in Q1 on an overall blended basis. Martin Juravsky: If you look at service centers, on a margin basis, percentages, it will be flattish. Same-store will be up overall, should be flattish on a percentage basis or dollar per ton basis. But when you look at bottom line contribution in dollars, it is accretive right away. Michael Tupholme: Perfect. No, for sure. And I mean, obviously, the visibility is not quite sort of as good. But if we look out to Q2, is that a similar sort of dynamic? Or can things change -- begin to change kind of quickly with Kloeckner? Or is it going to take some time such that sort of what you've described in -- as being the dynamic in Q1, is that sort of the right way to also think about sort of the next few quarters as we look out a little further? Martin Juravsky: Sorry, are you talking specifically about Kloeckner or the broader market, Mike? Michael Tupholme: No. Well, service center margins overall for the company, inclusive of Kloeckner as we kind of move past Q1. Like I understand it depends what happens with steel prices. But so far, everything looks pretty solid on the steel pricing front, and there is the lag effect. So beginning to maybe get some visibility into Q2. Just wondering if this sort of Kloeckner dynamic, does that act as a bit of a drag for a little while such that as we look to Q2, we should be kind of thinking sort of flattish as well? Martin Juravsky: Yes. So talking about the Kloeckner piece of it first, that's not a 30-day turnaround situation. There are going to be initiatives that will unfold over years, not months. And when I talked about CapEx, for example, there are some opportunities that are coming to the table related to CapEx, some of which is catch-up, some of which is incremental new opportunities, but those don't happen quickly. Those are being scoped out. Those will take some time. They will come to the table over the course of 2026 and probably even in 2027. So some of the improvement in margin profile that we're expecting to come out of the former Kloeckner branches, that will unfold over a couple of year period. So it wouldn't -- I wouldn't suspect that you're going to see any meaningful noticeable difference for the initiatives that we're putting in place in Q2 versus Q1. That's going to take a little bit longer time to unfold. In terms of broader market conditions, though, Mike, almost by definition, our visibility is somewhat limited just because that is how we structure our operations being highly flexible, highly adaptable. We don't have the contract business. So we can adapt to whatever the market conditions are. So John's comments, we're quite optimistic, but we don't have a backlog or a formalized pipeline that lets us see what Q2 and Q3 and Q4 are going to be because so much of what we do is just adapting to market conditions, whether they're good, bad or otherwise. Right now, we're quite optimistic of what the rest of the year is going to look like, but we'll play it out as it plays out. And if it's good, that we will be very well positioned to do that. If there's some twists and turns like we saw in the last couple of years, we'll adapt to that as well. Michael Tupholme: That's helpful. And then maybe just one final one, picking up on some of the comments that you made about CapEx. Can you help us understand this $100 million or so that you'd expect to deploy in the next -- each of the next couple of years. Presumably, maintenance CapEx has gone up a little bit as a result of some of the acquisitions. So is it possible to kind of talk about how much of that $100 million is maintenance and then of the balance, I mean, I think I have a pretty good idea, but can you talk a little bit about where you plan on devoting or directing that capital in terms of specific opportunities? Martin Juravsky: Yes. If I look at what the maintenance piece is, your premise is right on, which is the maintenance piece of it does go up, in particular, where using the Kloeckner transaction example, there is some catch-up associated with those operations for sure. And so the bar keeps going up. But the most meaningful part of the $100 million is discretionary that will have some degree of a return attached to it. Michael Tupholme: Okay. And it's facility modernization, value add is continue to be the focus and I guess, any further detail there? Martin Juravsky: Some of the individual projects are still being scoped out. So it will be more of the same of the types of things you've seen in the past, different kinds of modernizations across different facilities, where we'll be debottlenecking, expanding the footprint, enhancing the product flow that will exist in some of those operations. In a couple of cases, we're looking at rationalizing 2 locations into one, enhancing the flow a little bit better, putting everything under one roof. So it fits into the same category, the type of modernizations that we've done in the past. And then the type of equipment projects, more of the same, Mike. Operator: The next question comes from Ian Gillies of Stifel. Ian Gillies: Russel has obviously been quite busy doing bolt-on M&A over the last 5 years, if not longer. Some of your peers have been executing what I would call larger transactions in the last 6 months. And as you look across the competitive landscape, I'm curious if you feel a desire or need to start moving your acquisitions into a larger snack bracket just in an effort to keep up from a size perspective or whether the market is still so fragmented that you're not very worried at this point in time? Martin Juravsky: My apologies for gravitating on a couple of your words, but it sort of does set the frame of reference for us. We don't find a need to do anything. It's purely where the opportunities are. And when we have looked at some transactions that other competitors have done, whether big, small or otherwise, it's not like we didn't know about them or see them or have opportunities on them. We've come to our own conclusions. And our own conclusions were not to pursue things that we don't think makes sense. So other people will have their own strategies and their own initiatives, and that's all fine and good. our strategy, I think, has been successful. And it's not a case of we look at stuff that is of a certain size or scope. That's just what has made sense over the course of the past period of time. And we think some of the chunkier things that have been out there have inherent challenges associated with them. And we're quite comfortable with the approach that we've taken. And in some ways, when you talk about the chunkier or the scalable things, Ian, if we look at the aggregation of what we've done over time, there's a bunch of singles and doubles. And when you put them all together, we've deployed about $1 billion of capital through acquisitions and through internal investments. And that's a meaningful amount. It just happened to come through a series of transactions over the course of time. And that's what the next number of years looks like. that will be more of the same. If there's something chunkier that comes available that meets our criteria, that's fine, too. If it doesn't meet our criteria, we don't need to do it. John Reid: And Ian, just to add on to that, I think our balance sheet flexibility puts us in a position to take advantage of any opportunity that we see that fits within our metrics and it's disciplined. It also puts us in a position not to have to do anything. And sometimes our nose are just as good as our guesses. And so we'll remain very disciplined. Again, we think there will be a lot of opportunities out there. We'll see what fits. But again, it puts us in a very nice position to have a lot of flexibility going forward to continue to push the company, as Marty said, the singles and doubles approach for a lot of loans. Ian Gillies: No, that's very helpful context. John, there was a lot of last week, if I could call it that, around Fast Markets rolling out a Canadian HRC price. I know it's not necessarily really core to what you do, but it is an input into the value-added products that you sell in some instances. And so are you willing to comment at all on the price point they laid out? Because it feels a little high relative to what's been talked about in market for where the Canadian steel price is. John Reid: Yes. I think they came out. They pulled the market. Obviously, they're taking more of a median or an average. So I think it's within the realm of reasonableness and maybe a little bit on the high side. I think the challenge for them has been the historical pricing, and we've talked about this before on calls, historically, U.S.-based currency adjusted within a few percentage points. When that disconnected, it became a little bit of a free fall. That gap has now narrowed and continues to narrow. So I think there's just a little bit of ambiguity, and I actually feel for them as they try to put that together because things are starting to tighten back up between that spread of Canada and the U.S. So I think it is moving directionally correct. I think they may just came out just a little bit over market day 1, but I think the market is moving in that direction. Ian Gillies: Yes. No, that's very helpful. Marty, I've tried this before, and I'll try again, but there's obviously -- you've been opportunistic in and around the buyback. In the event you choose not to be opportunistic on the buyback given the move in the share price, are there other ways you may want to use those funds, i.e., like perhaps higher dividend increases, maybe you put a bit more towards M&A than you have historically? I'm just trying to kind of risk and think about how you allocate capital here this year. Martin Juravsky: Well, you've tried again so. I'll try my answer again. How is that? Ian Gillies: I like that. Martin Juravsky: I'll go back to what John said in terms of our capital structure, which is it's set up in a way for a reason. to give us a lot of flexibility. And that flexibility is about making decisions that are not based upon February 12, 2026, and what it might do on February 13, 2026. We're trying to make as many long-term impact decisions as possible. And so we don't really feel that there's a need -- there's not a best before date on our balance sheet. It really gives us a lot of flexibility and optionality to do what we want, when we want. And we don't feel that we need to be forced into a time-constrained box. And I think, again, if we look over a multiyear period, I have a much higher degree of conviction of what we will do on aggregate over a period of time, just like we have done for the last couple of years. But on a very short-term narrow basis, it's really ebbing and flowing a fair amount, and we're not making decisions purely on a short-term basis. Higher degree of conviction of what our long term will be. And if you look at the last 5 years, it's probably a good reflection of what the next 5 years is going to be, whether it's NCIB, whether it's dividends, whether it's acquisitions or CapEx. Did I not answer your question again? Ian Gillies: I'll just go to the [ drawing board. ] Operator: The next question comes from Sean Jack at Raymond James. Sean Jack: So I know that you mentioned before that M&A has kind of followed an opportunistic trend. But if you had to highlight top strategic priorities with acquisitions, is it adding spokes to hubs? Is it filling white space? Is it new customers? Any color would be appreciated. Martin Juravsky: So the answer is yes. And it may sound repetitive, but it really is a multipronged approach. And it is all of the above. It's not one or the other. It's a series of things that in aggregate, we think is meaningful and additive. And as I was just mentioning to Ian, the last couple of years, there's been an accumulation of a series of initiatives, both internal and external, how we return capital to shareholders. And it's going to be more of that. Some of it just doesn't even get on the radar screen, quite frankly. The stuff that some of our folks are doing in the field on a day-to-day basis and going after customers, going after market share, generating returns, generating margin, that doesn't necessarily get a lot of profile, but that's just blocking and tackling that they're dealing with every day, and then there's a few things that pop up here and there that are more meaningful that actually just do become more noticeable in the public context. But it really is an all-of-the-above approach. Operator: The next question comes from Jonathan Goldman of Scotiabank. Jonathan Goldman: I just want to know, is it possible to quantify or even directionally talk about how much your volumes are benefiting from data center work? I mean, John, you talked about kind of pretty decent end markets for a few quarters now. It looks like it's staying that way. The only drag would be ag. Volumes have kind of been flattish on a same-store basis. Is data center work kind of offsetting some of the weakness you're seeing in ag or some other verticals? John Reid: It's a good question. It's because we touch so many layers from structural steel fabricators and people making racking for data centers. It's a little hard to put an exact pin on that, but it is impacting us across multiple customer base. The thing that's interesting is you've seen, if you look at the Architectural Billing Index, it's hovering just below that 50%, which would mean expansion. It is a big portion of that, and it's with wind towers as well. It's driving the energy side of it, whether it's solar, whether it's wind, whether it's nuclear small nuclear, medium or large. So it's driving that power demand as well. So it's hard to quantify exactly. But no, we think it's making a meaningful impact, and we think it will continue to for the next several years. Jonathan Goldman: That's interesting color. I appreciate that. And then I guess another one on the industry kind of the consolidation we've seen lately, another 2 of your big peers have consolidated and it follows on another one that happened, I think, last October. When you guys think about what's happening there, how do you think about that from a competitive dynamic standpoint? And how does it potentially change your approach to M&A? John Reid: I got your question there backwards. I guess, it doesn't really change our approach. We look at every opportunity that's out there, what does it do? How does it stand on its own 2 feet? How does it compare to a myriad of things that are out there buying our own stock back? What does it do for our shareholders? What risk does it put our balance sheet at? Understanding we are in a cyclical industry, and we've taken out some of that volatility by changes we've made in the past by exiting OCTG and line pipe, we don't want to recreate that again. We don't want to get out over our skis on the balance sheet. But we're not -- as Marty mentioned earlier, we spent over $1 billion now in the last 5 years. So we're growing. We're just doing it very systematically. And so we like our approach. But I will say when looking at some of the other deals, I guess, the growth for the sake of growth is not something we're interested in. And so what is it doing for our shareholders and what is it doing for our company long term? And how does it impact our balance sheet, we are very cognizant of that. Jonathan Goldman: Understood. And I'm sure investors will appreciate the discipline as well. I guess one more maybe for you, Marty. I mean, I guess this has been asked a bunch of different ways. But if we sit here today and you think about the M&A pipeline that you have and the visibility there, how do you think about the relative attractiveness of M&A versus buybacks today? Martin Juravsky: We'll constantly calibrate them and the opportunities on both of those buckets change every day because our share price changes every day and the M&A opportunities change every day. So it's a constant recalibration. But it is a fair observation, though, which is -- we're not doing M&A for the sake of M&A. And there are some businesses that might be interesting, but not at certain values. And we have seen M&A opportunities over the last couple of years that come to market, leave the market, come back to market, leave the market. And sometimes they are good businesses that just have wrong valuation expectations. So not to be repetitive with John's comment about not growth for the sake of growth for us. And there are always opportunities that are out there, some of which are just not attractive either from an economic perspective or business perspective or the like. And if we see opportunities that make sense both in terms of internal deployment external deployment, share buybacks, it's a constant recalibration, which is why if we look back over the last 5 years, in aggregate, we've done a bunch of all of the above. But on a quarterly basis, sometimes we do more of one versus the other. It's a constant shift of where the opportunities are. Operator: We have no further questions. I will turn the call back over to Martin Juravsky for closing comments. John Reid: Great. Thank you, operator. I really appreciate everybody for joining our call today. Very good questions, and we're really excited about what unfolded in 2025 and the opportunities that are in front of us. So thank you for indulging with us through the discussion. If you have any questions, please feel free to reach out. Otherwise, we look forward to staying in touch during the balance of the quarter. Take care, everyone. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.
