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Katie Mackenzie: Good morning, everyone, and welcome to the Elixinol Q4 FY '25 Results and Outlook Webinar. On our call today, we have Gavin Evans, the Chair; Natalie Butler, Executive Director and CEO; and Adam Dimitropoulos, CFO. And my name is Katie Mackenzie, Investor Relations for Elixinol. The presentation today will run for about 20 minutes, and then we will open up for Q&A. [Operator Instructions]. So now I'd like to hand over to Gavin Evans. Gavin Evans: Thank you, Katie, and good morning, everyone. Thanks for joining us today to listen to this presentation about the solid progress that we're making at Elixinol. Let me start by providing some context to my role in the business. I was appointed Chair of Elixinol Wellness in December 2025 at a pivotal time for the company. Most recently, I've founded OpenWay Food Co., where we built a vertically integrated category-leading portfolio of better-for-you brands, brands such as Red Tractor, Table of Plenty and Keep it Cleaner. That experience building brands, strengthening supply chains and integrating businesses to deliver scale is highly relevant to EXL today. Over the last 2 decades, I've developed strong relationships across food supply chains, retail distribution and the broader investment community. My focus is on financial and operational discipline, targeting scalable, high-margin categories and aligning our cost base to those core revenue drivers. I also bring proven experience in M&A. From my perspective, my mandate is clear; to create a solid foundation for scalable growth. We're now operating from a stronger, more focused position than we were 6 months ago. In 2025, we rebuilt the leadership team and simplified how the company operates. We've removed a layer of middle management, tightened decision-making and created a much nimbler organization. This is an experienced team, but it's also an entrepreneurial one. We're used to operating with discipline, speed and accountability, and that matters because every dollar we invest needs to work hard and needs to be invested into the right places. Natalie Butler, our CEO and Executive Director, brings strong commercial and operational experience in consumer health. Adam Dimitropoulos, CFO, has strengthened our financial discipline and reporting transparency. And Nat and Adam have been the key drivers of the improved performance you're seeing in Q4 2025 and will guide the business through 2026. You'll be hearing from both of them later in the presentation. We're also well supported by Pauline Gately as an Independent Non-Executive Director, providing strong governance and another important perspective as we reset for the future. So to that future, EXL has a bold, ambitious vision; to build a portfolio of premium branded health food assets supported by Australian manufacturing and positioned for global growth. Premium health brands are where sustained consumer growth is occurring, strong loyalty, better margins and long-term value. Australian manufacturer gives us quality control, supply chain resilience and authenticity, particularly for export markets and global growth ensures we can scale beyond Australia. This vision is about a tight thematic, scale and building a platform asset, not just a collection of products or brands. Australia's broader wellness market is around $160 billion today and forecast to exceed $300 billion by 2033, growing at roughly 7%. Within wellness, functional foods represent a $10.5 billion opportunity, growing steadily, while dietary supplements are smaller but growing faster at around 8% CAGR. Importantly, that growth is significantly outpacing other general grocery categories. Australia also ranks top 10 globally for per capita wellness spend at roughly $7,400 per person per year, which shows that wellness is already embedded in our everyday behavior. Our brands compete across functional foods, everyday wellness and supplements, giving us exposure to segments that are growing faster than traditional grocery rather than relying on a single category. This is a large, expanding and structurally supported market. The opportunity is real, and it is substantial. Retailers and industry commentators refer to this as an invest or tailwind category. So that's the opportunity. Let's talk about who we are today and how we're positioning EXL to be the platform for that vision. Elixinol Wellness is a sustainable nutrition and wellness company operating in Australia and the U.S. We run a vertically integrated model, controlling production, manufacturing and distribution. Our portfolio spans nutrition, wellness and super food ingredients. Products are sold through grocery, wholesale and e-commerce channels. And in the U.S.A., Elixinol branded hemp and nutraceuticals have been well supported in that market for around 10 years. Together, this gives XL a scalable, diversified platform to leverage growth domestically and internationally. I view it as a great foundation for us to build our vision on. So then to drill into that, EXL is a diversified platform built for longevity and everyday wellness. The business is structured around 3 key streams: nutrition products, dietary supplement -- sorry, functional foods and beverages, wellness products, dietary supplements and nutraceuticals and super and food ingredients, where we are a B2B supplier and utilize these products in our own branded products as a point of difference. This brand and product diversification captures multiple growth opportunities while maintaining high-margin scalable profits. We'll hear later from Nat how this aligns with the wellness tailwinds and megatrends. Our brand portfolio supports continued organic growth and also opens up the opportunity for targeted new product launches. We operate 6 core brands with the majority of revenue coming from the top 3 on this slide, Hemp Foods Australia, the Healthy Chef and Australian Primary Hemp. Those brands make up 75% of our revenue. Mt Elephant is being reset for growth via a strong innovation pipeline. Sooulseeds is a useful and modern brand targeting healthy snacking on the go. And while our U.S.-based Elixinol CBD business continues to contribute to the group, we're navigating through a changing regulatory environment before deciding if we reestablish a growth profile or proceed towards an exit. This portfolio allows us to leverage strong brands while innovating, supporting our premium health platform vision. We will cover some of that innovation later in the presentation. As you can see here, EXL operates diverse channels, spanning B2B and B2C. Retail partnerships include Woolworths, Coles, Costco, Aldi and independents like IGA and Harris Farms. Our e-commerce channels such as Shopify and Amazon are growing, giving us direct consumer access. We're also reestablishing our strong position in the B2B hemp supply, leveraging manufacturing capabilities and strong industry relationships. This multichannel strategy derisks the business and drives growth. So I know many of you are familiar with the business structure, our brands and channels, but in the context of it being a platform for growth, both organic and via M&A, it's important to remind everyone what that platform now looks like. For those new investors, I'm sure this provides context for the vision I outlined earlier. So moving on to our Q4 financials for FY '25, which is really the financial platform or the financial foundation for building that vision. This Q4 highlight slide shows the reset we have taken is now starting to deliver results. Revenue for Q4 was $4.1 million, up just under 10% quarter-on-quarter. FY '25 revenue increased 3.6% year-on-year, but it's the quality of that revenue that I'm happy about. Gross margins improved due to higher-margin products and channels. The e-commerce sales of the Healthy Chef grew 42% year-on-year, showing the strength of our direct-to-consumer strategy. With a structural cost base reduction, the business was both profitable for the quarter and underlying or normalized operating cash flow positive, creating that foundation for growth. And whilst more work needs to be done, we're now firmly on the path to profitability that we've been talking about for the last 6 months. On that note, I'll hand over to Adam, who will talk through the improvements in the revenue mix and cost reduction performance. Adam Dimitropoulos: Thank you, Gavin. Let me take you through our Q4 and full year 2025 performance, which demonstrates a clear improvement in revenue quality, margin profile and the resilience of the business. Q4 is our seasonally strongest quarter, and we delivered revenue of $4.1 million, up 9.5% quarter-on-quarter, giving us a strong exit run rate into 2026. For the full 2025 year, revenue was $15.5 million, representing 3.6% growth year-on-year. While top line growth was modest, the more important story is the quality of that revenue, which improved materially over the year. We have made a deliberate shift towards higher-margin products and channels, and this is clearly reflected in our revenue mix. E-commerce increased from 21% of revenue in 2024 to 38% in 2025, while lower-margin bulk ingredients reduced from 24% to 14%. This repositioning is driving better gross margins and more predictable cash generation. A key contributor to this shift is the Healthy Chef, where e-commerce sales grew 42% in Q4 compared to the prior year. This growth not only improves margins, but also derisked the business by diversifying us away from a small number of larger wholesaler and retailer customers. At the same time, we have successfully streamlined our SKU range across retail brands, removing underperforming products, improving inventory efficiency and allowing us to focus resources on the highest return products. In summary, 2025 marked a turning point in our business. We exited the year with a much stronger revenue mix, higher margins and growing direct-to-consumer exposure, which puts us in a solid position to drive improved profitability and scalable growth. Now let me take you through the progress we've made this year and how we have reset the business for profitability, starting with revenue. As you can see on the top chart, revenue has remained resilient and consistent throughout 2025, ranging between roughly $3 million to $4 million per quarter. We saw solid momentum into Q2, some expected seasonality in Q3 and then a rebound in Q4. This stability is important because it demonstrates that our cost actions were not taken at the expense of revenue generation. Now turning to EBITDA. The bottom chart really tells the story of the year. In the first half, EBITDA was clearly negative as we were still carrying a higher historical cost base. In Q3, we accelerated our cost reduction initiatives across staffing, marketing and corporate overheads with some transitional cost increases to achieve that change. These disciplined actions flow fully through the P&L in Q4, where we reached positive EBITDA slightly better than breakeven. This marks a critical step change for the business. On a year-to-year basis, our operating cost base in Q4 '25 was reduced by approximately 30% compared to the same period in '24. Importantly, this is a structural reduction, not a temporary pause in spend. As a result, our ongoing expense rate is now significantly lower than historical levels. We also delivered positive underlying operating cash flow for the quarter, reinforcing that this improvement is real and sustainable. During the second half, we completed a two-tranche capital raise totaling $2.5 million, which further strengthened our balance sheet and provides flexibility as we move forward. Taken together, we now have a leaner cost structure, improving profitability and a stronger capital position. This creates a solid foundation for both organic growth and selective M&A opportunities as we look to scale the business in a disciplined way. I'll now hand over to Natalie, our CEO, for the key business drivers of 2026. Natalie Butler: Thanks, Adam. Over the past year, we've been very deliberate about resetting Elixinol for the next phase of profitable growth, making sure we're putting capital into the right places. At a high level, we know we're operating in a market that supports long-term growth with 70% to 80% of consumers rating wellness as a high priority. Longevity or well aging is shifting health spend from reactive to preventative, and that supports repeat purchase and a longer customer life cycle with Gen X and Millennials now the fastest-growing spenders on wellness. Food-led wellness categories or functional food, where many of Elixinol products play grow more consistently than supplements alone because they're part of that everyday shopping habit. Up to 70% of consumers say clean label and natural ingredients influence their purchase decisions. And finally, diversified portfolios across both grocery and e-commerce like we have at Elixinol are far more resilient to market fluctuations. Different categories move at different speeds, but together, they reduce that volatility and risk. And these dynamics are guiding exactly how we're going to allocate our capital moving forward. The focus for 2026 and beyond is about converting these trends into revenue growth. Cost controls remain constant and capital needs to be directed to parts of the portfolio with the strongest mix of both growth and return. In D2C e-commerce, investment is concentrated on where the returns are the highest, and the Healthy Chef is the main driver of growth and margin for us, while the Elixinol U.S. brand refresh, which is in the process of being rolled out, is focused on improving both conversion and retention and then long-term growth. In retail, everyday nutrition drives scale and repeat purchase. Our innovation focus is on products that really earn that shelf space and will grow the categories that they're in. Hemp remains a core platform for us. Elixinol is currently the largest hemp brand and ingredient supplier in Australia and contracted volumes for 2026 are up on 2025, which is really positive. And our vertically integrated model supports steady growth into the future without that need for extra capital. So as the market demand for hemp continues to grow, our strength across private label and branded hemp positions us for strong organic growth. Leading our innovation pipeline is the Healthy Chef Metabolic Burn launching this month. GLP-1 medication has fundamentally changed how consumers think about metabolic health and weight loss. In Australia, there is currently 400,000 to 500,000 people currently already using GLP-1 medications. But as interest -- but the interest around GLP-1 goes much further than this. And for every active user, there are 2 to 3 more consumers who are curious, but not currently on the treatment. So this creates a very large pre-GLP-1 audience, and this audience is our focus. Metabolic health is relevant to around 9 million Australians who are looking for credible everyday solutions. Metabolic Burn is built for this moment. It's not a pharmaceutical replacement. It's a natural TGA-regulated bridge that supports energy, glucose and metabolism using a clinically informed formula. This puts Elixinol in the right place in the GLP-1 cycle, early enough to capture that demand and credible enough to earn the trust. Alongside the GLP-1 shift, we're seeing a strong demand for lighter ways to consume protein. Consumers are moving away from heavy shakes and towards clean drinkable formats that support hydration and daily protein intake. Protein water is now one of the fastest-growing protein segments, growing at 8% in a protein market forecast to reach $1.1 billion by 2034. The Healthy Chef Protein waters launched in 2025 position us early in this trend with a premium functional offer aligned with where the category is headed. Finally, Mt Elephant, our healthy baking range, shows how we're applying innovation-led thinking at a brand level. As supermarkets reduce their ranges, we've reduced -- we have repositioned Mt Elephant to compete more effectively at shelf level, moving from a niche free from queue to a clean mainstream whole food proposition. Growth is coming from innovation that earns its place on the shelf. World-first sustainable formats and smart brand collaborations bring genuine news to traditional baking categories. This strategy is built in close partnership with Coles, giving us confidence at Mt Elephant's sustained growth in grocery. You can see on the screen, we have our new Mt Elephant peanut butter Whole Food cookie on the left, which is a collaboration with Pic's Peanut Butter. And on the right, our 2 new pancake mixes, which come in a mix and pour tub, and all 3 of these products are rolling out in Coles in May. Our sustainable pancake shakers are a world-first and address a long-standing sustainability issue for the category. About 95% of pancakes sold in grocery are sold currently in plastic shakers. And with only 19% of plastic in Australia being recycled, the real impact comes from reducing plastic in the first place. These products also provide key PR opportunities for both Mt Elephant and Elixinol and cement our corporate positioning as a sustainable nutrition company. I'm going to hand back to Gavin to wrap up. Thank you. Gavin Evans: Great. Thanks, Nat. Those opportunities are really exciting for us moving forward. So following Adam and Nat's updates, I can now share with you that the FY '26 outlook is anchored on 4 pillars. Operational momentum; continue to improve performance of this rightsized cost base and continue to drive stronger margins. Cost efficiency; maintain a structurally lower OpEx run rate, which then gives us flexibility to invest in growth. Build a growth foundation as a platform for sustainable organic growth, leveraging the category strengths that we already have. And then four and finally, strategic opportunities; pursue value-accretive M&A and focus on core revenue drivers. EXL is now operating from a stronger, more efficient cost base, well positioned to capture the growth opportunities and deliver long-term shareholder value. Please review the customary disclaimers. And thank you very much for your attention and ongoing support. And now I'd like to hand back to Katie to facilitate Q&A. Katie Mackenzie: Great. Thanks so much, Gavin and Nat and Adam for a really interesting presentation about the company and all the exciting things that you're doing and the outlook moving forward. [Operator Instructions] We might sort of kick off with a common investor question just about the supermarket channels in Australia and the opportunities and challenges that, that presents. In the presentation, you talked about your focus on higher-margin revenue and SKU rationalization, the partnership with Coles. Many investors are aware that some niche retailers can have a difficult relationship with some of those supermarkets. Are you able to just give a little bit more detail about what's happening on the ground? Perhaps Nat will start with you and then Gavin, if you could add a little bit as well. Natalie Butler: Yes. Thanks, Katie. Look, it's a fair question. And the short answer is that the supermarkets are tough right now, but they're not completely closed. This affects us at Elixinol more with some products than others. Our hemp ingredients are reasonably stable. But it's -- for the more niche brands like Mt Elephant, it has been a challenging year. But with that said, they are really open to true innovation, and it's just how they're defining that innovation and working with the buyers to give them products that they know that they need and that they know are going to provide, I guess, excitement to the category and something new to the category and growth to the category. So that's really what we're focused on. And I think one of the great things about being a small and nimble organization is that you can move so much faster to respond to trends. And if a buyer can give us feedback in one review, we can deliver on the next. And that's really what we're focused at delivering at the moment, playing to -- I guess, playing to our strength. Gavin Evans: Yes. Good answer, Nat. I think as well as that collaborative innovation, we have a couple of other key advantages, Katie, and to the investors listing that we have over our competitors, and we've talked about that diversification of channels. So the growing e-commerce business primarily through the Healthy Chef, at least in part, insulates us from much of the range rationalization that's been done quite aggressively by the 2 majors in particular. So that's been part of that strategy. I think that helps a lot. I think secondly, in that hemp space, we hold that strong position in the supply chain. So we're -- as Nat said, we're either the branded option on the shelf or in a number of situations, we're also the ultimate supplier of the hemp seed that is in the private label. So again, that diversification really gives us a natural hedge, which strengthens our position. Katie Mackenzie: Okay. Thank you, Nat, and Gavin, that makes sense. Gavin, we've got another one here for you. At the start of the presentation you were talking about the fact that you've got a mandate to create that solid foundation for scalable growth. So can you talk a little bit more about your vision for the company and what sort of assets you would be looking at to potentially scale the business in the future? Gavin Evans: Yes. Good question, Katie. I think that mandate for scalable growth starts with aligning the business to those wellness market opportunities that we've referred to earlier in the presentation. But just to be really clear, we have some urgency to optimize the business performance right now in the short term to align the market value of EXL more with our peers. I mean in FY '25, we reported revenue of circa $16 million. We're tracking towards profitability, as we can see in Q4. And we benchmarked our market cap against some of our listed peers in the food space, and they're in the range of 1 to 1.5x revenue. We're currently around 0.3. So that market re-rating is the first priority. And obviously, we will continue to deliver with the underlying business performance to build that confidence. But as we move towards that, we'll continue to look for the right asset to achieve the vision that we've just outlined, and that is to build a portfolio of premium branded health food assets. Now that portfolio has to deliver consistent growth, strengthen EXL's market position, and it has to create long-term shareholder value. Those assets have to be compelling as value accretive on acquisition. And given I've spent the last 5 years assessing businesses in this space, I'm confident those assets are available in the market. The other opportunity here is that there's been a lack of transactions in the private markets as many of the people listening would be aware, and that creates opportunities to buy these assets at the right time and at the right price and really use the platform that we've got to build something that's got scale that can be in a strong position as a listed player. Katie Mackenzie: That's great. Thanks, Gavin for that extra content and extra context. [Operator Instructions] Just a final one here. We've got lots of questions from investors about the loan note and the sale, potential sale of the U.S. business. You, Nat or Gavin, can you just give investors a little bit of an update on what's happening on that front? Gavin Evans: Yes. Why don't roll with that one, Nat. So the status of the loan notes remains unchanged. The Board doesn't think it's the best use of shareholder funds to hold an AGM to make any changes to the terms of those loan notes. But we do have our AGM coming up in May, and that presents an opportunity for us to look at our capital management. We're always seeking to optimize capital management and our balance sheet strength. So I also acknowledge the security link of those loan notes to the U.S. entity, which brings me to the update there that you requested. So late last year, the regulatory framework for CBD shifted in the U.S. exactly where that lands and the future implementation of how that plays out in the market is being heavily debated and lobbied in the U.S. political system at the moment. Indications are that within the next 2 to 3 months, there'll be more clarity on that. In the meantime, we continue to run the business to optimize its contribution. We're also staying connected with some prospective buyers on that should the market position become clearer. So we keep an open mind to what's happening in that space. And as I said, we continue to run that business with a long-term view. But this regulatory situation, hopefully, will become much clearer in the next 2 to 3 months. Katie Mackenzie: Okay. Great. Thank you for that update. So with that, if there's no further questions coming through from investors, but if people have listened to the presentation have got any further questions, we've got Gavin's address details there and my contact details as well. So please feel free to reach out to us after. So Gavin, I'll just hand it back over to you just to wrap it up, and thanks, everybody, for joining. Gavin Evans: No. Look, really just thank you. I appreciate people being engaged and the ongoing support. We are working very hard to improve the position of the business, and we think we've made some really good inroads in Q4, but there's still lots of hard work in front of us, and we're committed to stay focused, aren't we Nat and Adam. Natalie Butler: 100%. Gavin Evans: Thank you. Katie Mackenzie: Thanks so much. Bye. Natalie Butler: Thank you. Bye-bye.
Operator: Greetings, and welcome to the Varex First Quarter Fiscal Year 2026 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. [Operator Instructions]. It's now my pleasure to turn the call over to Christopher Belfiore, Director of Investor Relations. Christopher, please go ahead. Christopher Belfiore: Good afternoon, and welcome to Varex Imaging's earnings conference call for the first quarter of fiscal year 2026. With me today are Sunny Sanyal, our President and CEO; and Sam Maheshwari, our CFO. Please note that the live webcast of this conference call includes a supplemental slide presentation that can be accessed at Varex's website at vareximaging.com. The webcast and supplemental slide presentation will be archived on Varex's website. To simplify our discussion, unless otherwise stated, all references to the quarter are for the first quarter of fiscal year 2026 and to the year are for the fiscal year 2026. In addition, unless otherwise stated, quarterly comparisons are made year-over-year from the first quarter of fiscal year 2026 to the first quarter of fiscal year 2025. I would like to remind you that Q1 of 2025 was a 14-week quarter. Finally, all references to the year are to the fiscal year and not the calendar year, unless otherwise stated. Please be advised that during this call, we will be making forward-looking statements, which are predictions or projections about future events. These statements are based on current information, expectations and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Risks relating to our business are described in our quarterly earnings release and our filings with the SEC. Additional information concerning factors that could cause actual results to materially differ from those anticipated is contained in our SEC filings, including Items 1A, Risk Factors of our quarterly reports on Form 10-Q, and our annual report on Form 10-K. The information in these discussions speaks as of today's date, and we assume no obligation to update or revise the forward-looking statements in this discussion. On today's call, we will be discussing certain non-GAAP financial measures. Beginning with the first quarter of fiscal 2026, we changed our non-GAAP policy with regard to equity method investments. We will provide more detail later in the call. A reconciliation of these changes is presented at the back of our earnings release and slide presentation for the quarter. Our non-GAAP measures are not presented in accordance with, nor are they a substitute for GAAP financial measures. We provided a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure in our earnings press release, which is posted on our website. I will now turn the call over to Sunny. Sunny Sanyal: Thank you, Chris. Good afternoon, everyone, and thank you for joining us for our first quarter earnings call. I'm very pleased to announce a strong start to the year. First quarter revenue was $210 million, up 5% year-over-year and towards the high end of our guidance. Growth in the quarter was driven by strength in our cargo systems business, which contributed to a 17% year-over-year increase in Industrial segment revenue. Our Medical segment performance was stable year-over-year in what is typically our seasonally light quarter with continued strength in CT and growing engagement around next-generation system designs. Non-GAAP gross margin of 34% in Q1 was at the high end of our guidance, benefiting primarily from a favorable product sales mix in the quarter. Looking at a year-over-year comparison, total revenue was up 5% with Medical segment flat compared to last year and Industrial segment up 17%. Non-GAAP EBITDA of $29 million was up 12% compared to the same quarter last year. Non-GAAP EPS in the first quarter was $0.19, up $0.09 compared to $0.10 last year. Let me give you some insights into sales detail by modality in the quarter compared to 5-quarter average, which we refer to as the sales trend. Our Medical segment performed well in the quarter, driven by solid demand for X-ray sources, particularly in high-end CT as well as digital detectors. Customer activity and sales pipeline development around new platforms continued to gain momentum. Mammography modality exceeded its sales trend in the quarter. CT, fluoroscopy and radiography modalities were in line with their respective sales trends, while dental and oncology modalities were below their respective sales trend. Our Industrial segment delivered another solid growth quarter with broad-based strength across multiple platforms and verticals. Global demand for security screening remains strong, driving growth in both cargo security inspection systems and components. We also continue to see positive momentum in our nondestructive testing and inspection business, supported by strength in our high-energy linear accelerators and X-ray tube products, both of which are used in nondestructive testing applications. In addition, demand for photon counting detectors was solid across several industrial verticals and drove growth in our food inspection products. Overall, the Industrial segment remains an attractive growth opportunity for the company. We are collaborating closely with customers to address complex inspection problems by using X-ray imaging in real-time manufacturing and finding solutions that were previously difficult or impossible to achieve. At the beginning of December, we attended RSNA, the Radiological Society of North America's Annual Meeting. This is the world's largest medical imaging division and brings together over 38,000 radiology professionals and medical imaging OEMs from all over the world. RSNA is one of the most important events on our calendar each year because of the deep and broad engagement it enables with our customer base. We use the conference to showcase our newest technologies and more importantly, to work with customers on how these innovations can be designed into their current platforms and future systems. We held more than 150 customer meetings focused primarily on advancing design win opportunities and opportunities to upgrade their systems to our latest technologies. These meetings underscored increased customer engagement with a meaningful emphasis on innovation-driven discussions across all modalities. We view this increased level of activity as a positive signal for future demand. These engagements are translating into a growing pipeline of new business opportunities, which typically last for multiple product cycles and support durable long-term revenue streams. We felt a very strong reception to our new technologies, which reinforces our confidence that the investments we've made in innovation are positioning Varex well for sustained growth as customers move from technology evaluation to system development and ultimately commercialization. This year at RSNA, we introduced a more integrated modality-based approach to our value proposition. Across key modalities, including CT, general radiography, fluoroscopy, mammography, we showcased Varex's offerings, including tubes, detectors, generators, connectors, heat exchangers and software as fully integrated imaging chain assemblies and subsystems rather than as individual components. This modality-based approach represents a meaningful evolution in how we engage with customers. By taking a modality-based approach, we're able to deliver best-in-class performance and attractive total system economics while also enabling potential faster time to market for customers looking to bring new and differentiated imaging applications to market. We believe this approach further strengthens our position as a strategic partner to our customers and enhances our ability to drive long-term recurring revenue through deeper system-level design wins. We are encouraged by the enthusiastic receptivity to our approach, and we will continue these discussions with our customers with the intention of securing new design wins in fiscal '26 and beyond. Our Lumen family of radiographic detectors, combined with our Nexus software was a significant topic of discussions at RSNA. Customers and prospects were very interested in our regional manufacturing strategy, particularly with our factories in India, which they see as critical for their future growth in the region. We also had numerous conversations about our cutting-edge photon counting technologies and the progress that we are making there. For the past few years, our customers have been busy dealing with the fallout from COVID, chip shortages, followed by supply chain crisis and had to deploy R&D and growth capital towards taking care of maintenance problems. During the 2025 RSNA, we felt that our customers were returning to new product planning mode. And at this RSNA, we felt even more so that our customers were actively engaged in new product development and were in commercialization mode. In summary, RSNA was very positive for us and gave us a good feel for our customers' vision and where they were headed. While these design-in opportunities typically convert over time, several of the discussions we had at RSNA are tied to platforms that are currently already under development, particularly in general radiography modality. We are confident that some of these opportunities will convert this fiscal year with the revenue opportunities as early as fiscal '27. Moving to our Industrial segment. Our cargo security systems business continues to be a bright spot with multiple installations during the quarter in various countries. In addition, during the quarter, we received multiple orders for different products, including repeat orders from an existing customer. Our customer base has long considered our linear accelerator technology as best-in-class, and we view repeat orders like this as a testament to our success of deployment and performance of our new systems. We remain engaged on many tender offers and look forward to continued sales success in our cargo systems business in fiscal '26 and beyond. With that, let me hand over the call to Sam. Shubham Maheshwari: Thanks, Sunny, and hello, everyone. Turning to results for the first quarter. Our performance exceeded expectations. Revenues of $210 million were toward the high end of our guidance. Non-GAAP gross margin of 34% and non-GAAP EPS of $0.19 were also at the high end of expectations. Compared to the same period in fiscal 2025, total revenues increased 5%, driven by a 17% increase in Industrial, primarily from cargo system shipments. Medical revenue was stable compared to last year. Medical revenues were $145 million, and Industrial revenues were $65 million, representing 69% and 31% of total revenues, respectively. Analyzing regional performance. Americas grew 17%, driven by the strength in our Industrial segment related to the cargo systems business, EMEA rose 7% and APAC decreased 7% year-over-year. Sales volume to China remained steady, contributing 17% of total revenues, underscoring the continued resilience of our health care market position. Let me now cover our results on a GAAP basis. First quarter gross margin was 33%, down 100 basis points year-over-year. Operating expenses were $54 million, down $3 million year-over-year. We reported operating income of $15 million, net income of $2 million and GAAP EPS of $0.05 per diluted share based on fully diluted 42 million shares. Before I discuss Q1 non-GAAP results, I want to highlight a recent change to our non-GAAP policy. We review our non-GAAP policy annually to determine whether any changes should be made. As a result of this review, we've modified our non-GAAP policy to exclude gains and losses from our equity method investments. In making this decision, we considered a strategic shift at one of our equity method investees and also the fact that we do not control operations of our equity method investments. We determined that including the results of these businesses in our non-GAAP financials no longer provides information helpful to evaluate our ongoing operations. Going forward, this is our approach to report non-GAAP results as well as guidance for future quarters. Reconciliations for each quarter and full fiscal year 2025 can be found in the back of this presentation and earnings press release. Now moving on to non-GAAP results for the quarter. Gross margin in Q1 was 34% at the high end of our expectations, driven by favorable product sales mix. Gross margins were down 90 basis points year-over-year, primarily due to 130 basis points favorable impact from refunds of German customs duties and taxes in Q1 of '25. R&D spending was $22 million, a decrease of $1 million year-over-year and representing 10% of revenues. Please note, Q1 '25 included the final payment of $1 million for the transfer of technology from Micro-X. SG&A expense was $30 million, down $1 million from Q1 '25 and representing 14% of revenues. Operating expenses totaled $52 million, a decrease of $3 million year-over-year and represented 25% of revenues. Operating income was $19 million, an increase of $5 million year-over-year, and operating margin was 9% of revenue, up from 7% in Q1 '25. Tax expense was $3 million, flat year-over-year. Q1 tax rate of 27% was higher than our expectations due to income distribution across entities. We continue to expect full fiscal year 2026 tax rate to be around 23%. Net earnings were $8 million or $0.19 per diluted share, up 90% from $0.10 in the year ago quarter. Average diluted shares for the quarter on a non-GAAP basis were 42 million. Now turning to the balance sheet. Accounts receivable decreased by $10 million and days sales outstanding increased by 2 days to 64 days. Inventory increased $29 million to $328 million and days of inventory increased by 34 days to 214 days. The increase in inventory during the quarter will support anticipated demand across Industrial segment, including new product ramps and cargo system deliveries. As those programs progress, our aim is to normalize our inventories. Accounts payable increased by $9 million, driven by increase in inventory and days payable increased 9 days to 51 days. Now moving to debt and cash flow information. Net cash outflow from operations was $16 million in the quarter, primarily driven by the increase in inventory. We ended the quarter with cash, cash equivalents and marketable securities of $126 million, down $30 million compared to the fourth quarter of 2025. Gross debt outstanding at the end of the quarter was $370 million and debt net of $126 million of cash, cash equivalents and marketable securities was $244 million. Adjusted EBITDA for the quarter was $29 million or 14% of sales. Our trailing 12 months adjusted EBITDA was $127 million [Audio Gap] to outlook for the second quarter. Guidance for the second quarter is as follows: revenues are expected between $210 million and $225 million. Non-GAAP earnings per diluted share are expected between $0.15 and $0.25. Our expectations are based on non-GAAP gross margin of 33% to 34%, non-GAAP operating expenses of approximately $52 million, interest and other expense net in the range of $7 million to $8 million, tax rate of about 23% for the second quarter and non-GAAP diluted share count of about 42 million shares. I would now like to hand the call back to Sunny for some closing thoughts before beginning our Q&A. Sunny Sanyal: Thank you, Sam. We are very pleased with the solid start to fiscal '26. Looking ahead, we're encouraged by the depth and quality of the ongoing dialogue that we're having with our Medical customers, particularly around innovation and integration of our technologies into their next-generation imaging systems. On the Industrial side, our close collaboration with customers continues to drive new applications for products across a broad range of verticals, including oil and gas, food inspection and security screening. Across both segments, this engagement reinforces our confidence in the durability of our customer relationships and the long-term opportunities ahead. None of our progress would be possible without the dedication of our employees and partners around the world, and I want to thank them sincerely for their continued efforts. Together, we are advancing our strategy and strengthening the future of our business. Your commitment and passion continues to make a meaningful difference to Varex. In closing, the combination of a solid execution in the quarter, strong customer engagement around new platforms and increasing modality-based subsystem collaboration gives us confidence that we are well positioned as we move forward through fiscal '26 and beyond. With that, we will now open up the call for your questions. Operator: [Operator Instructions] Our first question is coming from Larry Solow from CJS. Lawrence Solow: I guess, Sunny, maybe first question for you, just kind of high level. You sound pretty optimistic, I guess, certainly, the pipeline stuff sounds great. Maybe you can give us a little more color just on the current environment, where we stand today? I know you only give guidance out for 1 quarter, but you sound pretty just optimistic in general on both sides of the business. So maybe you can give us a little more at least qualitative outlook for the rest of the year. Sunny Sanyal: Larry, yes, so let me start with Medical, right? First of all, in Medical, we feel like the headwinds that we faced in '24 and where we had signaled that in the second half of '25, that we would have those behind us. They're truly behind -- they feel behind us, and they continue to -- our customers continue to show orders activity. So we feel good that the problems of the past are -- we're past them. That's number one. So in general, Medical is stable. But within that, we continue to see strength in CT. There's no real -- anything that I can call out as weakness in CT and its strength globally. And we continue to look at Medical markets, CT markets and adoption rates of CT globally. All of that projects a positive indication for us, and our relationships with our OEM customers continue to be strong. That's Medical. All other modalities in Medical -- so that said, China is stable for us. China is stable, CT is strong, and all other modalities, we see normal cyclical patterns, nothing that alarms us or anything that I can call out as extraordinary or remarkable. So from that perspective, we feel good about Medical for the rest of the year. Same way as I look at Industrial, the order pipeline, the order activity, the engagement of our customers is very strong. We saw very strong orders for photon counting in Industrial, particularly in the food inspection space, and NDT, nondestructive testing, pipeline and activity remains strong. And then security, of course, we've talked ad nauseam about our traction there. We're very happy with how we're seeing the security orders pipeline funnel growing there. So this is the background for me feeling good about where we are. And then to top it off, look at RSNA, the customer interactions were very different. Two years ago, in 2024, there wasn't a single R&D conversation. It was all about one problem after another after another that our customers were facing, and that tone has shifted pretty dramatically. And so as I look at the engagement of the customers and I look at the type of design-in opportunities we're looking at, we're looking at opportunities that are not only long range. We're not just talking about photon counting, nanotubes and forward-looking technologies. We're talking about products that we currently have in the mid-tier, in the value-tier CT systems and what our customers need in emerging markets where they're going today, tomorrow. So that's why my comment was that we're expecting to close some of those in fiscal '26 with hope that we can get engaged with customers, particularly with radiographic, to ship them products in fiscal '27, '28. So this is what's going on, which makes me excited. Lawrence Solow: No, I can feel that enthusiasm. And you mentioned the India opportunity. I was going to ask you just about India, how it's progressing. I imagine it's still a little bit of a headwind to your business, but it sounds like it won't be for long, and it sounds like it's also creating a lot of opportunities for you. Maybe you can elaborate on that. Sunny Sanyal: I'll let Sam comment on add-on. Let me just start by saying the India factory, as you know, for detectors is open. We're shipping detectors from there globally. These are radiographic detectors, and it is tracking with what we had intended for that site in Vizag. Pune construction is coming along very well, but we're also shipping quite a few tubes that are marked made in India to all over the world. So the activity is going on. The new factory for tubes, factory will still take a little bit of time to come online, but there's progress being made, and I feel we're on track. And it's resonating with our customers. There's not a conversation that I have with customers where India doesn't come up. And the story is the same. Hey, we want to do business in India. We're expanding to India. India is favoring systems that have local content, domestic content, made in India. So we want you to supply us from India, and that becomes a differentiator for them. So this is exactly what we had planned for, and we're seeing that start to materialize. Sam? Shubham Maheshwari: Yes. So like Sunny said, there's a lot of excitement from the customer side on our India operations and ability to provide the product from there, not just for India consumption, but also for global consumption. And in terms of the bricks and mortar development in India, essentially, one factory is already producing detectors, and we are in the process of ramping up that factory. And the second one, the tubes factory, before we begin to ship tubes from there, it's still another 12 months. Building is largely complete. We are now moving in the equipment. So as we move in the equipment, then it will be followed by the qualification cycle of the equipment, followed by the qualification cycle of tubes that would be produced from there, and then we would be able to export tubes from there or ship to customers in India. So in terms of actual progress, it is tremendous in India at this time. From a P&L perspective, it is a burden in the sense we are ramping up some inventory, we are ramping up some costs on the P&L. So the P&L is seeing the burden right now, but it is truly an investment. And so that's what you're seeing right now. Lawrence Solow: Great. Sam, can I just squeeze one more in. Just on the guidance on the quarter. I know you like to give yourself a little room or just allow for a wider range. But the low end of your -- essentially, all your components, from sales down to margin, down to tax rate are actually kind of in line with this quarter, which was basically $0.20 or $0.19. So why would the low end of the EPS be $0.15 and not $0.20? What am I missing there? Shubham Maheshwari: Yes. So you would notice that we have reduced the range for the EPS as well as revenue. So that is one factor to play over there. Other than that, there isn't anything else there. So maybe I didn't capture your question? Or is that what you wanted to know? Lawrence Solow: Yes. No, I was just saying like you did $210 million this quarter. If I point that $210 million and like what you did this quarter, basically, it's actually above what you did in Q1. Now essentially, the low end of all your target ranges are essentially exactly what you did this quarter, and you did $0.19. So what would drive that down to $0.15, if you know what I'm saying? Shubham Maheshwari: Yes. So this last quarter, we produced about north of 33.5%, so 33.6% gross margin. But on the low end, we are baking it with 33% gross. So the guidance is 33% to 34%, that's why. Operator: Next question is coming from Young Li from Jefferies. Young Li: I guess to start, can I ask about the Industrial segment a little bit. Are there any incremental disclosures on the cargo orders that you can provide? Good to hear about the wins during the quarter and the repeat order. I think last year, quarterly orders ranged from like $14 million to $25 million-ish. Is fiscal 1Q orders still in that range? And just given the recent strong performance in that business, is it possible that industrials can grow double digits for this year? Shubham Maheshwari: Sure. So Young, last year, in FY '25, we announced more than $55 million of cargo business that we booked. And when we announced that, we were very early in the market, and we wanted to say that we are seeing good traction in that market. Going forward, our approach towards cargo systems and orders would be that we would not be announcing on every single purchase order that we received. We just wanted to say that this last quarter, we got business from multiple customers, multiple countries, multiple units. So the traction is pretty strong. In terms of overall number, what really matters is when we ship the product to the customer. So through revenue process, obviously, we would be talking about it in terms of our Industrial segment. So what I'm trying to say here is that you would not be seeing press release for every single purchase order from us unless it is material and then we need to disclose that specifically. So that's on the order side and how we are approaching. And then I do want to say that this business is tender-driven, and it is also somewhat episodic in the sense some quarters we win, we can win large amounts and then there may not be any tender that may close in the next quarter, for example. So the business is somewhat lumpy. However, our goal would be to smooth the revenue as much as we can. Of course, we have to keep the customer requirements and objectives first and foremost. And then your last question in terms of Industrial business growing double digit. Yes, the potential is certainly there. It can grow. We need to not just win cargo systems orders in a significant manner, but then also our customers would need to want to get that product before our fiscal year end. So those will be some of the puts and takes for our ability to grow double digit in Industrial this year. Young Li: Okay. Great. That's very helpful color. And then one on China. So 17% of rev, that's around $35.6 million. It's one of the bigger quarters in 2.5 years. I think you previously were expecting flattish to slight growth in fiscal '26. I guess if you just annualize the growth, it's like 10% growth or something like that. Can you maybe update us on your latest thinking on how much China can contribute in fiscal '26? Shubham Maheshwari: Yes. So Young, China quarterly revenues on a year-on-year basis, they were flattish, like we had said in the last earnings call. And we are expecting China to remain stable, flattish to maybe slight growth, but mostly, I would characterize it as flattish year-over-year. But keep in mind, the China dynamic in terms of quarterly seasonality, because of Chinese New Year, is always somewhat different than the rest of the business. China, typically, we've seen stronger in our fiscal Q1. And then because of Chinese New Year, our fiscal Q2, which is the March quarter, China generally is somewhat light. That is the typical pattern out of China revenues. So I would not do Q1 x4 for China. I would again say that from a full fiscal '26 China revenues perspective, we are looking at flattish to minor growth, something like that. Operator: [Operator Instructions] Our next question is coming from Suraj Kalia from Oppenheimer. Suraj Kalia: Sunny, Sam, Chris, congrats on a nice start to the year. So gentlemen, let me start out first. Sunny, if I got your comments right, at the RSNA, you said there was a lot of discussions about general radiography. Maybe if you could parse it a little more for us, Sunny. What do you think customers are gravitating towards, more price-sensitive products or higher-end products? I guess what I'm just trying to sift through is, use this as a proxy of what the macro level conditions are and where your consumer sentiment is. Sunny Sanyal: Yes. So Suraj, over the years, we had lost share in radiography. So for us, introduction of new products is a way for us to gain share back. And as you know, we created these low-cost products that are very functionally rich and very, very good products, solid products and priced very attractively with very good cost structure, also made in India. All of these things combined is what has been attracting our customers. These products, these radiographic detectors are best-in-class, absolutely best-in-class. They'll go toe-to-toe with any high-end products that we've made and some are even better. So with that in mind, there's a lot of interest in this segment, particularly because these are very, very lightweight detectors. And we're targeting segments of the market that can take on these products quickly both as stand-alone detectors, but also combined with our software package. We have a product line called Nexus, which is an acquisition workstation, which is ideal for someone trying to bring on a new application to market. If someone wants to bring a new mobile cart to market, the combination of our tube detector, high-voltage connector and the software gives them an imaging chain that pretty much drops in, so to say. And so there was a lot of interest from customers who are looking at markets like South Asia, India, Indonesia, Latin America that look at this as part of their analog to digital conversion of their installed base, and it's a very attractive proposition for them. So there are many conversations with those types of prospects. There are also conversations with customers who are our current customers, who are looking to expand their radiography portfolio. During COVID, there was an intense amount of purchases of mobile carts and other radiographic just regular DR systems. And then the industry went through a bit of a digestion in '21, '22, '23. And now we feel like the sort of the markets come back to being vibrant on radiographic as well. And the conversations weren't just about detectors. They were about detectors and tubes both. And the question kept coming up, when can we receive these from India? When can Made in India be ready? And so there was a lot of interest from our customers for the global markets. Suraj Kalia: Got it. And I'll pose my couple of questions together. One for you, Sam, one for you, Sunny. Sam, Med Device segment flattish. We understand the seasonality. Maybe I missed your comments about the composition within Medical Devices and the impact on gross margins. If you could just give us some color there would be great. And Sunny, for you, obviously, the analyst prior to me also asked about China. How do you plan for China just given the daily, my word, drama that we see on a macro level. What gives you the confidence really? And any additional color if you could give us on status of photon counting sort of from a market perspective. Gentlemen, congrats again. Sunny Sanyal: Thanks. Sam, do you want to go first? So Suraj, let me start with China. So we'd go crazy if we changed our plans for China based on what you see here on news every day. We look at China in 2 different ways. Think about China as a geography, right; Japan as a geography; India as a geography, and what does the end market there look like, end user demand? And we look at it from that perspective and see how we're doing, sending -- creating products and shipping products to all our OEMs who then sell into China. That's how we look at it and say, are we doing the right things, are we competitively playing the right way, are these the right products, et cetera, et cetera. And we stay focused on that as one consideration from a product management perspective. Second, keep in mind, every Chinese OEM, and I call them Chinese OEMs, they happen to be global OEMs who happen to be based in China, they're all selling their products globally. So our traditional OEMs that we refer to as Chinese OEMs, they're not just selling in China, they're selling elsewhere. So we are heads down with them figuring out how to get our newer solutions, everything designed in for them to win in those global markets. And guess what, those OEMs are winning in global markets. They are capturing share bit by bit in global markets. And I'm talking about particularly with CT in my frame of reference right now, just as an example, is CT. These OEMs are winning CT business globally. So I treat our OEMs that are based in Shanghai and Shenzhen and Suzhou and wherever they are, no different from our OEMs that are in Japan and the U.S. and other parts of the world. So we're really excited to continue to work with them. That has a longer horizon and a longer, I'd say, a different type of a view through the windshield versus the China demand as an end market and what's going on in there. So that's how we see China, okay? So I see Chinese OEMs as critical to our success in India. I see them as critical to our success in Latin America, South Asia, Africa, lots of places. And we look at the value-tier segment and how we can work with them closely to increase our value proposition for them and help them be successful in those markets. Photon counting -- so Suraj, that's my response to your question on China. And by the way, regardless of what our President says or regardless of what the Chinese Premiere says, they all have their chatter, but then our relationships with the customers haven't changed much, and the orders keep coming in and orders have remained pretty stable and strong and consistent. In terms of photon counting, we're making really good progress. All I can say at this point is the 2 OEMs that we're engaged with are knee deep in their product commercialization process. They're in that process of -- in their typical R&D cycles. I cannot comment on what stage they're in or what they're doing. All I can say is that they're heads down and charging forward full steam. At the same time, our other OEMs are also sort of -- that have been engaging with us, continue to engage with us and are continuing to look -- they're looking at the data. And we're in this mode where there's a bit of dearth of data in the sense that until our first few OEMs come out and expose themselves and talk about their systems, you're not going to -- we're going to only be able to share with them the type of data that we generate ourselves, and that's what we're doing. And they're using that to validate and do their own assessment of the technology, and that continues to move forward. So we're continuing to build a pipeline and interest of OEMs. Our goal is to democratize this technology. The early entrants in photon counting CT have targeted the very, very high end of the market. Our interest here is to say what can we do about a large swath of the CT market, and that's where we're headed. So think of it as we're in the game, but in a different sort of a way. Suraj Kalia: Got it. Shubham Maheshwari: And then, Suraj, I'll take your last question for me in terms of gross margin in Med Device. So in general, the more the complex product, then the more margins we have generally, because we are providing a lot more value in that given product. So when it comes to tubes and detectors, et cetera, in the Medical segment, generally, the products are more complex in CT and oncology modalities, so to say. So our margins are generally higher in those modalities. When it comes to RAD and dental, our margins are somewhat lower, particularly we are having some challenges in addressing the RAD market, radiographic market while producing the product out of Germany or the U.S. So in RAD, we do have a strategy to produce these products out of India and be able to be competitive in the market while still making good gross margins there. But this is still, at least at this time, for this last quarter, it's a journey in play. And in 12 months, we hope to have a very different story around that with the help of India coming online and fully ramped up. So that's on the gross margin for various segments in Medical Device. And then on the Industrial side, Typically, we are seeing very good traction in photon counting for Industrial applications. And it's a new product, new technology. At the same time, we've talked about a few times before in terms of our linear accelerators as well as cargo systems. Margins are a bit low when we ship the hardware, and when these products, after 18 or 24 months, they go into service, then we are able to capture a higher margin. So on the Industrial, I would say, service business, photon counting is higher margin than the rest of the business. Operator: Next question is coming from James Sidoti from Sidoti & Company. James Sidoti: Sam, can you talk a little bit about inventory? It was up pretty significantly in the quarter. Is that because of the surge in orders for cargo inspection systems? And where do you think that number goes over the next few quarters? Shubham Maheshwari: Yes. So that's a great question, Jim. So yes, some of the increase in inventory is clearly intentional as we get ready to ramp up cargo systems. And some of our products in cargo are first-time implementation. So we also need to produce the product, ship it over to the customer site and get it site accepted. So there is a bunch of product which is finished goods and actually is at site is going through qualification and overall final testing or final acceptance is what we call it. So some of the inventory is because of that. At the same time, given the strength in the business, we are also expanding our factory in Las Vegas. And at the same time, the finished assembly for cargo systems happens in the U.K. So we are expanding at both the places in terms of inventory. And then another reason for the increase in inventory is that we are beginning some of the qualification cycles for detectors in India. So there is inventory over there as well. So between, I would say, primarily cargo systems and the Industrial segment, that is what is driving the inventory increase. And then secondarily, it is India. And then there is another factor that there is now more tariff capitalized into the inventory. So that has also driven inventory up a little bit. So I would say our goal would be to bring this inventory down. It should get normalized. I would say inventory is probably $10 million, $15 million higher, and I would like to see it be brought down by those amounts in the next couple of quarters. James Sidoti: Okay. And in terms of your plans for refinancing, what's the next milestone there? And can you just give us some color on where you think you'll go, what direction? Shubham Maheshwari: Yes. So just to remind everybody, our high-yield debt that is due for maturity in September -- in October of 2027. And we would like to refinance it before it goes current, so more than 12 months before its maturity. So the way I'm looking at it is refinance it before October of 2026, which is this year. And so we've been working on it, and we are making good progress there. And so we'll share more information with you as and when it becomes the right time to share, but we've been working on that. James Sidoti: And what's the interest rate on that debt? Shubham Maheshwari: So right now, it is 7.875% interest rate right now. Hopefully, we are able to bring it down with the refinancing, but we'll just have to work on it and announce it and share with you as and when our decision becomes more clear. Operator: We've reached the end of our question-and-answer session. I'd like to turn the floor back over to you for any further or closing comments. Christopher Belfiore: Thank you all for your questions and participating in our earnings conference call today. The webcast and supplemental slide presentation will be archived on our website. A replay of this quarterly conference call will be available through February 24 and can be accessed at vareximaging.com/investor-relations. Thank you, and goodbye. Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.
Conversation: Katarina Rautenberg: Good morning, and welcome to the presentation of Investment AB Latour's year-end report for 2025. [Operator Instructions] With that, I hand over to CEO, Johan Hjertonsson; and CFO, Mikael Johnsson Albrektsson. Johan Hjertonsson: Thank you very much, Katarina. Welcome, everybody. I'm here together with Mikael. Today, the presentation will be divided into 2 sections. The first part is the usual one with we've always done. We'll walk through the Latour Group's development in Q4 and the full year. And we will be commenting on the development of the investment portfolio and the wholly owned operations. And then we will open up for questions. Then we have a new thing, a second part, where this time, we will make a deep dive into Latour Industries, which is 1 of our 7 wholly owned operations. We will then later rotate our 7 wholly owned operations on the quarterly report. So you will meet more colleagues later on. But today, we're inviting Tina Hultkvist, who is the CEO of Latour Industries for this section. And finally, we will have -- after Tina's presentation, we will have a Q&A session together on the Latour Industries. So thus, 2 Q&A sessions today. Good. Let's go into the Latour Group key highlights. We finished the year on a very positive note, delivering a record quarterly results with improved profitability. Continued strong performance across our operations despite the challenging business climate. We had an organic order intake growth in both Q4 and the full year, which indicates a positive underlying demand, although it does vary between industries and regions. On the one hand, we're facing a weak market environment driven by increasing geopolitical instability. On the other hand, we own companies operating in sectors shaped by global megatrends such as energy efficiency, accessibility and automation, which provide strong prospects for growth going forward. I will comment more on the financial outcome more in detail later in this presentation. And finally, the acquisition activity has been quite high during the quarter. We signed an agreement to acquire Alstor to Latour Industries and divested 2 companies within Latour Industries Mobility division, AAT and Batec. In addition, Latour Future Solutions made a minority investment in NOAQ. It is rewarding to see that all the efforts of our M&A teams, both centrally and within our businesses are paying off. Summarizing the year, we have completed 7 acquisitions, adding SEK 1.8 billion in annual revenue, a solid foundation as we enter into 2026. And here, I would like quickly to hand over to Mikael to present our net asset value. So over to you, Mikael. Mikael Albrektsson: Thank you very much, Johan. And if looking on the net asset value development during the year, we can conclude that it increased by 2.4% adjusted for dividends during the year and amounted to SEK 216 per share compared to SIXRX that increased by 12.7%. And the share price at the end of December was SEK 225, which means that there is a premium of 4% compared to how we present the net asset value. And as of yesterday, the net asset value was SEK 218 per share. And the share price on the same day closed at SEK 229, which gives a premium to our way of describing the net asset value of about 5%. The consolidated net debt decreased during the quarter from SEK 16.8 billion to SEK 15 billion, supported by a strong cash flow. And the net debt corresponds to about 10% of the market value of our investments, leaving headroom for further acquisitions going forward. And with that, I hand back over to you, Johan. Johan Hjertonsson: Thank you, Mikael. And then we have the dividend here. We have a good profit development in our holdings and a strong financial position. So the Board of Directors proposes an increased dividend to SEK 5.10 per share, which is an increase of 10.9%. And the proposal is in line with the dividend policy, which you can see here on the slide. And thus, we have a strong historic trend of increased dividends, as you can see on this slide that shows at least the last 10 years. So if we move on then into the investment portfolio. So there's no major changes within the listed portfolio during the quarter. Earlier in the year, however, we increased our holdings in CTEK to 35.3%. And value development during the year was 1.2%, where SIXRX was 12.7%. Some of our holdings have shown weaker stock market performance, while others have been strong. Until yesterday, February 10, the portfolio value was SEK 89.2 billion, and the total returns amount to 1.4% so far this year. And the SIXRX was 5.4%. And if we go to the next slide, looking at the underlying performance, it is clear that the greater part of our holdings have demonstrated positive growth and profitability over the years, also especially the last couple of years that has been quite tough business-wise. The majority of our companies have reported the Q4 results and performance has been strong for most of them despite challenging market conditions. Geopolitical instability continues to affect the markets though the impact varies depending on market exposure and geographic presence. The acquisition activities are high in our listed holdings. And one example among several is Sweco, who acquired assar architects during the quarter, thereby strengthening its position even more in Belgium. And if we take the next slide, just to show a little bit longer perspective on our listed holdings. As Latour is a long-term owner, it is worth evaluating the total return of the listed portfolio from a longer perspective, as I said. And during the last 15 years, the total return amounts to about 600% compared to SIXRX that amounts to 350%. We see this as a confirmation that the holdings in our portfolio are contributing to the positive shareholder value creation. And then I would like to comment on the wholly owned operations. And the wholly owned operations ended the year with a very strong quarter. Order intake increased by 7%, of which 8% was organic and net sales increased 6%, of which 5% was organic. The organic growth indicates an underlying good demand for our companies, but the picture is mixed. The construction industry remains weak, for instance, with the Hultafors facing the toughest market conditions. At the same time, long-term drivers as energy efficiency, accessibility, automation support growth opportunity, benefiting companies like Swegon, Bemsiq and Innovalift. Caljan also reported solid underlying demand driven by major logistic customers and Nord-Lock Group has performed strongly throughout the year, supported by its global industrial exposure and an increasing focus on safety. We have good cost control and profitability is increasing in the quarter. The adjusted operating result for the quarter is record high with an operating margin of 15%. And then to comment our wholly owned business on the full year. And our businesses have navigated their operations well throughout the year in markets marked by the geopolitical disturbances that you all know. Total growth order intake was 13% and net sales 9%. Various growth initiatives, combined with currency headwinds have put pressure on the operating margin. The Q4 outcome, however, indicates that we are moving in the right direction and that our investments are paying off. Adjusted operating profit amounted to SEK 3.9 billion compared to SEK 3.8 billion the previous year, and the EBIT margin was 14% compared to 14.6% in the previous year. Lastly, a strong cash flow generation accounting to more than SEK 3.7 billion in positive cash flow. So a strong result, especially in a turbulent year, and we are very happy and proud for that. And if I go over and comment on our acquisitions during 2025. And during the quarter, Latour Industries signed the agreement to acquire Swedish Alstor, which I mentioned, which was finalized in January of this year. And Alstor is a provider of compact forestry machinery for thinning and forest management. And with this acquisition, Latour Industries is entering a new segment, the market for forestry equipment. Latour Industry also divested AAT and Batec during the quarter. And with that, they left the Mobility division. In addition, after the reporting period, Bemsiq within Latour Industries increased their services offer by the acquired Scandinavian Sealing based in Sweden. In total, this year, we have finalized -- in last year, I should say, we have finalized 7 acquisitions. Should we include the 2 acquisitions finalized in January of this year, the acquisitions during the year adds to more than SEK 2 billion in net sales on an annual basis. And we're very happy with our M&A performance as well during 2025. So having said that, I hand back to Mikael to comment on our 7 business areas. Over to you, Mikael. Mikael Albrektsson: Thank you very much, Johan. And the regular fashion, we start by taking a closer look at Bemsiq Group. And Bemsiq had a continued good performance in the quarter. Order intake in line with last year, which is driven by both organic growth and acquisitions, although partly offset by negative currency effects. And the total organic growth in net sales was 12%, driven by the Building Automation division, while the Metering division is a bit slower. A strong performance overall, considering the challenging market within the real estate and construction industries. And the adjusted operating profit amounted to SEK 94 million with a good margin of 18.4%. And the margin was slightly negatively affected by growth initiatives ongoing and recent recruitments. With that said, we then turn the page and direct the focus towards Caljan. And order intake remained strong during the quarter, increasing by 20% when adjusting for currency effects, and the order backlog is at solid levels for the coming quarters. Caljan is now increasing the production capacity to meet the strong demand. Driven by the higher order intake during the year, net sales showed a very strong development in the quarter, growing organically by a very strong 38%. And the adjusted operating profit was very strong as well, amounting to SEK 109 million with an operating margin of 23.9%, which is a combination by good cost control, a strong gross margin and high volumes. With that said, we turn the page and take a look at Hultafors Group. And as Johan commented a bit earlier, the overall market conditions continues to be challenging for Hultafors Group, especially in North America. And the total net sales is organically down by 4% compared to the corresponding quarter last year. The profit margin is lower than last year, mainly due to a combination of long-term investments for future growth as well as lower volumes in the period. And the adjusted operating profit amounted to SEK 301 million with a margin of 16.8%, which is good under the circumstances. We then turn page and take a look at Innovalift. And for Innovalift, we saw order intake continue to grow, supported by acquisition and a very healthy organic growth. Total net sales grew by 37%, driven by both acquisition and organic growth and especially within the Components & Modernization segment as well as the direct service and sales segment. And the gross margin continues to improve step-by-step, and the cost controls remain strong, which allowed the operating profit -- the quarterly adjusted operating profit amounted to SEK 132 million with a margin of 13.8% and summarizes a very good year for Innovalift. With that, we turn the page and continue with Latour Industries. And Latour Industries business unit showed a mixed development with a sustained strong demand for REAC and MAXAGV while the remaining units faced somewhat softer market conditions. In total, order intake is growing organically by a strong 12% during the quarter. Net sales is down by 3% from last year, driven by REAC and LSAB. And the adjusted operating profit amounts to SEK 30 million with an operating margin of 6.4%. And the result is negatively affected by currency effects and the weak market climate as well as ongoing investment for future growth. And as we have commented, worth mentioning again, Latour Industries is currently -- has an under-absorption of the fixed cost on the central level following the distribution of Innovalift putting additional pressure on the margin for the time being. And as the heading of the picture states, the focus of Latour Industries continues to be on developing the existing holdings and to find new platform investments, which Tina will talk more about later in the presentation. And to briefly recap what Johan also had said earlier, the Mobility division was divested during the quarter and the acquisition of Alstor was signed in December and finalized in January. We then turn page again and take a look at Nord-Lock Group. That continues to develop strongly during the year and in quarter 4, despite the tough business climate, reporting growth across several metrics. Order intake grew organically by a strong 19% during the quarter. The net sales grew organically by a very healthy 10%, reaching an all-time high for a single quarter. All sales units contributed to the growth and the order backlog remains at solid levels going into the coming quarters. And the quarterly adjusted operating profit increased to SEK 139 million with a strong operating margin of 25.5% despite significant negative currency effects. But summarizing a very strong year for Nord-Lock Group overall. We then turn page again and look at our final business area, Swegon. And for Swegon, the market has stabilized somewhat during the quarter and order intake strengthened during the quarter and is up 10% organically from last year. Total net sales grew organically by 4%, driven by North America and the segment air handling, cooling and heating. Adjusted operating profit came in at SEK 307 million with a margin of 11.4%, supported by higher volumes and an improved margin. We can also once again comment that Andreas �rje Wellstam left his role as CEO of Swegon on February 1 and will assume the role of Chief Investment Officer of Latour in April. Very exciting and welcome back, Andreas, we say. And we can also comment that Eva Karlsson now is serving as Interim CEO for Swegon. So we want to take the opportunity to congratulate Eva to that appointment and wish you all the best in that position. And then to continue, we continue with the financial targets. And with that, I hand over back to you, Johan. Johan Hjertonsson: Thank you, Mikael. Excellent. So our financial targets. During the last 12 months, we have had a growth of 8.7%, EBIT margin of 14% and return on operating capital of 13.9%. This is an outcome that we're pleased with. The targets are to be seen over a business cycle, and we have been in some time in recession for some time now and growth is driven by both acquisition and organic growth, but with strong currency headwinds. We had about SEK 900 million in negative headwinds on the top line in the quarter -- no, in the full year. EBIT margin is a good level and return on operating capital is satisfying. So -- and then I go to the next slide here before the Q&A. To summarize, 2025 have been yet another year marked by the global uncertainties affecting the business climate. However, we are pleased with the outcome, and we are entering 2026 with a strong order backlog and an organization well prepared to meet both opportunities and challenges. Latour is a long-term sustainable investment company and a responsible owner creating value for our shareholders. We are financially strong and continue to invest in our holdings, both existing and new ones to enable future growth and create value for our shareholders. We have a strong corporate culture that we treasure, which is of great value while we move forward in a volatile and rapidly changing world. So with that, I'd like to thank you listening in so far, and we open up for the first Q&A session here together with myself and Mikael. Operator: [Operator Instructions] The next question comes from Linus Sigurdson from DNB Carnegie. Linus Sigurdson: So my first question is on Hultafors and the margin profile. And I agree that 16.8% margin is definitely strong in the face of these headwinds. But could you just help us pick apart how much of this headwind comes from the FX and the negative volumes? And how much is these strategic growth investments that you're undertaking? Johan Hjertonsson: I can start and then Mikael, maybe you can shed some more light on it. I think overall, on the full year on the industrial operations, it's about 3% negative headwind on the top line and about the same on the EBIT. So that translates to a little bit less than SEK 1 billion on the top line and some SEK 120 million to SEK 130 million on the EBIT in total. But then over to you, Mikael, if you want to comment a bit more specifically on Hultafors. Mikael Albrektsson: No, I can just -- I mean, for Hultafors, I think, I mean, the important -- the most important driver for Hultafors per se is the volume that is -- we are very confident looking at underlying margins that when volume comes, the EBIT margin profile is where we want it to be for Hultafors specifically. Linus Sigurdson: Okay. And then my second question is on Caljan since -- I mean, it's been a while, if ever, since we've seen sort of normal circumstances in this company. Should we think that this 20-plus EBIT margin level is reasonable to expect going forward if these market conditions persist? Johan Hjertonsson: Yes, I agree with you, Linus. It's been really roller coaster ride with Caljan. That's a little bit -- one is the nature of the business. It's a very project-oriented business with a very large projects. But it's also a business that is exposed to heavy CapEx type of investments with new clients, right? And then thirdly, I'd like to say -- they had an extreme peak during the pandemic when e-commerce was booming and then they had the equivalent reverse downward trend when the pandemic was over because there were overinvestments in the logistics sector. And now those investments are coming back. So I would say that last year, you would see that a more normalized year. Of course, the growth numbers are a bit crazy because you compare to very low numbers in the year before in 2024. Margin-wise, I think Caljan is a company that should operate somewhere on 20-plus EBIT margin on everything else the same over a longer period. Linus Sigurdson: Okay. And then my final question was on Swegon. I understand that volume growth is obviously a key driver here as well for margin improvements. But are there any other, say, notable actions that move the needle that you're taking in Swegon on the margin or cost side? Johan Hjertonsson: We always work with optimizing our cost. On a positive note, we have seen strong growth and indications that the market has turned in Q4 for Swegon. So, hopefully, we will see a stronger growth going forward. And also as a general comment, I would like to say that Swegon is very nicely positioned in the area of energy efficiency and also there is an increased interest in a healthy indoor climate,. And that's exactly what Swegon works with. So that plays very well in that sense. Something you want to add, Mikael on the margin? Mikael Albrektsson: No, not really. I think as you mentioned, Johan, the -- I mean, the increased demand for indoor air quality requires more advanced products, which plays well ahead for Swegon's offering and also that type of product is also more technology content typically offer healthy margins in that business as well. Operator: There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions. Mikael Albrektsson: And we do not have any written questions in the activity feed. So I hand back to you, Johan. Johan Hjertonsson: Thank you, Mikael. So that ends our first Q&A. Johan Hjertonsson: Now into our new thing, we will, on our quarterly report presentations, do a quick deep dive into each business areas, and we will have a rolling schema coming up. And the first one is the Tina Hultkvist for Latour Industries. So I hand over to you, Tina, and I know that you have a presentation, and then the 3 of us will together take Q&A on Latour Industries after that. So over to you, Tina, please. Tina Hultkvist: Thank you, Johan. So then moving into a deep dive of Latour Industries. Latour Industries is 1 of the 7 companies in Latour's wholly-owned portfolio. The main mission for Latour Industries is to build new company platforms. We are the home where good companies are young, grow as teenagers and ultimately move away becoming new company groups in the Latour wholly owned portfolio. Actually, 3 out of 6 sister companies have grown within Latour Industries and then moved out forming new company groups. And that's Nord-Lock, which was quite a few years ago, then Bemsiq and last Innovalift roughly 2 years ago. If combining us, around SEK 10 billion out of the current wholly owned operation of Latour comes from previous Latour Industries companies. Altogether, we've made around 60 acquisitions and stands for around 30% of the value of the wholly owned portfolio. And this is just to show how building the new platforms has played out over time, forming the SEK 10 billion. The gray part is the portfolio currently reported as Latour Industries. And within here, we continue nurturing companies that have the potential to form new platforms, and we also develop companies that may be more relevant on a stand-alone basis. So when Latour Industries as such is small, we are most successful because by then, we have most probably recently let one of our company groups move away from home, and our work starts all over again. So creating new business areas is our main mission. We do this by proactively establishing and nurturing contacts with good companies. This is an area we have strengthened the last 2 years. And of course, we also engage in structured processes as they come out. By active business development to support growth and add-on acquisitions, we take the steps towards forming a new business area. Guiding stars in the acquisition process is, of course, the Latour Investment criteria, focusing on acquiring good companies with good growth potential. As mentioned, we have intensified the actions in proactive deal sourcing lately and are spending quite some time in building and growing relations with good companies. The current portfolio we have is a quite wide range of companies. With respect of time, I will just mention the last 2 acquisitions, the most recent one then being Alstor. Alstor designs and manufactures compact forest machines for customers ranging all the way from professional players to self-employed forest owners. And then before that, it was MAXAGV and MAXAGV designs and manufactures automated guided vehicles, combined with in-house developed software solutions for various kinds of industrial use cases. So coming back to what Mikael showed, what you see on the 5-year perspective to the right is the development of the companies still within Latour Industries portfolio. The 2 new business areas built during those 5 years are excluded here and reported separately, but have, of course, been a major part of the efforts made within Latour Industries. We have a quite widespread operations in the portfolio and the performance differs between the companies that we have today. As you know, 2 companies that we had has been divested during the quarter. And in addition to that, the underlying demand is good in REAC and MAXAGV, but we are exposed to currency fluctuations, and we do have some headwind in other parts of the portfolio. When looking ahead, we are striving for a high level of acquisitions. Historically, the pace of platform builds has been around 2 platforms in roughly 5 years. And this is a quite good indicator of the pace that we are aiming for going forward. We hope this has given a clear view of who we are in Latour Industries and what our value for the Latour Group is. And with that, we open up for questions. Johan Hjertonsson: Thank you, Tina, for an excellent and to the point and clear presentation. And therefore, we open up for the Q&A session with Tina and Mikael and myself. Operator: [Operator Instructions] The next question comes from Linus Sigurdson from DNB Carnegie. Linus Sigurdson: Hello again. Thank you for being on. I had 2 quick questions. The first one being, I mean, I understand, of course, that there's lower pressure on the companies within Latour Industries to sort of show immediate, say, profitability improvements, et cetera. But where do you draw the line where you would decide that you would divest a business in Latour Industries? Johan Hjertonsson: It's a good question. I can take a first cut on that and then Mikael and Tina, please join in. I would say we have the same pressure expectation on Latour Industry companies as all our companies. But naturally, we take a slightly higher risk in parts of Latour Industries when we enter a new segment and so on. And it can also be that when we come into a new segment, we learn a lot about the segment and we learn about that industry and we see things we like, and then we continue and we build and we see that our initial hypothesis was correct. And sometimes we see that it was tougher than expected, and we see that maybe it doesn't fit us in that sense. And that you could see them in the Mobility division was an example where we said we can't add value. There's more other interesting opportunities and then we go up. So it's not that we have fixed EBIT margin that you come -- it's where we feel that this is not long-term viable in that sense, that's where we exit. You want to add to that, Tina or Mikael? Tina Hultkvist: I think it's a good description. Maybe just adding there that we are, of course, very much looking into the potential also when looking at the profit. So where can we go with this kind of business. That's an important metric for us. And then to some extent, maybe we do have a little bit more patience also in developing the companies here within Latour Industries than what we usually have. Johan Hjertonsson: And many of many -- if I can add to that, many of the Latour Industry companies are naturally slightly smaller in size. And therefore, Latour Industries has a very professional central overhead, if I may say so, to support them, to support and develop in terms of business development, M&A, strategy formulation and so on. Linus Sigurdson: Okay. That's helpful. And then my second question was on if there are any sort of sectors or megatrends that you're actively working with currently, but that you don't have in the portfolio right now? Johan Hjertonsson: Good -- very good question. Do you want to say something on that? Tina Hultkvist: Of course, we are continuously looking into interesting sectors. And there were a few that we are maybe more interested in others. And let's see what happens with that. But I think we should not disclose that particularly here. But we are open to many new sectors as long as it is within the Latour investment criteria. So we are looking broadly, of course. And Latour Industries is the area where we can enter into completely new sectors. So that's why we are open to entering into anything new that is enough interesting and fits into the criteria. Johan Hjertonsson: But I think we can mention Tina, one acquisition that we just did as an example of how we think is Alstor then in the forestry sector. And we have identified that the forestry sector is a very long-term globally interesting sector to be in. It's an under trend, so to speak, of the whole green thinking of more -- you will build more with wood and energy and all of that, that comes from our forest. And then also you know, Linus, that has followed us a long time. We are also looking for a company with good technology that has an international potential. And within the forestry sector, actually globally, Sweden and Finland are the technology leading countries in the forest industry sector. So obviously, then we start with one company, and now we will learn this sector in depth. And hopefully, we can make add-on acquisitions and build something interesting within that. So I think that's the way we think, and I think Alstor is a good example of that, right? Operator: The next question comes from Oskar Lindstrom from Danske Bank. Oskar Lindström: Yes. Just a quick question on the execution of acquisitions within Latour Industries and when you do acquisitions in your companies, are these the same M&A teams carrying out all of these acquisitions? Or does Latour Industries have its own dedicated M&A team? That's my question. Johan Hjertonsson: Good question. It is a mix. We have Investment AB Latour has its own M&A team that works with many of our wholly owned businesses to help them with as internal consultants, you could also say, to help them with M&A. One of those business areas is Latour Industries. So Latour Industries draws its resources, so to speak, from the Latour team in that sense. Other business areas might also have their own M&A team. So the precise answer to your question, there is a mix between central team and the local teams, but they all work tightly together, of course. Oskar Lindström: If I may, a follow-up question. When you look at acquisition targets for Latour Industries, are you actively thinking about businesses that could, in the future, be merged with your other wholly owned companies? Or is that not really part of the consideration when selecting acquisition targets? Johan Hjertonsson: I can start and then, Mikael, if you want to comment. I think no, primarily, it is to find new areas. Obviously, Latour Industry will have a lot of inbound interesting cases, but they will be funneled directly to the other business areas where it's more appropriate in that sense. So we would not -- I think I understand your question. I think we would not buy something that we think would fit in Swegon and keep it in Latour Industries and then transfer it. Then we will ask for instance, to do the transaction directly. So Latour Industries is a transaction vehicle for the other business areas to be clear. Oskar Lindström: Good. So it's like a stand-alone incubator, not an incubator for the other wholly owned company. Excellent. Operator: There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions and closing comments. Mikael Albrektsson: Yes, we do not have any written questions in the feed. So I think that concludes then the final segment Q&A. And I hand over to you, Johan. Johan Hjertonsson: Thank you, Mikael, and thank you, Tina, for this premier of an in-depth in one of our business areas. That was great. Tina, thank you for visiting us here on the call. And thank you, everybody, for listening in, and that concludes the complete presentation of the Q4 report and looking forward to talk to you and speak to you again when we have our Q1 presentation later on this year. So from Tina and from Mikael, thank you very much. Bye.
Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Royalty Pharma Fourth Quarter Earnings Conference Call. I would now like to turn the conference over to George Grofik, Senior Vice President, Head of Investor Relations and Communications. Please go ahead, sir. George Grofik: Good morning, and good afternoon to everyone on the call. Thank you for joining us to review Royalty Pharma's fourth quarter and full year 2025 results. You can find the press release with our earnings results and slides to this call on the investors page of our website at royaltypharma.com. On Slide two, I'd like to remind you that information presented in this call contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from these. We refer you to our most recent 10-K on file with the SEC for a description of these risks. All forward-looking statements are based on information currently available to Royalty Pharma, and we assume no obligation to update any such forward-looking statements. Non-GAAP liquidity measures will be used to help you understand our financial results, and the reconciliation of these measures to our GAAP financials is provided in the earnings press release available on our website. And with that, please advance to Slide three. Our speakers on the call today are Pablo Legorreta, Chief Executive Officer and Chairman of the Board; Christopher Hite, EVP, Vice Chairman; Marshall Urist, EVP, Head of Research and Investment; and Terrance Coyne, EVP, Chief Financial Officer. Pablo will discuss the key highlights, after which Christopher will discuss our transaction pipeline. Marshall will then provide a portfolio update, and Terrance will review the financials. Following concluding remarks from Pablo, we will hold a Q&A session. And with that, I'd like to turn the call over to Pablo. Pablo Legorreta: Thank you, George, and welcome to everyone on the call. 2025 was truly a landmark year for Royalty Pharma, as we executed successfully towards our goal to be the premier capital allocator in life sciences with consistent compounding growth. Slide five summarizes a strong momentum over the year. Starting with the financials, we delivered strong double-digit growth in both portfolio receipts, our top line, and royalty receipts, which are our recurring cash flows. We raised our guidance three times in the year and delivered full-year results slightly above the top end of our most recent update. This tremendous momentum was driven by the strength of our diversified portfolio. We maintained strong returns in our business with a return on invested capital of 15.8% and a return on invested equity of 22.8% for the year. By combining strong growth and attractive returns, we believe we have a clear path to drive shareholder value creation. Looking ahead, our 2026 full-year guidance implies 3% to 8% growth in royalty receipts, which reflects the strength of our base business. As usual, our guidance is based on our current portfolio and does not include the benefit of any future transactions. In 2025, we also completed one of the most transformative steps in our company's evolution through the internalization of our external manager. This brought together our valuable intellectual capital and our unique royalty portfolio. We are already seeing benefits from improved alignment and governance as well as from a significant reduction in costs. Turning to capital allocation, we announced $4.7 billion of transactions on attractive therapies during the year and deployed capital of $2.6 billion. At the same time, we returned $1.7 billion of capital to shareholders. We repurchased 37 million shares for a total of $1.2 billion and paid over $500 million in dividends. And we increased our dividend by 7% in 2026, consistent with our mid-single-digit growth target. We are also delighted to see multiple positive clinical and regulatory updates across our portfolio, including FDA approval of Mycorso and positive Phase III results on TERNFIA. Looking ahead, we see the potential to unlock significant additional value from our large and, we think, underappreciated development stage pipeline, whereas Marshall will highlight we expect multiple pivotal readouts in the relatively near future. As many of you know, slide six is a particularly favorite of mine, as it demonstrates our consistent double-digit growth on average since our IPO. We have delivered this impressive record year in, year out, regardless of the market backdrop. This speaks to the quality of our asset selection and our unique business model. Slide seven underscores an important trend. In 2025, the biopharma market reached $10 billion in announced transaction value for the first time ever. The strong growth trajectory is clear. Over the past five years, the average annual value nearly doubled versus the prior five years and is nearly triple the level of fifteen years ago. This is a market that Royalty Pharma pioneered and that we continue to lead in both share and innovation. Most importantly, we expect this growth to continue, driven by the increasing recognition of the benefits of biopharma royalties, huge demand for capital in life sciences, and the incredible pace of scientific innovation. On slide eight, my final slide, we show that we are executing exceptionally well against our financial targets. On our 2022 Investor Day, we introduced clear targets for top-line growth and capital deployment. And I am pleased to report that we delivered on both. We achieved compounded annual portfolio receipts growth of 13%, squarely within our target range of 11% to 14% for the 10% or greater top-line growth over the decade as a whole. We have also reached our five-year capital deployment target of $10 billion to $12 billion approximately one year ahead of schedule. Furthermore, I am incredibly proud of the breadth and quality of the deals we have announced, and our transaction pipeline remains strong. I could not be more excited for the potential to scale our capital deployment given the strong fundamental tailwinds underpinning our business. Now before turning the call over to Christopher, I'd like to offer a bigger picture perspective on Royalty Pharma, particularly in an environment of significant uncertainty. Royalty Pharma is a unique compounding machine. We grow consistently, year in and year out, and delivered an impressive 16% growth last year. Our business delivers consistent returns to our shareholders. You will hear later from Marshall, we have also a number of potential value-enhancing pipeline readouts in the near term. Our business is resilient, and in a time of uncertainty, we believe we offer a very compelling investment proposition. And with that, I will hand it over to Christopher. Christopher Hite: Thanks, Pablo. It's my pleasure to give an update on our transaction pipeline and the growing demand for Symphony synthetic royalties, the attractive non-dilutive funding paradigm that we pioneered. Beginning on slide 10, this provides a broad overview of the investments we made in 2025 in our transaction funnel. As you can see, we were incredibly busy and reviewed more than 480 potential royalty transactions. This resulted in 155 confidentiality agreements signed, 109 in-depth reviews, and 35 proposals submitted. Our disciplined and highly selective approach resulted in us executing eight transactions for nine therapies, or just 2% of our initial reviews, for an announced value of $4.7 billion. Slide 11 expands on the funnel with a longer-term perspective on our investment activity. Since 2020, the year of our IPO, the team has nearly doubled the volume of initial reviews conducted and has more than doubled the number of in-depth reviews. The growth in our funnel has come during periods of both strong and more restrictive capital markets, highlighting how the benefits of royalties are becoming more widely recognized. Furthermore, we are encouraged that the growth in our in-depth reviews, which is where our team spends more time and due diligence, has kept pace with initial reviews, indicating that an increasing number of high-quality biopharma companies are evaluating royalties as part of their capital structure. Moving to slide 12, 2025 was our strongest year ever for synthetic royalty transactions, with four synthetic deals totaling more than $2 billion. This was over five times higher than the transaction value in 2020. In each of the four transactions, we acquired a royalty on a potentially transformative best-in-class therapy. And 2026 has continued in a similar fashion with its synthetic deal on Teva's potential vitiligo therapy, Teva 408, for up to $500 million. Let's look more broadly at the synthetic royalty opportunity on slide 13. 2025 set a new record for synthetic royalty transactions, with the market value jumping by about 50% versus the prior year to $4.7 billion. The graphic on the right shows that over the past five years, biopharma funding has been dominated by equity, licensing deals, and debt. Synthetic royalties have been a small part, just 5%. From our ongoing partnership discussions, we see synthetic royalties being routinely discussed at the board level and C-suites as an important and growing funding modality. Why is this? Simply put, synthetic royalties solve funding problems in a way that equity and debt can't, and are increasingly being recognized as an important part of a biopharma company's capital structure. More specifically, compared with traditional debt and equity financing, they offer greater flexibility, no operational restrictions, they are non-dilutive to equity holders, and they can be tailored to the individual needs of a company. This drove our groundbreaking transaction with Revolution Medicine. And given our leadership in this space, we believe we are optimally positioned to benefit from this important paradigm shift in biotech funding. So to close, we are confident that synthetics will be an important growth driver in the coming years. With that, let me hand it over to Marshall. Marshall Urist: Thanks, Christopher. I want to discuss two important aspects of our portfolio today. First, I'll look back at 2025 capital deployment to highlight some key themes. And then second, to look forward toward important 2026 events in our broad development stage portfolio. Slide 15 demonstrates how well we executed against our capital deployment strategy in 2025. Deployed capital of close to $900 million in the fourth quarter alone, highlighting our scalable and flexible diligent deal execution capabilities. We acquired existing royalties on approved products Ambutra, for ATTR amyloidosis, Epirizvi for SMA, as well as the synthetic royalty on the expected approval of Denali's groundbreaking therapy for a rare condition called Hunter syndrome. We also acquired existing royalties on Nuvalence's two lung cancer therapies that are expected to be FDA approved in 2026 and 2027. This busy quarter took our total capital deployment for the year to $2.6 billion, which resulted, as Pablo highlighted, in the achievement of our five-year capital deployment target of $10 billion to $12 billion one year ahead of schedule. Taking a step back shows how we were able to deliver balanced capital deployment to our shareholders year in and year out, with 67% of our 2025 investments in approved products and 33% in development stage therapies, right in line with our historical average. What's also remarkable is the diversity underlying our $4.7 billion in announced transaction value. As a reminder, announced value is a broader measure than capital deployment that includes potential future payments and obligations in addition to upfront amounts. 2025 was also the first year that synthetic royalties exceeded existing royalties in committed capital, reinforcing Christopher's comments about the important role of synthetic royalties in the biopharma funding ecosystem. Slide 16 summarizes the four exciting transactions that we completed over the last three months for a combined announced value of $1.4 billion. The first thing to note is that the transactions cover four very different therapeutic areas, marketers, and development stages, showing how our investment approach consistently produces diversity in our royalties. Second, two of the four transactions are synthetic royalty deals, including Denali and most recently, Teva's potentially transformative vitiligo therapy, TEV-408. The existing royalty transactions cover Nuvalence's two development stage drugs for small cell lung cancer, and the residual royalty in Roche's blockbuster Evirizvi. Third, these largely are or are expected by consensus to be blockbuster medicines. This highlights our disciplined focus on innovative, first or best-in-class medicines to drive our diversified, sustainable, and attractive growth profile. Next, I'll turn to our development stage pipeline and upcoming events. We're exceptionally well positioned for our next wave of value creation with one of the deepest and most innovative development stage pipelines in the industry. Slide 17 shows that our portfolio already delivered a number of successful Phase III readouts and regulatory approvals in 2025. Most recently, the FDA approval and launch of Cytokinetic Mycorso and Obstructive hypertrophic cardiomyopathy. And these events together will lead to several new royalty-generating launches this year. Now unlike many biopharma business models, Royalty Pharma is not defined by any single clinical trial outcome. Slide 18 shows that there is much more to come from our development stage pipeline, with multiple pivotal readouts expected over the next twenty-four months. 2026 will be an exciting year. We'll see the first phase three data on Revolution Medicine directs on Rasib in pancreatic cancer, a drug which has the potential to revolutionize this devastating disease. We'll also see the results of the first outcomes trial for our investments in the LP little a class of drugs with Novartis' policarcin. We continue to believe that the LP little a class could be the next major class of cardiovascular disease drugs, and we're perfectly positioned with the two lead pipeline products in pelicarcin and Amgen's olpasiran. We'll also see data for Biogen's litifilimab in lupus late this year or early next year. And while not on this slide, we expect to see data this year for Mycorso in nonobstructive hypertrophic cardiomyopathy, which is a potentially large new indication. In 2027, we expect pivotal data from Sanofi's rexalimab in multiple sclerosis and from J&J's seltorexant in major depressive disorder. We'll also see the LPA outcomes trial from opaciran. Each of these potentially transformative therapies would add very significant royalties to our top line. More broadly, we work look across our entire pipeline of 20 development stage therapies, we estimate combined peak sales of over $43 billion on a non-risk adjusted basis, which could translate to over $2.1 billion in peak annual royalties to Royalty Pharma. So to close, there is really significant but underappreciated potential in our pipeline. In the next two years, we'll see multiple events that could unlock substantial value. At the same time, this isn't it, and our ongoing capital deployment will allow us to expand and repopulate our pipeline in the years to come. And with that, I'll hand it over to Terrance. Terrance Coyne: Thanks, Marshall. Let's move to Slide 20. This slide shows how our efficient business model generates substantial cash flow to be reinvested. Royalty receipts grew by 17% in the fourth and 13% for the year, reflecting the strength of our diversified portfolio. When we add in milestones and other contractual receipts, portfolio receipts, our top line grew 18% in the quarter and 16% for the year. As we move down the column, operating and professional costs equated to 6.7% of portfolio receipts in the fourth quarter and 8.9% for the year. The quarter clearly demonstrates the benefit of cash savings from the internalization transaction, which we completed in May. Net interest paid was de minimis in the quarter, reflecting the semiannual timing of our interest payment schedule, with payments primarily in the first and third quarters together with the interest we received from the cash on our balance sheet. For the year, net interest paid was $242 million. Moving further down the column, we have consistently stated that when we think of the cash generated by the business to then be redeployed into value-enhancing royalties, we look to portfolio cash flow, which is adjusted EBITDA less net interest paid. This amounted to $815 million for the quarter and $2.7 billion for the year. Our margin for the year of around 84% again demonstrates the high underlying level of cash conversion and efficiency in the business. Capital deployment in the quarter of $887 million took us to $2.6 billion on a full-year basis, reflecting the high level of transaction activity you heard about earlier. Lastly, our weighted average share count declined by approximately 5% in the quarter versus the prior year period, and by 5% for the year, reflecting the impact of our share buyback program. Slide 21 provides more detail on the evolution of our top line in 2025. Royalty receipts, which we consider our recurring cash inflows, grew by 13%. Key drivers were the strong performance of Voronego, Trelegy, Tremfya, and the cystic fibrosis franchise, with very little contribution from new acquisitions made in the year. Portfolio receipts grew by 16% at the high end of our guidance of 14% to 16% and well ahead of our initial guidance of around 4% to 9%. Slide 22 updates our recently introduced portfolio return for the full year. Return on invested capital has been remarkably stable, at around 15% on average from 2019 to 2025, was 15.8% in 2025. Return on invested equity, which shows the impact of conservative leverage on our equity return, has been consistently in the low 20% range and was 22.8% in 2025. Both figures for 2025 included a benefit from the sale of the MorphoSys development funding bonds. As a reminder, we sold the MorphoSys development funding bonds in the first quarter for proceeds of $511 million, which resulted in an IRR of approximately 25% on our investment. As I have said previously, we are in the returns business, and these metrics show that we are continuing to invest at attractive returns that will drive long-term value for our shareholders. Slide 23 shows that we continue to maintain the financial flexibility to execute our strategy and return capital to shareholders. At the end of 2025, we had cash and equivalents of $619 million. In terms of borrowings, we have investment-grade debt outstanding of $9.2 billion, including the $2 billion of notes we issued in the third quarter, and the weighted average duration of our senior unsecured notes is around thirteen years. Our leverage now stands at around 3x total debt to adjusted EBITDA, or 2.8x on a net basis. We also have access to our $1.8 billion revolver, which is undrawn. Taken together, we have access to over $3.5 billion of financial capacity through cash on our balance sheet, the cash our business generates, and access to the debt markets. Turning to our capital allocation framework, we deployed $2.6 billion of capital on attractive royalty deals in 2025. At the same time, we returned a record $1.7 billion to our shareholders, including share repurchases of $1.2 billion and our growing dividend. Slide 24 provides our full-year 2026 financial guidance. We expect portfolio receipts to be in the range of $3.275 billion to $3.425 billion. This assumes growth in royalty receipts of around 3% to 8%, reflecting the strong underlying momentum of our diversified portfolio. Our guidance takes into account the loss of exclusivity for Promacta as well as the launch of biosimilar TYSABRI in the United States and the potential impact of IRS. It also reflects an expected decrease in milestones and other contractual receipts from $128 million in 2025 to approximately $60 million in 2026. Importantly, and consistent with our standard practice, this guidance is based on our portfolio as of today and does not take into account the benefit of any future royalty acquisitions. Payments for operating and professional costs are expected to be in the range of 5% to 6.5% of portfolio receipts in 2026. This significant reduction when compared with 8.9% in 2025 is primarily the result of cost savings from the internalization of the manager. Lastly, interest paid is expected to be around $350 million to $360 million in 2026. Based on our semiannual payment cycle, we anticipate interest paid to be around $175 million in each of the first and third quarters, with de minimis amounts payable in Q2 and Q4. The year-over-year increase reflects interest payments on the $2 billion in notes issued in September 2025, for which the first payment will be paid in the first quarter. This guidance does not take into account interest received on our cash balance, which was $34 million in 2025. As a final consideration, we expect to issue equity performance awards, which is our long-term incentive compensation program, due to the success of investments in 2020 and 2021. We expect equity performance awards to be approximately $85 million in 2026, with approximately half of that value reflected in the share count over the course of the year. This is very similar to the $81 million in equity performance awards that were earned in 2025. Slide 25, my final slide, drills down deeper into our 2026 top-line guidance. We expect royalty receipts to benefit from multiple growth drivers, including established royalty streams on Trelegy, Tremfya, and Evrysdi, as well as the strong launch trajectory of Voronega and the recent royalty acquisitions on Ambeltra and Ambutra. Together, we expect these drivers to allow us to absorb the impact of the LOEs on Promacta and Tysabri while still driving royalty receipts growth of 3% to 8%. Portfolio receipts, of course, include the more variable milestones and other contractual receipts, which are expected to be approximately $70 million lower in 2026, as I already noted. To close, we delivered a strong fourth quarter and full year, and our guidance for 2026 puts us well on track to achieve our long-term financial objectives. With that, I would like to hand the call back to Pablo. Pablo Legorreta: Thanks, Terry. To conclude, I would like to stress how delighted I am with our performance in 2025. I started out by saying it was a landmark year. On all key measures, growth, returns, strengthening our portfolio, and maintaining market leadership, we delivered. I want to close on Slide 27 with a reminder of why we believe we are well-positioned to drive strong value creation. First, we are the clear leader in the rapidly expanding biopharma royalty market with strong fundamental tailwinds, reflecting the huge demand for funding life sciences innovation. Second, we have a best-in-class platform for investing in the most transformative and innovative products marketed by premier biopharma companies, and we expect to remain the undisputed leader. And looking ahead, we are excited about the prospect of expanding our team and platform in China. So stay tuned. Third, we have an incredible track record of delivering consistent and attractive returns, including an IRR and return on invested capital in the mid-teens and a return on invested equity of over 20%. Lastly, we expect to deliver strong global utility top and bottom-line growth through 2030 and beyond. As a result, we are confident we are on track to generate annualized total shareholder returns of at least the mid-teens over the next five years. With the manager now internalized, our shareholders are positioned to benefit from durable value creation in 2026 and beyond. With that, we will be happy to take your questions. We will now open up the call to your questions. Operator, please take the first question. Operator: For your name to be announced. And to withdraw your question, press 11 again. The first question comes from Geoffrey Meacham with Citi. Your line is now open. Geoffrey Meacham: Alright. Great. Thanks for the question, guys. Just have two. The first on dividend and buybacks. Last year, you guys had a big step up. How sustainable is that looking to 2026? Do you feel like that could have been better spent on royalty deals? I guess I'm just trying to get a sense for how the deployment mix can evolve. And the second question is, have thawing of the capital markets this year. Is there an accretive way for royalty to get more involved in, say, privates or crossovers or even IPOs? I wasn't sure how you view the returns there versus a more mature process. Thank you. Pablo Legorreta: Sure, Jeff. Thanks for your question. Terry, why don't you take the first question, and then Christopher can answer the second one on capital markets? Terrance Coyne: Sure, Jeff. So at the time of the internalization, we laid out what we call our dynamic capital allocation framework, where we're thinking about how we're going to deploy capital based on the relative attractiveness of the royalty opportunities weighed against the relative value of our stock price relative to intrinsic value. So think when you look at 2025, it's a pretty good example of how we think about it. We started the year. Deal activity in the beginning of the year was a little bit slower. And our stock price was, we thought, at a really attractive valuation. And so we accelerated our share repurchases in the beginning of the year, particularly in the first quarter and also into the second quarter. And then as deal activity picked up a lot in the second half of the year, we dialed back our share repurchases. And we spent a lot of capital on new investments, which we think drove really, we will drive really attractive long-term returns. So I think going forward, we're going to continue to take the same approach. We're going to look at relative value. Right now, I would say, you know, we feel really, really excited about the pipeline and the opportunities for royalties. But we're going to continue to return capital to shareholders through share repurchases and dividends. But I think the priority right now is probably a little bit more biased towards the royalties. Christopher Hite: And on your second question, Jeff, following the capital markets, I mean, and whether we could get more involved potentially with private companies. We, you know, we're very focused on high-quality pharmaceutical products, biopharmaceutical products. And if they're housed within a private company, you know, we look at those all the time. And our focus really is on investing in high-quality assets. We have made some investments, you know, on private companies over the years, you know, small equity investments associated with potential royalties, and that's something we always do. But I think we're excited really with just the growth of the opportunity set, whether the markets are strong or weak. You've seen our reviews and our opportunity set grow in any environment in the capital market. So that's really the focus. You know, we're really hunting for really high-quality assets wherever they are. Geoffrey Meacham: Great. Thanks, guys. Operator: Thank you. And our next question will come from Michael Nedelcovych with TD Cowen. Your line is open. Michael Nedelcovych: Hi. Thanks for the questions. I have two. My first is on Alephrek. I know the arbitration around the royalty is ongoing, so my question is not about the royalty, but rather about the product's end market performance. We're now past one year into the launch of the drug. How has Vertex's conversion of CF patients over to Alifrac been tracking relative to your assumptions? At peak, Vertex expects to convert the majority of patients. Do you agree with that outlook, and how long do you think it could take? That's my first question. And then my second question relates to your view of the general medicine and cardiometabolic disease categories, which I know is kind of a broad topic. But there's something of a debate as to whether long-acting injectables or daily orals are best positioned to capture the largest slice of the commercial opportunity in diseases like high cholesterol, hypertension, and obesity. Do you have an opinion on this? If you were to wade more deeply into the chronic disease waters, should we expect Royalty Pharma to exhibit a strong opinion on drug delivery format, or would you try to diversify? Thank you. Pablo Legorreta: Sure. Thanks for your question, Mike. Terry, why don't you take the first one on alastrex, and then Marshall can take on the second question. Terrance Coyne: Sure, Mike. So it's a great question. When Alistair first launched, I think there was from investors a lot of debate about how rapid the conversion would be. And I think there were many that thought that the conversion would be pretty rapid. And we had a different view at the time that we thought that it would be gradual. And it's really because TRIKAFTA is just an amazing drug that's totally transformed that disease. And so, you know, it's sometimes hard to switch from something that's working really well. So I think by and large, it's been pretty consistent with what we thought. It has been gradual but steady. I think it's tough for us to speculate at this point on what percent will ultimately go to Elliptrak. But I think either way, what we laid out at our Investor Day I think is how we think about it long term. Where, you know, we think that by 2030, even with a lot of patients switching to a LiftTrak and under a downside case, where we are not successful in the arbitration, that we still would recognize portfolio receipt or royalty receipts from the CF franchise of around $800 million, which is above what our initial sort of downside range was a couple of years ago. So overall, we expect CF to remain a really important contributor over the long term, and it was great to see 2025, it actually grew our royalty receipts actually grew 7% for the year even in the face of, you know, conversion to ElivTrak where we're currently getting a lower royalty rate. Marshall Urist: Great. Mike, good morning. And to your question on general medicine products and the cardiovascular and the cardiometabolic market, specifically. You know, first of all, I'd just make a general comment, which is, you know, when we look at that whole area, general medicine, you know, cardiovascular disease, cardiometabolic disease. You know, we're certainly excited about that and see a lot of opportunity there in the future, and it's a place where, you know, we continue to look for opportunities, you know, like you've seen us do in the past. I think to your question specifically about, you know, what will sort of be a preferred delivery option, you know, I would point to the lessons that we've seen from, you know, current markets. Right? You know, you look at next-generation cholesterol agents. Right? You have kinda two very different dosing profiles there, and, you know, they've both found success. So I think the incredible thing about those markets is they're so big. There's such a diversity of, you know, patient need and preference that, you know, there's opportunities for lots of different profiles, and you'll see us approach it in the same way we've done in the past, which is, you know, finding a combination of a differentiated product that's important to patients in the hands of a marketer that we believe, you know, certainly with our partnership, could maximize the value of that product. And, you know, we continue to look for those opportunities and, you know, we'll bring the same discipline and patience that we have in the past. And when we find the right thing, we will certainly go after it vigorously. Michael Nedelcovych: Great. Thanks so much. Operator: Thank you. And the next question will come from Terence Flynn with Morgan Stanley. Your line is open. Terence Flynn: Great. Thanks for taking the questions. I had two as well. Christopher, you mentioned on one of your slides that this is the first year, I think, that synthetic royalties and announced value has exceeded traditional royalties. So just as you think about the trend this year, do you think that will continue on mix? I know it's a little bit opportunistic, but just how do you think about that going forward? And then one for Marshall, on LP, again, you know, you guys are levered to a few of the late-stage products here. Novartis' trial, as everyone knows, was delayed to the second half of this year. So just how do you think about that in terms of likelihood of success for maybe this trial, but then any implications for the second readout, which I believe we're gonna get from Amgen in '27. Thank you. Christopher Hite: Yeah. Thanks for the question, Terence. And actually, it was actually Marshall on his slide that he commented on the one pie chart where synthetics were a little bit larger than the existing royalty capital deployment, at least around the announced value of the deal to 44% last year versus 40% for an existing royalty. Look. The bottom line is we're super excited about the synthetic royalty market as we've said at our analyst day and on these calls. I think you're really seeing that come through. The Deloitte survey really highlighted, I think, the growth and the awareness of how we can work with companies and why synthetic royalties are a better solution in some cases and in a lot of cases, compared to debt or equity financing for companies. And so we see the excitement in the sector every single day. We're getting calls every single day around that opportunity, and for us, it's really always just maintaining discipline and investing in really high-quality opportunities. But, you know, the opportunity set is there, and we see the growth continuing for sure. Marshall Urist: And then, Terence, your question on LP, so no change in our enthusiasm there. As we've been highlighting, you know, we are really excited about the potential of this class. The news on the timing, I think as we talked about in the past, you know, when you run a first-in-class outcomes trial, you know, a big question is, of course, gonna be the event rate. And specifically, in this case, you know, this is a population where, you know, the exact event rate hasn't really been characterized. Certainly, in a group of patients who are, you know, pretty well treated in terms of other factors like LDL cholesterol. So, you know, in our mind, there was always a pretty significant range on what the event rate could be and what the timing would be. So, you know, to see it kinda shifting around a little bit here is not it doesn't come as a particular surprise to us and doesn't change our view. We're still eagerly awaiting the results from Novartis this year. Thank you. Operator, next question, please. Operator: And our next question will come from Asad Haider with Goldman Sachs. Your line is open. Asad Haider: Great. Thanks for taking the questions and congrats on all the continuing strong execution. I have two. First for Marshall, just on the broader portfolio, just appreciate all the framing on the catalyst part. But maybe just based on your own diligence and sizing of the markets and the opportunities, what assets do you think are still most underappreciated? And current Wall Street models? And then, I have one for Christopher. Christopher, you've talked in the past about the China opportunity as an area of strategic importance and focus. Any updates there would be helpful. When could these opportunities start to become a funnel into the transaction pipeline? Thank you. Marshall Urist: Great. Thanks, Asad. Good morning. So as we look at the pipeline, I think there are, you know, the biggest takeaway for us, and we think about how the world looks at our pipeline is, I think it's also just important to take a step back and think about the aggregate potential there. And I think that was one of the things that we wanted to highlight was, you know, there's very significant potential for value creation right now in our pipeline. As we mentioned in the prepared remarks, you know, about $2 billion or so of potential non-adjusted peak royalties. You think about that in the context of where our top line is today, you know, that's a very significant potential. And we'll continue to add there. We'll continue to add to the development stage portfolio and then, of course, the marketed portfolio as well. When you look across here, you know, we do get a significant number of questions on LC little a and revolution medicine. But the other ones, the other products we highlighted here, you know, Biogen ladafilumab, we'll have phase three results here coming up. Sanofi, brexalumab, we've highlighted the non the post c d 20 or non c d twenty part of the market in real need for new targets. In MS is