Operator: Good morning, ladies and gentlemen, and welcome to the Orbit Garant Drilling's Financial Fiscal 2026 Second Quarter Results Conference Call and Webcast. [Operator Instructions] Please be aware that certain information discussed today may be forward-looking in nature. Such forward-looking information reflects the company's current views with respect to future events. Any such information is subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward-looking information. For more information on the risks, uncertainties and assumptions relating to forward-looking information, please refer to the company's latest MD&A and annual information form, which are available on SEDAR+. Management may also refer to certain non-IFRS financial measures. Although Orbit Garant believes these measures provide useful supplemental information about financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Please refer to the company's latest MD&A for additional information regarding non-IFRS financial measures. This call is being recorded on Thursday, February 12, 2026. I would now like to turn the floor over to Mr. Daniel Maheu, President and CEO of Orbit Garant Drilling. Welcome, sir. Daniel Maheu: Thank you, Jim, and good morning, ladies and gentlemen. With me on the call is Pier-Luc Laplante, Chief Financial Officer. Following my opening remarks, Pier-Luc will review our financial results in greater detail, and I will conclude with comments on our outlook. We will then welcome questions. As expected, our results for our fiscal second quarter reflect the full resumption of certain projects in Canada and South America that were temporarily delayed in Q1 and the continued ramp-up of new drilling projects in Canada. Aside from a customer initiated delay on one drilling project in South America and unexpected modification to another during Q2, we have increased overall drilling activity in the quarter in both Canada and South America, including a higher proportion of specialized drilling in Canada. Our revenue and margin for the quarter were somewhat constrained by the temporary delay on these 2 projects in South America. Competitive pricing on new projects and contract renewals remained during the quarter. Overall, revenue for our fiscal second quarter was up by 10.5% compared to Q2 a year ago, and our adjusted gross margin was 18.5% compared to 21.5% in Q2 last year. Our drill utilization rate in the quarter reached the highest level in more than 2 years and supported by new drilling contracts and contract renewals. We expect further increase in our drilling utilization rate in our fiscal third quarter, which we can accommodate with minimal mobilization costs. Some of these increased utilization gains may not be fully realized until our fiscal fourth quarter due to the various challenges caused by the severe winter weather conditions we have experienced in Canada in January and into February. We also expect to continue to benefit from the continued advancement of our ramp-up activity on new projects in Canada as projects typically yield lower gross margin during the ramp-up period. While we have experienced some unexpected project delays in the first half of the year, these projects are all back online now, and we are well positioned to continue increasing our drilling utilization rate to drive revenue growth. Demand for our drilling services in both Canada and South America remained strong, supported by record gold prices and elevated copper prices and bidding activities on new projects remains at a high level. I will now turn the call over to Pier-Luc to review our financial results for the second quarter in greater detail. Pier-Luc? Pier-Luc Laplante: Thank you, Daniel, and good morning, everyone. Revenue for the quarter totaled $47.9 million, up from $43.5 million in Q2 last year. Canada revenue was $33.8 million in the quarter, an increase of 9.8% compared to Q2 last year, reflecting increased drilling activity and a higher proportion of specialized drilling. International revenue totaled $14.1 million, an increase of 12.1% compared to Q2 a year ago, reflecting increased drilling activity in both Chile and Guyana. So our revenue was constrained in the quarter by a customer decision to temporarily delay one project and unexpected modifications to another drill program. The project that was temporarily delayed by a customer decision was fully resumed in January 2026. Gross profit was $6.5 million or 13.5% of revenue compared to $7.2 million or 16.5% of revenue in Q2 2025. Adjusted gross margin, excluding depreciation expenses, was 18.5% in the quarter compared to 21.5% in Q2 last year. The decreases in gross profit and adjusted gross margins are primarily attributable to lower drilling productivity on certain projects in Canada, a competitive pricing environment on new contracts and contract renewals and the customer initiated delay and modifications to certain drilling programs in South America. Adjusted EBITDA totaled $5.1 million, up from $4.5 million in Q2 last year. Net earnings for the quarter were $1.3 million or $0.03 per share diluted compared to $0.5 million or $0.01 per share and diluted in Q2 last year. The increases in adjusted EBITDA and net earnings were primarily attributable to lower income tax expenses and a favorable foreign exchange variation, partially offset by lower operating earnings. Turning to our balance sheet. We repaid a net amount of $3.3 million on our credit facility in the quarter compared to a repayment of $2.4 million in Q2 a year ago. Our long-term debt under the credit facility, including the current portion, was $16.0 million at quarter end, down from $19.3 million at the end of Q1, but up from $14.0 million at our fiscal 2025 year-end. Our increased debt in the first half of fiscal 2026 is the result of our yearly shipments of equipment inventory for our operations in Nunavut and Nunavik. We expect to continue to pay down debt on a net basis throughout the remainder of fiscal 2026. On December 22, 2025, the company entered into a sixth amended and restated credit agreement with National Bank and the lenders in respect of the credit facility. The credit facility consists of a $30.0 million revolving credit facility, along with the credit facility in the unused amount of USD 5.0 million utilized for the purposes of standby letters of credit. The credit facility expires on December 22, 2029. On October 28, we announced that the Toronto Stock Exchange approved our renewed normal course issuer bid, which allows us to repurchase up to 500,000 shares over a 12-month period that began on October 31, 2025. During the quarter, we repurchased and canceled 141,450 shares at a weighted average price of $1.29 per share pursuant to the NCIB program. We continue to view the NCIB as a useful tool to enhance shareholder value when the underlying value of Orbit Garant is not reflected in our share price. Our working capital was $51.9 million at quarter end compared to $50.4 million at the end of fiscal 2025. I will now turn the call back to Daniel for closing comments. Daniel? Daniel Maheu: Thank you, Pier-Luc. With record gold prices and historically high copper prices supporting strong customer demand for our drilling services, we are confident in our business outlook for the second half of fiscal 2026 and entering into fiscal 2027. The level of demand for our drilling services from senior and intermediate mining customers in both Canada and South America is increasing, and we are seeing a definite acceleration of requests for proposal from junior exploration company in Canada. Due to the sustained high level of demand in our industry, we expect to experience cost inflation with respect to supply, material and wages. So we are going to have to work with our customers to accommodate these expected increases to our input costs with future contract and renewal. Increased demand from junior exploration company may have a positive impact on the current pricing environment. Our overall priorities remain the same going forward, a strategic focus on senior and well-financed intermediate customers in Canada and South America, our disciplined business strategy and continuous operational improvement program. By focusing on this priority, we intend to capitalize on opportunities in this period of elevated customer demand to deliver enhanced profitability and value for our shareholders. That concludes our formal remarks this morning. We will now welcome any questions. James, please begin the question period. Operator: [Operator Instructions] We will hear first from Kerem Aksoy at Glacier Pass. Kerem Aksoy: It seems like it's an exciting time for the industry. I had a couple of questions. Just maybe one more routine to start. I was wondering if you can provide a little more color on the outlook for the International segment. You mentioned during the prepared remarks that the segment was impacted by a customer decision in South America, and we kind of saw the margins decrease year-over-year. What should we expect for the second half of the year in that segment and maybe going on? Daniel Maheu: Thank you for this question. Essentially, in Chile, we have 3 customers, big copper mines, and they have some concerns with budget. They have sometime -- some requests to move the drill. So that could take several weeks to do so. So essentially, we have long-term contracts with these customers in Chile, and that's the point. The other thing is in Guyana, actually, the market is very strong and customer asked us to move also equipment from a site to another site. So that creates some delays. But that's very positive for the next quarter because the market is increasing there. And these requests from customers, it's a good thing for us. Kerem Aksoy: That's helpful. And then maybe just kind of moving to Canada. I mean you kind of provided some commentary in your prepared remarks, but I was wondering if you could just kind of dig into that a little bit more. Maybe just kind of big picture when you speak to your clients, maybe on the senior side, have they provided any commentary to you about what their budgets will look like in 2026? And I'm just curious how that might have changed year-over-year or kind of what their expectations that they've outlined to you are? Daniel Maheu: Yes, that's correct. The point is here is our customer, as you know, probably more -- in Canada, more than 80% of our drilling business is related to a customer in the gold industry. So with the gold price, actually, customer wants to increase their drilling exploration project, and they ask us to add several drills there and there. For example, we have a customer asking for 2 new drills in Q2. So we added. And we -- in the quarter, we had more than -- I think it's 10 drills. So we -- that's why our utilization rates went from 56% in Q1 to 62% in Q3 and Q2. So -- and we expect this level of utilization rate for new contracts from actual customer will increase in Q3, probably at 65% utilization rate. So that's the market in Canada. So that's very encouraging for us. It's great. Kerem Aksoy: That's helpful. Maybe just one last one for me. You mentioned you started to see some increased demand from juniors. I'm curious, we saw a lot of financing for juniors kind of last year, maybe started this year. Has all of that money started to flow into tenders? Or do you think there's still a bit of delay and you might see a step-up in demand from juniors? Or I mean, have we seen all the demand from juniors yet? Or is it still to come? Daniel Maheu: What we see actually in the market, the money is coming. Right now, we have requests from juniors for more than, let's say, a small program. Let's say, in the last few quarters, we have small requests for less than 5,000 meters for 2, 3 months' work. Now we see since end of December 2025, we see a request for a longer drilling program, more 6 months, and it's over 5,000 meters, 15,000, 20,000. So that's interesting. This is not our main market. We focus more on major and intermediate customer. But that means the small drilling companies will go with these small request from juniors. So that gives us more space to work with our target customer for long term and let's say, more specialized drilling. So at the end of the day, that's exactly where we want to go. And that's, let's say, junior demand is positive for us on the short and long term. Operator: [Operator Instructions] Mr. Maheu, I do not see any signals from our audience. I would like to turn it back to you, sir, for any additional or closing remarks that you have. Daniel Maheu: Thank you, Jim, and thank you, everyone, for participating today. We look forward to speaking with you again soon. Operator: Ladies and gentlemen, this does conclude today's Orbit Garant Drilling 2026 Q2 Conference Call and Webcast. We do thank you all for your participation, and you may now disconnect your lines.
Carolina Stromlid: A warm welcome to RaySearch 2025 Year-end Results Presentation. My name is Carolina Stromlid, and I'm Head of Investor Relations. With me today are our CEO and Founder, Johan Lof; and our CFO, Nina Gronberg, who will take you through the key highlights and financial results. After the presentation, we will open up for questions. Feel free to submit them in the Q&A chat or ask them live. With that said, Johan, over to you. Johan Löf: Thank you, Carolina, and welcome again, everyone. So this is the agenda for this webcast. I will start with an introduction about RaySearch, then I will summarize Q4 and the full year. After that, Nina Gronberg will talk about the financial development. Then I'll take over again and mention the dividend proposal that we have. Since there is a strong focus on AI these days, I will make a deep dive into what that means for RaySearch. And then I will just summarize the presentation and make an outlook. After that, we take Q&A. So a few words about RaySearch. RaySearch is a pure software company, and we are dedicated to cancer treatment software. And we have 4 platforms, RayStation, RayCare, RayIntelligence and RayCommand. What we see in this image is a comprehensive cancer center. And our long-term goal is to support such a center with all the software that they need. So not only radiotherapy, but also support for chemotherapy, surgery, tumor board meetings and other things. So that's a long-term vision for RaySearch. So far, we have focused mainly on radiation therapy of cancer. What we see in this image is the user interface of RayStation, our treatment planning system. And it summarizes quite well what's going on in treatment planning, radiotherapy. In the upper left upper -- let's see, upper right image here, you see a machine. This particular machine happens to be an X-ray by Hitachi. And we can see in this image how the machine moves around the patient. So it rotates and it also swivels this ring around the patient. So one thing that we have to do in our treatment planning system is to model this machine, so we understand how we can move and also the physics of the beam, so we can calculate dose in the patient, et cetera. The next thing we need is a model of the patient. So we see the patient in the middle upper image here and also in the other images, you see different cross-section of the patient. And we also see the dose distribution, which is the color wash overlaid on the CT images. And the idea here is that we get a high dose to the tumor, which is the red color in this image and low dose to the organs at risk outside of the tumor. For example, you see the spinal cord in this surgical view that it has a very low dose. The lower right image shows the patient from the source. If you look at the patient from the source, this is how the patient would move. It looks like the patient rotates, but it's actually the source that rotates around the patient. So this is, in summary, what we are doing in treatment planning for radiotherapy. We also want our systems to absorb data as we treat the patients so that all of our products will automatically capture the data that is being generated before the treatment starts, during the treatment and during follow-up what happens