exciting to us. And then another product that we highlighted was J&J's depression product that is a little that is off the radar, but, you know, but J&J has, you know, has put a lot of development resources into, and we'll update her for that next year. So, you know, what we really like is the diversity of it, the depth of our development stage pipeline. And, you know, taking a step back and thinking about the aggregate potential for value creation for our shareholders in the next few years. Christopher Hite: And then on the China question, you know, we are very excited about that opportunity. You know, I showed a slide in the Analyst Day that I think in 2020 there were only two out-licensing deals out of China into the Western sort of multinational companies that created royalties. And it's almost like every day you wake up and you're reading about a new deal where Western multinationals are in-licensing something out of China. So that opportunity set is, you know, we're very excited about it. Multiple teams have gone to China multiple times last year. And so then I think we did, you know, a deal last year with b one, which, yeah, certainly, I think a lot of the Chinese companies look at b one as a leader and a company that, you know, formerly was based in China. And they saw that transaction we did for Indaltra, which was, you know, $885 million upfront, and I think that definitely opened a lot of eyes of the Chinese companies that we've spoken to around the opportunity to monetize their royalty streams. And then I would just remind you that a lot of those transactions are at somewhat of the earlier stage in nature, you know, so we are really tracking and following those deals and how they progress within the multinationals, the western multinationals, clinical pipeline. And, you know, we are eagerly awaiting the opportunity to put those into the funnel to your point. And then lastly, I would just say, you know, we are looking at expanding our team and our platform in China and hope to have an announcement on that in the very near term. Operator: Thank you. And the next question comes from Christopher Schott with JPM. Your line is open. Christopher Schott: Great. Thanks very much. You recently did a deal with Teva for its IL 15. Can you talk a little bit more about what attracted you to that asset? And maybe as part of that, just bigger picture, think this is a bit earlier than historically Royalty Pharma has gone. And is that a trend we should be thinking about of royalty looking maybe more mid-stage assets as you get larger and kind of can diversify the portfolio more? The second one for me was on Verengio. That launch has ramped really nicely. I think it's an asset that's a little less understood by the Street. Maybe just elaborate a little bit more on just how you're thinking about growth for that product from here and how large of an asset that could become for Royalty Pharma over time? Thank you. Pablo Legorreta: Sure. Christopher, how are you? So Marshall will take the questions, but, you know, maybe yeah. Go ahead, Marshall. Marshall Urist: Sure. Christopher, thanks for those two questions. So first of all, on Teva. So what attracted us there? You know, it was a few basic things. You know, first was vitiligo is a market that has real unmet need, and there's real need in it that as an autoimmune indication where there just hasn't been enough innovation for patients. And two, you know, the science of it not to get too far into the details, but the target IL of the product that we invested in with Teva is, you know, is really kind of fundamental to the biology and pathophysiology of vitiligo. And so that, you know, made a really strong story for us. And then third, you know, like we said, you know, we got a sense of, you know, some, you know, looking at the available data and, you know, that that's certainly intrigued and excited us. And, you know, that came together to get us really excited about this market that, you know, is underappreciated and has blockbuster potential. And you asked about the structure, and are we thinking about, you know, is this any sign of moving earlier? You know, not at all. I think it's consistent with what you've seen us do, which is be creative in structure to where we can tranche capital over time. And that's really effective because you'd think about it, we're making a relatively small investment here to help fund the phase two b of $75 million. And then we will have, following that, the option to significantly scale up that investment to help fund the phase three. So, you know, that's a very powerful mechanism to us and a very powerful structure. You've seen us do it that allows us to access more innovation, be a better partner, be a more flexible partner in a way that doesn't at all change the kind of risk profile of our portfolio for our shareholders. So, you know, we think it's a very cool structure and another example of how we've been innovating, you know, with royalty-based financing to expand the opportunity and expand the role. Second question, thanks for asking about Voronego. You know, we couldn't be more thrilled with how that product is launched and how Servier has done with it. You know, that product, again, another great example of serving a profound unmet need. So, you know, it's had a very strong launch. We continue to be excited about its potential. You know, we've talked about how, you know, this is a drug that could have, you know, a very long duration of therapy as it kinda helps to control and helps to control the growth of these low-grade gliomas. And could be, you know, we saw very significant commercial potential there. I think at our last update, we've shown it's very well on its way to being a blockbuster product. And, you know, if you look at the trajectory there, I think we still feel great about the trajectory that it's on and excited to see what the future holds. Operator: The next question will come from Ashwani Verma with UBS. Your line is open. Ashwani Verma: Hi. Thanks for taking my question. I had a portfolio question and one on the P&L. So maybe just on the portfolio like Mycorzo, how are you thinking about the potential implication for this upcoming non-obstructive HCM study? There's a fair bit of heterogeneity in this patient population, and KEMZARIS has also failed. Just curious if you're thinking about it as sort of like an upside driver or expected to work. And then on the operating and professional cost, the run rate that you provided for 2026, is this a good way to think about just paying on a going forward basis? Or is there any additional phasing out of the impact that's not reflected on the internalization front? Thanks. Pablo Legorreta: Sure. Thanks for the question, Ashwani. Marshall will answer the first one on Mycorzo, and then Terry can address the question on P&L and operating expenses. Marshall Urist: Hi, Ashwani. Good morning. Thanks for the question on Cytokinetics and Mycorzo. So first, just I think it highlights, as we mentioned in the prepared remarks, you know, we're really happy to see that approval and it's a great example of how our development stage portfolio, you know, can continue to drive and contribute to our top-line growth in portfolio receipts. We are super excited to see, you know, commercialization in Cytokinetics has been a great partner for us, and they've put together a great team. You know, specifically to your question on non-obstructive cardiomyopathy, you know, our base case when we made this investment was it was premised on the currently approved indication of obstructive disease. So, you know, we did not assume that this trial turned out positively when we made the investment. That being said, I think, you know, the data that they've shown in phase two is compelling. They've had the opportunity, I think, to learn from, you know, learn from Camzius' experience there. And so, you know, I think we'll we are with you and the world waiting to see, you know, with excitement to see what this trial holds. But, you know, our basic thesis for this investment was really focused on obstructive disease. Terrance Coyne: And then, Ashwani, your question on operating professional costs. We're very pleased with how things are tracking. At the time of the announcement of the internalization, we said we expected to realize $100 million in savings in 2026, and we're on track to realize that. Looking out a little bit longer term, we continue to feel like we're on track to get to that 4% to 5% range over time. So things are going really well, and we are, you know, realizing a lot of the benefits financially of the internalization. Operator: Thank you. The next question will come from Umer Raffat with Evercore. Your line is open. Umer Raffat: Hi, guys. This is Mikey Furey in for Umer. Two questions for me. Thanks for taking my questions. The first on J&J, they're talking about what's next in immunology with their oral IL-23 icotide. Do you feel or view that as incremental market expansion or as a cannibalization risk to Tremfya over time? And my second question concerns Trelegy. GSK described Trelegy as a durable respiratory franchise and noted the Trelegy legacy team supporting the Nucalis COBT launch while they invest behind longer-acting options. How do you think about Trelegy's contribution to your portfolio over the next few years given what I just said? Thank you. Pablo Legorreta: Thanks, Mikey, for those two questions on two great products. Go ahead, Marshall. Marshall Urist: Yep. Hi, Mikey. So your first question on the IL-23 oral at J&J and whether or not we saw that as market expanding or would have an impact on Tremfya. We definitely see it as market expanding. I think, you know, that is a great product, but Tremfya is a great product as well, and you're seeing that in the very strong momentum in the inflammatory bowel disease launch for Tremfya. And I think that echoes J&J's comment that they see, you know, that they see very significant potential for both products when they look forward. So we're still very enthusiastic about Tremfya's trajectory. And, you know, we think an oral product just is a new option for patients, potentially even at different stages of their disease. Your second question was on another one of our another product we really like, and that's Trelegy. You know, GSK has one of the strong respiratory franchises out there. You know, you've seen that in the performance of Trelegy, which has, you know, I think, continued to outperform people's expectations in terms of the durability of that growth. And, you know, we are certainly excited about Trelegy's growth from here even as, you know, GSK does what you would expect, which is continue to deepen and broaden their respiratory franchise. And we don't believe that's gonna come. We don't believe Trelegy is gonna pay any kind of price because of that. Operator: Great. Thank you. And the next question will come from Jason Gerberry with Bank of America. Your line is open. Jason Gerberry: Hi. Good morning. This is Tina Ramadan on for Jason. Thank you for taking our question. Just had two follow-ups to prior discussion points. I guess, first on the China market. Could you characterize how future deal structures may differ in China from the way you've kinda done historical deals if at all? Like, are you finding that the diligence process comes with any added or expected process-related hurdles that impact normal efficiency? And then second is just on the on the LP lowering class readouts. How important in your view is the treatment effect size coming above or below 15% to 20% risk reduction due to the commercial peak sales opportunity? Thank you. Pablo Legorreta: Sure. Maybe I'll take your China question. And, you know, we don't foresee any change in the way we structure transactions and how we actually diligence them. You asked us about diligence. It's exactly the same process that we follow for products. You know, just realize that what is likely to happen in China deals is that we would be buying a royalty from a Chinese company that licensed a product to a company in the US or Europe, and they did that because, you know, the vast majority of Chinese companies do not have clinical and marketing infrastructure in the US and Europe. They need a partner to help them run the trials in the US, in Europe, and eventually to market the products. So the payer of the royalty will be a US or European company, like in the case of the deal we did with b one. The marketer is Amgen. And for us, you know, the payer is Amgen, the credit risk is Amgen, so, you know, we feel very comfortable. Now in terms of being effective in that market, you know, we have mentioned on this call that what we need is presence locally. And that's something that, you know, you will see very soon from us with a local team with exceptional people. And it's a market that we intend to build and really focus on because we do see, you know, very significant opportunities coming from China. Thank you for the question. Marshall Urist: And then your second question on scenarios around the effect size in the upcoming Novartis LP trial. There's no question, and you won't surprise me to hear us say that the effect size does matter. I think we should, given that, you know, we're a few months away at this point from seeing this data, you know, I think there will be a lot of discussion, I am sure, based on, you know, based on what it all shows. And I think it will matter, you know, in the range that you talked about. You know, the types of patients who benefited, were there any subgroups where there was particularly strong benefit or had a particular impact on benefit. And I think, you know, the physician community will work that out for who are the patients most likely to benefit. So, you know, again, you know, just I think it does highlight the incredible potential of our development stage portfolio. We're really excited to see this. You know, after waiting a few years at this point for this event, as you might imagine, we are eager to see it and discuss the data with everybody. Thank you. Operator: I am showing no further questions in the queue. I would now like to turn the call back over to Pablo for closing remarks. Pablo Legorreta: Thank you, operator, and thank you to everyone on the call for continued interest in Royalty Pharma. If you have any follow-up questions, please feel free to reach out to George Grofik and his team. Thank you, everyone. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Jonas Ström: Okay. Good morning, all, and a warm welcome to ABG Sundal Collier's Q4 results presentation. Before we kick off the presentation, I would like to mention that we will, as usually have a Q&A session after the presentation and should you want to raise a question, please use the Q&A function in Teams, and we will answer all your questions in turn. We ended the year on a high, and we are entering 2026 from a position of strength. We have continued to build momentum during the year, and we have proven our ability to deliver with market conditions in 2025 sometimes being helpful and sometimes being anything but helpful. We have continued to focus on what we can influence, namely, how we advise our clients, how we execute on our advice and our own growth strategy and how we resolve situations that arise either because of market conditions or client-specific circumstances. And we have continued to focus on ensuring our own profitability, also short term, enabling us to make long-term investments to take investment costs that will drive long-term profitability. Business-wise, we are happy to observe continued strength within our debt capital markets operations and not least within our M&A operations with record high revenues for us in 2025. Conditions in equity capital markets have gradually improved during the year and IPO activity picked up somewhat in 2025, especially in Sweden. Even though IPOs tend to be the product that is the most sensitive in our product portfolio to general volatility, either economically or politically induced, we observed that our backlog when it comes to IPOs is in a better shape entering 2026 versus 2025. We continue to improve our firm to become the Nordic investment bank of choice, the investment bank of choice for clients, talents and investors. We continue to focusing on strengthening our positions in our core operations as well as developing our business by broadening our offering to new client groups, such as private banking and alternative investments. On that note, strengthening our position, we are pleased with having succeeded in joining forces with FIH Partners in Denmark, the by far top-ranked independent financial adviser in Denmark for a decade. And we are doing that at a point in time with all-time high revenues in our current Danish operations. By continuing on this track, we are committed to our long-term targets of increasing revenue per head by at least 20% versus the 2024 level and to deliver a mid-cycle operating margin of at least 25%. So in the fourth quarter that just ended, this resulted in us if we flip to the next slide, looking at the numbers, please. Delivering revenue growth of 15% to NOK 720 million. This growth is a result of, especially in the quarter, a strength in our M&A operations. But looking at the entire year, we have had solid contributions from all geographies and product areas as well as sectors. In the full year, we ended up with revenues of NOK 2.172 billion, a top line growth of 12% with, as alluded to earlier, broad contribution from all geographies with Denmark delivering all-time higher revenues and solid growth from both Sweden and Norway as well. Continuing with our operating margin that increased with 2 percentage points from 21% to 23%. That includes -- the 23% includes costs for setting up our new business initiatives, private banking and alternative investments and that had a negative effect on the operating margin of some 3 percentage points in 2025 versus some 2 percentage points in 2024. We delivered earnings per share at NOK 0.26 in the quarter, up from NOK 0.21, an increase of 24%, highlighting the operational leverage in our business. Year-to-date, our EPS ended up at NOK 0.66 versus NOK 0.56 on a fully diluted basis last year, including the investments once again in our new business initiative, having a negative impact on EPS by NOK 0.07 this year and NOK 0.06 last year, respectively. So let's continue looking at the macro and market backdrop. The markets continue to be supported by low volatility in the quarter, even though we had some spikes in the quarter with VIX sitting well above the 20 level a couple of times, introducing short-term hesitation amongst the investor community. But we are at a low level, and we feel that the conditions have stabilized. Credit conditions have also continued to improve. Credit spreads, as illustrated on the right-hand side of this chart, continue to tighten, and we have seen the very strong conditions in debt capital markets in Q4 continuing into the start of this year. So with strong credit conditions, low volatility and a market that seems to be very, very reluctant to take everything that is stated from a political point of view. As granted, we feel that we have stronger conditions for us to deliver looking at the market situation 2026 versus 2025. Continuing with the next slide and looking at how our main markets within Investment Banking have performed in the Nordics during the year and the last couple of quarters and starting off with equity capital markets. The headline number is, of course, impressive with an increase of 77% to NOK 139 billion in total volumes in the fourth quarter, 2025. This is slightly distorted by one or two large transactions and the biggest one being the DKK 60 billion rights issue in Orsted in Q4, a transaction that is typically not part of our addressable market. Excluding that and maybe one other one-off, so to speak, transaction, ECM volumes were actually down both in the quarter and full year, as you can see, excluding these rights issues on the left-hand side of the chart. Debt capital markets on the contrary, the headline number is very representative for actual underlying performance in markets being very, very strong. 2025 was a record year in terms of volumes overall. And we are pleased with our own position within DCM, strengthening our position in Sweden to become the #1 player in DCM high-yield 2025. The uptick and recovery seen from 2021 is, to some extent, of course, cyclical, but not only that, it is a structural growth we are witnessing. The very vibrant Nordic DCM market has attracted many non-Nordic issuers as well looking to tap into the opportunities offered here. And finally, looking at the M&A market, that continues to be, well, stable or muted depending on how you want to look at it. In the absence of the expected pickup in activity levels, such as structured processes, not the bilateral ones we've seen dominating the arena so far, number of transactions is still rather muted. Volumes actually down by 5% in the quarter year-on-year. And more or less flat, up by 4% full year -- over full year last year. Okay. Moving over, looking to the next slide on how we performed against this backdrop. In our Corporate Financing operations, we delivered revenues at NOK 736 million in the full year, which is down by 7% versus 2024. As you can see on the right-hand side of this slide, we closed numerous transactions during the quarter with a widespread between both ECM and DCM sectors and geographies. A couple of IPOs during the quarter, one in India for Orkla and one in Norway and lots of secondary placings, our DCM operation was highly active, as you can see in the quarter with quite a few large transactions completed. Moving over to the next slide, please, looking at how we did in our M&A business. Well, we delivered what can be, I'd say, best described as a stunning set of numbers. Revenue accelerated during the year, with Q4 ending up at NOK 334 million, up by 55% and versus Q4 last year, and we reached a revenue level of NOK 829 million for the full year, which is up by 44%. This is by far a record in terms of M&A revenues for us, outperforming the general activity in the market. And as you can see on the right-hand side of this slide, we closed quite a few high-profile transactions during the quarter, yet again, with a decent spread between sectors and contribution from all geographies. Let's continue with looking at our Brokerage and Research operations. The headline number in terms of revenues has been remarkably steady over the last 4 or 5 years, with revenues around the NOK 600 million mark. We actually reached above the 2021 post-MiFID world record level with NOK 606 million in revenues, which is up by 7% year-on-year. But looking under the hood, there are differences, as always, between our different desks, locations and products, with Norway equity sales yet again, delivering impressive growth, not least from new brokerage clients and I'd say, stability elsewhere. I would also like to highlight the strong performance within our Research department. We cover some 400 companies, which is amongst the highest of all Nordic investment banks, which is crucial for our ability to deliver on both Brokerage and IPOs over time, of course. In the latest Prospera survey, we achieved top 3 positions in 23 sectors, including the #1 position in important sectors such as Bank and Financials in Sweden, and Shipping, Seafood, Materials, Real Estate and Construction in Norway. Well done, all. Okay. So over to the next slide, please, looking at our headcount that has been rather or very stable, I would say, over the last couple of years. We have a continued focus on growth of front staff. We have in these numbers included our new business initiatives of which private banking is the biggest one, which is in line with our strategy. But the average year-to-date of 332 FTEs is basically flat versus same period last year. We are ready to grow that number now. We have, meanwhile, slimmed -- continued to slim our Support and Operations division slightly, and we will continue to focus on leveraging our well-invested platform further, not least as illustrated by the acquisition of FIH in Denmark. And as you can see on the right-hand side of this slide, we have come a long way in our target of improving revenue per head by at least 20% versus 2024. The task ahead now is to keep and improved that level slightly while increasing number of FTEs, mainly on front operations. That is the most important definition for us when it comes to continued profitable growth. Okay. Let's continue looking at our operating cost level. That increased by 10% to NOK 1.681 billion, which is an increase by, yes, 10% basically. While we have kept the compensation to revenue ratio steady around 55-plus percent, the increased profitability obviously is the main driver for the increase in costs due to our variable remuneration model. IT systems, where inflation comes with a bit of a lag, increased costs for IT systems and increased activity levels on our front operation contributes further to that slight cost increase, as do our investments in our new ventures, even though the year-on-year effect is marginal. But looking at our underlying fixed cost base in Q4 eliminating the still negative effects from the weak and -- weaker NOK, especially in relation to SEK, the underlying cost base is flat year-on-year. So let's flip to the next slide and talk about -- a bit about our capitalization and the proposed dividend, which is NOK 0.55 per share. That proposal reflects our commitment to distribute excess capital back to shareholders through cash dividends and buybacks. It should be noted that the core capital effect from the acquisition of FIH, the goodwill effect, is some NOK 100 million or NOK 0.18 per diluted share. NOK 0.55 in dividend allows for both a healthy cash distribution and buybacks while maintaining solid capitalization, as you can see on the right-hand side of this graph. So before we conclude, I would like to draw your attention to our acquisition of FIH Partners. By joining forces with FIH, we will significantly strengthen our position in Denmark. We are joining forces with a firm that is #1 within Danish M&A and also has been ranked as the #1 financial adviser in Prospera for basically the last decade. This is a firm that has closed over 200 transactions with some EUR 110 billion in deal value. We are welcoming some 27 professionals to the ABG family with a combined plus 200 years of experience. If we continue with the next slide, yes, we are joining forces also with FIH at a point in time where, as I alluded to earlier, we are delivering our best year ever in Denmark. From our combined #1 position in Denmark, we can now offer a much broader product portfolio, such as bonds or IPOs, for instance, to a larger client group. We are convinced we are a perfect fit with both of us having a strong partnership culture and eagerness to win. We take nothing for granted, but our own ability to deliver top-notch services and advice to our clients as well as potential clients. By joining forces by -- with FIH, our clear ambition is to fortify the #1 position within Danish M&A and build a market-leading position within ECM and DCM. This is exactly in line with our strategic ambitions to strengthen our positions in core markets and to leverage our already well-invested platform. So with that, I'd like to summarize the key takeaways from Q4 and the full year. We had a strong year and a strong quarter, not least. In the quarter, revenue is up by 15% and 12% for the full year. This year, the main driver behind our growth, both in the quarter and full year is our remarkably strong M&A operations. Having said that, ECM conditions improved during the year and the IPO window reopened, particularly in Sweden. DCM continued on a high level, and we kept our strong position overall in the Nordic high-yield segment. Brokerage and Research continued to deliver stable and solid revenues throughout the year. And we demonstrated our ability to execute on our strategy with the acquisition of FIH, at the same time as ABG Denmark delivered its best year ever. The development over the last couple of years with better contribution and stronger positions across all geographies has strengthened our diversified business model further. So with that, I'd like to open up the floor for questions should there be any. Operator: Yes, we have received one. That is, what is your current pipeline visibility? Jonas Ström: Yes, that's a very good question. Pipeline is one thing in terms of gross numbers, the absolute number. Quality is another thing. And I think the best way to measure quality, high versus low, is to look at how diversified the pipeline is. Diversified in terms of products, sectors and geographies. And from that point of view, I'd say that we are in a better shape pipeline-wise than in a long time. As always, the obvious disclaimer is that market conditions short term can obviously be a bit of an obstacle. But once again, having such a diversified pipeline entering 2026 makes me comfortable we are on a continued path to growth. Operator: I believe that was it from the audience today. Jonas Ström: Okay. Yours truly and Kristian Fyksen, our CEO in Norway, are ready to take on any questions, should you have any follow-ups. We will be talking to media and we stuck short term, but please do not hesitate to reach out. I'd suggest that you contact Anna Tropp if you have any further follow-ups, and we will try to revert as soon as possible. Thank you for tuning in this morning.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the RADCOM Ltd. Results Conference Call for 2025. All participants are present in a listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. As a reminder, this conference is being recorded and will be available for replay on the company's website at www.radcom.com later today. On the call are Benny Eppstein, RADCOM's CEO, and Hadar Rahav, RADCOM CFO. Please note that management has prepared the presentation for your reference. That will be used during the call. If you have not downloaded it yet, you may do so through the link in the investor section of RADCOM's website at www.radcom.com/investorrelations. Before we begin, I would like to review the safe harbor provision. This conference call will contain forward-looking statements. Forward-looking statements in the conference call involve several risks and uncertainties, including but are not limited to the company's statements about its momentum, strategic direction and goals, market position, and trajectory. Future execution and delivery of values to customers and stakeholders, expansion within its existing customer base, and expansion of its footprint. Development of and enhancing strategic partnerships, and expected benefits and revenue from collaborations, the success of new technologies, including AI, to among other things, enhance automation pipelines, opportunities, and customer engagements, and the timing thereof, demand for its product, and solutions, and the ability to address new customer segments. And expand its market reach. Trends in the market, the expected benefit of its AI-driven assurance, and other solutions, its expectation with respect to gross margins, research and development, and sales and marketing expenses, expectations regarding the growth of 5G and AI, and its full-year 2026 revenue guidance future growth and profitability, resilience and long-term commitment. The company does not undertake to update forward-looking statements. The full Safe Harbor provisions, including risks that could cause results to differ from these forward-looking statements, are outlined in today's press release and the company's SEC filings. In this conference call, management will refer to certain non-GAAP financial measures, which are provided to enhance the user's overall understanding of the company's financial performance. By excluding non-cash stock-based compensation that has been expensed in accordance with ASC topic 718 financial income expenses related to acquisitions and amortization of intangible assets related to acquisitions, non-GAAP results provide information helpful in assessing RADCOM's core operational performance and evaluating and comparing the operations consistently from period to period. Presentation of this additional information is not meant to be considered as a substitute for the corresponding financial measures prepared in accordance with the generally accepted accounting principles. Investors are encouraged to review the reconciliations of GAAP to non-GAAP financial measures included in the quarter's earnings release available on our website www.radcom.com. Now I would like to turn over the call to Benny. Please go ahead. Benny Eppstein: Thank you, operator, and good morning, everyone. Please turn to Slide seven for our financial highlights. RADCOM delivered its sixth consecutive year of growth with a record $71.5 million in revenue, representing 17.2% year-over-year growth above the midpoint of our most recent revenue guidance of 15% to 18%. GAAP earnings per share increased by just over 65% year over year and we achieved the highest cash and short-term deposit balances in the company's history of $109.9 million with no debt. In terms of profitability, RADCOM reached record results across multiple KPIs, including earnings and operating margin, demonstrating tight cost control, strong operational efficiency, and a scalable business model. As shown on Slide eight, we delivered another strong fourth quarter with revenue up 16% year over year and $18 million. Our strong results demonstrate the solid foundation we have established for RADCOM. RADCOM continues to deliver profitability supported by our technology advantage, a top-tier customer base, and an exceptional team. Our focus now is to expand our customer base, specifically adding new Tier 1 customers to our roster to enable our next phase of profitable growth. Expanding our Tier 1 customer footprint remains a key priority, and we are actively engaged across a set of meaningful new prospects. We continue to see a healthy set of opportunities and demand remains strong. As is common with Tier 1 customers, timing can shift as engagements move from technical evaluation to proof of concept to closing. Given this momentum, we expect revenue to grow by 8% to 12% in 2026, way above the service assurance market growth. Achieving this outlook will require both new business and continued expansion within our existing customer base, and we remain confident in our ability to execute. Looking forward, our strong balance sheet is a strategic advantage, signaling to Tier 1 customers our resilience and long-term commitment. This also allows us to continue our product innovation and R&D investments, and over time, expand our footprint all while maintaining disciplined financial management and profitability. Our performance also validates the growing market value of our industry-leading solutions. We remain firmly committed to enabling exceptional user experiences while addressing our customers' evolving operational and business needs. Our results and improved profitability are a direct result of our focused execution of strategy and the ongoing value we offer to our customers, all driven by our highly skilled team. The continued advancement of our technology leadership positions us for accelerated scalable growth. Heading into 2026, we expect to maintain a disciplined focus on technology advancement, including in our 5G service assurance offering and AgenTiK AI capabilities. We will continue to support operators in optimizing their network operations, reducing costs, and driving network automation. We see continued and growing opportunities to build on our existing customer base and support sustainable long-term growth. Turning to Slide nine, where we look more broadly at the market environment, telcos are approaching a key inflection point driven by AI adoption. A recent GSMA survey conducted in partnership with RADCOM found that 71% of operators plan to implement AgenTiK AI this year. Yet, only 41% report having an end-to-end data that integrates information across the organization. This gap between AI ambition and data readiness presents a clear opportunity for RADCOM to add value by enabling operators to access reliable subscriber-focused data. This data supports multiple AgenTiK use cases and broader efforts to deliver consistently high-quality customer experiences. AI-driven demand continues to reshape network priorities. Operators are increasingly integrating AI across network layers to optimize capacity and efficiency as they continue the transformation to 5G. As we have