to the patient after the treatment. And by absorbing all of this data in the system RayIntelligence, we can achieve clinical insights and feed information back to our systems to improve the systems. And some of those icons are -- represent machine learning models, but it can also be other aspects and other types of clinical insights. And we use this feedback data to improve our algorithms. We have some examples of that already out in the field. We can improve the efficiency of the operation. Ultimately, we want to provide decision support so that the members of the Tumor Board, for example, can make the best possible choice of strategy for the patient and ultimately improve outcomes. I show this diagram just to illustrate the long-term journey in terms of revenues. The reason is I want to highlight that we shouldn't look at RaySearch revenues on a quarterly basis. If you zoom out a little bit, this one goes all the way back to 2008. We can see that there has been a steady growth of revenues year after year. The 2 pandemic years are an exception, and we understand why those were -- those 2 years were weaker. But besides those, there has been a steady growth of the company, even though you may see fluctuations between quarters. Okay. And now I will make a few comments about the last quarter and also the full year. So Q4 was a strong finish of the year. Net sales grew by 16% to SEK 375 million, which is all-time high. Adjusted for the strong currency headwinds, the growth would have been 28%. Recurring support revenue was SEK 139 million, which corresponds to 37% of the total revenues. The strong sales translated directly into improved profitability. Operating profit increased by 25% to SEK 92 million, resulting in a 24% EBIT margin. Adjusted for currency losses, the margin would have been 27%. So for the full year 2025, net sales increased by 13% to SEK 1.34 billion, marking the highest annual revenue in the company's history. Organically, net sales grew by 19%. Recurring support revenue was SEK 524 million, which corresponds to 39% of the total revenues. Operating profit was SEK 292 million for the full year and the margin 22%. If we adjust for currency effects and extraordinary items, the operating profit would have been SEK 353 million and the margin of 26%. Let me briefly highlight a few of the new orders and expanded installations we secured during the quarter. We continue to see solid momentum with strong license sales to both new and existing customers across all regions. Greater Poland Cancer Center expanded its RayStation installation to include Proton Therapy, bringing photon and proton planning together on a single platform. The University of Pennsylvania, one of the premier proton therapy institutions in the U.S., selected RayStation as a unified treatment planning system for proton therapy across its 3 clinics. And Universitätsklinikum Gießen und Marburg in Germany chose to replace Philips Pinnacle, which reaches end of life in 2027 with RayStation. We have also seen strong clinical progress during the quarter. The Royal Marsden NHS Foundation Trust achieved a major milestone by performing its first online adaptive treatment on the standard Elekta linac using RayStation's adaptive planning module. Until now, most online adaptive treatments have been limited to specialized machines that a few centers have. This achievement makes online adaptive radiotherapy accessible to far more clinics and patients. At the Southwest Florida Proton Center, the first patient treatments were delivered using RayStation and RayCare together with IBA's Proton Therapy System, enabling highly precise treatments, including proton arc therapy. Together with the trend to Proton Therapy Center, we performed the world's first clinical proton arc treatments in 2025, a technique that improves dose distribution by using many beam angles and optimized energy levels. This achievement was actually named one of the top 10 scientific breakthroughs of the year across the entire field of physics by Physics World, and that's something that we are very proud of. And now I will hand over to Nina, who will go through in more detail the financial development. Nina Gronberg: Thank you, Johan. Taking off from your presentation and the numbers in brief, we can conclude that it has been high interest in RaySearch solutions throughout the year, and that goes both from new and existing customers and in all of our regions. And that is also something that is very much reflected in the numbers for the last quarter. Order intake increased by 8% in the fourth quarter and 17% for the full year. And I want to highlight that these numbers include the effects from the stronger Swedish krona, which, as you know, has affected us a lot during the year. And that goes both in terms of growth and on the bottom line. Order backlog end of December amounted to SEK 1.528 billion, and the book-to-bill ratio was 0.9, both in the quarter and for the full year. Moving on to net sales. We finished the year beating the last sales record by far. Net sales of SEK 375 million means a growth of 16%. The organic growth was 28%, showing that the underlying business really performs well. License sales growth was 15% in quarter 4 and support sales grew with 6% year-on-year. When we take out the currency effects from the support sales numbers, the growth was 16%. The high net sales drove EBIT to SEK 92 million in the quarter and strengthened the margin to 24% compared to 23% for the same period last year. Currency losses from the revaluation of working capital affected EBIT with just above SEK 10 million. And adjusted for that, the EBIT margin would have been 27%. Next slide is the rolling 12 development of net sales and EBIT and the perspective that we believe gives a better description of RaySearch's business performance. For the full year 2025, net sales increased 13% to SEK 1.344 billion. The organic growth was 19%. And with an EBIT of SEK 292 million, we ended the full year 2025 with a margin of 22%. That is equal to last year, but also burdened by SEK 37 million in currency losses. Adjusted for those and an additional SEK 23 million that we treat as nonrecurring costs, the margin would have been 26%. Moving to the next slide, showing the revenue split and where I focus on the revenue from support, we saw a growth of 11% in our support revenue for the full year 2025. With the steady growth we have in our support revenue over time, we increased the robustness in the business from recurring revenue. And for the total year 2025, the portion of recurring revenue in relation to total net sales was 39%. Cash flow in quarter 4, as you can see here on the next slide, improved significantly and amounted to SEK 91 million, and that includes positive effects from a lower working capital. We will continue to put focus on having a good cash flow in 2026. However, I want to point out that I also -- or what I also said in quarter 3 that the cash flow can fluctuate also going forward. We always seek to work with standard payments or standard payment terms in our customer agreements, but we also have situations where the gap between sales and payment is longer. It can be tenders or framework agreements or related to certain markets, sales that comes with a good profit, but where we have to accept later invoicing. We want to have a position where we sometimes for strategic reasons and in relation to important customers can choose to accept profitable sales over short payment terms. And with the cash balance end of 2025 amounting to SEK 407 million and no loans, we have a solid financial position. The next slide shows the contract assets, that is our customer receivables and also our contract liabilities, and that is the balance sheet items that shows how much payments we have received from our customers in advance. We have, during 2025, moved away from a position where our contract assets were lower than the contract liabilities. And that is, to a large extent, dependent on that we have delivered on prepaid sales in our backlog. But I want to point out that a net position of SEK 118 million is still a good position. But of course, this doesn't take away our intention to lower this number and to improve the working capital where we can during 2026. And with this, I hand over back to you, Johan. Johan Löf: Thank you very much, Nina. So I will just briefly mention the dividend proposal. So we are pleased to announce that the Board proposes a dividend of SEK 4 per share for 2025, which is up from SEK 3 per share. The dividend will be decided at the Annual General Meeting on May 7. The Board has also revised RaySearch dividend policy effective from 2026. The goal is to distribute 50% of profit after tax annually, taking into account the company's capital needs, investment opportunities and overall financial position. And now I would like to devote some time to AI and how it affects RaySearch. It's very important to note that AI is something very positive for RaySearch, and it's definitely not a threat against our products. There has been some belief in the community in general for software companies that AI can create and replace ordinary system development. That's probably true for simpler applications and with thin functionality and not so much data. With our large and complex systems, it's not doable for AI today. AI can only produce smaller snippets of code with high quality. Also, in our field, we need very deep domain knowledge. We also need to consider patient safety as well as cybersecurity and we are liable for that, and we have to take responsibility for the code. AI could never make sure or promise that there is no ML treatment of patients, for example. So we -- as a company, we need to understand the code and make sure that it doesn't harm any patients as we treat millions of cancer patients, and we cannot make a mistake one single time. There are also huge data requirements in our field. We need clinical data, images, plans, contours, et cetera. We need to perform measurements for machine modeling and quality assurance. Then we have the medical device regulations such as FDA where we, as a company, have to promise and document that our system performs according to the requirements and that it is a safe application. And AI doesn't take any responsibility in that regard. And it's also -- we are existing in an ecosystem with many, many partnerships with machine vendors and our installed base of about 1,200 clinics. And in order to develop these platforms that we develop, we need to do that in partnership with all of these stakeholders. So AI for RaySearch is a very useful thing. We have a large machine learning department at RaySearch, where we leverage AI for our products. For example, we have a functionality in RayStation called deep learning segmentation, where we based on images such as CT images and MR images can automatically segment the organs in the patient, as you see in that image to the right. So those are about 200 structures in the patient that has been automatically segmented with deep learning segmentation, and it takes about 1 minute to do that, which would take many hours to do in a manual setting or in a manual manner. And this is used clinically throughout the world and only 2025, 270,000 patients were segmented using this particular module. This leads to significant time savings, and it also increased the segmentation quality, and you can achieve better consistency over different users and over different institutions. The second product that we have in RayStation is deep learning planning. So here, we automate the very time-consuming task of treatment plan generation. 7,000 clinical treatment plans have been generated by our customers so far, but this is increasing rapidly now as more and more customers get their hands on this technology. This increased plan quality and again, consistency and saves a lot of time. It also opens up for multiple treatment plan generation for patients so that we can explore a larger solution space. One good example is a customer in Belgium, Iridium that have now automated almost all of their prostate patient planning using the AI capability in RayStation. So what they have seen is that the deep learning planning models outperform manual planning by a human being, achieving superior quality and consistency. And you can see some of the time savings that they achieve. So on the patient modeling side, they save 44% time and on the plan generation side, they save 47%. We also use AI to help develop our developers write code faster. So AI can then, for example, Microsoft Copilot can help our developers to find bugs, can explain complex code and patterns write tests and also help with documentation. But it's important that developers stay in control. They always review and modify the AI output. The code that's generated by AI is not always -- is not very tidy or beautiful. So we have to -- the developers have to stay on top of that. Okay. And now the final section of the presentation is a quick summary and outlook. So we saw that we had record high net sales despite macro uncertainty and a very heavy currency headwind. In spite of that, we could show solid profitability and also improved cash flow, which is that we are very happy about. There is still a strong demand for RaySearch Solution and increasing demand, I would say, for RaySearch Solutions across all the regions. And we are confident about our EBIT margin target of at least 25% in 2026. So with that, I will open up the Q&A session. And I believe Carolina will manage the questions. Carolina Stromlid: Thank you, Johan. Yes, we will start the Q&A session with live questions. But before we do that, I would like to remind you that you can post written questions in the Q&A chat. So let's start with the first question that comes from Kristofer Liljeberg at DNB Carnegie. Kristofer Liljeberg-Svensson: Yes, sorry. I have quite a number of questions. Maybe I'll start with 3 and then come back. So first... Johan Löf: Kristofer, can I ask you to ask one question at a time? Kristofer Liljeberg-Svensson: Okay. Maybe then I would like to ask about the support revenues, if there are any one-offs here helping that in Q4 or if that's a good starting point for 2026? Nina Gronberg: Yes, that's a question for me then. Yes, we have some one-offs. It is not very much. But I mean, it is a little bit tricky, I think, to talk about one-offs in our support revenue because we always have a little portion of that. We have situations where our customer contracts are -- I mean, there is a delay in timing when they are renewed. And it might be that we -- because of that, have revenue for, I mean, more than 3 months in 1 quarter. So it's a little bit too hard to say, Kristofer, give a straight answer to that. But I would say that you can use this as the base going forward. Johan Löf: Please go ahead, Kristofer. No, no, take one question at a time. That's all. Kristofer Liljeberg-Svensson: Okay. That's helpful. Yes. My second question, the news that you set out a couple of weeks ago about Royal Marsden doing online adaptive on Elekta machine. was this without RayCare? And if so, how are they able to do that? I don't know if that's -- if it's possible to just give a quick answer on that. Johan Löf: Yes. There was on the Versa HD Elekta machine. So far, only RayStation without RayCare, but that means the workflow is somewhat clunky, it takes more time. And -- but it is doable to do it, and that's the important message here. They will implement RayCare going forward and then the workflow will be smoother and quicker. Of course, it's more -- they have also a Radixact machine, so we'll be quicker on that machine given that we have interoperability between RayCare and the Radixact. And it will be also smoother on a TrueBeam, Varian TrueBeam since RayCare is fully integrated. But the point here is that even without this strong integration, you can do it, but it's not as quick. Kristofer Liljeberg-Svensson: Okay. That's helpful. And my third question, if you could comment on the Pinnacle conversion in Q4 and the outlook for that here in 2026. Johan Löf: Yes, we will of course, focus -- this is the last year that Pinnacle is around. So there will be a strong focus during 2026. In -- Q4 was actually surprisingly low. It has been a quite high percentage of license sales in previous quarters. In Q4, it was actually the license revenues from Pinnacle conversion was only 11%. So that shows that we can -- because I think that has been discussed and there's been a lot of questions about whether we are able to convert other clinics than Pinnacle clinics, but that shows you that, that's very possible. Carolina Stromlid: The next question comes from Mattias Vadsten at SEB. Mattias Vadsten: Can you hear me? Johan Löf: Yes, we hear you loud and clear. Mattias Vadsten: Good. I will always take them one by one. So you shared the license share of Pinnacle here in Q4, which was a low number. Could you share that for the full year? And also, that leads me to believe then that the conversion -- the Varian conversion and Elekta conversion must have been very strong to end the year. So just yes, if the momentum has switched gears there and what's driving that? That's the first one. Johan Löf: Yes. Okay. So first, you asked for the full year number, I think it was 23% license revenues from Pinnacle conversion. Yes. It's just that we have been able to convert other types of clinics. For example, this large University of Pennsylvania order in Q4, which was, I believe, SEK 57 million, around that number. Nina Gronberg: Revenues in order. Johan Löf: What was it in SEK 53 million in revenue. Nina Gronberg: A bit above SEK 40 million. Johan Löf: And that was an Eclipse conversion. So that, of course, affected that mix for the Q4. So -- but this will vary from quarter-to-quarter. It's very hard to predict. We will have -- since we have a time-limited opportunity now for Pinnacle conversion, there will be a strong focus for that in 2026. Mattias Vadsten: Good. And then I have a follow-up on Kristofer's question on the online adaptive radiotherapy that you can perform on Elekta, Linacs and TrueBeam with RayStation. But do I still read you correctly that in order for a clinic to seamlessly sort of perform online adaptive, you would still need RayCare in the future? Or how should I interpret that? Johan Löf: That's correct. And to have like a broad clinical use for this RayCare is needed. So you have understood that correctly. Mattias Vadsten: Okay. Good. And do you expect it to be frequently used among those clinics that have RayCare for maybe 2026 and the years to come? Johan Löf: The main drivers for RayCare going forward now that we have a very good combination of equipment with RayStation, RayCare and Varian TrueBeam where you can make extremely effective online adaptive treatments. So we see a lot of -- well, all over the world for this combination. Mattias Vadsten: I will limit myself to one more question. So in terms of the new orders, the University of Pennsylvania, if that was recorded as sales in Q4? And then maybe the same question for Greater Poland Cancer Center as well. That's my last one. Nina Gronberg: Yes, it was a big portion of the order was recorded as sale as Johan also just said. Carolina Stromlid: We have a question from Oscar Bergman at Redeye. Oscar Bergman: Yes. Just wondering if you can give an update on roughly how many Pinnacle centers are left to convert? And also then were there fewer conversions in absolute terms from the clinics in Q4? Or have you sort of lost any market share on conversion? Johan Löf: Okay. We don't know the number of Pinnacle clinics. It's in flux right now. So it's very hard to know the number of remaining Pinnacle clinics. In some countries, there are almost none like in the U.K. and Japan, they have been basically all converted. In Germany, there are quite a few remaining in the United States and China. But it's a couple of hundred. I can't give you more detail, but there's still a big opportunity out there. And no, we have not lost market share in terms of Pinnacle conversion. It's rather that other conversions have been -- because we look at percentages here. So in absolute numbers, we haven't -- we are still very successful in converting Pinnacle clinics to RayStation. Oscar Bergman: Okay. I always asked about RayCare, and I have to ask about it also this time. I just wondering how many new RayCare centers were signed in Q4? And perhaps also if you can elaborate on what remains the largest obstacle for increasing RayCare clinics. Johan Löf: No. There are no real obstacles. We had, I believe, 4 RayCare orders in 2025 in total. Of course, that's not where we want to be. But we see -- we believe that this will ramp up during 2026. And okay, one obstacle is the online adaptive capability, which needs 2 new versions of RayStation and RayCare requires FDA approval, and that takes the time it takes. It's not something we can -- it will be affected to some extent, but it will also in the hands of FDA. But -- so that's needed. But in Europe, the online adaptive treatments on this platform will start during spring. So we see the first. And that's also a good message for the U.S. market because then it's just a matter of time before they can get their hands on this functionality as well. So regarding ramp-up of RayCare, it only takes time, but there is a lot of interest for RayCare now. There are no particular obstacles in place. So we are quite confident that we will see, let's say, over the next 2, 3 years, a good ramp-up of RayCare sales. Oscar Bergman: And I think in the Q3 report, you mentioned that you opened up some modalities for a customer base for a 6-month trial period. Just wondering if we can get an update on how that has progressed so far. Johan Löf: It's still limited to a couple of countries, and it's progressing well. So they are very happy that they can try out new functionality. I think the limiting factor there is the time they have at their disposal. They're running very busy clinics, and it's hard to spend time on just exploring new functionality. But otherwise, it has been very well received in the countries where we have opened up so far. Oscar Bergman: Okay. And just a final question. I know you're not supposed to give your view on the share price, of course. But at these share price levels, why are you focusing on dividends rather than stock repurchases? Johan Löf: Yes, that's a good question. I think buying back shares is an interesting option that we will look into deeper. So we are looking into that for sure. Carolina Stromlid: We will now take a question from [ Ariane Nothermeer ]. Unknown Analyst: Can you hear me? Johan Löf: Yes. Unknown Analyst: I have a question about the order backlog. So we have seen it steadily decrease over the past few years and right now is on the 1.1x for the sales for this year. Why is it decreasing so much? And is this like a problem for revenue growth going forward? Or is there something else going on here? Johan Löf: The main reason why it has shrunk lately is the dollar effect or the currency effect. So no, we don't really see it as a problem. Unknown Analyst: Okay. So you don't think that is limiting growth like over the past few years? Johan Löf: No. Carolina Stromlid: We will now move back to Kristofer Liljeberg at DNB Carnegie. I guess you have a follow-up question. Kristofer Liljeberg-Svensson: Yes, a few more. First, just a clarification. The 11% and 23% you mentioned for Pinnacle conversion part of total license sales or is that for total license sales or license sales to new customers? Nina Gronberg: Out of total license sales. Kristofer Liljeberg-Svensson: Yes. Great. Then a question on the cost and particularly administration costs seem to have remained high here in Q4. Sequentially given that, I guess, third quarter, you should have had the extraordinary cost, much of that in that line or... Nina Gronberg: Sorry, Kristofer, can you please... Kristofer Liljeberg-Svensson: If I look at the administration costs, they remain at a quite high level. They're actually higher in Q4 than in third quarter and second quarter when I guess you had cost for the employee conference? Or was that another cost line? Nina Gronberg: No, it's included in the administration costs. Kristofer Liljeberg-Svensson: Okay. But did you have such costs this quarter as well? Or why does administration costs remain so high? Nina Gronberg: No, we didn't have those costs in this quarter. And yes, it's a good question. I must come back to that one. I haven't looked at it from that perspective. Kristofer Liljeberg-Svensson: Okay. And then maybe, Johan, I don't know if you want to say, you sound pretty positive in the CEO word in the report. So when it comes to the sales outlook for 2026, do you expect this a similar positive trend here or anything that could change that? Johan Löf: No, to achieve the 25% EBIT margin and -- with at least 25% EBIT margin that relies heavily on sales growth. So we are positive in that regard. Carolina Stromlid: Now we have a question from [ Mats Andersson ]. Unknown Analyst: I have a question about Ortega order. In Q3, you said that the first will have income in Q4. So my first question is how much is the income in Q4? And when will the next delivery to next center, don't know? Johan Löf: I didn't hear which -- was it Ortega you were talking about... Unknown Analyst: Yes, Ortega. Johan Löf: No, that will come -- there hasn't been any revenue from that during 2025. But our estimate is that there will be revenues from at least 2 centers during 2026 from the Ortega order that will be delivered and booked as revenue. Carolina Stromlid: Moving on to the next question that comes from Carlos Moreno. Carlos Moreno: In the -- you're obviously very near your kind of previously set medium-term margin targets. And you mentioned in Q3 that you might revise those targets, give new long-term guidance. Do you still expect to do that at some point during 2026? Johan Löf: Yes. During 2026, we will communicate a new, let's say, 3-year margin target and possibly some other financial target. But you can expect that will be communicated. Carlos Moreno: And is that with like the half year or the first quarter or sometime during the year? Johan Löf: I don't know for sure. It involves the Board has to make a decision. So I can say by myself. But that's not a problem. We want to communicate a new, let's say, medium-term target. Carlos Moreno: Sorry, I interrupted you. I apologize. Sorry. Johan Löf: No problem. Go ahead. Carlos Moreno: No, no, that was it. That's good. So we're going to get some new targets sometime during the year. And by the sound of it, we're going to get margin and maybe sales. There's going to be some sort of more than margin medium-term target. Okay. And I just want to add what the -- another person said. I mean, if your shares are just being pushed down because they're in some basket, I appreciate the dividend is fantastic, but it just seems to me you have to be on the other side of AI selling, and it just seems to me a buyback is -- there'll come a point where spending your cash on buying your shares is a very sensible investment, right? And to me, it just seems like an extremely good idea. But anyway, I just wanted to look at that. Johan Löf: I note your comment, and I think you're probably right. Carolina Stromlid: And we have a follow-up question from Ariane Nothermeer. Unknown Analyst: It was answered, sorry. Carolina Stromlid: We have a follow-up question from Mattias Vadsten. Mattias Vadsten: I just thought if you could help disclose some outlook on timing of approvals, release of modes to expand the use of the software products you have to further cancer therapy areas. Johan Löf: Time line for that is -- so if you take liver ablation, for example, that can be used in Europe as of now. There, we are waiting for 510(k) clearance in the U.S. Chemotherapy will be clear sometime during 2027. And surgery will be -- yes, that's even further into the future. So I can't say that. But liver ablation will be first, chemotherapy after that and then surgery is coming after that. Carolina Stromlid: Thank you all for your questions. With that, we will conclude today's presentation. A recording will be available shortly on our investor website. And if you have any additional questions, you are very welcome to reach out to us. We appreciate your participation today, and we look forward to connecting with you again on April 29 when we present our Q1 results. We wish you a pleasant rest of your day. Thank you. Johan Löf: Thank you. Nina Gronberg: Thank you.
Operator: Welcome to AB InBev's Full Year 2025 Earnings Conference Call and Webcast. Hosting the call today from AB InBev are Mr. Michel Doukeris, Chief Executive Officer; and Mr. Fernando Tennenbaum, Chief Financial Officer. [Operator Instructions] Today's webcast will be available for on-demand playback later today. [Operator Instructions] Some of the information provided during the conference call may contain statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. It is possible that AB InBev's actual results and financial condition may differ, possibly materially from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect AB InBev's future results, see risk factors in the company's latest annual report on Form 20-F filed with the Securities and Exchange Commission on March 12, 2025. AB InBev assumes no obligation to update or revise any forward-looking information provided during the conference call and shall not be liable for any action taken in reliance upon such information. It is now my pleasure to turn the floor over to Mr. Michel Doukeris. Sir, you may begin. Michel Doukeris: Thank you, and welcome, everyone, to our full year 2025 earnings call. It is a great pleasure to be speaking with you all today. Today, Fernando and I will take you through our operating highlights and provide you with an update on the progress we have made in executing our strategic priorities. After that, we'll be happy to answer your questions. Let's start with the key highlights for the year. In 2025, we executed our strategy with discipline, delivering another year of dollar-based EPS growth, continued margin expansion and solid free cash flow generation, even as we navigated a dynamic consumer environment. As we reflect on the year, we are encouraged with the consistency of our financial performance, the durability of our strategy and the resilience of our business. While near-term demand across many CPG categories was impacted by a constrained consumer environment and unseasonal weather, we continue to invest in our strategic priorities. We remain disciplined in our revenue management choices and delivered EBITDA growth within our outlook. We continue to make progress this year. We strengthened our operating model and increased our portfolio brand power. We also formed new long-term partnerships to extend the reach of our brands and deepen the connection to our consumers. The momentum of our growth priorities continued. Our mega brands and premium portfolio grew ahead of our overall business. The growth of our Beyond Beer and non-alcohol beer portfolios accelerated, increasing revenue by 23% and 34%, respectively. And BEES Marketplace GMV increased by 61% to now reach $3.5 billion. Solid free cash flow generation enabled us to increase the size of our share buyback program, pay an interim dividend and propose a final dividend that combined represents a 15% increase versus last year and further strengthened our balance sheet. We exit 2025 with improving momentum across many of our key markets, and we entered 2026 well positioned to engage consumers and accelerate growth. Turning to our operating performance. While our overall volumes for the year were below potential, momentum across many of our key markets accelerated through the fourth quarter with improved volume performance in December. The combination of our disciplined revenue management and portfolio of mega brands that command a premium price drove a revenue per hectoliter increase of 4.4% this year, resulting in top line growth of 2%. Our productivity initiatives more than offset transactional FX headwinds to drive an EBITDA increase of 4.9% with margin expansion of 101 basis points. The strength of our diversified geographic footprint enables us to navigate the current environment and deliver consistent profitable growth. Revenue increased in 65% of our markets this year, and we delivered EBITDA growth in 4 of our 5 operating regions. Our footprint also positions us well to capture a disproportionate share of future industry growth with a diversified mix of currencies. Around 70% of our EBITDA is generated in emerging and developing markets that are projected to account for more than 80% of the beer category volume growth through 2029. Now I will take a few minutes to walk you through the operational highlights for the year from our key regions, starting with North America. In the U.S., our business continues to build momentum, and we gained share in both beer and spirits in 2025. Our beer performance was led by Michelob Ultra and Busch Light, which were the top 2 volume share gainers in the industry. In Beyond Beer, our portfolio growth accelerated. Revenue increased in the high 30s, led by Cutwater, which grew revenue in the triple digits. While industry volumes were below trend in 2025, we are encouraged by the start to 2026. Beer industry volumes and revenues grew in January. And later this year, we look forward to celebrating the 150 years anniversary of Budweiser and activating the category at the FIFA World Cup. This past weekend also provided us a good opportunity