seen, many have already moved from proof of concept initiatives to commercial deployment in 2025. In the area of AgenTiK AI, operator demand is increasingly shifting toward unified end-to-end platforms. In our recent survey, the majority of operators indicated that they are interested in deploying integrated end-to-end systems. RADCOM is well-positioned to address this need with a comprehensive solution that integrates smoothly with business and service management systems for customer support care and automation of operational workflows. This aligns well with the industry's shift toward more streamlined data-driven operations. Moving on to Slide 10, our product innovations. We continue to see growing customer interest in our advanced high-capacity data capture solution, which enables telecom operators to analyze massive amounts of data to understand the real customer experience at scale while significantly reducing infrastructure costs. We believe this solution can reduce the total cost of ownership by up to 75% compared to competing solutions, enabling broader visibility into the customer experience. As highlighted in our survey, operators are exploring AgenTiK across targeted use cases. Our focus is on developing telco-specific AI agents that deliver high accuracy, faster decision-making, and measurable operational improvements across specific domains. This capability not only enhances the value of our existing platform but also positions RADCOM to address new customer segments and expand our market reach. Turning to Slide 11, our new contract wins. In the fourth quarter, RADCOM announced a new customer win, One Global, which selected RADCOM AS to deliver next-generation AI-powered assurance across both subscribers and IoT, enabling 4G and 5G monitoring at scale for 43 million subscribers. We also expanded within an existing customer, a leading European operator, via Rakuten and Symphony to supply our network visibility solution. The solution will deliver accurate intelligent data collection across its network end-to-end. Regarding our installed base, Slide 12. RADCOM continues to support AT&T as it sustains leading network performance across the industry. In 2025, the mobility service revenues increased, reflecting ongoing customer demand and operational strength. AT&T finished the year with 120 million subscribers. One industry analyst noted that AT&T's network remains robust and is widely regarded as the most reliable network option in rural areas across the US. Within its fully virtualized cloud-native network, Rakuten Mobile continues to utilize RADCOM Assurance solutions to deliver high-performance, reliable network quality that supports scalable growth. The operator passed 10 million subscribers in December 2025 and ranked first in the 2025 Orycon customer satisfaction survey. Turning to Slide 13, we focus on our partners. We are continuing our partnership strategy with NVIDIA and ServiceNow. Our high-capacity user analytics solution is powered by NVIDIA data processing units. In field trials, it has reduced operational costs by up to 75% while maintaining full real-time visibility, making it a strong enabler of scalable 5G assurance in AIOps. We believe this partnership will start contributing initial wins over the course of 2026. Turning to ServiceNow on Slide 14. We continue to deepen our partnership and will showcase multiple joint demos at Mobile World Congress in March. Our RADCOM AIM AIOps solution is now fully integrated, certified, and available as a connector in the ServiceNow store, enabling real-time network monitoring, advanced automation use cases. We expect this collaboration to begin delivering initial wins during 2026. Go to market activities, Slide 15. In 2025, we strengthened our market presence by participating in key industry events, including Fuse in Dublin and NetworkX in Paris during Q4. We are preparing for upcoming high-impact engagements, including Mobile World Congress 2026 and NVIDIA GTC in March, to showcase our solutions, expand strategic relationships, and drive momentum. RADCOM's technology leadership continued to gain global recognition. Named to the 100 for 2025, RADCOM was recognized as one of the solution providers shaping the future of telecom and digital infrastructure. We were also finalists in the first network award for best network test and measurement and received the best AIML innovation award at the 2025 Global Connectivity Awards in London. These accolades validate our industry-leading solutions, reinforce our competitive differentiation, and highlight the value we deliver to customers and stakeholders worldwide. Before I wrap up, I want to briefly address the governance update. The board of directors has appointed board member Rami Schwartz as chairman, effective February 8, 2026, succeeding Sami Tota. Rami has served on RADCOM's board since '20 and brings deep experience in strategy leadership, governance, and scaling technology businesses. I've spent meaningful time with Rami over the last year at RADCOM and previous roles, and I'm confident in his ability to support the team as we remain focused on our growth strategy. I would also like to thank Sami for his support during my first year as CEO. Importantly, Sami will continue to serve on the board. From my perspective, the board provides the oversight and support our team needs. We are aligned on our strategy priorities and execution plan as we enter 2026, and we remain focused on expanding our Tier 1 customer footprint, advancing our technology roadmap, and delivering profitable growth. In summary, turning to Slide 16. 2025 was a solid year, defined by strong growth, disciplined operational and financial execution, and continued market momentum. We strengthened strategic partnerships with NVIDIA and ServiceNow while initiating discussions with additional collaborations. We secured a new customer, expanded our service offering, advanced AgenTiK AI solutions, and launched our high-capacity data capture solution. Turning to 2026, we remain focused on driving innovation, particularly in AgenTiK AI use cases, and delivering solutions that reduce the total cost of ownership for operators. With a robust pipeline of opportunities, we anticipate another year of double-digit revenue growth, reinforcing our leadership in 5G assurance. The company is committed to sustaining profitability, maintaining expense discipline, and leveraging its solid foundation to support long-term value operation. Our near-term focus is to continue to deliver strong operational and financial execution, converting a growing pipeline of opportunities into revenue while further expanding our presence within our existing customer base. We have established key strategic partnerships and expect to deepen these relationships to scale our business and expand our addressable market. AI remains a strong catalyst for our business, and we are investing in AI and automation to maintain our leadership in real-time network intelligence. Our customers recognize both the opportunities and challenges of AI, and RADCOM has proven its ability to deliver a total cost of ownership advantage over our peers' solutions. Operationally, we remain committed to delivering consistent profitability and cash flow while maintaining flexibility as we continue to scale organically. In conclusion, we enter 2026 with momentum and a clear set of goals. We have proven our business model and established a sound foundation for profitable growth. With that, I'll now turn the call over to our CFO, Hadar Rahav, to review the financial results in detail. Hadar Rahav: Thank you, Benny, and good morning, everyone. As a reminder, unless otherwise noted, I will refer to non-GAAP results. Reconciliation between GAAP and non-GAAP measures are provided in our press release and presentation. Additionally, all comparisons are year over year unless otherwise noted. Please turn to Slide 17 for our quarterly financial highlights. We are pleased with how our team closed the year, delivering growth in both revenue and profitability. RADCOM delivered another quarterly revenue record with total revenue of $18.9 million, up 16% year over year. At the same time, we continued to manage expenses effectively while increasing strategic investments in research and development. As a result, we delivered significant improvements in margins and record profitability. Gross margin in the fourth quarter was 77.6%, the highest since 2018. Please note that our gross margin may vary depending on the revenue mix. Operating income reached $4.3 million, surpassing the third-quarter record with an operating margin of 23%, the highest in eight years. Net income was $5.2 million or $0.31 per diluted share, compared to $3.8 million or $0.23 per diluted share last year. As shown in Slide 18, our gross R&D expenses for the fourth quarter were $4.9 million, an increase of 16.2% year over year. This growth reflects our focus on strengthening collaboration, fostering innovation, and expanding our portfolio. We plan to continue strategic investment in R&D to deliver advanced intelligent solutions with a focus on agent-to-agent and multimodal workflows while supporting our strategic partnership and productization efforts. Sales and marketing expenses for the fourth quarter were $4.2 million, a 1.4% year-over-year increase. We continue to invest in our sales capability and anticipate that sales and marketing expenses will gradually rise in the coming quarters to support pipeline growth and expansion in high-value regions. On a GAAP basis, as shown on Slide 19, our net income for 2025 was $3.6 million, a 62% year-over-year increase. GAAP earnings per share were $0.21 per diluted share compared to $0.14 per share last year. We ended 2025 with 325 employees. Hadar Rahav: Now let's review Slide 20, which presents the full-year results. In line with our full-year guidance, we finished 2025 with a record revenue of $71.5 million, an increase of 17.2% from 2024, above the midpoint of our projected 15% to 18% growth range. Our gross margin was 76.8% in 2025, up from 75.2% in 2024. Operating income increased by 55% in 2025, reaching an all-time high of $14.8 million or 20.6% of revenue, compared to $9.5 million or 15.6% in 2024. Net income for 2025 reached a record $18.4 million, accounting for 25.8% of revenue or $1.09 per diluted share. This compares to a net income of $13.5 million or 22.1% of revenue, equating to $0.83 per diluted share in 2024. Operator: As shown, Hadar Rahav: on Slide 18, our gross R&D expenses in 2025 were $18.5 million, an increase of $1.9 million from 2024, reflecting 11.1% year-over-year growth. Looking ahead to 2026, we plan to increase our R&D to further develop automation and AI capabilities and support our strategic partnership and productization goals. We received a total of $400,000 in grants from the Israel Innovation Authority during the year. To support our growth, sales and marketing expenses in 2025 were $17.3 million, up 10.5% from $15.7 million in 2024. G&A expenses for 2025 were $4.8 million, a decrease of $11,000 year over year. On a GAAP basis, as shown on Slide 19, our net income for 2025 reached a new high of $12 million or 16.8% of revenue or $0.71 per diluted share, compared to $7 million or 11.4% of revenue or $0.43 per diluted share in 2024. Turning to the balance sheet on Slide 21. We closed quarter four with a record $109.9 million in cash, cash equivalents, and short-term bank deposits, reflecting positive cash flow of $3.2 million in the quarter and $15.2 million for the year driven by our strong results. That concludes our prepared remarks. Thank you. And we will now pass the call back to the operator for your questions. Operator: Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. If you have a question, please press 1. If you wish to cancel your request, please press 2. Please stand by while we poll for your questions. The first question is from Alinda Li of William Blair. Please go ahead. Alinda Li: Awesome. Thank you. Benny, with $199 million in the balance sheet and no debt, how should we think about capital allocation in 2026, especially as it relates to M&A? Benny Eppstein: Hi, Alinda. Thanks for the question. Our first priority remains to look into M&A. And it's our first priority, this is what we are trying to accelerate, and this is what's prioritizing. So I answer your question. Alinda Li: Okay. Cool. And any changes in the guidance loss of And what are some of the assumptions in the 2026 guide? Benny Eppstein: Sure. We believe we are it's it's we're basically at the second half of our sales cycle. It's hard to pinpoint exactly when we're to close, and this is why we we we let the guidance eight to 12%. And we're assuming that we will close it in the in the first half of the year. Some of the some of the strategic opportunities. Alinda Li: Awesome. Thank you. Got it. Thanks. If there are any additional questions, please press 1. If you wish to cancel your request, please press 2. The next question is from Ryan Koontz of Needham and Company. Please go ahead. Ryan Koontz: Great. Thanks, guys. Wanted to ask about you've you've got a great run rate there with your large customer AT&T and look at your land and expand strategy. What are some of the key drivers for expanding your business with existing customers there? Is it their deployments of the 5G standalone core? Or is it adoption of AgenTiK AI? Or what are some of the key drivers we should think about for you to be able to grow the size of new accounts? Thank you. Benny Eppstein: Thanks, Ryan. I would say that we have lots of opportunities within our existing customer, including AT&T. AgenTiK is driving a lot of opportunities. Our unique dataset that we bring to the table is helping AT&T and other customers to promote their own AgenTiK plus and promote their own efficiency within operations. So this is still the main target to support our biggest customers. Ryan Koontz: Got it. And, you know, I I could certainly see how the the analytics angle know, is is a is an easy entry point for AI for for RADCOM. The AgenTiK element here, you know, how critical is that to you know, your break to to your breaking into an account today? Or is that really kind of a ladder sale kind of upsell for your basic capabilities? Benny Eppstein: I think it's a combination of both, Ryan. So it is the error analysis capabilities that are driving a lot of opportunities, including in North America and in demand, by the way. And while promoting our own core business, pushing our ACE product within existing new customers and prospects. But, definitely, the AI and the unique data set is a critical ingredient from our value proposition. Ryan Koontz: Got it. Thanks. And you know, with regards to your your data collection, I I assume these are on hardware hardware NICs for the network equipment. The NVIDIA BlueField, where is that in terms of introduction, and what sort of, you know, architecture to use if you're not using an NVIDIA based product? FPGA based? Benny Eppstein: We actually we actually using both NVIDIA based standard server and cloud-native solution in all fronts. And we still believe that our product, our software is the most efficient one out there comparing to our peer competition. Ryan Koontz: Great. Thanks. That's all I've got. Thanks, Benny. Benny Eppstein: Thank you, Ryan. Operator: There are no further questions at this time. Alinda Li: This concludes the RADCOM Ltd. Fourth quarter 2025 results conference call. Thank you for your participation. You may go ahead and disconnect.
Operator: Good morning, ladies and gentlemen, and welcome to Veru Inc. Investors Conference Call. All participants will be in listen-only mode. Please note this event is being recorded. I would now like to turn the conference call over to Mr. Sam Fisch, Veru Inc. Executive Director, Investor Relations and Corporate Communications. Please go ahead. Good morning. The statements made on this conference call may be forward-looking statements. Forward-looking statements may include, but are not necessarily limited to, statements of the company's plans, objectives, expectations, or intentions regarding its business, operations, regulatory interactions, finances, and development and product portfolio. Such forward-looking statements are subject to known and unknown risks and uncertainties, and our actual results may differ significantly from those projected, suggested, or included in any forward-looking statements. Risks that may cause actual results or developments to differ materially are contained in our 10-Q and 10-K SEC filings as well as in our press releases from time to time. I would now like to turn the conference call over to Doctor Mitchell Steiner, Veru Inc.'s Chairman, CEO, and President. Good morning. With me on this morning's call are Doctor Gary Barnett, our Chief Scientific Officer, Michele Greco, our Chief Financial Officer and Chief Administrative Officer, Phil Greenberg, General Counsel, and Sam Fisch, Executive Director of Investor Relations and Corporate Communications. Thank you for joining our first quarter fiscal year 2026 earnings call. Veru Inc. is a late clinical-stage biopharmaceutical company focused on developing novel medicines for the treatment of cardiometabolic and inflammatory diseases. Our drug development program consists of two new chemical entities, small molecules, Novosarm and sabizabulin. The first one, Novosarm, is an oral selective androgen receptor and is being developed as a next-generation drug that, when combined with a GLP-1 receptor agonist, as demonstrated in our company's recently completed Phase 2 quality study, makes weight reduction more tissue selective, focusing on fat loss and preservation of lean mass and physical function, which is intended to lead to greater weight loss compared to GLP-1 receptor agonist treatment alone, with a focus on older patients with obesity. Our second asset, cabozantinib, a microtubule disruptor, is being developed as a broad anti-inflammatory agent to reduce vascular plaque inflammation to slow the progression of and promote the regression of atherosclerotic cardiovascular disease. This morning, we will focus on the update of our obesity program and we will also provide financial highlights for fiscal 2026 first quarter ended December 31, 2025. GLP-1 receptor agonists have been shown to produce significant weight loss in patients who are overweight or have obesity. Unfortunately, this weight loss is tissue nonselective with the indiscriminate significant loss of both lean mass and fat. Of the total weight loss, up to 50% is attributable to lean mass. Although the GLP-1 receptor agonist treatment has resulted in profound weight loss for many patients, the strategy for the next generation of obesity drugs should be a combination therapy with a GLP-1 receptor agonist for patients to lose fat only while preserving lean mass and physical function and bone mineral density for the highest quality weight reduction. Veru Inc. has completed a positive Phase 2b quality clinical trial conducted on 168 older patients with obesity, providing a proof of concept that Novosarm could be that next-generation drug in combination with the GLP-1 receptor agonist to make the weight loss journey more selective for only fat loss while preserving lean mass and physical function during the active weight loss period, but also notably after semaglutide was discontinued and those on monotherapy significantly prevented the regain of both body weight and fat mass such that by the end of the 28-week study, there was greater loss of fat mass while preserving lean mass for higher quality weight reduction compared to the placebo group. In September 2025, we announced a successful FDA meeting providing regulatory clarity for the development of Novosarm in combination with GLP-1 receptor agonist for greater quality weight loss in the treatment of obesity. According to FDA feedback, there are at least two possible regulatory pathways for the development of the Novosarm in combination with GLP-1 receptor agonist treatment for obesity with preservation of lean mass, which are based on incremental weight loss. First, incremental weight loss with at least a 5% placebo-corrected weight loss difference at 52 weeks of maintenance treatment with Novosarm in combination with GLP-1 receptor agonist treatment compared to GLP-1 receptor agonist treatment alone may be an acceptable primary endpoint to support efficacy for approval. Second, if the incremental weight loss is less than 5% corrected weight loss, including similar weight loss at 52 weeks maintenance treatment with Novosarm in combination with GLP-1 receptor agonist treatment compared to GLP-1 receptor agonist treatment alone, but the Novosarm treatment group demonstrates a clinically significant positive benefit such as a statistically significant and clinically meaningful benefit in the preservation of physical function, this may also be acceptable to support efficacy for approval. FDA also confirmed that Novosarm three milligrams is an acceptable dosage for future Veru Inc. clinical development. Now coincidentally, on December 19, 2025, the FDA announced that total hip bone mineral density, that's BMD, assessed by DEXA scan qualifies as a validated surrogate endpoint for drug development in postmenopausal women with osteoporosis at risk for fracture instead of the current standard that requires Phase 3 clinical studies must use bone fractures as a primary endpoint. This is relevant for our Novosarm Obesity program as it's been reported in the scientific literature that GLP-1 receptor agonist therapy affects body composition by also reducing hip BMD. In fact, the semaglutide Wegovy FDA label has recently been updated to include the safety concern of increased risk of hip and pelvic fractures based on the SELECT cardiovascular trial, which is sponsored by Novo Nordisk in over 17,000 subjects. In the SELECT trial, four to five times more hip fractures of the hip and pelvis were reported on Wegovy than in placebo in female patients and in all patients aged 75 and older. The good news for our Novosarm obesity program is that in previously published preclinical studies and rat models of postmenopausal female osteoporosis, Novosarm has been shown to have both anabolic and anti-resorptive activities that resulted in increased bone mineral density. Consequently, this means that distinct from incremental weight loss, or muscle preservation and physical function as primary endpoints, improving BMD in postmenopausal women with obesity receiving a GLP-1 receptor agonist who also have osteoporosis could be another primary endpoint going forward for Novosarm to seek regulatory approval for improving body composition. Now let's turn to the current status of our planned Phase 2b PLATO clinical study. A common and serious clinical and therapeutic challenge of GLP-1 receptor agonist treatments is that 88% of patients with obesity after one year on GLP-1 receptor agonist drug hit a weight loss plateau with a stop losing additional weight. This is based on the Cervant 1 study conducted by Eli Lilly and Company. Unfortunately, 62.6% of these patients still have clinical obesity at the time they reach the weight loss plateau. One explanation might be that the loss of muscle stimulates appetite in patients receiving a GLP-1 receptor agonist to consume more calories, which may be an important reason why patients hit that weight loss plateau. Novosarm has been shown in clinical studies to directly burn fat, preserve muscle, increase physical function, and burn more calories, which would help break through the weight loss plateau leading to incremental weight reduction. Veru Inc.'s planned Phase 2b PLATO clinical study is a double-blind placebo-controlled study to evaluate the effect of Novosarm three milligrams on total body weight, fat mass, lean mass, physical function, bone mineral density, and safety in approximately 200 older patients aged greater than or equal to 65 years of age who have obesity with a BMI of greater or equal to 35 and are initiating semaglutide treatment for weight reduction. The primary efficacy endpoint of the study is the percent change from baseline in total body weight at 68 weeks. An interim analysis will be conducted at 34 weeks to assess the percent change of baseline in lean body mass and fat mass as measured by DEXA scan. The key secondary endpoints of total fat mass, total lean mass, physical function using the Stair Climb test, bone mineral density, and a patient-recorded outcome questionnaires for physical function, HbA1c, and insulin resistance. Semaglutide was selected as a GLP-1 receptor agonist for the Phase 2b PLATO study to build on Veru Inc.'s previous clinical experience using Novosarm in combination with semaglutide in the Phase 2 quality clinical study. Further, there's now an oral form of semaglutide which may be used in combination with oral Novosarm in future Phase 3 clinical studies, making the potential bridging of the future Phase 3 clinical studies data to the Phase 2b PLATO Novosarm plus injectable semaglutide data possible. In contrast, tirzepatide injectable does not have an oral formulation. The principal investigator for the Phase 2b PLATO clinical trial will be again Steven Heimsfield, MD, Professor and the Director of the Body Composition Metabolism Laboratory at the Pennington Biomedical Research Center in Baton Rouge, Louisiana. The clinical study is expected to begin this quarter. An interim analysis to assess change in lean body mass and fat mass measured by DEXA will be conducted at 34 weeks, which is anticipated to be in 2027. I will now turn the call over to Michele Greco, CFO and CEO, to discuss the financial highlights. Michele? Michele Greco: Thank you, Doctor Steiner. On October 31, 2025, Veru Inc. completed an underwritten public offering of 1,400,000 shares of our common stock, pre-funded warrants to purchase up to 7,000,000 shares of our common stock, accompanying Series A warrants to purchase up to 8,400,000 shares of our common stock, and accompanying Series B warrants to purchase up to 8,400,000 shares of our common stock at a public offering price of $3 per share of common stock and the accompanying Series A and Series B warrants. Net proceeds to the company from this offering were approximately $23,400,000 after deducting underwriting costs and discounts paid by the company. In the prior year period, on December 30, 2024, Veru Inc. sold the FC2 female condom business to Clear Future Inc. In our financial statements, all direct revenues, costs, and expenses related to the FC2 Female Condom business are classified within loss from discontinued operations net of tax in the statements of operations. Now let's review the results for the three months ended December 31, 2025. Research and development costs decreased to $1,300,000 from $5,700,000 in the three months ended December 31, 2024. The decrease is primarily due to a wind-down of the Phase 2b quality clinical study for Novosarm as a treatment to augment fat loss and prevent muscle loss, which was completed during fiscal 2025. General and administrative expenses were $4,100,000 compared to $5,200,000 in the prior quarter. The decrease is primarily due to a decrease in share-based compensation. We recognized a gain on the sale of NTAPI assets of $695,000 in the prior quarter, which is based on nonrefundable consideration related to promissory notes previously due to Veru Inc. As the promissory notes are now settled, no additional gain is expected in future periods. In conjunction with the sale of the FC2 Female Condom business, we recorded a gain on extinguishment of debt of $8,600,000 in the prior year's quarter related to the termination of the residual royalty agreement. During the prior fiscal year, the company entered into a settlement agreement with On Kinetic Inc., whereby the company received a cash payment of $6,300,000 in Series D preferred stock and a warrant, which had a combined fair value of $2,500,000. The loss associated with the change in fair value of securities held related to On Kinetics was $100,000 compared with $300,000 for the prior period. The bottom line result was a net loss of $5,300,000 or $0.26 per diluted common share, compared to a net loss of $8,900,000 or $0.61 per diluted common share in the prior year's quarter. For the prior period's quarter, the net loss included a net loss of $7,100,000 from discontinued operations. Now looking at the balance sheet. As of December 31, 2025, our cash, cash equivalents, and restricted cash balance was $33,000,000 compared to $15,800,000 as of September 30, 2025. On both December 31, 2025, and September 30, 2025, there was $100,000 of restricted cash related to the sale of the FC2 female condom business. Our net working capital was $29,700,000 as of December 31, 2025, compared to $11,100,000 as of September 30, 2025. The company is not profitable and has had negative cash flow from operations. Based on the company's current operating plan, our cash as of the issuance date of these financial statements is expected to be sufficient for the company to fund operations through the interim analysis in the Phase 2b PLATO clinical study to assess percent change from baseline in lean body mass and fat mass as measured by DEXA scan. During the three months ended December 31, 2025, we used cash of $6,200,000 for operating activities, compared with $11,300,000 used for operating activities in the prior period. There was no cash generated from investing activities in the current period. For the three months ended December 31, 2024, we generated cash from investing activities of $17,200,000, primarily from proceeds from the sale of the FC2 female condom business of $16,200,000. Net cash provided by financing activities for the three months ended December 31, 2025, was $23,400,000, which were the proceeds from the sale of common stock and warrants in an underwritten public offering net of commissions and costs. We used cash in financing activities for the three months ended December 31, 2024, of $4,200,000 related to the change of control payment to SWK pursuant to the residual royalty agreement terminated in conjunction with the sale of the FC2 female condom business. Now I'd like to turn the call back to Doctor Mitchell Steiner. Doctor Steiner? Mitchell Steiner: Thank you, Michele. With that, we'll now open the call to the question and answer session. Our first question comes from Edward Nash with Canaccord. Please go ahead. Hey, good morning, guys. Thanks so much for taking my question. I wanted to first just add just a couple of questions. One was why not use the oral semaglutide in this study as opposed to having the optionality in the Phase 3? Is it just because of its relatively new now, its lack of real-world data? I think the reason is that trying to minimize potential difference between what we saw in the Phase 2b quality study and what we want to see in the PLATO study. And so the oral form is not exactly the same as the injectable. The injectable is a little bit better. So that means that if we show what we need to show in the Phase 2b PLATO study, then we should see even better response with an oral semaglutide that doesn't do as well as the injectable. So really it's been calculated, took a step back and said, why do you want to change and add tirzepatide now? And since you created a completely different study with different outcomes potentially. We're trying to be safe as we move towards now. With that said, it's, you know, somatostatin is the active ingredient in both the injectable and the oral. And so that could be easily bridged and what you're trying to bridge is not the efficacy, because we're going to be testing the efficacy in the Phase 3, which you want to bridge is into all the safety. And you should be able to do that. Got it. Thank you. And just one follow-up is on the with regards to the function aspect, functional aspect of the FDA allowing that as a potential approval path preservation of function. Did you guys specifically discuss with the agency about stair climb test and the specific questionnaires that you're looking to employ to determine whether or not they consider those to be sufficient for that endpoint? Yeah. So we did speak to the agency specifically about stair climb. As you know, we've done five now with the quality studies, six studies previously done with Novosarm and done by our company here at Veru Inc. with 1,000 patients using StairClimb. So we have twenty years of experience with StairClimb. And it's not just talking to the agency with this trial and other trials, also every major scientific group. And stair climb still comes out as the best way to measure what's happening in this patient population. It's most sensitive to declines and it's very sensitive to anabolic intervention. With that said, the main comments that the FDA brought up was in the conduct of the study, they wanted to make sure that we did duplicate stair climb runs. In other words, the patient goes up the stairs once and goes up a second time and then you average that. And they also wanted to make sure that in addition to loaded that we did unloaded. What that means is that when a patient goes up the stairs, they unload it means they just go up just as they are. Loaded means that you add a backpack with some weight and the concept there is just kind of clever is we're trying to normalize weight. And the way you normalize weight is that you just add back the weight that they lost when they come back to that final visit. And you do that with the plates. And so this way, you're actually measuring and challenging the patient's muscle. So that's why it becomes such a sensitive measure of intervention. And so we had those kinds of discussions with the FDA. What's open is and what we're going to focus on in the PLATO study is also what happens with the patient-reported outcomes and how the patient-reported outcomes help to further define how patients function and feel. And so that's why the Phase 2 makes more sense than jumping into a Phase 3 because that will help with the clinical meaningfulness of what we're actually measuring objectively. Got it. Thank you very much. And the next question comes from Rohan Mathur with Oppenheimer. Please go ahead. This is Rohan on for Leland. Thanks for the question. I just wanted to ask on the interim analysis plans. Are there any pre-specified decision rules with respect to futility or alteration of the sample size that are part of the criteria there? Thank you. Sure. So I have Doctor Gary Barnett, our Chief Scientific Officer. And Gary? Yes. No, there is no futility analysis or sample size re-estimation associated with this interim analysis. And as you know, the primary endpoint is weight loss. And so the interim analysis is looking at lean mass and fat mass. And so the real purpose of it is to gain confirmation that we're heading in the right direction, meaning that you're seeing the lean mass preservation and the additional fat mass loss that would at 34 weeks, that should translate to 68 weeks, a weight loss benefit. And so from a statistical standpoint, by not looking at total weight loss, plus it's too early anyway, at 34 weeks, you're not taking a statistical penalty or an alpha hit at the interim, which will affect the amount of alpha spend you have at the end of the study. Got it. And just one more for me. You go down the route of assessing functional benefit and in the case that maybe less than 5% of weight loss is observed, is there any sense for what degree of weight loss needs to be seen and is that counterbalanced by the magnitude of functional benefit? Yes. So as I said in my public statements, that question has come up before. So greater than 5% alone is weight loss, incremental weight loss you're in. If it's less than 5% and the weight loss could be similar to the GLP-1 receptor agonist, meaning that you didn't see incremental weight loss difference at all. But to show the physical function benefit, then that can be a basis for approval going forward. Understood. Thank you. Ladies and gentlemen, this concludes our question and answer session. I would like to turn the conference back over to Doctor Mitchell Steiner for any closing remarks. Thank you. I appreciate everyone who joined us on today's call and we look forward to updating you all on our progress in our next investor call. Thank you again. The digital replay of the conference call will be available beginning 12 p.m. time today, February 11, by dialing +1 855-606-658 in the US and +1 (412) 317-0088 internationally. You'll be prompted to enter the replay access code which will be 7414536. Please record your name and company when joining. The conference call has now concluded. Thank you for attending today's discussion.