to engage with our consumers in one of the most watched live sporting events in the U.S., the Super Bowl. We continue to invest behind our brands to fuel momentum, and the creativity and effectiveness of our marketing was once again recognized by consumers. Budweiser, Michelob Ultra and Bud Light were named as 3 of the top 10 ads according to the USA Today Ad Meter with Budweiser taking the top spot for the second year in a row. Now let's turn to Middle Americas. In Mexico, our business momentum continued, delivering a mid-single-digit top and bottom-line increase with our above core beer portfolio leading our growth. In Colombia, record high volumes and margin expansion drove double-digit EBITDA growth with revenue increasing across all price segments of our portfolio. In Brazil, our momentum improved in the fourth quarter as we gained market share and our volumes returned to growth in December as weather normalized. Our premium and super premium beer brands delivered high teens volume growth in 2025 and gained share to now lead the premium segment. In Europe, market share gains and premiumization partially offset the softer industry with performance driven by our mega brands and non-alcohol beer. In South Africa, our momentum continued with market share gains in beer and Beyond Beer and disciplined revenue and cost management driving mid-single-digit top and bottom-line growth. Now moving to APAC. In China, revenue declined by low teens with our volumes underperforming a more stable industry as we adjusted inventory levels and focus areas to better reflect the channel and geographic shift. In Q4, our market share trend improved to be flat versus last year, driven by improvements in Budweiser brand power and our in-home channel performance. As we move forward, we continue to focus on rebuilding momentum and reigniting growth. Now I would like to take a few minutes to reflect on the beer category and progress we have made in executing our strategy. Let's start with the category. Beer plays an important role in bringing people together and creating moments of celebration, and we believe beer has a long runway for future volume growth across our footprint, supported by favorable demographics, economic growth and opportunities to increase category penetration. According to IWSR, the beer and Beyond Beer category is forecast to continue to gain share of alcohol beverages in 2025 and has now gained more than 200 basis points since 2021. And looking ahead, beer is expected to grow volumes globally and continue to gain share of alcohol beverage. In 2025, we invested $7.4 billion in sales and marketing and have averaged more than $7 billion per year since 2021. Our marketing effectiveness continues to strengthen, and our mega brands and mega platform approach were key contributors to the brand power of our portfolio, reaching a record high in 2025. Our mega brands led our growth and have increased revenue at a CAGR of 10% since 2021 and now represent 57% of our total revenues. We are the leader in the premium beer segment globally and see significant headroom for category to continue to premiumize. Premium beer is forecast to grow volumes across all geographic clusters and at more than double the rate of the category overall. And the best example of premium execution in our portfolio is Corona. In 2025, Corona celebrated 100 years since its original launch and 2026 is off to a fast start with the brand sharing the golden moments at the Milan Cortina Winter Olympics. Since 2018, the volumes of Corona have doubled. And in 2025, volume increased by double digits in 30 markets. The quality, brand power and consumer preference for Corona has earned the right for a premium price point. Corona sells on average at a 20% premium to the nearest competitor. And in 2025, was again ranked as the most valuable beer brand in the world. We continue to lead the development of the category and expand occasions to meet consumer trends. Our balanced choice portfolio includes options for consumers seeking low carb, low calories, sugar-free, gluten-free and non-alcohol alternatives. This portfolio is growing ahead of the overall beer category and momentum continued in 2025. Led by Corona Cero globally and Michelob ULTRA Zero in the U.S., our non-alcohol beer portfolio delivered a 34% revenue increase, and we estimate to gaining share in 70% of our top 14 non-alcohol beer markets. While non-alcohol beer is currently a relatively small portion of our global beer volume, it is a key opportunity to develop new consumption occasions and increase participation, and we are investing and innovating to lead the growth. In Beyond Beer, the growth of our portfolio accelerated, increasing revenue by 23% in 2025. Our performance was led by Cutwater in the U.S., which grew revenue in the triple digits and was the #1 share gaining brand in the total spirits industry in the fourth quarter. After the successful rollout in Africa, our flavored beer Flying Fish is now expanding to Europe and the Americas. Beyond Beer now accounts for 3% of the total revenue of our business, and the category is projected to grow volumes at double the rate of the overall beer category. The strength of our brands, route-to-market capabilities and innovation pipeline gives us a strong right to win in this segment. Discipline and incremental innovation is a key enabler of our growth. In 2025, our innovations across packaging, brands and liquids contributed 11% of our total revenue. In the U.S., we led the industry innovation with 3 of the top 5 innovations of the year, with Michelob ULTRA Zero and Busch Light Apple, the top 2. In China, we launched a 1-liter can for Budweiser and a Corona full-open lid can to bring the iconic lime ritual into the in-home channel. In South Korea, we launched the country's first 4 Zero beer with great taste, zero alcohol, zero sugar, zero calories and zero gluten. And in Beyond Beer, we are expanding our winning propositions globally and innovating with flavor varieties to provide consumers with choice. Let's now turn to our second strategic pillar, digitize and monetize our ecosystem. In 2025, BEES captured $53 billion in gross merchandising value, a 12% increase versus last year. The growth of BEES Marketplace accelerated and delivered $3.5 billion of GMV this year, a 61% increase versus last year. The Marketplace on BEES has grown rapidly since we initially started developing the platform in 2021. We recognized early that many of our customers could benefit from a one-stop shop for their business and similarly, that many consumer goods partners could benefit from leveraging the breadth and efficiency of the digital connection we have with our customers. The marketplace has grown to $3.5 billion in GMV business from a standing start 5 years ago, and we continue to explore the opportunities to scale and enhance profitability. We are still early in the marketplace journey, but we are encouraged by the progress we have made and see a clear opportunity to continue the growth momentum while solving a pain point for our customers and partners. In DTC, our digital platforms continue to enable a one-to-one connection with our consumers and developing new consumption occasions. In 2025, we continue to grow our consumer base, now serving 12.3 million consumers, an 11% increase versus 2024. With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, optimize our business. Fernando Tennenbaum: Thank you, Michel. Good morning, good afternoon, everyone. I will take a few minutes to discuss the progress we have made on 4 key areas of focus in optimizing our business, improving margins, compounding dollar EPS and free cash flow growth, making disciplined capital allocation choices and advancing our sustainability priorities. Our EBITDA margin improved by 101 basis points this year with margin expansion across 4 of our 5 operating regions. While each year has unique dynamics, we are confident that the combination of our leadership advantages, disciplined revenue management, continued premiumization and efficient operating model creates an opportunity for further margin expansion over time. Moving on to EPS. This year, we delivered underlying profit growth of $350 million. Underlying EPS was $3.73 per share, a 6% increase versus last year's in dollars and a 9.4% increase in constant currency. Dollar-based EPS has now grown at a CAGR of 6.7% since 2021. EBITDA growth accounted for a $0.46 per share increase this year. Lower net interest expense from active debt management and continued deleveraging contributed $0.09 per share but was partially offset by a higher cost of hedging and FX movements. We maintained this level through a combination of EBITDA growth and margin expansion, reducing our net interest expense through deleveraging, and maintaining our disciplined resource allocation. Looking ahead, we are encouraged about the opportunities to grow from this base. With this solid cash generation, we continue to strengthen our balance sheet. We repurchased $2.7 billion of debt. And despite a $2.8 billion FX headwind on our net debt from a stronger euro, we reached a leverage ratio of 2.87x. In 2025, we improved our debt maturity profile while maintaining our weighted average coupon. Our bond portfolio remains well distributed with no relevant medium-term refinancing needs. We have no bonds maturing in 2026, a weighted average maturity of 13 years and no financial covenants. As we continue to deleverage, we have increased flexibility in our capital allocation choices. We have raised our dividend every year since 2021, including the payment of an interim dividend in 2025. We have completed $3.2 billion of share buybacks and are currently executing a further $6 billion program. For 2025, the Board has proposed a final dividend of EUR 1 per share. Combined with the interim dividend announced in October, this represents a total dividend increase of 15% year-over-year with the ambition to continue a progressive dividend over time. Now turning to sustainability. Our 2025 goals were set in 2018 to drive impact and efficiency across our value chain. As our business is closely tied to the natural environment and the local communities, we focus on areas that are relevant to us, water, agriculture, climate and packaging. We achieved our water and agriculture goals and made strong progress against our climate and packaging objectives over the past 8 years. We are proud of the progress made, and we'll continue building on our strong foundation in these areas. As we look ahead to 2026, we expect EBITDA to grow between 4% and 8% on an organic basis, in line with our medium-term outlook. As we continue to invest to execute our strategy while optimizing our resource allocation, we expect net CapEx to be between $3.5 billion and $4 billion, and we expect our normalized effective tax rate to be between 26% and 28%. With that, I would like to hand it back to Michel for some final comments. Michel Doukeris: Thanks, Fernando. Before opening for Q&A, I would like to take a moment to recap on our performance for the year. It's fair to say the operating environment in 2025 was dynamic. Despite this backdrop, the disciplined execution of our strategy delivered consistent financial results. EBITDA grew within our outlook. Underlying EPS increased by 6% in U.S. dollars, and we delivered another year of solid free cash flow generation. We strengthened our balance sheet and increased our capital allocation flexibility, enabling a progressive increase in our dividend and announcement of a larger share buyback program. While our volume performance was below our potential in 2025, we are encouraged with the momentum we saw as we exited the fourth quarter. Our volume trend improved in December, and we gained or maintained share in 80% of our markets in the quarter. The combination of our mega brands with an unparalleled lineup of mega platforms is a powerful opportunity to lead and grow the category. This past weekend, we kicked off an exciting calendar of events with both the Super Bowl and the opening of the Winter Olympics. And then the summer will bring FIFA World Cup in North America. With 104 games across 3 countries, each game is an opportunity to bring beer and sports together to create unforgettable moments for fans around the world. We entered 2026 with improving momentum, and we are well positioned to activate the category and engage consumers. With that, I'll hand it back to the operator for the Q&A. Operator: [Operator Instructions] Our first questions come from the line of Edward Mundy with Jefferies. Edward Mundy: Two questions, please. So last year, you wrote that beer is a passion point for consumers and a vibrant category globally. And this year, you're starting off with beer plays an important role in bringing people together and creating moments of celebration. I'd love to get a bit more context into this nuance. And to what extent can you, as industry leader, help to bring across a more balanced message around the positive attributes of moderate consumption and getting people together is my first question. And my follow-up, again, for Michel. You're sounding a little bit more optimistic about the prospects for 2026. How much of this owes to sort of consistent application and progress with your strategy? And how much of this owes to some very early green shoots that you might be seeing from a cyclical standpoint? Michel Doukeris: Thanks for the question. I think that on the first point, they are actually both right. Beer is a passion point for consumers, but beer always brings people together around moments of celebration and enjoyment. And I often say that we listen to a lot of things that are happening and everything gets better when people get together and drink a beer. So the world really needs a beer. And this is important as we get people to exchange ideas, to socialize, to enjoy moments as we saw this weekend with Super Bowl or during the Olympic Winter Games in Milan Cortina, everybody was enjoying the sessions and having the opportunity to be together with friends and drink a beer. So I'm extremely optimistic about the role that our product plays and how we can always enable memorable moments for our consumers. That's why we invest in the platforms that we invest on our brands, and we keep pushing the category forward with innovation. In terms of the tone for 2026, let's say, I think that 2025 was definitely a very complicated year with many dynamics impacting different markets, industry and consumer goods in general, right? And beer was not insulated from what happened last year. As we saw most of the impact for beer came on the second half of the year. But as we phased the year towards the end of the year, we saw momentum reaccelerating, especially in December. And this momentum is carrying on now early in January in majority of the markets. We have a very good year in terms of opportunities to activate and land our innovations. And I think that if you look forward during the summer, the World Cup always presents a unique opportunity for us and the fact that's going to happen in the Americas, 104 games plus across the world is going to be great. And in connection with our strategy, of course, despite of everything that happened last year, you've seen the numbers, we continue to invest on our strategy, always focusing on the long term. Our growth accelerators and growth drivers like balanced choices, premiumization, non-alcohol beer, Beyond Beer and BEES marketplace are all working as per plan. And therefore, the more the mix contribution of these initiatives and the more solid the execution behind our 3 pillars of this strategy becomes, the more optimism, of course, we build and continue to deliver our midterm outlook. That's why it's unchanged for 2026. Thank you for the question. Operator: Our next questions come from the line of Rob Ottenstein with Evercore... Robert Ottenstein: Michel, you've done a terrific job turning around the U.S. market, and it really looks like it's in the best position to grow in many, many years. Can you first maybe kind of give us a sense of the key elements of that turnaround and what you've learned from that? And then perhaps even more importantly, can you talk about other major markets around the world where you can apply those learnings, those strategies, tactics to put the markets on a better trajectory and maybe specify particular actions along that front that perhaps you started in '25 or plan to start in '26, so we can get a sense of how you can take what you've learned and the momentum in the U.S. and move it around the world. Michel Doukeris: Thanks for the question. So to start with, I think that the team is doing a great job in the U.S. So they are working really hard on things that we agreed and those things are turning the results around. I think that we have been in a long journey in the U.S. since 2008. We got a business that had structural disadvantage because the portfolio was concentrated in segments that were not growing. You remember that since 2017, when I arrived in the U.S., there was this idea of rebalancing our portfolio for growth and the idea that, of course, this rebalance will not happen overnight. So we continue to be very focused on this strategy, investing in the right segmentation and in the right brands, innovating in the segments where we had low or no participation. And the biggest learning, I think, for everybody in the U.S., including myself, is the power of consistency. So the U.S. is a market that moves on the long horizon. It doesn't move overnight. Investments, that's why we continue to heavy up our investments in the U.S. and hard work. And I'm very glad to see the team working very hard to execute this strategy and start harvesting some of the efforts that they are making over the last 3, 5 years in this market. So we are very focused. We are very consistent. We are investing, and we are working hard in getting this strategy to benefit our business and our wholesalers and our customers in the U.S. When you think about other markets, you know that we have a very large footprint. So every day is a different day. It's never boring. But if I would choose only one market at this moment where we are very focused in turning around is China. So China went from a big accommodation of the industry first re-accommodating. This industry plays different by region, as you know. So the east part of China suffered much more than the inland. The on-trade channels declined much more than the off-trade. And because our business had a very large footprint in the East and in the on-trade, we had to reorganize ourselves. So we took last year a huge effort to keep the business healthy, especially in inventories, cash flow for our wholesalers, while we start to reorganize towards off-trade and more inland distribution as well. I think the recipe for the China business is the same. It starts with right focus and moving at the speed that we need, which was not the case before. Execute with consistency. We have a great portfolio in China. invest on the right channels, which we are doing now and making sure that the team is working as hard and with the sense of urgency that we need. And I'm glad to see that quarter 4 share was stable, Budweiser was in a better place. And now in 2026, we need to continue to work on this direction so we can reignite growth there. Thanks for the question. Operator: Our next questions come from the line of Sanjeet Aujla with UBS. Sanjeet Aujla: Two from me, please. I'd like to follow up on China there, please. And maybe just a little bit more of an update on your commercial execution. How far or how much progress do you think you've made in terms of penetrating the off-trade channel? Are you now gaining share within that channel? And just tied to that, what are you seeing in the on-trade channel? Any signs of some of the anti-extravaganza measures in your key provinces starting to ease at all? That's my first question on China. And secondly, just on Brazil, it's been a tough year in Brazil from a category standpoint. You spoke about December returning to growth. Has that also continued into January? And just your -- the competitive dynamics in the market. I think you alluded to some share gains in Q4. It would be great to dig deeper into that. Michel Doukeris: Thanks for the questions. So I think that in China, the 2 questions. First, the off-trade in China is changing very quickly. So the biggest acceleration of all is this O2O channel, but it's a very sophisticated O2O channel because it's very dynamic. It serves different channels from the O2O. And this was a channel that we used to lead in China. We were lagging behind now, and we are accelerating big time gaining share of this channel. And then there is the large off-premise, which we had to adjust distribution, pack assortment, price and promotion. And this is evolving, but there is a lot of room there for us to improve. The on-trade is not improving, but I think that the good news is that it's not getting worse either. So I saw relative stabilization on the industry last year in China, which is a good signal. The industry was let's call it, minus 1%. I think that this opens an opportunity for this year to have a more positive outlook for the industry. Chinese New Year moved, right? So it's a little bit later, should help as well, another 2, 3 weeks of Chinese New Year loading in sales to consumers within 2026. So let's see. It's early to say. I was there in January. I liked what I saw in terms of industry consumption and our execution, but it's too early to call. And in terms of Brazil, I think that we discussed during the calls last year, there were actually 3 things playing into the dynamics of Brazil. One was part of the consumers under stress in disposable income because of the high inflation. There was a very abnormal weather. So we call them seasonal weather but was really cold and rainy through a big portion of the middle of the year in Brazil. And then as we kept running our revenue management agenda, there were like relative price gaps in Brazil hanging there for over a year. I think that during the year and especially at the end of the year, the weather improved a big time, and that was the biggest change in the dynamics in the market. But also, I think that the gaps in terms of relative start to close. And then the power of our brands and the level of our execution start to speak louder, and we ended the year with very good momentum. As we look at the beginning of the year, weather remains normal. Normal is good for us. And our brands continue to have very strong demand. So the beginning of the year has been so far positive. Thank you for the questions. Operator: Our next questions come from the line of Trevor Stirling with Bernstein. Trevor Stirling: One question for me, but probably a longer one. Fernando, I appreciate you're not going to give guidance on margins. But if I look at 2025, despite the problems in volumes in many regions, you still delivered 100 bps of margin expansion. As I look forward to 2026, as Michel has commented, the outlook for volumes is looking better than it has for probably quite a few years in terms of both momentum as you exit 2025 and the FIFA World Cup coming. So that's looking positive. COGS outlook to me looks similar to 2026, there's moving parts in different countries in Midwest premium, but probably similar, but albeit probably a little bit more pressure in the first half than the second half because of currency hedges. A&P, you're probably going to spend more because of all the activation but knowing you guys will be disciplined spend. Price/mix looks solid. That looks like a pretty good outlook for margins for 2026 as well. Am I reading things the wrong way? Fernando Tennenbaum: Trevor, so very comprehensive analysis. I think what you are saying and what we saw happening in 2025 is not anyhow different than what we've been discussing for a while. When we look at our business, when we look structurally our business, we continue to see opportunities to drive further margin expansion. And as you said very well, kind of every quarter, every year has its unique dynamics. But on a year where you see your cost dynamics more of a normal year, like 2025 was more of a normal year and 2026 as well and hopefully, going forward, we have to see more normal years by driving efficiency, by making sure that we continue to invest behind our brands, which command a premium with all these components, we continue to see further opportunities to expand margin, okay? So -- and then when you talk about the cost of goods sold, you are right because you have the FX curves kind of given what happened last year, we always hedge 1 year later. You know that there is going to be a little bit more pressure on the first half than on the second half. In terms of investment, this year is somehow different because we have the World Cup. So we have some more concentration of investments of sales and marketing in the second and third quarter. But overall, kind of business is healthy. We are excited with the opportunities, and we'll continue to invest behind it. But maybe even giving more high-level view, the fundamental drivers of our margin at the end of the day are the iconic mega brands, the unique global footprint, the meaningful leadership positions that we have, this very efficient operating model that we keep looking for further opportunities and the financial discipline and ownership culture. So I still believe we have room to further improve on that. Operator: Our next questions come from the line of Andrea Pistacchi. Andrea Pistacchi: I also have 2, please. And sorry about my voice, which is a bit low. First one is on Beyond Beer in the U.S., please. Now you referenced your capabilities and route-to-market advantage that clearly gives you a right to win in Beyond Beer. So focusing on the U.S., where your prepared cocktails are growing very strongly, and you've also launched Phorm Energy this year, again, leveraging your competitive advantages. So the question is, if you could share some thoughts maybe on what you think your Beyond Beer business could look like in the U.S. 3, 5 years from now, what the long-term or medium-term innovation pipeline looks like? Are you planning to bring new brands to market? Are you open to more M&A like the BeatBox deal? And ultimately, how large do you think -- what's the ambition? How large could Beyond Beer be in, say, 5 years' time in the U.S.? The second question actually is also on the U.S., a bit more specific on margins going to Trevor's point, I guess. So COGS inflation in the U.S. increased a bit in Q4. I think it will increase a bit further this year. So in light of that, can you share something on your revenue management strategy in the U.S. this year? And what are the levers do you have to protect to help margins in the U.S. this year? Michel Doukeris: Andrea, no issues with the voice. I think we are both on the same page here. So mine is a little bit under the weather as well. Thank you for the questions. U.S. Beyond Beer. So this is something that we've been discussing as well since 2017 as we start to rebalance our portfolio and invest in segments that we under-index. And definitely, these ready-to-drink beverages that source from other alcohol beverages and other occasions, they are a great opportunity for our business in the U.S., and we've been investing and building capabilities and brands in this segment. So today, this represents a little bit less than 3% of our business in the U.S., but it is growing very fast. And if you look at the brands that we are building, these brands today are ranking top 10, top 20 in the spirits industry in general in the U.S. and Cutwater specifically is ranking at the top of the fastest-growing brands in the industry for last year and the fastest one for the quarter 4. So I think that the headroom for growth is huge because they source from outside of the beer arena, and they are very incremental to our business. They are brands that we build from scratch. Therefore, they have still a lot of headroom for growth. As you said, we continue to complement this portfolio with BeatBox, for example, which is a different proposition for different occasions for different consumer cohorts, and our portfolio is getting stronger, but we still have a lot of headroom to grow in this area. Connecting this with the second point, they are also margin incremental. So as this mix continues to grow, as the mix of Michelob ULTRA continues to grow, this is all incremental to our margins. So we are managing our margins, not only from the cost productivity standpoint, but also from mix and revenue, as you said. And in terms of revenue, you all know we price in line with inflation. I think that COGS and the cost of goods sold will continue to fluctuate. That's why we hedge so we can have a more long-term perspective. And we'll continue to invest to accelerate the momentum of our business in the U.S. So we are moving in the right direction, still a lot that we need to continue to do. But so far, we are happy with the evolution, and we'll continue to execute in the way that we are executing so far. Operator: Our next questions come from the line of Mitch Collett with Deutsche Bank. Mitch, could you please check if you're self-muted. Mitchell Collett: Sorry, can you hear me now? Operator: We can hear you. Mitchell Collett: Okay. Apologies. So Michel, Fernando, I was just going to ask about your thoughts on phasing in 2026. Fernando, I think you've just given some of the components, but transactional FX, I guess, is more helpful in the second half. You've obviously got some phasing around your marketing and sales spend and some pretty uneven comps. So can you maybe just sort of tie that together and give us some thoughts on how we should think about phasing across 2026? And then my follow-up is on CapEx, which is still well below depreciation. And I think your guidance suggests that it will remain well below in '26. I know you've talked before about how you're using technology and AI and other tools to keep CapEx at a low level. Can you just comment on how you're doing that and how sustainable that level of CapEx is going forward? Fernando Tennenbaum: Mitch, so on the first question on phasing. So phasing, I think on the last question, we went over very well on that, but it's -- given what happened to the FX last year and kind of knowing that we hedge 1 year out, you know that last year, you had kind of -- you are going to have a bigger challenge in the first half of the year, especially in markets like Brazil and Mexico, where currency was really depreciated at the beginning of last year. And then you have kind of easier comps towards the second half of the year on cost of goods sold and transaction. So that is something definitely fair to say. And then of course, if you look at our financial filings like the 20-F, you look some of our exposures, you can get a good guess on how these things will behave kind of in the year of 2026. On sales and marketing, this is going to be somehow of a different year because since you have this World Cup, with a massive event in a lot of our markets, more towards Q2 and Q3. So one would expect some sales and marketing concentration. What is important to bear in mind is that even though kind of there are different dynamics in the year, we are going to manage the business to make sure we invest in the long term and create long-term value, not necessarily trying to cater to one quarter or another. But one would expect more concentration of sales and marketing investments in the second and the third quarter this year specifically. In terms of CapEx, it's not different than what we've been talking about. By looking at further efficiency opportunities, by looking on the role on technology, by kind of looking at every single different investment in our business, we are confident that we can kind of deliver the CapEx within the outlook for this year and still do everything that we need to do. We still have CapEx -- growth CapEx within this kind of envelope, anything that we need to support the business. So very comfortable with this level of CapEx. Operator: Our next questions come from the line of Gen Cross with BNP Paribas. Gen Cross: Just one question from me actually. It's actually on BEES marketplace. It looks like you've added over $1 billion in marketplace GMV in 2022. And interestingly, it looks like it's pretty much all driven by the 3P part of the business. I think, Michel, you mentioned looking at opportunities to scale and further increase profitability in marketplace. So I just wonder if you could give us some thoughts on the potential to scale marketplace further, particularly as the higher margin 3P part of the business becomes a bigger part of the mix. Michel Doukeris: Thanks for the question. So marketplace is a growth opportunity for us, as I've been highlighting over the last couple of years. and it's incremental to the beer business that we have. So it's a new revenue stream. And it's adjacent because actually, we built the technology product to serve better our customers. At the same time, we could increase this addressable market for our business by solving 2 pain points. One pain point is our customers. They were underserved by most of the CPGs because they are small, fragmented in distant areas. And on the other side, the CPGs need growth. They need to reach more customers. And the fact that we built this digital channel enables them to seamlessly reach a much broader and much more important base of customers. We always knew that the model would work. So we start testing and building the 1P. The 1P was using the capabilities