Jonas Ström: Okay. Good morning, all, and a warm welcome to ABG Sundal Collier's Q4 results presentation. Before we kick off the presentation, I would like to mention that we will, as usually have a Q&A session after the presentation and should you want to raise a question, please use the Q&A function in Teams, and we will answer all your questions in turn. We ended the year on a high, and we are entering 2026 from a position of strength. We have continued to build momentum during the year, and we have proven our ability to deliver with market conditions in 2025 sometimes being helpful and sometimes being anything but helpful. We have continued to focus on what we can influence, namely, how we advise our clients, how we execute on our advice and our own growth strategy and how we resolve situations that arise either because of market conditions or client-specific circumstances. And we have continued to focus on ensuring our own profitability, also short term, enabling us to make long-term investments to take investment costs that will drive long-term profitability. Business-wise, we are happy to observe continued strength within our debt capital markets operations and not least within our M&A operations with record high revenues for us in 2025. Conditions in equity capital markets have gradually improved during the year and IPO activity picked up somewhat in 2025, especially in Sweden. Even though IPOs tend to be the product that is the most sensitive in our product portfolio to general volatility, either economically or politically induced, we observed that our backlog when it comes to IPOs is in a better shape entering 2026 versus 2025. We continue to improve our firm to become the Nordic investment bank of choice, the investment bank of choice for clients, talents and investors. We continue to focusing on strengthening our positions in our core operations as well as developing our business by broadening our offering to new client groups, such as private banking and alternative investments. On that note, strengthening our position, we are pleased with having succeeded in joining forces with FIH Partners in Denmark, the by far top-ranked independent financial adviser in Denmark for a decade. And we are doing that at a point in time with all-time high revenues in our current Danish operations. By continuing on this track, we are committed to our long-term targets of increasing revenue per head by at least 20% versus the 2024 level and to deliver a mid-cycle operating margin of at least 25%. So in the fourth quarter that just ended, this resulted in us if we flip to the next slide, looking at the numbers, please. Delivering revenue growth of 15% to NOK 720 million. This growth is a result of, especially in the quarter, a strength in our M&A operations. But looking at the entire year, we have had solid contributions from all geographies and product areas as well as sectors. In the full year, we ended up with revenues of NOK 2.172 billion, a top line growth of 12% with, as alluded to earlier, broad contribution from all geographies with Denmark delivering all-time higher revenues and solid growth from both Sweden and Norway as well. Continuing with our operating margin that increased with 2 percentage points from 21% to 23%. That includes -- the 23% includes costs for setting up our new business initiatives, private banking and alternative investments and that had a negative effect on the operating margin of some 3 percentage points in 2025 versus some 2 percentage points in 2024. We delivered earnings per share at NOK 0.26 in the quarter, up from NOK 0.21, an increase of 24%, highlighting the operational leverage in our business. Year-to-date, our EPS ended up at NOK 0.66 versus NOK 0.56 on a fully diluted basis last year, including the investments once again in our new business initiative, having a negative impact on EPS by NOK 0.07 this year and NOK 0.06 last year, respectively. So let's continue looking at the macro and market backdrop. The markets continue to be supported by low volatility in the quarter, even though we had some spikes in the quarter with VIX sitting well above the 20 level a couple of times, introducing short-term hesitation amongst the investor community. But we are at a low level, and we feel that the conditions have stabilized. Credit conditions have also continued to improve. Credit spreads, as illustrated on the right-hand side of this chart, continue to tighten, and we have seen the very strong conditions in debt capital markets in Q4 continuing into the start of this year. So with strong credit conditions, low volatility and a market that seems to be very, very reluctant to take everything that is stated from a political point of view. As granted, we feel that we have stronger conditions for us to deliver looking at the market situation 2026 versus 2025. Continuing with the next slide and looking at how our main markets within Investment Banking have performed in the Nordics during the year and the last couple of quarters and starting off with equity capital markets. The headline number is, of course, impressive with an increase of 77% to NOK 139 billion in total volumes in the fourth quarter, 2025. This is slightly distorted by one or two large transactions and the biggest one being the DKK 60 billion rights issue in Orsted in Q4, a transaction that is typically not part of our addressable market. Excluding that and maybe one other one-off, so to speak, transaction, ECM volumes were actually down both in the quarter and full year, as you can see, excluding these rights issues on the left-hand side of the chart. Debt capital markets on the contrary, the headline number is very representative for actual underlying performance in markets being very, very strong. 2025 was a record year in terms of volumes overall. And we are pleased with our own position within DCM, strengthening our position in Sweden to become the #1 player in DCM high-yield 2025. The uptick and recovery seen from 2021 is, to some extent, of course, cyclical, but not only that, it is a structural growth we are witnessing. The very vibrant Nordic DCM market has attracted many non-Nordic issuers as well looking to tap into the opportunities offered here. And finally, looking at the M&A market, that continues to be, well, stable or muted depending on how you want to look at it. In the absence of the expected pickup in activity levels, such as structured processes, not the bilateral ones we've seen dominating the arena so far, number of transactions is still rather muted. Volumes actually down by 5% in the quarter year-on-year. And more or less flat, up by 4% full year -- over full year last year. Okay. Moving over, looking to the next slide on how we performed against this backdrop. In our Corporate Financing operations, we delivered revenues at NOK 736 million in the full year, which is down by 7% versus 2024. As you can see on the right-hand side of this slide, we closed numerous transactions during the quarter with a widespread between both ECM and DCM sectors and geographies. A couple of IPOs during the quarter, one in India for Orkla and one in Norway and lots of secondary placings, our DCM operation was highly active, as you can see in the quarter with quite a few large transactions completed. Moving over to the next slide, please, looking at how we did in our M&A business. Well, we delivered what can be, I'd say, best described as a stunning set of numbers. Revenue accelerated during the year, with Q4 ending up at NOK 334 million, up by 55% and versus Q4 last year, and we reached a revenue level of NOK 829 million for the full year, which is up by 44%. This is by far a record in terms of M&A revenues for us, outperforming the general activity in the market. And as you can see on the right-hand side of this slide, we closed quite a few high-profile transactions during the quarter, yet again, with a decent spread between sectors and contribution from all geographies. Let's continue with looking at our Brokerage and Research operations. The headline number in terms of revenues has been remarkably steady over the last 4 or 5 years, with revenues around the NOK 600 million mark. We actually reached above the 2021 post-MiFID world record level with NOK 606 million in revenues, which is up by 7% year-on-year. But looking under the hood, there are differences, as always, between our different desks, locations and products, with Norway equity sales yet again, delivering impressive growth, not least from new brokerage clients and I'd say, stability elsewhere. I would also like to highlight the strong performance within our Research department. We cover some 400 companies, which is amongst the highest of all Nordic investment banks, which is crucial for our ability to deliver on both Brokerage and IPOs over time, of course. In the latest Prospera survey, we achieved top 3 positions in 23 sectors, including the #1 position in important sectors such as Bank and Financials in Sweden, and Shipping, Seafood, Materials, Real Estate and Construction in Norway. Well done, all. Okay. So over to the next slide, please, looking at our headcount that has been rather or very stable, I would say, over the last couple of years. We have a continued focus on growth of front staff. We have in these numbers included our new business initiatives of which private banking is the biggest one, which is in line with our strategy. But the average year-to-date of 332 FTEs is basically flat versus same period last year. We are ready to grow that number now. We have, meanwhile, slimmed -- continued to slim our Support and Operations division slightly, and we will continue to focus on leveraging our well-invested platform further, not least as illustrated by the acquisition of FIH in Denmark. And as you can see on the right-hand side of this slide, we have come a long way in our target of improving revenue per head by at least 20% versus 2024. The task ahead now is to keep and improved that level slightly while increasing number of FTEs, mainly on front operations. That is the most important definition for us when it comes to continued profitable growth. Okay. Let's continue looking at our operating cost level. That increased by 10% to NOK 1.681 billion, which is an increase by, yes, 10% basically. While we have kept the compensation to revenue ratio steady around 55-plus percent, the increased profitability obviously is the main driver for the increase in costs due to our variable remuneration model. IT systems, where inflation comes with a bit of a lag, increased costs for IT systems and increased activity levels on our front operation contributes further to that slight cost increase, as do our investments in our new ventures, even though the year-on-year effect is marginal. But looking at our underlying fixed cost base in Q4 eliminating the still negative effects from the weak and -- weaker NOK, especially in relation to SEK, the underlying cost base is flat year-on-year. So let's flip to the next slide and talk about -- a bit about our capitalization and the proposed dividend, which is NOK 0.55 per share. That proposal reflects our commitment to distribute excess capital back to shareholders through cash dividends and buybacks. It should be noted that the core capital effect from the acquisition of FIH, the goodwill effect, is some NOK 100 million or NOK 0.18 per diluted share. NOK 0.55 in dividend allows for both a healthy cash distribution and buybacks while maintaining solid capitalization, as you can see on the right-hand side of this graph. So before we conclude, I would like to draw your attention to our acquisition of FIH Partners. By joining forces with FIH, we will significantly strengthen our position in Denmark. We are joining forces with a firm that is #1 within Danish M&A and also has been ranked as the #1 financial adviser in Prospera for basically the last decade. This is a firm that has closed over 200 transactions with some EUR 110 billion in deal value. We are welcoming some 27 professionals to the ABG family with a combined plus 200 years of experience. If we continue with the next slide, yes, we are joining forces also with FIH at a point in time where, as I alluded to earlier, we are delivering our best year ever in Denmark. From our combined #1 position in Denmark, we can now offer a much broader product portfolio, such as bonds or IPOs, for instance, to a larger client group. We are convinced we are a perfect fit with both of us having a strong partnership culture and eagerness to win. We take nothing for granted, but our own ability to deliver top-notch services and advice to our clients as well as potential clients. By joining forces by -- with FIH, our clear ambition is to fortify the #1 position within Danish M&A and build a market-leading position within ECM and DCM. This is exactly in line with our strategic ambitions to strengthen our positions in core markets and to leverage our already well-invested platform. So with that, I'd like to summarize the key takeaways from Q4 and the full year. We had a strong year and a strong quarter, not least. In the quarter, revenue is up by 15% and 12% for the full year. This year, the main driver behind our growth, both in the quarter and full year is our remarkably strong M&A operations. Having said that, ECM conditions improved during the year and the IPO window reopened, particularly in Sweden. DCM continued on a high level, and we kept our strong position overall in the Nordic high-yield segment. Brokerage and Research continued to deliver stable and solid revenues throughout the year. And we demonstrated our ability to execute on our strategy with the acquisition of FIH, at the same time as ABG Denmark delivered its best year ever. The development over the last couple of years with better contribution and stronger positions across all geographies has strengthened our diversified business model further. So with that, I'd like to open up the floor for questions should there be any. Operator: Yes, we have received one. That is, what is your current pipeline visibility? Jonas Ström: Yes, that's a very good question. Pipeline is one thing in terms of gross numbers, the absolute number. Quality is another thing. And I think the best way to measure quality, high versus low, is to look at how diversified the pipeline is. Diversified in terms of products, sectors and geographies. And from that point of view, I'd say that we are in a better shape pipeline-wise than in a long time. As always, the obvious disclaimer is that market conditions short term can obviously be a bit of an obstacle. But once again, having such a diversified pipeline entering 2026 makes me comfortable we are on a continued path to growth. Operator: I believe that was it from the audience today. Jonas Ström: Okay. Yours truly and Kristian Fyksen, our CEO in Norway, are ready to take on any questions, should you have any follow-ups. We will be talking to media and we stuck short term, but please do not hesitate to reach out. I'd suggest that you contact Anna Tropp if you have any further follow-ups, and we will try to revert as soon as possible. Thank you for tuning in this morning.
William Lee: All right. Good morning, everyone, and welcome to our interim results presentation. It's great to be back here in-person seeing you all. After -- I think, it's been informed -- quite a long gap. It's also very happy to be doing it on the back of a good set of H1 results, which always helps. So let's crack on and have a little look through these. In terms of structure -- actually, I'm going to go through in terms of some of the highlights. Marc is going to talk through the financials in more detail, and then I'm going to give some highlights before we do the Q&A on our progress against some of our strategic priorities. So first of all, positive news in terms of revenue with this real pickup that we saw in Q2. Still underlying quite mixed market conditions, two standby areas probably for us has been the demand from our customers who make the equipment, the semiconductor manufacturing equipment, and that's for our encoder product line and also significant interest from the defense industry, which is a more broader cross sector of products. Real significance, I think, for us, though, is not just the responding to the market conditions and the great job we do there, but it's actually on our emerging businesses and the progress that we are making. So these are the bets that we are placing, the investments that we're making for the future for the long term of Renishaw. And I'm going to go through with you later on some of the progress that we have made there. And thirdly, I just wanted to stress -- clearly, we are an organization. We pride ourselves in our investment in engineering, in R&D for our long-term growth. The output of that is what is key, and we have had some really significant new product launches recently, genuine excitement, particularly from our sales team on the opportunities that they now see for making the most of these. In terms of operating margin, improvements there despite currency headwinds, and we'll look through there. And actually, we're really looking forward to a strong revenue and profit growth for the year ahead, and we released our guidance for that. We have a little look through some of the key performance indicators and some of the themes coming through here. First of all, than the -- very much that strong growth coming through in Q2. As I said, some areas strong. Other areas such as our sales of machine tool sensors, CMM sensors, the machine tool builders, the CMM builders, they're still quite sluggish overall actually. But the -- the one we always talk about is the extreme is the German machine tool market, which is still quite challenging. In terms of operating margin and flow through on to the bottom line, then we have taken actions there to improve to support this. We had a GBP 20 million cost reduction exercise and also the closure of our drug delivery business, which has supported that margin development. Also as a business, we very much are focusing on cash and cash flow conversion of making sure we are making the most of the assets that we've invested in over the last few years. We have seen some pressure on that though. We have had the impact of restructuring costs on that number. And also, we are investing at the moment in working capital as we respond to the production demands of our customers. Okay, that's some of the highlights. I'm going to hand over to Marc now to go through the financial numbers. Marc Saunders: Great. Thank you, Will. So I'm going to start by looking at some of the highlights from our income statement. As well as I said, we've had a record first half with reported revenue growth at 7.1%, rising to 11.5% at constant currency. We've seen growth in all 3 segments, and we've also seen an improving order book in all 3 segments and also all 3 regions. When we look at regional revenue performance, however, the picture is a bit more mixed. So if we look at the Americas first, really strong growth here, 15% at reported rates -- more than 15%, more than 20% at constant currency. And that was driven by strong demand coming through for high-value capital equipment, so things like our additive manufacturing machines or 5-axis co-ordinate measuring machines. So that's been a real success there. This region has also benefited from around GBP 5 million of higher pricing and surcharging to offset tariff duties that were introduced during 2025. When we look at APAC, also a really strong performance here. So growth of more than 10% at reported rates, more than 15% at constant currency. And here, the key positives were rising demand from the semiconductor and electronics manufacturing equipment sector for our position encoders and also really good growth, really good demand for our Equator flexible gauge from the consumer electronics subcontract manufacturers. So that's the story in APAC. EMEA was a bit of a different picture. Here, turnover down around 5% at both reported and constant currency basis. We've been reporting some subdued demand here in the EMEA region for a little while and that continued throughout the first part of the half, but we did see a pickup in demand later in the period, and we ended the period with the order book stronger. We also implemented a new sales ERP system in September in some territories, and that did have an impact during the half. But hopefully, you can see from the Q2 versus Q1 performance, we've seen a real step up here in the region, it's actually the biggest step up of all of our regions from Q1 to Q2. So we're moving in the right direction there. On an operating profit level, an increase of 11.4% to GBP 57.5 million and an improved operating margin by 0.6 percentage points. The moving parts there, as Will has touched on currency in one direction, organic margin improvement and another more of that in just a moment. But when we look at the income statement, perhaps the most notable thing you'll see is an 8.5% reduction in our gross engineering costs, which reflects some of the cost reduction actions that we've taken in the last 6 months. Operating -- sorry, profit before tax grew by a similar amount, 11.5% to GBP 64.1. Effective tax rate in the period was 21.1% at reported rates rising to 21.8% on an adjusted basis, and that's perhaps more representative of what we expect to see coming through in H2. And then finally, our dividend payment remains unchanged at 16.8p. Right, let's take a look at the operating margin evolution, and I'm comparing now the first half of the prior year with the first half of this year. So we're starting with 15.1% that we reported last year. And on the left-hand side of this bridge, you can see the external headwinds that we face largely from currency, but then being offset by the organic margin improvement we've generated through cost reduction and operating leverage. Starting with currency, that's been a headwind for us for some years now. We've seen progressive weakening of the U.S. dollar and the Japanese yen against sterling over several years. And we are exposed, of course, to this currency fluctuations because many of our costs are in sterling. Most of our revenues are in other currencies. And so we seek to manage that through the use of hedging contracts, forward currency contracts over 24 months. And over the last few years, our contracts have done a good job in helping to offset some of the movements we've seen on a year-to-year basis. And indeed, last year, when we looked at the prior year, we saw a particularly strong performance from our contracts and that was as a result of us taking them out at the time when sterling was much weaker than it is today. So they paid out handsomely last year. That has not been repeated to the same extent, but when we look at this year, our contracts have still done a good job, raising about GBP 5 million of revenue to offset roughly GBP 5.2 million of operating margin change as a result of moving exchange rates. But overall, when we wrap that up, we've got GBP 8 million less in currency income, in contract income, GBP 5.2 million of movement in currency, so GBP 13.2 million, 3.6 percentage points of margin. So a significant headwind. With tariffs, that's impacted our revenues by around 1.4%, but had no impact on operating profit, and as a result, has had a small degradating -- degrading effect on operating margin. Moving to the positive side of the equation. Cost reduction. Will mentioned, we ran two cost reduction programs over the last year, a company-wide operating cost reduction initiative aiming to remove GBP 20 million of cost from our run rate on an annualized basis. And we also closed down the loss-making drug delivery aspect of our neurological business, aiming to save around GBP 3 million on an annualized basis. Pleased to say those savings have started to come through. The combined impact of those programs has been roughly a 7% headcount reduction for us at a group level to just below 5,000 employees at the end of December. And we've seen GBP 9 million of savings coming through, so 2.4 percentage points in the first half, and we expect to achieve that GBP 23 million of annualized savings on an ongoing basis here forward. So that's coming through as planned. The other side of it has been operating leverage. So we've generated an 11.5% constant currency growth in the period. That has resulted, obviously, in more gross profit, which is more than offset inflationary pressures that we've seen in our cost base around things like pay benefits, health insurance. All right. So that's the margin story. I'm going to now just walk through each of the 3 segment performances for you, starting with Industrial Metrology, our biggest segment. So here, the story is solid revenue performance growth of 4.3%, rising to 8.8% on a constant currency basis. The growth drivers here were our emerging systems and software businesses. So these are our 5-axis co-ordinate measuring machines, our flexible gauges and metrology software that supports both of those products and helped use us to make the most of them. It's really pleasing to see growth in this area. These are emerging businesses, and we're really targeting top line growth. And here is a key part of our growth strategy. So it's really pleasing to see that coming through. Another success story here is our calibration products. This is an established product line, and we've seen growing demand here, particularly coming from the semiconductor and electronics manufacturing sector. So those machine builders actually use our calibration products in their factories to help them to make and pass off their machines. So we've seen rising demand coming from there as activity levels have risen. By contrast, we've seen flat sales for the sensor part of this segment. So that's our co-ordinate measuring machines, machine tool probes and also the styli and accessories that go with them. So that's been flat overall, some high points in Asia, in consumer electronics, but weaker general demand in -- particularly in Europe and particularly in the automotive sector. So when we look at the operating performance of this business, it's roughly flat in margin terms. We saw essentially currency headwinds being pretty much offset by the combination of cost saving and operating leverage, but we ended up at pretty much the same operating margin. Let's move on to Position Measurements or our other large segment. This did strong growth in the period. So we saw 7.4% rising to more than -- yes nearly 12% sorry, at a constant currency basis. And this was something of a game of two halves. We definitely saw a really notable pickup in this business in the second quarter. And we've got great momentum going into second half. The drivers of growth here were strong performances from our established open optical and magnetic encoder businesses. We've mentioned semiconductor and electronics manufacturing equipment. That's been a key driver. But actually, we've also seen strong demand from general factory automation and robotics, particularly for the magnetic encoded line. By contrast laser encoders have seen a reduction compared to a really abnormally strong period in the prior year. These are used in front-end semi and wafer inspection. And yes, we had an abnormally strong comparator to go against. But we're actually really confident in the long-term future of this business. We think this is volatility rather than a trend. We've seen rising order book, and we've launched new products in this area. So we're really confident about the long-term prospects. When we look at operating performance, we've seen similar effects that we saw in the Metrology business. So currency headwinds offset by cost savings to an extent, but here, the product mix change has been quite significant in this period comparator. So we've reduced by about 4 percentage points up to 23.4%. So still a strong for operating performance here. And I think the more meaningful comparison to take is if you look at the comparison against the whole of last year, which was 22.5%. So the first half really was a bit of an abnormal period. So we've got good momentum here, good top line growth and improving underlying margins. Finally, Specialized Tech. So the smaller segment, but the one that's grown the fastest in this period. So growth of more than 25% at a constant currency basis. So really strong growth. And that has been almost largely coming from our Additive Manufacturing business within here. So we have a strategy here of selling to key accounts, and we've seen many of those adding to their fleet of machines as they ramp up production. But we're also targeting new customers, and we've seen quite a lot of those coming in, in this period, and we've seen particularly strong demand from both new and existing customers in the aerospace and defense sector. That's been the notable change in demand in the period. Spectroscopy down slightly, slightly stronger in America, slightly weaker elsewhere, but we've seen good order momentum on that recently, normally has a stronger H2. So looking forward to that this year. And in neurological, that's the smallest part of this product group, and the key sort of thing here is that we completed the closure of the loss-making drug delivery aspect in the period. So when we wrap all of that up and look at the moving parts on margin, we can see a real step change in performance here, 22 percentage points of margin improvement. We're now just short of breakeven on this segment. The moving parts there, yes, currency, again, slightly less proportionately than the others because of slightly different regional sales patterns. We've seen cost reduction, obviously, coming through with both the company-wide program and the focused drug delivery activity. But the large majority of the margin improvement coming through here is from operating leverage with the growing AM business. So that's been the key driver of margin improvement. Right, lastly from me, just a quick look at return on capital and cash generation. So we focus on return on invested capital to make sure that we're allocating resources to profitable investments. We saw an improvement here to 13.2%, so 0.6 percentage points. We have a target of 15%. So clearly, we have some way to go. And the way we're going to get there is by driving our operating margins, but up to our target range and also keeping a lid on investment in capital. We have had a period of higher investment in recent years in property. That's now behind us, and we're operating at a lower level of CapEx. So in the first half, CapEx was GBP 17 million, and we're expecting to run at a rate of about GBP 40 million for the year as a whole, and that's focused mainly on plant and equipment to support capacity and productivity growth. And that's part of the cash generation story. The other side is working capital. We have ramped up working capital in the period. Obviously, we've seen a bit of an inflection in demand in Q2 and that's triggered us, obviously, to increase our production rate, drawing in more piece balls, more work in progress, et cetera. So that has -- we've seen that during the period. So our cash conversion overall is just below our target at 68%, but we think we're doing all the right things here in terms of keeping a lid on CapEx and making sure we're supporting growth with our balance sheet. Finally, our cash balances, currently just over GBP 240 million at the end of the period, so down compared to the summer, and this reflects the outflows that we've seen on the cost reduction activities, on working capital and on the dividend payment in respect of H2 last year. All right. I think that's enough for me. I'll hand back to Will. William Lee: Lovely. Thank you very much, Marc. So, as I said, I'd like to now talk through some of our strategic priorities and a little bit of a look more into the future. And I'm going to focus on the first 3 of these because I think the cash generation and ROIC, we have already touched on. So the first area here is the key strategy for us, which we've always talked about of long-term growth through product innovation. It's our key overriding strategy. To set the scene for this. I just want to reflect back firstly, on our long-term value creation model, something we've shared and many of you will be familiar with. Just to go through, if we look on the left here, then we can see that the markets that we operate in, that GBP 6 billion addressable market, and really most importantly, the fact that they are favorable markets that we think on average, are growing by more than 5% a year. You can see the drivers in the 4 boxes around the addressable market. What we've seen recently probably is acceleration here, all the news on AI and the data centers there really feels like it's accelerating the growth from the electrification area there. We are certainly seeing, I think, continued acceleration of our customers also looking at the adoption of the automation and so had to automate processes right across from machining to metrology, but for a range of things there. And we're also seeing probably a broader one, which maybe cuts across slightly differently with all these of the expenditure on defense. And it's really how do we help customers there with manufacturing agility, ramp-ups, new technologies to go in there. So positives, some changes going on there from our market. The key bit for us then is how do we outperform. And on the top right, you can see those 3 key themes. So the first is growing in existing markets. This is how do we sell more sensor technology normally to the machine tool -- the machine builders around the world, whether that is semiconductor or machine tool. And we'll also talk -- we'll often talk about this in terms of the number of dollars we get per machine tool spend or sold for the machine tool industry, for example. Next, increasing technology value is about us selling the increasingly complicated systems. So capital goods together with the software to enable them. And then thirdly is looking in terms of moving into new markets. And to be clear, this is very close adjacent to new markets to where we are already operating. With all of these, the innovation side being disruptive, having the USPs is absolutely key for us to succeed and give our sales teams around the world, the strongest advantage that we can. I'm really pleased that actually, despite reducing engineering expenditure, what we are seeing is a really strong pipeline of products that we have recently launched. And also, we've got a really healthy pipeline of products to come through for the future. I just want to highlight a few that are kind of really key for our strategy and for our success. So if we first will look at Industrial Metrology, we've had a really strong reception for the Equator-X and MODUS IM Equator software that goes with it. Equator-X brings very high-speed measurement to the shop floor, and it does it without the need for a master part to compare with. So our customers immediately get the benefit that it brings. The real enabler with it is the software, which dramatically deskills the level of knowledge needed to be able to program the device. So what we have with the combination of these two is, amazing performance on the shop floor, Metrology where you need it at the point of manufacture and also far simpler for our customers to deploy and far more flexible in terms of the range of different parts that they can measure. This is really key for us. You can see there's excitement from our existing sales team all around the world and what they can do with the customers that liked our existing products but need this. But there's also excitement in terms of the new routes to market that we can open up. So people who are selling already a machining and manufacturing solution where this can be a part of it, they can own it and they can sell it. So a lot going on there and a lot to do. From position measurement, Marc talked earlier about -- with our laser encoder product line being sold into the wafer inspection, the great thing here is this is always a market where the challenges of the next generation of wafer technology is getting smaller, these customers always have really tough metrology challenges. And we've really stepped forward with our next generation of laser encoder in terms of the performance that we are now giving to those customers. Again, had a chance to meet some of them recently, really positive on the relationship that we have with them. ASTRiA, we have talked about. So this is actually a new area for us using inductive. Again, it's been really well received by the market in terms of the metrology performance that it delivers. And then finally, from a specialized technology point of view, Strada is our new Raman instrument. And Raman traditionally is an instrument used for the Raman expert in the Raman map who will do things. Strada is designed to simplify. It automates the Raman process from a hardware, dramatically simplifies the software. So it's Raman for the non-Raman person. So if you want to solve a problem, you can do it with this, you don't need to know anything about the technology that is inside. So this has opened up different opportunities, different markets for us with Raman. And finally, LIBERTAS is new software that we have launched to go with our Additive Manufacturing business. So what this does is, when you are making a part additively, you have to put in supports to hold it in place? And what LIBERTAS does is by doing very clever novel scanning strategies dramatically reduces the number of supports that you need. So what this does is it speeds up the cycle time. You don't have to build these supports, you save time. You save waste because you're not processing the material. And you also save post processing time because there's a lot less than the support material to remove after the build. So it's pushing forward the productivity of our machine for our customers. What it also does actually is really improve. The tricky service on additive part is the bottom and the surface finish of that with our new software is really noticeably moved and a step change in performance there. This was really well received by a number of our customers. So a strong healthy product launches there, much more to come in the future. So while we absolutely see that our future is the growth, what we've been clear on and talked to you about is making sure that the business is as focused and as lean as it can be to support that growth. If we look at the initiatives that we have going forward, then in terms of this graph, you can see that, I guess, Marc earlier brought this up in terms of the 15.7% that we ended up with this half year now that we've just announced them. For the rest of this year, we still see continuing to have some currency headwinds, some benefit from the cost reduction program and then actually the flow-through of the margin from the revenue development taking us up to our end of year results. The interesting bit really is going forward, we set ourselves targets on this. Some of that will be achieved by the revenue flow in the future of looking at the growth strategy -- that innovation that growth strategy, but the other bit is on the development on productivity across the group. We're in early stages on this. I guess we've already done some activities, which we talked about, we are very much now in the planning stage of what are the best opportunities that we have as a business going through that and then working on the program to deploy that. So when we're back up here for Capital Markets Day in June, it's going to be a great chance to update you in more detail on those plans and what we intend to do. And thirdly, I want to spend a little bit of time on the emerging businesses. As I highlighted at the start, I think, overall, this is the bit that is the most encouraging for me with the developments that we have seen here. So right across the board on our different reporting segments, we have emerging businesses. What we have looked at here over the last several years, there's quite a bit of work and focus on these areas. And you all have seen, if you've been monitoring for a while that some of these businesses are ones that we have divested or closed. Some of them are ones that we've had for a while, but we've made quite significant strategic changes on them. And those ones, I would classify as the Metrology, CMM and gauging systems and Additive Manufacturing that both had and in some respects, quite a similar of really focusing down, understanding what our differentiators are targeting key customers and making sure we are very clear what we are about. And it's been great to see both of them really starting to do well. Additive, in particular, this time that strategy of focusing on customers with volume opportunity focusing on a highly productive single-sized machine is really starting to pay dividends. And what we're now seeing is a repeat orders coming through, both from actually the customers that we talked about in the past, whether that's of the medical that we talk about, but it's really also being accelerated now with interest and customers in defense, understanding the opportunities that Additive gives for them. Now what we also did when we exited from some of the businesses that we didn't feel were going to meet the criteria for what we wanted for the long term of the business was we did pick out some of the best areas of innovation that we felt we had across the group and tried to accelerate those. And as Marc talked about when he was talking about the position measurement both in closed optical encoders, really starting to go well. But I think that for me, the star here is definitely on the inductive encoders, FORTiS, I talked about it in the innovation. We went -- we've launched this as our MVP of saying we're just going to do one size. We're going to get it out. We're going to really hit the deadlines. The team did a fantastic job of doing it. The feedback from customers, the metrology is superb, the ease of use is superb. And now we have customers saying that they really want to switch over to our technology, design us on the existing platforms and designs us on new platforms. Now this is designed for a broad range of industries. The one at the moment where it feels like it's hitting the sweet spot is on the defense industry. We have actually recently decision that we need to invest more from an engineering and a manufacturing point of view to make the most of the immediate opportunities that we have here. These businesses all take time to come through, but this is one that feels like it is working at a different pace to what we are used to. Really important for us. I mean we're talking through with the team internally, moving these emerging businesses through into established is key. We have a lot of exciting R&D going on for the future, some of which is going to power existing businesses, but some of it is the new emerging businesses of the future. So we need to make space for it to come through so we can invest in it by migrating some at the moment. So lots of positivity going forward. But with us, there's always the uncertainty in the markets that we operate in, but we certainly feel like we have momentum going into H2. And I'm really pleased to give a positive revenue and profit trading guidance for the year ahead. Thank you very much. We now have time for Q&A, which is great to be doing in person. Lacie Midgley: Will and Marc, it's Lacie Midgley here from Bloomberg Intelligence. Just a couple for me. First, I guess, on the China strategy. At the full year, we talked a little bit about the entry-level market there, perhaps kind of looking at lower-priced alternatives to some of your core products. I know we're not quite -- we're not far on from the full year in that description, but is there any update on the strategy there and how that's evolved and any progress you can update us on? William Lee: Yes, certainly. So I think -- I'm just trying to think back to exactly what we said at full year, but certainly, what we are looking at now is, we have certain products which are established, but we can tweak and adjust so that they are limited in performance for an entry-level China market, so where we can target and go after business at a lower price to the customer. We're doing that in a quite a limited way in testing things out. So that's very specific. We're also getting the innovation engine and it's interesting here, particularly probably on some of the more sensor technology side of the business. The innovation engine has come up with some really good ideas on stripping manufacturing costs and simple designs, particularly encoders there is some really quite exciting