that we have, the route to market, the trucks, the sales reps. But as we built the product and enhanced the technology, we always knew that the biggest opportunity is actually what we call 3P, which is touchless, right? So the app is downloaded by the bar owner. The bar owner sees an assortment that's much bigger than only the beer assortment or the products that we sell. They place the orders. The orders are then redirected to the different suppliers, and the suppliers take care of the delivery of these orders. And we, of course, in the middle, we are the product delivery and the marketplace for them to sell, to promote, to follow through with their sales team because the suite of products that this has is beyond only the app; we can also digitize our partners. And this is the part that is scaling fast and the most and is also the one that's the most profitable. The simple way to understand the opportunity is that on average on these retailers, beer accounts for 34% to 40% of what they sell. Therefore, there is a 1.5 to 2x addressable revenues that today we do not participate without the marketplace, and we can participate. And as you know, I think you were with us in Mexico, we are, in some cases, even increasing this addressable market because we are taking, for example, technology products like minutes for people to buy and operate their phones or paying their bills. So there is many incremental opportunities that can be built on top of that credit. We have partners today selling credit to these points of sales. So all of that builds on top of what the marketplace will directly build. So we are in early stage. It is scaling up at the pace that we want to scale up and it's becoming the business that we thought that could become. So very happy with the development, but a long way to go still. Thank you for the question. Operator: Our next questions come from the line of Sarah Simon with Morgan Stanley. Sarah Simon: I have 2 questions. First one was on Zero again. Your growth is extraordinarily high compared to peers. What do you think you're doing that they're not? And then the second one would be on RTDs. Your RTD business is obviously largely concentrated in the U.S. How are you thinking about that in the context of other markets and exporting it? Michel Doukeris: Thanks for the questions. I think I got both of them. If I didn't, please help me here at the end. So the non-alcohol beer, I think that we've been talking about that. We invested a lot in the technology. So making sure that we have superior products. And this investment was done in 2020, 2021, 2022. Many breakthroughs there. The liquids are fantastic. It's really great taste beer without alcohol, products that range from what we shared with you today in South Korea that is zero calorie and zero gluten and zero sugar, great taste to the fantastic Michelob ULTRA Zero in the U.S. that has only 29 calories, but it tastes delicious. So we invested first on the product and technology. Then we start to roll out this on our winning brands. So we have great brands across the globe. And every time that we put together a non-alcohol version of these brands, of course, consumers try and they choose the strong brands that we have. And then I think that the last point, we decided to invest and walk the talk. So just think about Olympic Games, a mega platform that we have globally that we sponsor with both Corona Cero and Michelob ULTRA Zero. So we got to get great product. We lined up the brands and innovation, and then we are investing behind that. And when we do all of together with our execution, which is superior execution, we can gain share quickly as we are gaining. We can expand categories, reach more consumers and get the growth that we are getting with this. So consumers are there. We are there for them, and we are gaining share in an accelerated way in this segment. In terms of RTD, actually, if you look at the numbers, RTD for us is bigger outside the U.S. than it is in the U.S. It's 3% of our global business, it's around 2 -- between 2% and 3% in the U.S. The most meaningful expansion that we are doing in this Beyond Beer space started last year, and we are rolling out this year is with Flying Fish, which is this beer liquid, but it's very different than beer. It's flavored. It has very different demographics that we reach with the product. It competes a lot outside of the beer space because of the taste profile, brings a lot of new consumers to the category because they are flavor seekers. They like sweetener liquids. They don't like too much the bitter. And then this is now going to 10 different countries. And in every country, we have a nice story to tell so far because this is fulfilling what the plans were and what we want to achieve. And then we also have Cutwater, which we are building in a very diligent way in the U.S., but we already started to expand to Canada, and there are some other markets coming in the lineup. And we have today a global portfolio, let's say, for Beyond beer that caters each of the segments within the Beyond Beer. So NUTRL, Brutal Fruit and Beats are also getting expanded globally to different countries. So there's more to come there. The opportunity is very big outside the U.S. and outside Africa, and we are just scratching the surface so far. So more to do. Thanks for the question. Operator: This was the final question. If your question has not been answered, please feel free to contact the Investor Relations team. I will now turn the floor back over to Mr. Michel Doukeris for closing remarks. Michel Doukeris: Thank you. Thank you, everyone, for the time today, for the ongoing partnership and support to the business. I hope you are all well, get some time to drink a beer. Cheers. Operator: Thank you. This does conclude today's earnings conference call and webcast. Please disconnect your lines at this time and have a wonderful day.
Andreas Trösch: Hello, everyone. This is Andreas Trosch from Investor Relations thyssenkrupp. Also on behalf of my entire team, I wish you a very warm welcome to our conference call on the first quarter results '25-'26. With me on the call are our CEO, Miguel Lopez; and our CFO, Axel Hamann. Before I hand over to the CEO and CFO for their presentations, I have some housekeeping. All the documents for this call are available in the IR section on the website. The call will be recorded, and a replay will be available shortly after the call. After the presentations, there will be the usual Q&A session for our analysts. we use Microsoft Teams for the call [Operator Instructions]. With that, I would like to hand over to our CEO, Miguel Lopez. Miguel Angel Lopez Borrego: Thank you, Andreas, and hello, everyone. Welcome to our first conference call in the current fiscal year. Let me start with an overview of our management priorities. First of all, portfolio. In terms of our strategic transformation, we continue to execute ACES 2030 with full focus also in order to establish thyssenkrupp as a lean financial holding company. With the successful spin-off of TKMS in October, a major milestone on our path towards this target picture, we created significant value for our shareholders. That is our clear ambition also for any portfolio actions ahead. For Materials Services, we push ahead for capital market readiness and their respective stand-alone setup. At Automotive Technology, we defined and implemented a new structure with clear focus on the core businesses. Moreover, we also initiated the sale of the noncore business unit, Automation Engineering, in November. At Steel Europe, negotiations with Jindal about the majority holding are ongoing and the respective due diligence is on its way. And let me remind you that we have reached a collective restructuring agreement with IG Metall Union in December, an historic milestone for thyssenkrupp. And in addition, actually another very important historical milestone just from last week, we have agreed on a term sheet on the new shareholder structure of HKM. Salzgitter plans to continue to operate HKM as the sole shareholder from June 1, 2026 onwards. That also means that the slab supply to thyssenkrupp Steel will already end in 2028. Regarding performance, Q1 marks a confirming start to the new financial year, even though our markets remain challenging across many of our customers' industries. Therefore, we confirm our group guidance for fiscal year '25, '26. On a relevant note, the likely positive implications from current political initiatives in Europe, such as CBAM or steel tariffs have not yet translated into measurable tangible effects, but they do present upside potential for our businesses going forward. On the green transformation side, we continue to build momentum. Let's start with the recent announcement. Uniper and Uhde have signed a framework agreement on ammonia cracking technology. The agreement covers up to 6 large-scale plants with a total capacity of 7,200 metric tonnes of ammonia per day. In addition, construction of the DRI plant at Steel Europe is moving ahead with full commitment. More from an ESG perspective, CDP -- so Carbon Disclosure Project, again honored thyssenkrupp for transparency and climate protection for the 10th consecutive year. With this result, thyssenkrupp has once again secured a place on the annual Climate A List, make it one of only 877 companies internationally with this distinction, including 34 companies from Germany. To summarize, a difficult market environment persists, but we are executing our strategy with discipline, reshaping our portfolio and improving our operational performance. Plus, we are confirming our full year guidance. Axel, the stage is yours for the financial section. Axel Hamann: Thanks, Miguel. Hello, everyone. This is Axel. Yes, let me turn now to the financial overview for the first quarter. Despite the macro environment you just have heard about, we achieved a promising and confirming start into the new fiscal year. We've increased our EBIT adjusted despite the top line headwinds, which continues to serve as a proof point that our internal efforts and the respective performance management are paying off. While sales decreased to EUR 7.2 billion, that means an 8% decline year-over-year. Our EBIT adjusted increased to EUR 211 million, which is EUR 20 million above last year's level. Net income came in at minus EUR 334 million, mainly [Audio Gap] We have experienced some technical issues here. Apologies for that. I believe that I was talking about the net income, which came in at minus EUR 334 million. And I explained that this was on the back of the expected restructuring expenses at Steel Europe. Now let me now turn to free cash flow. And as already flagged in our last conference call, you see a typical seasonal pattern here at the beginning of the fiscal year. And that's what you see at the minus EUR 1.5 billion free cash flow before M&A. And this is important to get it right, and I want to highlight it right here. Our free cash flow before M&A guidance for the entire year remains unchanged as we expect a reversal of this Q1 pattern in the course of the fiscal year, particularly in the second half. So that cash flow development led to a decrease in our net cash position. It's now at EUR 3.2 billion. That is still a very solid level that will also recover throughout the fiscal year as free cash flow before M&A is improving. Also some operational comments. We see tangible results from our restructuring and performance initiatives. Workforce reduction is progressing as planned, with FTE down by around 1,100 year-to-date, first quarter, 1 quarter. And a bit more from a broader perspective, the future economic development remains challenging overall from our point of view. And we do continue to face weak customer demand, particularly in Europe, but also uncertain upside potential that is related to the political framework in Europe. Now first quarter sales and EBIT adjusted development, which you see here in that chart. Most segments managed to improve or at least stabilize their performance despite weak demand conditions. I've already mentioned that the sales decline of more than EUR 600 million is more than offset in our EBIT adjusted. This is again a pretty clear proof point for our increased underlying resilience. With regard to sales, we saw declines of stagnation across all segments, with the decline mainly driven by three segments. First, Decarbon Technologies, still facing hesitant markets and some project postponements on the customer side. Then Material Services and Steel Europe, they both showed lower demand that, for example, you can see also at the trading business at our Materials Services segment. In terms of EBIT adjusted, we saw a number of improvements across the group with Steel Europe posting the biggest increase, which was also due to lower raw materials prices and some efficiency gains. Looking at DT, Decarbon Technologies, the negative first quarter resulted from lower sales and project-related additional costs at the cement business. Let's now talk a little bit about Automotive Technology. Overall, challenging market environment, soft demand levels also in Q1. Total, we had a sales decline of around about 3% year-over-year. However, if you adjust for the negative currency effects, sales were around about on prior year's level. Here, we experienced a growth in the serial business that was overshadowed by the declines in the project business as well as from our business unit, Springs & Stabilizers. Let's take a look at earnings. We saw per performance increase. EBIT adjusted came in at EUR 20 million. That's up by EUR 8 million year-over-year. So what we can see is here that our internal countermeasures such as volume compensations from customers, savings from restructuring, and efficiency initiatives are in place and are working. Ultimately, these efforts could more than offset the top line and currency headwinds. Let's look at -- business cash flow came in again in negative territory at around about minus EUR 70 million. That's mainly driven by restructuring cash outs and net working capital changes as expected. Let's turn to Decarbon Technologies. Overall, we continue to see an ongoing hesitant market environment with a number of project deferrals on the customer side. That translated into weak order intake and therefore, declining sales of minus 19% in our first quarter, especially in the water electrolyzers business at thyssenkrupp nucera and in the new build businesses at Chemicals. These lower sales led to the decrease of EBIT adjusted by minus EUR 33 million to minus EUR 16 million. In addition, some project-related additional costs at Polysius impacted that result. Performance measures and efficiency gains supported earnings, however, could not compensate the decrease. Also, the cash flow was hit by missing sales. The drop in business cash flow to minus EUR 162 million was driven by the lower top line as well as negative cash profiles in our project business at DT. Let's turn to Materials Services. Material Services delivered higher earnings despite a challenging market environment, particularly in Europe. Sales declined here by minus 6% year-over-year, mainly due to weaker performance in the direct-to-customer business, which also led to significantly lower shipments. At the same time, distribution and processing businesses in North America showed some solid growth. EBIT adjusted came in at EUR 50 million, with a strong performance of our processing business, especially in North America, more than offsetting the decline in European distribution and also supported by APEX cost reduction and efficiency measures. Business cash flow. Business cash flow was down year-over-year, reflecting the before mentioned typical seasonality with the net working capital buildup at the start of the fiscal year, also influenced by higher price levels that we particularly see at some commodities. Steel Europe. So for Steel, the market conditions in Europe remain challenging, with, for example, demand being still quite reluctant. Consequently, sales decreased by minus 10% and shipments fell by 4%. However, we also saw some higher volumes from our automotive customers and from steel service centers. Let's take a look at EBIT adjusted. Despite the lower top line, EBIT adjusted at Steel increased to EUR 216 million. That is due to more favorable raw material prices and also efficiency measures that was supporting the positive earnings development. Business cash flow at Steel decreased year-over-year, also, as mentioned, driven by a seasonal buildup of net working capital and here, mainly receivables and payables. Last but not least, Marine Systems, TKMS. Overall, we see ongoing strong demand for defense products across the product range. Order backlog continues to be impressive, stands now at a record level of EUR 18.7 billion. And so here only a couple of brief comments on Marine as a segment of thyssenkrupp because all operational details are available in the reporting of TKMS as of yesterday as they already conducted their earnings call. Important to mention is here for Marine Systems, all relevant will develop in line with our outlook, including the updated sales guidance. Now let's take a look at our EBIT adjusted to net income bridge. You can see here that we are also in a transition period. Let's take a special look at the special items. The first and largest portion of restructuring expenses of EUR 400 million, more specifically EUR 401 million at Steel Europe is now included in our first quarter, and the remainder will be booked in the course of the financial year '25-'26. In addition, we faced some impairment losses at Automotive Technology in connection with the signing of the sale of our business unit Automation Engineering. The remaining positions are rather straightforward. Overall, we saw a negative net income of EUR 334 million. Now what do we get from net income to our free cash flow before M&A. In essence, the delta between net income and free cash flow before M&A is the aforementioned seasonal net working capital swing, particularly within our materials businesses that will, as mentioned, reverse over the course of the fiscal year, particularly in the second half. Remaining positions, meaning cash flow from invest and M&A and these adjustments are also straightforward. So it's really -- it's the seasonal net working capital pattern. Again, also very important for me to highlight, we do confirm our free cash flow before M&A guidance for the entire year, which is a good segue to the next chart. So guidance. Miguel and also myself have already stressed that we confirm our group guidance. And that means in particularly, we expect sales in the range of minus 2% to plus 1% compared to prior year, so unchanged. EBIT adjusted, as previously guided, will end in the range between EUR 500 million and EUR 900 million. Free cash flow before M&A is expected to come in between minus EUR 600 million and minus EUR 300 million despite our Q1, as explained, including expected cash outflows from restructuring of up to EUR 350 million. So the EUR 350 million cash outflows from restructuring are already included in our guidance of minus EUR 600 million to minus EUR 300 million. Looking at investments, obviously, also a driver of free cash flow before M&A. Overall, we are pretty cautious with investments. And that means that we're orientating ourselves rather to the lower end of our guidance of EUR 1.4 billion to EUR 1.6 billion. Here, similar to the last financial year, there might be a possible revisit over the remainder of the year as we see clearer towards the end of the year. Last but not least, net income. Here, our unchanged guidance, minus EUR 800 million to minus EUR 400 million, including restructuring expenses, mainly at Steel Europe. So if you look at the segments, there are a couple of smaller changes, but those do balance out on a group perspective. For example, on sales, automotive -- the guidance now takes into account the initiated sale of Automation Engineering, the business unit, and we have now better or higher sales expectations for Marine Systems. But overall, group guidance is confirmed for all KPIs. With that, Miguel, I'd say it's up to you again. Miguel Angel Lopez Borrego: Thank you very much, Axel. Before we come to our Q&A, I would like to highlight some reflections and outline the way forward. That slide looks familiar to you. That's why I will keep it short. The overall key message is big decisions are behind us. Now it's about disciplined execution and implementation. As you all know, we are developing thyssenkrupp into a lean financial holding company. By doing so, we will strengthen the independence of our segments and increase their accountability as well as entrepreneurial freedom. I'm convinced that this will also encourage innovation and unlock additional growth prospects. I'm also convinced that this approach will ultimately translate into additional value for our shareholders. And by working with full steam towards the capital market readiness of Materials Services, we make sure that this may become an option to further develop thyssenkrupp towards our strategic goal of a financial holding. With that, we are at the end of today's presentation. Thank you all for your continued interest and trust. We are now ready to take your questions. Andreas, back to you. Andreas Trösch: Thank you very much, Miguel and Axel. As mentioned, we are now ready to take your questions, and we are opening the Q&A session for our analysts. The first one in line is Boris. Boris Bourdet: I have three. So the first one is on the general discussions. There were recent rumors that [ Salz ] might be interested also in the steel business. So I would be interested to get an update on the process. Where are you? And what's according to your knowledge, the most likely time line for a decision? Maybe the second one that would be on the political support you mentioned during the presentation, CBAM and TRQ and others. You pointed out the fact that there could be some upside going forward. So does your current guidance include those supports? And if not, what could be the potential uplift? The last one is on Steel Europe, pretty decent margin over the period in Q1. So I would be interested to know how much is the contribution from the energy compensation in Germany this quarter? Miguel Angel Lopez Borrego: Boris, for your questions -- I'll start with the first one. So we are in the due diligence process with Jindal Group, intense conversations. Of course, you always understand that we cannot do any kind of statements around timing. And of course, it's also important to understand that the highlight of last week has been HKM. So the agreement that Salzgitter will continue the company on its own. And of course, all this influences, of course, also the due diligence process because that's a new factor coming now in and certainly positive. So discussions ongoing, and we will let you know as soon as something is more concrete to be reported. Yes, it is expected -- your second question, it is expected that we will see improved, pricing after the tariffs will be introduced in Europe. And also the CBAM -- concrete CBAM actions will, I believe, also help. We will not see anything this fiscal year around it because we expect the European Union to decide on the tariffs around May, June. And until then everything is really getting into the orders, we will see an impact for sure next fiscal year. But the likelihood that we see this fiscal year some positive effects already in our view is, for the time being, very limited. For the third question, I hand over to Axel. Axel Hamann: Thanks, Miguel. Yes, Boris, you've asked for the electric compensation and what the share is for the, let's say, increase also in EBIT. It's basically 3 components that help us increasing the EBIT. It's raw material prices, it's efficiency gains. And as you said, it's the electrical price compensation, and that is a bit higher than last year. I hope that gives you an indication. Boris Bourdet: Can you just remind us how much that was last year? Axel Hamann: That was a low 3-digit million euro number. Andreas Trösch: Now the next question comes from Jason Fairclough. If not, then we try the next in line and come back to Jason in a second. Next in line is Alain Gabriel. Alain Gabriel: A couple of questions. On HKM, how do you see the cash outflows relating to the sale potentially being phased over the course of this year and beyond? That's the first question. The second one is still on HKM. Can you give us some indication of the pro forma Steel Europe EBITDA without HKM, potentially for '25 or even Q1 '26, just to help us quantify the impact of HKM or even if it's easier, if you can give us what would your guidance have been ex-HKM for '25, '26? Miguel Angel Lopez Borrego: All right. Thanks. First of all, cash outflow or I should say, potential cash outflow for HKM, a term sheet has been signed. And as we stated, it's going to be a low to mid-3-digit million euro number. The cash outflow pattern, what I can already provide you with as of now, it's going to be a minor part of this year, and we're going to stretch that out over at least 3 years. So you would see a sequential cash out, and we're going to start with a smaller part in this year in case we're going to close the deal, and that is expected for June of this year. Axel Hamann: With regard to guidance for HKM, we do not disclose, let's say, individual guidance for that business as part of our Steel segment. Alain Gabriel: But can you give us some indication if it's a positive EBITDA or negative EBITDA if we were to strip it out? Or even that you cannot give any color? Axel Hamann: Well, there's still a couple of variables also to be negotiated in terms of supply from HKM. So it's really -- it's too early to tell. Andreas Trösch: Now let's try Jason again, Jason Fairclough. Unmute yourself. All right. Well then, let's try again later. Now we're switching over to Bastian. Bastian Synagowitz. Can you unmute yourself Bastian? Bastian Synagowitz: Maybe firstly, starting off on the strategic plans you have for the Steel business. I guess maybe looking at the broader market, obviously, the -- I guess, the equity market has significantly rerated the valuation of any European steel asset given the very supportive policy backdrop. And if we overlay this with the talks you're currently having on the possible sale of the unit, this must be obviously a very different conversation today versus the talks which you probably had at the very early stage of that process. So can you confirm that you're basically seeing a positive momentum here in these talks? And -- or is there also a scenario where at least you may potentially crystallize the value of the steel unit in a different way? And has this become more likely? That's my first question. Miguel Angel Lopez Borrego: Obviously, a very relevant strategic question you raised. I mean, it is quite clear that the sentiment, and we have seen that -- you have seen that also in all the steel companies that are publicly listed. So the sentiment has turned into a positive one for the last 4 months. We have seen increases in the share prices of around 50% and more. So there is a clear positive sentiment. It is also clear that this is due to the tariff situation, as mentioned before, and the limitation also of the import quota for Europe. And of course, the idea of resilience -- and I've been reporting, you remember about the Steel summit with Chancellor Merz and also talks that we had directly with Ursula von der Leyen and her team. So yes, there is a clear positive sentiment here. And of course, that will have, for sure, to get into an input for the conversations with our colleagues from Jindal, no doubt about that. Bastian Synagowitz: Maybe just looking also at the recent news around the possible plans to delay the phaseout under the European ETS scheme. I would think that, that must be quite positive news for you as well in terms of like the CapEx perspective of the business. And in that sense, probably in the overall context, probably is another derisking factor for the unit. Would you agree with this? Miguel Angel Lopez Borrego: Yes, there are really good things happening, and this will have quite a different shape in terms of Steel for the future. Bastian Synagowitz: Then maybe lastly, one more technical question just on the restructuring costs you're expecting. I think you're now guiding for EUR 700 million to EUR 800 million of restructuring costs in total. Is this only related to Steel? Or does this already include something for the other units as well or maybe even for HKM? Or is this just Steel? Axel Hamann: Yes. Let me take that question, Bastian. The vast majority is Steel related. And we've also, let's say, provisioned -- not technically, but planned for some at HKM. And what is also included is a minor part for automotive. So vast majority is Steel. Bastian Synagowitz: The HKM portion, however, that does not include the low to mid-3-digit number you were referring to earlier, I suppose? Or does it include that one as well? Axel Hamann: It's not too far away, let me put it that way. Andreas Trösch: All right. Thank you, Bastian and now again, trying Jason. Jason Fairclough: Look, a couple of quick ones for me. First, I was wondering if you could just give us an update on Elevators. How are you thinking about the value of that stake? And what's the path to releasing that value? On Material Services, we've talked about this one before, huge working capital in this business. Do you think it's performing the way it needs to? And again, how do you think about releasing value? And Steel, is the vision to sell completely now? Or would you just be looking to sell a 51% stake? Axel Hamann: Let me maybe start with Elevator, Jason. You've probably seen currently booked at around about EUR 2 billion. I think there's a certain expectation in the market around, let's say, further developing TKE. So as of now, we're super happy with our share, and we're looking forward what the developments around TKE will be. Obviously, there are some, let's say, talk in the market around IPO. Let's see. We're happy with our share, and we're looking forward how this is going to develop. With regard to working capital, I think that's something we've touched upon also in the past for Materials Services. Are we happy with the performance? I think we're working towards capital market readiness, let me put it that way. And working capital efficiency is a part of it. And yes, so let's see when that business is going to be capital market ready, and so we will let you know once we're there. With regard to Steel, it's maybe a question for you, Miguel. If I recall you correctly, it was around whether we're going to sell or whether we intend to sell 100%, or whether we can think of any 50% structure. Miguel Angel Lopez Borrego: Okay. I was having technical problems for 30 seconds. Well, Jason, on your question around what portion of the business is -- of the Steel business is in discussion for selling. We continue to go the direction of to sell the majority of it. That's what is in the discussions with Jindal right now. Jason Fairclough: Can I just follow up on the Material Services. So it's an interesting phrase you used there, working towards capital market readiness. So should we read from that, that you're considering a potential IPO or sale of that business? Axel Hamann: No. I mean it's part of our overall strategy that we want to enable our businesses and then ultimately become a financial holding company. And that would encompass that the segments would eventually be also listed. That's something we've communicated and materials may be one of them. But as I said, no -- final decision not yet taken, but we're working hard on, let's say, getting all ducks in a row. Jason Fairclough: Okay. Glad we could make it for a third time. Thank you. Andreas Trösch: [Operator Instructions] Next follow-up question is coming from Alain Gabriel. Alain Gabriel: A couple of follow-ups. On Steel Europe, you are not too far from the bottom end of your guidance range just with the Q1 numbers. Should we see your full year number as conservative? Or are there any items that you expect to develop over the course of the year that would drag down the margins? That's one. The second question is on Steel Europe. Can you remind us what are the pension provisions allocated to Steel Europe? And on top of that, what are the other restructuring provisions that are booked as liabilities on your balance sheet for Steel Europe? Miguel Angel Lopez Borrego: Sure. Thank you. First of all, we've touched upon the guidance for steel after that promising start. As said, the reasons are threefold. It's efficiency gains -- it's lower raw material prices, and it's also the electrical price compensation. So I would not rule out at this point in time that we continue to see efficiency gains. And with regard to prices, let's see. But you see me rather, let's say, on the comfortable side, if I look at our guidance range for steel, let me put it that way. Then pension provisions for Steel should be around EUR 2.4 billion. And with regard to -- I think you also asked around for restructuring provisions, that is something we have guided around a mid- to high 3-digit million euro numbers for this year. Andreas Trösch: Thank you, Alan, for your questions. There seems to be no more questions currently in the call. If you have more questions, please contact the Investor Relations team, including myself. So thank you very much for participating in that call, and have a great day. Thanks. Miguel Angel Lopez Borrego: Thanks, everyone. Bye-bye. Bye.