stuff for the future coming through that allows us to target the entry-level market at a different price point. Now people always worry about this in terms of what does that mean in terms of threat of the different areas. But actually, this is stuff which is designed such that it's only suitable for entry level. What we always see in things like the encoder market is things gradually moving on. So some areas will become more commoditized and as that happens, we'll have new opportunities elsewhere, so... Lacie Midgley: That's really helpful. And on Additive Manufacturing, I mean it's clearly moving in the right direction, which is great to see. I think these are obviously much bigger ticket items for you. So not many are going to be needed to kind of move that specialized technologies aisle. I mean you talked to the defense customers. But in terms of size, are these smaller end users? I'm just trying to think about how significant the move is there? How quickly we get to that becoming an established business? And Is this about kind of expanding AM usage and really embedding the technology with your existing customers? Or is it growing the base and new customers, I think you've talked to both of those, but a bit of extra color on that would be helpful. William Lee: Yes, I think both of those are key. And often, we'll try and say, look, we're focusing on existing customers and repeat business and not doing too much and then new customers will come along. So absolutely, we're targeting existing and new. Size of the customers can range from really large to far more dedicated specialists supplying into industries. I think the most important bit across the board on this is people embracing and understanding the benefits designing for AM and showing them to their customers that this is the advantage you can get and what we can do for you now with this. So it feels like for a long time, and we've had this on machine tool pros, we had it on Equators, we had it on the ballbar product in calibration of us doing the marketing. Once the customer starts saying, this is what it can do, things start to really accelerate. There will, for sure, be ups and downs on that journey. As you say, with big ticket items, it doesn't take that much to change. It's also different for us from a manufacturing point of view, ramping up with encoders is somewhat different to ramping up with the scale and complexity of an AM machine. Mark Jones: Mark Davies Jones at Stifel. A couple of things, please. Firstly, slightly longer-term question, but obviously, it's frustrating in some ways to see all the good organic progress and profitability eaten up by FX and I'm not going to ask you about hedging strategy, but more about the cost space. I mean you are unusual in having so much of your R&D and manufacturing located in the home market rather than pushing that out into the regions. Is there any change in the thinking about that? Or do you think that's caught your ability to sort of control the technology go-to-market? William Lee: Yes. That's a very good question and one that we are considering at the moment. My honest though, is probably the reason that we would be moving any manufacturing would be for geopolitical access reasons. Because honestly, as we have things in terms of single point of manufacture, areas, we feel is extremely efficient. So we are -- this is one of our strategy decision topics of what we should be doing and are there certain products? It could be some of the stuff that was tied in with the question on low cost, which are ones that we decide we make further afield. I don't think we'd be doing this to try and -- the primary reason for doing this would not be to give ourselves more stability from a currency point of view. It would be a nice benefit from it. Mark Jones: Okay. And just a little one. I won't ask you about share buybacks because you can't say anything. And given the strength of the numbers and the strength of the balance sheet, is a flat dividend a bit mean? Is there some sort of reweighting to your thinking around that? William Lee: So we target a dividend cover of 2. And if you look at the midpoint on the profit for the end of the year, then this would give us that with a flat divi. Clearly, I guess we have an optimism around the business, but it is 1 quarter that things have happened, we don't want everyone to get carried away. So just, I guess, that the -- probably the fuller answer to that is on a capital allocation point of view, this is more of a strategic question for us to go through as a Board of thinking of how we want to run the business and use that cash or return that cash. So that's the bigger question for the future, not addressed by a divi really. Richard Paige: It's Richard Paige from Deutsche Numis. Two from me as well, please. On the defense, it sounds as though -- I may have been getting this wrong, but your growth is going to be ahead of the market. There's new applications that -- or new customers you're winning within that. Can you just elaborate on sort of end use within the defense market? William Lee: Yes, really broad. So we will have -- so ASTRiA, we talked about, which will be something that defense customers could integrate. Additive Manufacturing can be something that parts can be made with versus a lot of indirect stuff probably through machine tool, CMM builders and et cetera, which will allow the metrology and the precision of both machine parts needed for going into defense. So direct and indirect, a real mixture there. In terms of where we are on investment curves, I'm not sure that we really know, to be honest. Richard Paige: And the other word that normally goes with defense, aerospace, we haven't spoken about it much here, but obviously, with the industry ramp and so forth, expect that to be a reasonably strong area of demand for you as well? William Lee: Yes, I'm not sure exactly what our aerospace numbers are at the moment, but it's not... Marc Saunders: I would say that's probably we're seeing that coming through with our AGILITY sales, particularly in the Americas. That's -- we've got a lot of key customers that are in the aero engine sector in particular, but also airframe to a lesser extent. So that's been a driver of performance more recently in the nondefense element of A&D, although obviously, there's some overlap there in the engine business, they tend to serve both sectors. William Lee: I think one key when you're thinking about Additive Manufacturing, and I think this is a good thing for all of us. But if you're working with an aerospace, there is an awful lot of checking balances, review. So it's a very long development time that you're working with a customer before you get sales. Defense is far quicker on things that maybe don't have as long a lifetime. Marc Saunders: And perhaps if I could just add as well, I think there's quite a lot of new business formation going on at the moment in some of the later -- the more recent platforms that are being developed for modern warfare. There's new players entering the business, and we're seeing some of that within our customer base as well as repeat business coming from established customers. Bruno Gjani: It's Bruno Gjani from UBS. Just because we were on that defense topic, I just have a small follow-up. When you mentioned on the inductive encoder side that you were winning some customers and you were now being spec-ed in on some new accounts, does that specifically relate to defense? Because if that's the case, I was wondering whether if now you're being spec-ed in, you could actually see a material rise within that product line? Or how are you sort of thinking about that component? William Lee: Yes, this is still small. We have one size of ASTRiA at the moment. And it's great with the customers. They love it. But suddenly, it's okay, I need this size and I need this size and I need this size, which does create some engineering and manufacturing work. So, yes, that's going to be a positive. It's quick in our terms that we think for encoder business development, but it's still not going to have a material impact in the next year or so. Bruno Gjani: Understood. And it reads as if the emerging product line businesses were really strong within the half and the quarter. I was just wondering if there was any way you could maybe roughly quantify the contribution to growth from those emerging products or might not be? William Lee: I think probably at the moment, I think, take the positivity, but probably we're better off keeping it just the reporting segments that we have. Bruno Gjani: Understood. Were there any subtle differences in terms -- the order trends that were really encouraging or sort of read to be really encouraging ahead of revenue growing really well, the order book was growing. Were there any subtle differences within what you observed in order intake, particularly as it relates maybe to Q2? So for example, I'm thinking of you called out machine sensor as being actually quite flat in the half. Did you see any sort of pickup on the order intake side there that's worthy of calling out or not really? It's sort of similar drivers to revenue? Marc Saunders: Not worth calling out, I would say, on the machine tool sensors. Yes, the places that we saw the stronger growth were also the places that the revenue picked up. There's a strong correlation there. So additive and position measurement into semi, those were probably the highlights. But generally, automation demand for the wider position encoder business as well. Bruno Gjani: And just a final one that I was sort of wondering on is on laser encoders in terms of the mix headwind in the first half, what I wanted to get a sense of is whether the mix in the first half is abnormally low within laser encoders and therefore, there's a potential for that to grow in the coming, say, 12 to 24 months? Or was it that the mix in the first half of last year was abnormally high and actually we're at a normal level today? Marc Saunders: No, the latter is more the case. So it was an exceptional period in the prior year. I'd say the laser encoder product line has been a real success story for us over the last sort of 10 years or so. And we have a strong niche position in wafer inspection. And that is obviously tied to front-end semi and the trends in that market look decent at the moment. So -- and we've seen rising order book. So we're optimistic that if you look through the perturbation of the prior year, there's a nice growth story here. Mark Jones: Sorry, can I do a couple more? Defense, I don't remember being in your sort of breakdown of end markets being a big chunk in prior years. So could you give some sort of sense of the scale of that for you? I know it's tricky with your routes to market. William Lee: Yes. I think we normally talk about 5%. It feels like that's creeping up at the moment. And it's probably being quite impactful in certain areas that we've talked about. Marc Saunders: So it normally sits within what we call -- I mean, aerospace normally is where defense sits. We just -- we haven't called it A&D and perhaps we should. But the bulk of that historically has been civil. But yes, the defense proportion of that is rising. And as a share of the total, it feels like it's increasing overall as well as other segments so, yes less buoyant. Mark Jones: Okay. And the other one is you talked about geopolitical considerations in where you put your manufacturing. How about where your customers do? There's been all this talk about kind of reshoring and much less evidence of it actually driving investment. Are you seeing any of that coming through? William Lee: I think it's really hard to say. What we are certainly seeing is some of our customers where we would have shipped product to a certain country now saying, okay, actually, over the next 6 months, we are migrating manufacturing to a different area. Some of that's going the other way. So that's countries moving out actually. So -- and then there's a broadening in other areas. So it's actually quite complicated. We met with some of the electronics equipment manufacturers recently. And I think we probably need to understand a little bit more about why they are going to certain areas and what those trends are going to be. And for us, that doesn't matter much because we'll do the work with the design teams and then it tends to be just where we deliver the products to. Mark Jones: No, I guess I was also looking at the strength in the U.S. And is that -- do you think more product specific than market? William Lee: I think that is -- there's a good capital investment going on there at the moment. Again, probably some of the underlying manufacturing with the component side of it is maybe less. And we see some things going in, some things going out. So clearly, if you're a manufacturer that's going to be exporting, making stuff in the U.S., you may decide you're better off not making it there, which we have seen. Much of the complaints of our U.S. team. They're doing all the work and then moving the business to a... Harry Philips: It's Harry Philips from Peel Hunt. Just one question, please, on the order book. You talk a lot about the order book in the statement, but obviously didn't give us a number. So I'm assuming it's reasonably short cycle. I mean, in terms of the book-to-bill, given the revenue growth you've had in the period, can you at least give us an idea of where the book-to-bill might be against that? And then is it -- would it be right to assume that the order book is reasonably short cycle, maybe Additive Manufacturing apart or is that not? William Lee: It's not and it is. I think the one thing we would always put in as a caveat. So you're right with the Additive. On encoder, what we will see is when our customers start to get more stressed because they really think they've got orders coming through and they often don't find out until the last minute, they will start to put on call off orders and they'll give us a 12-month, 18-month order with predicted volumes, which will go on to our order book. Then they will cancel that extremely quickly if they change their mind, but they will also show it when they want to double that. So it's -- we look at the order book and it gives us a feeling, but you can't rely on it either. Marc Saunders: We know that some of it will be -- will melt away. Harry Philips: I mean just precisely on that point, I suppose twofold is does that heat, if you like, give you a window around pricing? I mean, if you get extreme demands in terms of potential demand -- I suspect you don't want to sort of mess up online, but -- and then the second is how you plan your manufacturing around that? Because clearly, if you sort of responded directly to those order flows, you could load your cost base. And then as you say, if you then get a cancellation, you're left with sort of stranded cost type stuff. So how do you sort of -- what's the very sure way of interpreting that sort of front end into manufacturing curve? William Lee: You say smooth as though it's anything but -- and normally when these things happen. So clearly, we're trying to work on very uncertain data, and we talk about many things, even if there's investment going in, the end customer may not decide on which supplier they want to use. Those suppliers may all be using our encoders somewhere, but they may be using different encoders from us. So you can't even say, okay, we know it's going to come. Let's make this because then this customer gets it and they want something different. With us, it is just trying to make sure as much as possible long-term strategy is migrate customers to our latest technology. That's far more designed for automated assembly, so we can ramp up and then it's supply chain holding up for us to be able to respond. Safety stocks and when we look at it in terms of our invested capital, we are high there because we know this happens in the markets that we operate in, we have to deal with that. So -- and then there's just a lot of panic that goes on to try and make everything happen as quickly as it can. It is on the more commoditized stuff and quite complicated of understanding because often we'll be -- we may even be dual sourced. So it's us and a competitor are both designed into a product and then it may be then who can supply better, quicker and whatever else. Marc Saunders: I'll just add, we are also increasing our use of temporary labor in some parts of the supply chain for things like cables for encoders, which are -- there's a lot of them to be made, and we use more temporary labor in our plants in India. William Lee: Do you want to go first and then you've got... Unknown Analyst: Just have a quick follow-up -- not a follow-up, but a question on ERP. Could you perhaps provide an update in regards to how that's planning out in terms of phasing, strategy, sort of key milestones to come? William Lee: Yes, we can. So it's certainly been a challenge. We have -- having done a small -- our Canadian office, which went relatively smoothly. We've now done our most complicated U.K. center. We experienced an awful lot of challenges. I think it's fair to say we are through the worst of that now, but we still have a number of challenges that we want to make sure it are resolved and working smoothly before we roll this out further with Germany being our next company that will transfer over to D365. So yes, it has not been a pleasant experience and a lot of lessons have been learned. Unknown Analyst: On the tool builder market. It sounds as if Europe has been soft for a while. I was just wondering whether you're seeing any signs of green shoots as it relates to German stimulus spending in '26 and beyond? Or are those not apparent yet? William Lee: The last conversation I had was back at the end of last year with the head of a German machine tool company, and they were talking about this being a 5-year recession like they saw back in the '90s of a really tough time. I didn't think it was going to get any worse. it's really tough over there, domestic market, export market. It's -- and I think as we talked about, we've seen some of them being taken over. So yes, it's tough. Unknown Analyst: Lastly, could we touch maybe upon humanoids? There are some companies in the market, sort of traditional industrial companies with, let's say, less expertise in automation and robotics that have been talking about this quite a lot, and the financial market has rewarded them for it. Do you have a suitable product today that could serve that market? Do you have any existing relationships with humanoid OEMs? And do you view it as a potential opportunity, say, over the next 5 to 10 years? William Lee: Okay. So I thought the first thing is are we going to do a humanoid robot, which would be easy? No, no. We are definitely not going to do that. So the bit we are talking with some people around here is on the encoder, the retro encoder technology. In our view, probably this is going to end up being a quite commoditized low-end market and the price point they'll be looking at is not going to be attractive, and we've got better opportunities to go after. So it's something we look at, we'll monitor, but I don't see it being significant for us. Unknown Analyst: Rich Hill from Jefferies. I just a couple of questions just looking at margins. Looking at Position Measurement, obviously, you had one of the largest margin movements kind of out in the division. Just wanted to ask, you kind of talked about FX and the mix. Just whether there's anything else in there, perhaps more costs falling in there comparatively. And I guess to Bruno's question earlier with it perhaps normalizing, just how you kind of see that in the second half, whether kind of that bit of growth in the order book for the laser encoders will kind of offset it a little bit for the second half? Marc Saunders: I'll take that. Yes. So I mean, I don't think we see anything sort of particularly different in terms of sort of cost base escalation going on in there. We did reduce costs slightly less in the position measurement sort of side of the organization and some of the other areas in the cost reduction process, but that was because we had some areas that we were really seeking to invest in and some of the emerging elements of the product line that we felt we wanted to allocate resource to. So it had a slightly lower proportionate, but we're talking 1% or so. It's not a huge factor in this. So no, the primary driver in the short term was mix, but we're seeing it's well into the 20s in operating margin and I think long term going in the right direction. Unknown Analyst: Okay. And then if I may, just chance to question looking at your kind of emerging products, and we've heard the kind of importance to your strategy going forward. Just in terms of margins, and I appreciate not specifics, but the assumption being that they're lower kind of margin to as they come in, as you gain that market share. But just looking at that kind of profile as they become more developed, I guess, what kind of time frame or any other details you could give us there would be great. William Lee: So do you mean in terms of gross margin, sorry, or bottom line? Unknown Analyst: Bottom line. William Lee: Okay. Yes. So if they're emerging, they are definitely ones that are not hitting our profitability targets. So at the moment, they're at different stages. So we have targets on when different ones should be getting into better stages of profitability. And ones like CMM engaging are far more established than some of the ones that we have just launched. Marc Saunders: Chris, have we got anything online? Chris Pockett: Nothing yet. Marc Saunders: Okay. All right, then closing remarks. William Lee: Yes. So if there are no more questions, I guess in terms of overall, great to be back here in person. As I said at the start, it feels like a really good H1 set of results, still lots of uncertainty as there always is with us going forward in the short term. For me, I think the leading message would be on the medium to long term. If you look at the opportunities we have from the innovation engine and also the progress we're making on those emerging businesses and the focus areas that we have there, that's the excitement that is within the business and the excitement that should be around Renishaw. So thank you all very much.
Operator: Welcome, everyone. The Heineken Full Year 2025 Results Call will begin shortly. [Operator Instructions] Raoul-Tristan Van Strien: Good morning and good afternoon, everyone, from Amsterdam. Thank you for joining us for today's live webcast on our 2025 full year results. Your host will be our Chief Executive Officer, Dolf van den Brink; and our Chief Financial Officer, Harold van den Broek. Following the presentation, we will be happy to take all your questions. The presentation includes expectations based on management's current views and involve known and unknown risks and uncertainties, and it is possible that the actual results may differ materially. For more information, please refer to the disclaimer on this first page of the presentation. I will now turn over the call to Dolf van den Brink. Rudolf Gijsbert van den Brink: Thank you, Tristan, and good morning afternoon, everybody. Now after 6 years and with some understandable mixed emotions, today is my final full year results presentation as CEO. It is not a farewell though, I am and will be fully focused and committed to the business through the end of May. And as you all know, I love this great company, and I will miss it dearly. My priority for the coming months is to leave Heineken in the strongest possible position with momentum, clarity and ambition. It is a natural moment to reflect on how far we have traveled since launching EverGreen in 2020 in the midst of COVID and to look ahead as we move into the disciplined execution of EverGreen 2030, our new 5-year growth strategy. Over the last 6 years, we launched a fundamental transformation of the company, delivered EverGreen 25 and navigated a demanding external environment. We have made meaningful progress in future proofing Heineken, growing the Heineken brand by more than 50%, consolidating our global leadership in 0.0, strengthening our advantaged footprint with significant deals in India, Southern Africa and Central America, while saving over EUR 3.5 billion in cost and digitizing the business, I am very proud of what we, as a team, have achieved, and there's more to do. The next chapter is our sharpened EverGreen 2030 strategy, which we introduced at the Capital Markets event at Seville. We now have a sharpened focus on 3 strategic priorities, and the task ahead is accelerating disciplined execution. Growth. It is the foundation of our business and remains our #1 priority. Productivity, which fuels reinvestment and healthy profit flow-through. Future fitting Heineken, enabled by our digital backbone and evolving operating model. Harold will explain how we are accelerating the disciplined execution of these priorities over the next few years. With this clarity, we aim to deliver superior and balanced growth and attractive shareholder returns while future-proofing Heineken. We track this through the Green Diamond, which we have now strengthened with ROIC as our capital efficiency KPI. Let's take a closer look at the key highlights of 2025. First, we delivered a well-balanced performance in challenging market conditions. In our growth pillar, we grew revenue through quality volume. We gained or held market share in more than 60% of our markets and in about 80% of our priority growth markets, which is even more important. In our productivity pillar, strong over-delivery of growth savings supported our margin expansion. On capital efficiency, we generated another year of solid cash flow and improved ROIC. And looking ahead, we expect operating profit to grow between 2% and 6% in '26. This is before the additional profit and earnings accretion from the FIFCO acquisition we completed last month. So let's take a closer look at our financial highlights. Total volume declined by 1.2%, reflecting softer markets in the Americas and Europe, partly offset by consolidated volume and license volume growth in APAC and resilience in Africa and Middle East. Within that, the momentum behind the Heineken brand continued to grow 2.7%. Net revenue increased 1.6%, and net revenue per hectoliter grew 3.8%, driven by disciplined pricing and positive mix. Operating profit grew 4.4% with a 41 basis point margin expansion and net profit grew faster at 4.9%. Diluted EPS (beia) came in at EUR 4.78 million, and we are proposing a total dividend of EUR 1.90 per share, a 2% absolute increase, indicating a payout to 39% of net profit. We're also expanding our payout range for future years to be 30% to 50%. Harold will cover this in more detail later. Although our volume declined in the year, and it's not yet where we wanted to be, the quality remained high. To better reflect our evolving asset lines approach in China, Latin America and Africa, Middle East, we will going forward report total volume, combining consolidated volume, which declined 2% and license volume, which grew almost 18%. Our mainstream brands outperformed the total portfolio declining only slightly and local power brands delivered solid growth for several major markets, including Cruzcampo in the U.K., Harar in Ethiopia, Tecate Original in Mexico and Kingfisher in India. Heineken 0.0 grew slightly. Our global brands grew almost 2% led by Heineken, up nearly 3%. The broader premium portfolio also performed well, supported by strong local brands such as Kingfisher Ultra in India, Bernini in South Africa and Legend Stout in Nigeria. This high-quality volume supported 2% net revenue growth with positive price/mix across all regions. Our productivity programs ensured solid revenue to profit conversion contributing to operating profit growth of 4.4%, in line with our guidance. Let me turn to the Heineken brand, which continues to lead our portfolio. Heineken delivered another year of growth in 2025, increasing by almost 3%, with 27 markets growing at double-digit rates. Heineken continues to stand out for its creativity in both idea and execution. At a time when people seek more real-world connection, Heineken champions socializing in a way that's authentic to who we are, supported by our global partnership with Formula 1 and Men's and Women's UEFA Champions League. Heineken 0.0 grew slightly. Inventory adjustments in Brazil, its largest markets, partly offset good growth in Spain and the United States, and it maintained its position as the world's largest alcohol-free beer brand. It is Heineken Silver that truly drove the growth for the brand. Silver grew by almost 30%, led by Vietnam in China. As you can see on the chart, Silver now represents about 15% of the total Heineken volume close to 9 million hectoliters. It can now be considered one of the most successful innovations in the history of the Heineken company. As part of the growth pillar in our sharpened EverGreen 2030 strategy, we're expanding our global brands. We are applying the principles of the centrally governed Heineken brand model across the broader global brand portfolio, strengthening consistency and discipline in execution. Across the global brand portfolio, we delivered 1.9% total volume growth in 2025, which shows solid progress. We have already spoken about Heineken. Amstel, our shadow premium brand connects friends around the world with a distinct social character. Amstel delivered another strong year across all 4 regions, with continued momentum in Brazil, a doubling of volume in China, revitalizing launch in Romania and a double-digit growth in South Africa. Birra Moretti continued to unlock food pairing occasions across Europe, supported by good performances in Switzerland and in France. Tiger remains a cornerstone of our success in Myanmar, while Tiger Crystal, a more refreshing sessionable member of the family, delivered strong results and contributed to the brand's revitalization in Vietnam. Desperados reinforced its relevance in markets with its bold flavors and Latin-inspired positioning resonates strongly with GenZ consumers, especially in Nigeria and in Spain. Productivity is our second strategic priority, and it's vital to support our growth agenda. This year, we delivered over EUR 500 million in gross savings, with increased flow-through to profits seen in our 41 basis point margin expansion. Our focus to boost cash led to a cash conversion of 87% after posting 103% last year, allowing us to deliver EUR 2.6 billion of free operating cash flow. Harold will expand on this and also how we will accelerate the EverGreen 2030 productivity agenda. When we look at our third strategic priority, future proofing our business, brew a better world remains our framework for delivering our environmental, social responsibility ambitions. On responsible consumption, we continue to lead the category by ensuring 0 alcohol options are widely available and easy to choose. In '25, our operating companies invested 26% of Heineken brand media to promote this message, reaching 1.4 billion consumers. On carbon, we continued progressing towards our 2030 net zero ambition for Scope 1 and 2, reducing emissions by 38% over the last 3 years. On water, we improved efficiency across all breweries to 2.9 liters per liter of beer. On the social pillar, we continue building a culture belonging by equipping leaders and colleagues across the company. In '25, women held 31% of senior management roles. With that, let me move to the regions. Starting with Africa, Middle East, where we delivered strong revenue growth, substantial profit improvement and overall market share gains. Net revenue grew 16%, with stable volume and strong price/mix reflecting earlier pricing actions as inflation eased, operating profits increased 60% supported by the transformed cost base of the past 2 years and a strong top line growth. Notably, in euros, operating profit grew more than 30%. In Nigeria, last year's cost base and capital structure adjustments, combined with continued discipline resulted in strong financial performance. Despite the soft markets, Nigerian Breweries gained significant share across lager, stout, beyond beer and nonalcoholic malts. Premium brands, Heineken, Desperados and Legend Stout all delivered double-digit growth. At Heineken Beverages in Southern Africa, commercial execution strengthened through the year. Our beer portfolio grew with Amstel delivering particularly strong results in South Africa. Bernini, our wine-based spritzer continued to grow and expand its consumer base. I would also like to highlight Ethiopia. The business improved steadily as the economy stabilized following the currency devaluation. We reinforced our market leadership and now secured the #1 position in the North too supported by continued momentum from Bedele and Harar. Turning to the Americas. Our business showed resilience. Markets softened as the year progressed, requiring agility while keeping strategic investments on track. Even in this environment, we gained overall share in the region. Net revenue declined 1% and beer volume was down 3%, while price/mix recovered strongly in the second half, up 2%. Operating profit declined 2%, decycling last year's significant step-up. In Mexico, despite macroeconomic and geopolitical uncertainties, the beer category remains resilient. Our system strength, supported by the Six store network and effective revenue management delivered solid financial results. Growth was broad-based. Tecate Original, Indio, Carta Blanca performed steadily, and Miller High Life surpassed the 1 million hectoliter mark in premium. In Brazil, after rebalancing and reducing excess inventory in the first half, the market softened in the second half. Based on sell-out data, we captured significant market share. Investment increased again in '25, including the opening of the new 5 million hectoliter Passos brewery. Amstel maintained strong momentum, supported by our CONMEBOL Libertadores partnership and the success of Amstel Ultra. In premium, Heineken gained share and Eisenbahn delivered double-digit growth. The United States remains challenging, further impacted by tariffs introduced in the first half. We continue to work on strengthening our portfolio, including the return of The Most Interesting Man for Dos Equis last month. Heineken 0.0 remains a highlight, delivering its seventh consecutive year of depletion growth. Moving on to APAC, where we delivered growth across all metrics and gained overall market share. Total volume increased 4% with consolidated beer volume slightly up and license volume up 27%. Net revenue grew 4%, supported by strong price/mix of almost 5%. Operating profit grew 5%, driven by strong performances in Vietnam, India and Myanmar. In Vietnam, volume grew high single digits as the market returned to positive momentum, a strengthened route to consumer and effective portfolio expansion enabled outperformance in both on and off-premise channels, accelerating our leadership position. Heineken grew in the high 30s, led behind Heineken Silver, while Larue Smooth continued expanding its footprint. In India, volume grew mid-single digits ahead of the overall market. As the country's largest brewer, we continued shaping the category, expanding our reach and transforming our sales model. Kingfisher maintained its growth trajectory, supported by cricket sponsorships, while the premium portfolio grew strongly led by Kingfisher Ultra, Ultra Max, Heineken Silver and our latest innovation, Amstel Grande. In China, Heineken Original and Silver delivered another year of double-digit growth supported by strong execution and high-impact sponsorship such as Masters Tennis and the Shanghai Formula 1. Amstel also doubled volume through distribution gains and excellent in-market execution. With the increasing contribution of royalties and share of associate profits, China became a top 3 market for the group in delivering net profit in 2025. Turning to Europe. Our performance was mixed in a challenging environment. Overall market share contracted slightly due to retailer disruptions, although we gained share in the on-premise channel. Net revenue in total volume each declined 3% with price/mix just above 1%, supported by pricing and a stronger premium portfolio. Operating profit declined almost 5% as volume deleverage and inflation more than offset the strong growth savings, including continued progress on supply chain rationalization, brewery closures and the refinement of our intermarket sourcing model. In the United Kingdom, our broad portfolio, innovation pipeline and continued investment in the Star Pubs estate supported solid financial performance. Cruzcampo continued its exceptional trajectory, now in its third year. Murphy's Stout outperformed the growing stout categories through distribution gains and expanded draught presence. In cider, premiumization continued with strong growth from Inch's and Old Mout. We also received top honors in the Advantage Survey, where customers rated us the #1 supplier across all FMCG companies in both on-trade and the grocers in the off-trade. In Western Europe, extended negotiations with off-premise buying groups weighed on performance. These discussions focused on protecting long-term sustainable category development were fully resolved in the second half, with distribution and shelf space recovering as the year progressed. Despite the disruptions, we gained on-premise share and continue to see strong contributions from our premium portfolio including Gallia, Texels and STELZ. Our global brands also performed well in selected markets, including Heineken in Italy, Birra Moretti in Switzerland, Amstel in Romania and Desperados in Spain. And let me now turn to our newest operating company. On January 30, we completed the acquisition of FIFCO after receiving all regulatory approvals. This transaction significantly strengthens our presence in Central America, and advances EverGreen 2030 by bringing together a portfolio of high-quality assets that enhances our long-term growth platform. It deepens our advantaged geographical footprint in markets supported by strong macroeconomic fundamentals and favorable demographic trends. Through this acquisition, we gained full control of Costa Rica's leading beverage company, including our common brands such as Imperial, a well-established PepsiCo franchise and attractive adjacent businesses in wine, spirits and in proximity retail. We also assumed full ownership of HEINEKEN Panama, a consistent strong performer that has repeatedly outpaced market growth. In addition, the transaction provides an equal partnership in Nicaragua's leading brewer, Compa��a Cervecera de Nicaragua, expands our access to a scalable food and beverage platform in Guatemala and adds fast-growing beyond beer brands in Mexico. The acquisition is expected to be value accretive enhancing our operating profit margin and earnings per share, while strengthening our strategic position across a dynamic, high-growth region. On day 1, we welcomed our new colleagues to the Heineken family and began the integration process, which is expected to complete in 2026. We have appointed a strong integration team to ensure business continuity while driving growth. Harold will take you through the financials of FIFCO, which will be accretive to earnings in '26. And with that, over to Harold to discuss the financials. Harold Broek: Thank you, Dolf, and good morning all. I'm pleased to take you through the financial highlights of our full year 2025 results and the outlook for 2026. And starting with our top line performance on Slide 17. We posted an organic growth of EUR 0.5 billion or 1.6%, a 2.1% volume decline was more than offset by a positive price/mix of 4.1%. Pricing contributed 2.8% and mix added another 1.3%, a result of continued premiumization and strong execution behind our global and local power brands. Pricing was more pronounced in Africa, Middle East, covering for local input cost inflation and currency devaluation, while in Europe and Americas, our revenue per hectoliter growth was very moderate. Currency translation dampened revenue by almost EUR 1.5 billion, reflecting the strengthening of the euro against some of our key currencies. The minor consolidation effect of minus EUR 84 million relates to our exit of Sierra Leone and a brewery sale in Eastern Congo. Turning to operating profit. where we delivered EUR 4.4 billion of operating profit (beia) growing 4.4% organically and resulting in an operating profit margin (beia) of 15.2%, up 41 basis points organically versus last year. The EUR 467 million of organic net revenue (beia) growth on the previous page translated to EUR 198 million organic operating profit growth, a conversion rate of 42%. With negative volume leverage, moderate pricing and continued investments in brand and digitalization, gross savings from our productivity programs were a critical driver. Variable cost per hectoliter increased by low single digits, with meaningful differences across regions, ranging from mid-single-digit decrease in Europe, low single-digit increases in Americas and Asia Pacific and high single-digit inflation in Africa, Middle East. Marketing and selling investment as a percentage of net revenue reached 9.9%, up 6 basis points compared to the prior year. Investments concentrated on our priority growth markets, including Brazil, Mexico, U.S., South Africa, Vietnam, U.K. and India, with a meaningful step-up in sponsorships and in trade execution, and particularly in Africa, Middle East and Asia Pacific. Marketing and selling expenditure on our 5 global and 25 local focus brands accounted for over 80% of total spend. On a regional level, the main contribution to operating profit growth was the Africa Middle East region, where operating profit grew 62%, as Dolf said, benefiting from a transformed cost base from productivity savings delivered over the past 2 years and revenue growth outpacing inflation. Operating margin (beia) improved over 400 basis points, now reaching 12.8% for the year 2025. In APAC, operating profit grew by 5.8% with strong contributions from Vietnam, India and Myanmar, held back by Cambodia. In the Americas, operating profit declined 1.9%, incorporating the tariff impact on imports into the USA. Also worth bearing in mind that we cycled a strong prior year comparison where the region grew operating profit by almost 25%. And finally, in Europe, operating profit declined 4.9%. Decreases in Poland, Austria and France outweighed growth in the U.K. and Spain. Lower material and energy costs and strong growth savings include a further European supply network rationalization were more than offset by volume deleverage and general inflation. Consolidation changes had a negative impact of EUR 36 million. Translational currency effect was EUR 290 million negative, again, mainly caused by the strengthening of the euro. Let me turn to the other key financial (beia) metrics on Slide 19. On the second line, you see that our share of profit (beia) from associates and joint ventures grew 5.3% organically, over half driven by strong mid-teens growth of our CRB partners in China. Net interest expenses (beia) decreased by 1% to EUR 522 million, reflecting a lower average net debt position and a lower average effective interest rate of 3.4%. Other net financing expenses improved by almost 18% to EUR 199 million due to lower losses from currency revaluations on outstanding foreign currency payables, especially in Nigeria, following our successful rights issue and subsequent balance sheet restructuring at the end of last year. Net profit increased by 4.9% organically to EUR 2.66 billion, which includes an increase in income tax expenses and noncontrolling interest. The effective tax rate (beia) was 27.2% compared to 27.9% in 2024. The improvement mainly reflects changes in the profit mix. All in all, and factoring in the share count reduction from our share buyback, this resulted in a constant currency EPS (beia) increase of 3.6% to EUR 4.78. We will propose at the AGM of this year a dividend increase of 2.2 per share to EUR 1.90. This equates to an equivalent amount of EUR 1.046 billion to be returned to shareholders through dividends. Finally, our net debt-to-EBITDA ratio was 2.2x at the end of the year below the long-term target of below 2.5x. When we consolidate FIFCO in 2026, we will see a moderate uplift and as per our policy, we'll aim to bring this back to below 2.5x target at pace. Let me now turn to the free operating cash flow. We generated EUR 2.6 billion of free operating cash flow in 2025, a strong cash conversion of 87% following last year's peak 103%. We are pleased with this performance. The year-on-year decrease of EUR 456 million should be seen in conjunction with last year's strong working capital improvements, which contributed approximately EUR 1 billion to our free operating cash flow for 2024. This year, we further improved working capital by over EUR 300 million, with main working capital as a percentage of net revenue, improving by almost 1%. Because the improvement is less than last year, the effect is negative, as shown in the EUR 523 million adverse impact. CapEx amounted to EUR 2.4 billion, representing 8.3% of net revenue (beia) in line with our guidance. Many investments related to our new Passos brewery in Brazil, our Star Pubs in the U.K. and in our digital backhaul. Cash used for interest, dividends and income tax decreased in aggregate by EUR 78 million. Let us now turn to our capital allocation priorities. As a reminder, in our value creation model, we prioritize capital allocation towards organic growth. We do so with a disciplined financial framework, with a prudent approach to debt. We remain committed to our long-term below 2.5x net debt-to-EBITDA ratio. We maintain a regular dividend policy as we've had for decades as an important and consistent source of shareholder returns. Going forward, we bring the dividend payout policy range to 30% to 50% of net profit before exceptional items and amortization of brands, so net profit (beia) compared with the prior range of 30% to 40%. We pursue value-enhancing acquisitions for long-term profitable growth. And with the FIFCO acquisition completed in January, we're excited to welcome the brands, the customers and the people to Heineken. Actively shaping the portfolio also means resolving or exiting operations where we see limited possibilities for sustained value creation. And as previously indicated, we consider returning excess capital via share buyback. This time last year, we announced a EUR 1.5 billion program and completed the first EUR 750 million tranche last month. We will shortly announce the start of our second EUR 750 million tranche. We outlined our EverGreen 2030 strategy last October at the Capital Markets Day in Seville. Let me now take a minute of how we accelerate execution in 2026. As Dolf already mentioned, our priorities are clear, with growth as our #1 priority. We are directing resources to strengthen our growth profile staying close to consumers and customers. At the same time, we are increasingly leveraging our global scale to improve productivity and simplify how we operate. A key focus is on how we build and manage our brands. All our global brands, representing almost 40% of total volume and now adapting the Heineken brand model, combining a pioneering spirit with a structured repeatable way of building brands that support consistent execution and better value delivery. Amstel's progress over the last year demonstrates the impact this can have. We are also increasing the breadth and space of our innovation. In 2026, we will have around 3x as many launches and pilots in our priority segments, which allows us to respond more effectively to changing consumer needs. Freddy AI will become a core enabler of our marketing and brand building processes. And by the end of 2026, most markets will be onboarded, representing close to 80% of our global marketing and selling investment. This will deepen consumer and customer relevance and enable excellent execution at speed and scale with improved ROIs over time. To fuel the growth and the profit, we are stepping up productivity initiatives and make changes to our operating model. We are moving to a simpler, leaner Heineken centered on empowered operating companies. In selected regions, we are transitioning to multi-market operating companies or MMOs. 4 MMOs will already go live in Europe in the next 6 months. We're accelerating the leveraging of our global scale, including further expanding our global supply networks and enlarging the scope of Heineken Business Services. The transition to a single global digital backbone will further standardize data and processes, enabling automation and productivity, and we are moving to a smaller, more strategic head office. Concretely, we will streamline our supply chain through brewery digitization and selected closures, exit markets where we do not see a path to sustainable growth and transition around 3,000 roles to Heineken Business Services to double its scale and broaden the services it provides. Across these initiatives, we expect a net reduction of between 5,000 and 6,000 roles over the next 2 years. Time lines will vary by market, and we will support impacted colleagues with care, respect and appropriate assistance. These actions are designed to deliver the EUR 400 million to EUR 500 million of annual gross savings and allow us to continue investing in our brands and capabilities while supporting healthy operating profit growth. Now then the outlook for 2026. We remain prudent on the macroeconomics and the consequent household spending in several markets. At this stage of the year, we do not expect the consumer environment to materially change. We anticipate operating profit to grow between 2% and 6% on an organic basis. As just highlighted, we accelerate the disciplined execution of EverGreen 2030 at pace, invest behind our growth and step up needed cost interventions. As such, we expect gross savings to be at the upper end of our medium-term guidance range. In terms of variable costs, we expect a low single-digit rise, primarily from currency effects on local inflation in Africa. The effective interest rates and the other net finance expenses are expected to be in line with 2025 and our effective tax rate to be in the range of 27% to 28%. And lastly, the completed acquisition of the FIFCO Beverage and Retail business is expected to be accretive to EPS in 2026. Now let's double-click on the financials of FIFCO. As a reminder, we acquired the business at 11.6x EV EBITDA multiple for a EUR 3.2 billion cash consideration. This means that our net debt-to-EBITDA ratio will increase moderately and expect to be back below 2.5x by 2027. At the time of the deal announcement in September, we gave you the '24 financials. The '25 financials do not differ materially. Net revenue of $1.15 billion and an operating profit of $276 million. These figures are, of course, based on the local accounting policies. The integration team will now start to align reporting with the Heineken accounting policies. And like I said earlier, we closed the transaction on the 30th of January. For the 11-month period, we expect FIFCO to be circa 2% to 3% accretive to EPS in 2026. To summarize, for 2025. We achieved a well-balanced performance in challenging market conditions. In the growth pillar, we delivered revenue growth consisting of quality volume with solid market share gains. In the productivity pillar, our teams realized another year of strong growth savings, the key driver of the operating margin expansion. We are pleased with the progress on capital efficiency with solid cash flow and an improving ROIC. And for 2026, in a similar market context as 2025, we accelerate the execution of EverGreen 2030, putting our growth strategy in place and taking bold productivity measures to unlock investment space and enable profit expansion. We expect operating profit (beia) to grow in the 2% to 6% range. Thanks for listening. And now over to you for questions. Operator: [Operator Instructions] Our first question comes from Sanjeet Aujla from UBS. Sanjeet Aujla: Dolf, just a quick word to wish you all the best for your next steps and thanks for all the openness and transparency over the years. I've got 2 questions, please. Firstly, can you just go into a little bit more on the pricing actions in Americas in Q4 and how your market share has responded to that? And is that perhaps behind some of your cautiousness on volumes into '26? And secondly, just digging a bit deeper into Europe, where are you on distribution and shelf space now following the resolution of the retailer disputes, are you anticipating to recoup that fully in 2026? Rudolf Gijsbert van den Brink: Very good. Thanks for your kind words, Sanjeet. Let me take a first step and then Harold can complement. Just on Europe, already in the second half, distribution and shelf space has been recovering month-over-month. On shelf space, there were some gaps left, but we are very confident that in the spring resets, those will be completely closed. We're also making very good progress on the retail negotiations for this year. And again, no regrets on biting the bullet last year, as very important strategic principles. And in our view, the long-term sustainability of the category were in play in those negotiations, and yes, the outcome of those negotiations, even though taking longer than expected, were acceptable to us. On pricing in the Americas, did you picked up that we took pricing up a bit to the back end of the year, but also in response to input cost. Our market share in the aggregate in Brazil has been very strong on sell-out. And we all know that at the beginning of the year, we had to stock resets impacting our sell-in. But on sell out market share has been very strong throughout. In Mexico, we had very strong market share indeed for the first 9 months, and that came a bit under pressure in the last quarter indeed. But in the aggregate, we are confident, and we are happy with where we are at. Harold, anything to add on that one? Harold Broek: Yes. Maybe on that last point, just to piggyback on that because Sanjeet, your question is also looking forward. And I think it's fair to say that we are happy with where the pricing and the promotional level of activity is at this moment in the run going forward. As you know, these things really go in waves, and we take pricing on our own demand by taking competitive realities into account, and we felt that we really had to adjust in the second half of the year, especially as what Dolf just said. But we are happy where it is, and we don't expect an overhang from that going into 2026. Operator: Our next question comes from Chris Pitcher from Rothschild & Co Redburn. Chris Pitcher: And I echo Sanjeet, Dolf, wishing you well in the future. And leading on from that comment, in Seville, it really felt like you presented the next chapter for Heineken. So it really was a surprise to read that you've decided to leave. I appreciate you're moving into the execution phase right now. And this morning, on interview, you said the Board has completely supported that strategy. I'm just trying to understand the role of the CEO over the next 2 to 5 years because there's obviously a lot of operational execution required with FIFCO, about 10% of the global workforce impacted either through transitional reduction. But also from a branding perspective, brand set that EUR 15 billion target for your international brands. And 3 out of the 5 actually saw volumes decline this year. So what is the challenge? Is it more of an operational execution? Or is it more on the brand side? And could you perhaps just give us a bit more color on Tiger, which seems to be sort of struggling in its positioning versus Heineken? Rudolf Gijsbert van den Brink: Very good. Thanks, Chris. Yes. A couple of thoughts. First of all, indeed, it is very important. And the words of Peter Wennink, the Chairman of our Supervisory Board in that press release a couple of weeks ago, we are very intentional that there is very explicit alignment between the Supervisory Board, the Executive Board and executive team that EverGreen 2030 is our strategy. It's clear, it's compelling, and it provides a lot of, yes, clarity and direction to the company. So that stands now and in the foreseeable future. It is all about accelerating disciplined execution. The announcements that we included in our release today on productivity, on FTE reductions should be seen very much in that spirit. And we're not slowing down. We are accelerating. We are now really operationalizing and double clicking on the priorities as we presented them in the interview, and more to come in the months and years ahead. On the branding, we indeed believe that about 10, 15 years ago, we made a governance change on brand Heineken, which ultimately unlocked systemic growth on the Heineken brand. It's amazing its year-over-year through all the disruption and turbulence of the last year, every year, the Heineken brands kept on growing. Last year, it was growing. It was up double digits in 27 years. So that governance model with a much more clear global governance and direction, but is now going to be applied on the other global brands. Amstel is a fantastic example that already moved a bit earlier, and you see the results with an acceleration of the performance of the Amstel brand across all regions. The incredible success in Brazil, now the doubling in China, South Africa returning to significant growth, but also in Europe in markets like Romania, where we are launching it. Moretti and Desperados, also a little bit because of mix effect because Europe is such a big proportion of those brands. And the home markets or some of the large markets, for example, Poland, for Desperados do impact a little bit the brand. But we are very confident that when the step-up in that brand confidence, there's a lot of potential for brand Desperados and Moretti. And we keep rolling out Moretti to new markets in Europe, and we keep expanding Desperados on a global level with, for example, in the Africa region, fantastic results in Nigeria, C�te d'Ivoire and other places. Tiger is disproportionately impacted by Vietnam because underlying the brand is doing well. Vietnam,of course, being such a big part of the brand. And there, we are really in a revitalization of the brand. Actually, Tiger Crystal is now in absolute terms, larger than Tiger Original and continuously grow. And actually, we are approaching the moment where the decline on the underlying Tiger Original business is smaller than the increase on Tiger Crystal. And in a way, what happened with the Heineken brand, the Heineken brand was under pressure for about a decade until the launch of Heineken Silver. And Silver has done an amazing job revitalizing brand Heineken across the APAC region. And we think with Tiger Crystal something happening similarly with Tiger. So let me leave it at that. Operator: Our next question comes from Simon Hales from Citi. Simon Hales: And I just echo as well everyone else's comments, Dolf to you. Thanks for all your insights and wisdom over the last 6 particularly challenging years for the industry and all the best for the future. I've got a couple as well, please. Obviously, you talked in your presentation and in the press release this morning about being prudent still on the consumer backdrop coming into 2026 and you've issued that 2% to 6% organic guidance for the year. So what factors do you think will drive you to the upper end or the bottom end of the range? Is the first question. What should we be bearing in mind there? And then secondly, around AI adoption in the business in 2026 and specifically AI adoption through Freddy's in marketing. What's that really going to mean do you think, for savings in marketing in the short term? How should we think about the overall marketing spend levels in 2026? I think from memory Dolf back in Seville at the end of last year, you talked about aiming to get A&P or marketing above 10% as a percentage of sales. You're on the cusp of that. Should we see you get there in 2026? Rudolf Gijsbert van den Brink: Yes. Very good. Thanks, Simon. Thanks for your kind words. Let me take the second part and then over to Harold. On the AI adoption. So first of all, the old AI machine learning has been adopted across the business for many, many years, particularly in supply chain, but also beyond. Of course, AI is different ways, whether it's the generative AI, your customer service, whether it's more agentic AI across operations, we're really moving at pace and in a focused way, focused on clear use cases that we are done scaling across our network. Marketing is indeed, as you were saying, particularly prone to the use of the more, let's say, future AI possibilities. What we announced, what Bram announced in Seville, the launch of Freddy AI, which is kind of our global internal marketing engine, which we're building, and it's built completely with AI in mind. And indeed, with time, it should unlock significant savings. To what extent we will reinvest these savings or whether we will let them go to the bottom line is to be determined along the way. We are not expressing ourselves at this point. We are very proud that even in a challenging year for the industry last year, we're able to expand our marketing investments in absolute terms. Indeed, we went up in basis points to very close to the 10%. And we, for this year, are still planning an absolute increase in our marketing investments. But indeed, yes, a lot of organizational focus and attention is now into the building, designing and scaling of Freddy AI now and for the years to come. Harold, if you can take the one on the prudent guidance. Harold Broek: Sure, well. The guidance, and indeed, it starts with a recognition to link it to what Dolf just said that it's important for us to continue to invest in the category and continue to invest in our brand portfolio and continue to invest in the digitization of Heineken. And we are basically being realistic that as from quarter 4 exit rates to quarter 1 starting rates, we don't see a material change in the consumer environment, neither in the economic certainty or uncertainty that the world is at the moment, offering us. So in that sense, I think Dolf is right that we're cautious on the macroeconomics and the economic sentiment determined to invest in the long-term health and strategic pillars of the growth of this organization and by stepping up productivity, ensure that we have got the flex to deal with those realities. And we talked, Simon, before about the fact that we are not giving, let's call it, good summer, bad summer ranges. We are really now starting to pivot to different scenarios in different markets aggregating that up and that's where the 2% to 6% range is coming from. So we'll just have to see how things are evolving in 2026, but we got the ammunition to keep on investing in growth. Operator: Our next question comes from Richard Withagen from Kepler. Richard Withagen: And also from my side, Dolf, all the best for the future. Now the 2 questions I have is the first one, you mentioned the aim to accelerate the growth of the global brands using the Heineken brand model. So maybe you can elaborate a bit in what way has the brand building of the global brand is different from the Heineken brand. Is it perhaps in terms of innovation, commercial execution, less resources, perhaps some background on that? And then the second question is back to Europe. Yes, we saw volume pressure from the retail disruptions and negotiations. Can you tell us what specific commercial changes are being implemented to avoid a repeat of those disruptions? And do you expect volume growth in Europe in 2026? Rudolf Gijsbert van den Brink: Thank you so much. Let me take the first one and then Harold if you can take the second one on Europe. So on the difference in the model, I don't want to go into too much detail, but the governance of Brand Heineken is firmly done from the center. And it means that positioning campaigns, tech lines, commercials are all centrally developed and sometimes adopted or customized for differences across regions. With some of the other global brands, take Moretti until very recently, brand ownership and governance was done out of Italy. But the team in Italy doesn't have the kind of global perspective that is now needed going forward. And the same applies to the other global brands. So this is really about strong global brand team centered in Amsterdam with a global perspective and really taking ownership of positioning the brand strategies, the core campaigns, really leveraging also the benefit of scale and skilled insights if you'd like. And we started moving that already a bit early with Amstel and you see the incredible success and acceleration of performance that was the consequence. Harold, over to you. Harold Broek: Yes. So let me tackle the Europe question. So first, it's important to realize that if you look at the volume growth in Europe, about 2/3 of the volume drop that we saw in Europe was related to market and market specific circumstances and about 1/3 was impact from the negotiations that we were just talking about. We also previously spoke about the household sentiment, the consumer sentiment in Europe that has been relatively subdued, and as a consequence of that, we really saw a trend towards more price-sensitive or value-seeking consumer. We spoke about that previous. Important to note that both in 2025 as well as the outlook for 2026, we believe that we are seeing price mix management that is below the level of CPI inflation that we see. And therefore, bringing affordability more back into the category. The second thing is what Glenn and team is doing is really starting to focus on growth pockets, whether this is our start-ups in the U.K., the Cruzcampo brand that we really see another 50% growth coming from there in the U.K. And we still believe that there are great growth opportunities in France, which is a growing market as consumers prefer increasingly beer over wine. And the same is true in some of the other southern markets with different propositions and innovation that Dolf was also talking about. So it is really about growth pockets, innovation, premiumization in selected markets, but also making sure that affordability comes into play. And in order to finance that and increased investment in brands and categories, we really need to take the cost out as a result of which we've really driven that productivity lens globally but also specifically in Europe. So that's the equation that we follow. Operator: Our next question comes from Olivier Nicolai. Olivier Nicolai: I would echo everyone else's comments. Thank you very much, Dolf. I got 2 questions, please. First of all, could you give us a little bit more color on Asia Pacific. In Q4, beer volumes has been slowing down about minus 3.4%. How much shipment phasing there is related to the debt, which is obviously going to benefit Q1? And if you could help us to quantify this, that would be great. And then secondly, a question on the free cash flow, EUR 2.6 billion. That was ahead of expectations. Could you give us a bit more details on how much upside do you see there going forward, particularly when it comes to net working capital and inventory specifically? And is it realistic to go back towards EUR 3 billion its year. Rudolf Gijsbert van den Brink: I'm for sure going to leave the second question to Harold. Let me take the APAC question. First of all, we -- let me emphasize, we are very happy with our performance across APAC. And I think the footprint is working very, very well. Vietnam, of course, is such a critical market for us. And after the incredible market disruption in '23, the stabilization in '24, '25 was really the year where both the market returned to growth but also where Heineken Vietnam really resumed market share gains. So we significantly outpaced the growth of the market across regions, across channels, both on and off-trade, premium and mainstream. So it's a very broad-based recovery of market as well as our relative performance momentum. There's always the timings of debt and those kind of things that impact a bit quarter-by-quarter performance. But in the aggregate, we're very happy with the performance of Vietnam. India, as we -- this is such a critical strategic pillar of the company now. I think we all agree, it's probably the largest frontier market globally in terms of upside on per capita and in absolute terms. We're very happy by the job done by the team after initially also, yes, a job to kind of integrate and normalize and standardize the business to Heineken standards. We are now really starting to see the fruits of, yes, the commercial strategies coming to life. The back end of last year was really impacted by weather. It was extraordinarily cold and wet in Q3 going into Q4. But from a market share performance, we're very happy with India, both on the core Kingfisher brand, which is by far the leading brands in the country, but also in particular, our premium portfolio with Kingfisher Ultra, Heineken, Amstel Grande, what have you. Cambodia is probably the market that has been the biggest drag on our results in Q4. They were playing against a large number of local players with a lot of overcapacity, not everybody playing to the same rules. So that remains a concern that we are focusing on. But in the aggregate, very happy with the APAC performance. Again, we keep reiterating in the organic results you're probably referring to, you don't have China, which is an absolute success story. This is such an important strategic pillar of the company now. We keep growing double digits. Brand Heineken up double digit again, and now Amstel becoming a sizable second engine, which is only at the beginning of the curve. And as we revealed in the press release or actually in my comments, I believe, it's now a top 3 market in terms of absolute net profit contribution, if you take the income from associates plus royalty income. So this -- yes, we sometimes feel frustrated and it's also one of the reasons where Tristan proposed to update the volume definition to give more visibility to the license volumes because actually, strategically, this is becoming a very important part of the business and relatively asset light. Let me leave it there. Harold, on the cash flow? Harold Broek: On the cash flow, I like the challenge. But there is a reason why we said we were pleased with our performance because we are -- as we said at the Capital Markets Day, really paying more and more attention to free operating cash flow delivery, but also return on invested capital as we extensively discussed then. It also is important to realize what we're doing with that free operating cash flow. We continue to invest in the organic side of the business, but the addition of FIFCO is a really, really important jewel that gives us coverage, great coverage with great brands in Central America. You will have noted that we're expanding our dividend range from 30% to 50% and are increasing our dividend slightly but slightly nonetheless. And we are announcing the second tranche of our share buyback program. So the free operating cash flow is an important metric for us to also enable sustainable shareholder value creation in the long term. The EUR 3 billion is a good ambition to have, but I'm not going to commit to it in 2026, as you will understand. Our real focus is to sustainably bring the cash conversion rate up to 90%. And you will have seen that all the levers are in play. Our net working capital improved as a percentage of revenue by 1%. Our CapEx, we really talk about growth without CapEx. Don't take this too literally. But we are really getting the leverage out of our existing capital base, and importantly, management focus, both better forecasting, but also action. Cash actions are really stepping up in that space. So that's the message that we're trying to signal, whether it leads to EUR 3 billion, time will tell. Operator: Our next question comes from Laurence Whyatt from Barclays. Laurence Whyatt: I once again echo everyone's thoughts, Dolf, best of luck for the future. I really appreciate you've taken the time over the past few years to help us out. A couple of questions for me. Firstly, on Mexico, I appreciate you've taken quite a bit of price in recent years and again in Q4. But what strikes me about the Mexican market is just sort of the lack of the premium segment. It seems to have a very low percentage of premium beers sold in Mexico. And so whilst I appreciate you're working on the price element, is there something more that could be done on mix within Mexico just to sort of get that percentage of premium beers up? And of course, I would have thought that leads to greater profitability there as well. And then secondly, on your Heineken 0 brand, we've seen a number of line extensions over the past year and a couple of more announced just this year. Some of those extensions are on sort of fruit flavors. I'm just wondering how you see this sort of strategy evolved? How close can you get to sort of more of a soft drink type of brand with the Heineken 0 as you add more and more fruit and whether those line extensions you're expecting to bring new consumers into the beer space? Do they go into the alcoholic side of Heineken once they try these line extensions? Sort of how do you see the nonalcoholic part of Heineken impacting the rest of the Heineken brand? Rudolf Gijsbert van den Brink: Very good. Very good questions. So thanks for your words, Laurence. On Mexico, indeed, historically, the premium segment has been small. I know from my own experience leading the market a bunch of years ago, that it is not for lack of trying on our behalf nor the competition. I think it might also be a reflection that the absolute price level in the market is, for example, compared to Brazil, much higher. So I think it might also have to do a little bit with the affordability of mainstream creating maybe less space to go above. Having said that, we do see premium segments now accelerating. In our portfolio, we see it with Miller High Life, which crossed the 1 million hectoliter mark. I remember doing the first license deal with, of course, many years ago, and it was -- Miller High Life was a rounding error and it's now becoming actually a meaningful brand at scale with very fast growth. The same for Dos Equis our affordable premium brands. So we do believe that there's an opportunity, but it might go a little bit at a different pace than it has been going in other markets like Vietnam or in Brazil. On the 0.0, the line extensions had come in 2 shapes. It's the flavors under the regular 0.0. We piloted them last year, and we are now really scaling them. And of course, a couple of key markets like now the U.S. and the U.K. And we have the ultimate, which is the triple 0, including 0 calories, which we piloted in the Northeast of the U.S. and which is expanding now too. So we're indeed experimenting, learning different ways rather than go to big global launches in one go. We're really kind of feeling our way to see where the consumer is at. But we are very confident that there's very good upside there. On the question on soft drinks, we do believe it's not about us trying to be a soft drink. I think it's the other way around. We believe that by extending our 0.0, we can play into premium adult natural beverages, which is clearly complementing soft drinks, and it's an area where soft drinks cannot go as easy as we can using a beer brand as a brand carrier makes it more adult. Given it's 0.0 beer, it's more natural. Typically, it has much lower sugars, much lower calories. So we believe -- and it commands premium pricing in a very significant way. So we really like where this is going and where the first generation of 0.0 beer started very close to beer occasions at moments that somebody chose for a no alcohol option. We do believe indeed that we can start to unlock new occasions that were not accessible before, as the 0.0 segment is maturing. And as the global leader, we should take the leading role in pioneering that. So we're pretty excited about it. Laurence Whyatt: Just maybe to follow up on Ultimate. Do you see that playing a different space to where the current 0.0 beers are? Are they taking share from each other? Or do you think that's really opening up a new market. Rudolf Gijsbert van den Brink: No, we do believe that, that's a new market. Where Heineken 0.0 Original, really plays into less beer drinkers or for certain occasions where people -- unlike a lunch occasion or a business dinner occasion where people rather stay in control and not have the alcohol version. The Ultimate plays into complete new occasions around sports moments, after sports occasions. That's why the global sponsorship with Padel is interesting in this regard. So we're really trying to -- in the end of the day, marketing is about growing consumer penetration, and that's what we're trying to do very intentionally with these line extensions. Operator: Our next question comes from Sarah Simon from Morgan Stanley. Sarah Simon: Dolf, you will be missed. I had 2 questions, please. First one was on FIFCO. You've given us some numbers in terms of the performance in dollars, but can you give us a bit more color around how the business performed organically in 2025, and also what you're kind of expecting in terms of what things are looking like for '26? And the second question was around sort of following on from Laurence's question on 0.0. You obviously had basically flat Heineken 0.0 volumes during the year. And I appreciate your comments about distributor inventory resets. But what do you think your 0.0, let's say, sellout is globally? And how does that compare with what you think the market is doing? Rudolf Gijsbert van den Brink: Yes. Thank Sarah. Let me take the second, and then maybe Harold can comment on the FIFCO question. So our largest Heineken 0.0 market globally is Brazil, and that was, as said, highly disrupted by the stock reset in Brazil. In the key and core markets, like, for example, the U.S., Heineken 0 continues to do very, very well. And in the aggregate, we need to be careful that we don't make new forward leading comments, but 0.0 should drive disproportionate growth across our portfolio. We remain very bullish. We believe consumer penetration is still low and building. We are unlocking new occasions as per the prior discussion. Globally, it's still low single-digit percentage of the total beer category. In Europe, it's nearing 4%, 5% in core markets like the Netherlands. Spain, it's 10%. I don't see no reason why this can't be 10% of global beer in XYZ years. We were the first mover about a decade ago. We have been very intentional about scaling and for sure, we will continue. So we would see '25 performance as an outlier due to some very specific cyclical reasons. But underlying, we are very confident in our low and no strategy portfolio and business momentum. Harold? Harold Broek: Yes, let me be brief on FIFCO. So first, I think it's important to reemphasize that this is really about long-term strategic fit. We're very happy with the brand portfolio. We're very happy with our market share positions. We're very happy with the grip that we have also through retail outlets. So we really believe that for the long term, this is a fantastic opportunity for us. And let's remind ourselves also that compared to the other markets, the per capita consumption is still relatively low. So we do see growth opportunities in the Central America, but in particular, in the Costa Rica market as well. Then in terms of the trading question that you're asking is pretty much in line with 2024. So no big dramas there. It's also very much in line with what we had assumed for 2025. So no surprises coming there. And yes, there has been likely many of the American markets, some impact from macroeconomic uncertainty, for example, tourism have been down a little bit, and that may have had some impact on market category growth momentum, but nothing that worries us at all going forward. Operator: Our next question comes from Andrea Pistacchi from Bank of America. Andrea Pistacchi: And Dolf, also on my part, thank you for the open interactions, insights and all the very best. Two questions, please. First one, I wanted to go back to Brazil a minute, please, which showed a sequential improvement in Q4. You gained share in the market, but could you maybe talk about the health of the market? Are you seeing signs of improvement as we go into this year? How constructive do you feel about Brazil recovery in '26? And also how is the new brewery opening proceeding? And will it drive cost savings already this year? My second question is actually on the multi-market operations. Could you talk a bit about the scope of these multi-market operations? How large are the clusters? Is this mainly a European initiative? Or is it global? And the pace of moving towards these MMOs and what do you see as the main benefit besides cost savings? Rudolf Gijsbert van den Brink: Thank you, Andrea. And let me take the first one and Harold will take the second one. So on Brazil, again, overall, on sellout, we are very happy and pleased with our ongoing market share momentum, really driven by brands Heineken and the Amstel brand, but now also Eisenbahn really picking up and some of the more super premium brands. The market did slow down remarkably in the second half of the year, the market is going into decline. We are deliberately cautious on the short-term outlook on Brazil. We don't want to look too much into January numbers. Let's wait for the Nielsen numbers also to see what that is looking like. We're really focusing on what we can control, which is brand portfolio, which is our relative pricing decisions, which are our activation plans. And there, again, we feel very confident also for this year. The brewery Passos is very important because of its physical location. We were trucking a lot of beer from the Northeast to the Southeast where the bulk of our volume is. And so there is Immediate logistical savings, there is government incentive savings. So even though our volume is not expanding at a rapid pace in the short term, this will come with an optimized P&L. And that was also one of the reasons why we did pursue that opening. Harold, on to the MMO question. . Harold Broek: Yes. So first, the reason why we're doing this MMO is really that we see opportunity to be stronger together as Glenn would call it. Most of the FMCG companies that we know of have already started to do that. And we do believe that there is opportunity, but very importantly, a dedicated management team at country level will continue to exist. So this is not really about taking the eyes of consumers and customers. It really is about pulling resources where we believe they are better equipped to do that above a single market and really pull, therefore, that together in a multi-market structure. We will look at this geography by geography. We have already some of these multi-market operations in play and the biggest one that we know is, of course, Heineken beverages in South Africa, where we already see leveraging portfolio, leveraging distribution systems, leveraging support offices is really benefiting the total of the cluster. So this is not new to us, and it's something that we really want to start looking seriously into, but in a very managed deliberate, intentional way. The scope, therefore, in Europe is centered around 4 Czech Slovak, Romania, Bulgaria, Benelux and the Germany, Austria, Switzerland cluster or multi-market organization. And as we already said in the earlier question, the benefits are not only about cost savings, it's really also about taking, let's call it, distraction away so that country organizations can focus on customers and consumers. And that the rest, the parent -- the biggest one in the multi-market organization does a lot of the administrative work and that is what we are trying to do. So it has cost benefits but certainly also focused benefits. Operator: Our next question comes from Celine Pannuti from JPMorgan. Celine Pannuti: First of all, I see a lot of changes that are happening in the organization. And clearly, on the EverGreen strategy. So I wanted to congratulate you, Dolf, on this. And obviously, wishing you a lot of luck for the future. My first question probably related to the EverGreen strategy where you said that top line growth is the core focus. In '25, you grew 1.6% organically. And I'm trying to understand how to unpack that for '26? You say -- I mean, obviously, price/mix accelerated into the quarter, although you seem to be saying that price/mix, you want to be a bit more careful about that. At least that was for Europe. So if you could try help me understand how the price/mix should develop in '26 versus the '25 level? And in an environment where, obviously, you are quite cautious as well about our demand, do you think that aiming for flat volume in '26 is achievable for you? So that's my first question. My second question is regarding profit delivery, the 2% to 6%, I think you made a comment about how this was really driven by EMEA. I would like to understand for '26 the balance of that by region? And as well, is there any balance we should think about H1, H2, given, I think, still some FX transaction in the first half of the year? Rudolf Gijsbert van den Brink: Thank you, Celine. Let me have a first go at it, and then I'm sure Harold has a thing or 2 to say on this. Let me start by the profit guidance of 2% to 6%. So we trimmed it a little bit and it's a combination of a couple of things. One is just to remain a bit prudent on the short-term expectations from the category. In different places, there's different drivers, affordability concerns or we have macroeconomic disruption still playing in parts of the footprint. Mid and long term, we remain confident explicitly so and that the category should sequentially improve to growth again. But in the short term, we rather err on the side of being a bit cautious on the category assumption. Very importantly, another reason is that we really want to maintain flexibility to keep investing in growth in digitizing the business, et cetera. As I said earlier, very pleased that even in a challenging lean year like last year, we were able to increase our absolute marketing selling expenses, increasing marketing selling as a percentage of revenue by some basis points. And so that guidance is also really set with that intention in mind to remain flexibility to keep those investment level in place even if there's unforeseen turbulence. Harold, over to you on the question on pricing and revenue. Harold Broek: Yes. Of course, going forward, we're not going to comment on pricing, certainly not specifically market by market for obvious reasons, Celine, you know. But maybe it's good that we look back towards 2025, which makes me a bit more comfortable to speak about it. And I think what we're trying to signal is a bit consistency in our behavior. And therefore, you really need to look at the revenue per hectoliter growth region by region, where in Africa, we indeed continue to predict input cost inflation from foreign exchange and local inflation, and we will take pricing for that if and when and how we can, like we did in 2025. In the other side, Vietnam is a good example of that, and Dolf alluded to that in the beginning. We see a very important opportunity to continue to manage the mix, because the growth of Heineken is a premiumization strategy, but in a 0.25 liter can. And that is an important component of the price mix that you see in Vietnam. And that is really what we are trying to do. To balance affordability, price-seeking consumer, but still going after premium because the consumer is prepared to go premium as long as it fits the pocket and the cash outlay like, for example, with 25 cl can. So revenue management is a very important part of our pricing strategy, not just pure pricing. And that's how we're trying to get this right market by market, region by region, and we will do in developed markets, particularly in Europe, be very cautious about the consumer environment not to overprice and really start paying attention to volume as well. Celine Pannuti: Any commentary on the balance of operating profit delivery? Harold Broek: Yes, between half 1 and half 2, well, you know that we're always aiming to be consistent and predictable, which the world would say the same. So I think we are trying to be very agile in approach to balance that out and give you line of sight, but it depends on factors and as Dolf already alluded to, we also have our investment strategy and are not here to manage quarter-by-quarter short term. We really are wanting to get this right for the long term as well. So we'll do our best, but cannot promise. Rudolf Gijsbert van den Brink: I think we're going to the last question. Operator: Our last question is from Trevor Stirling from Bernstein. Trevor Stirling: You'll be relieved to know there's only one question. But firstly, let me reiterate what everyone else has said, Dolf, and in particular, I look forward to saying it in person over a cold one tomorrow. The question, Dolf, clearly, 1st of June 2020, a world a lot has happened in those intervening years. When you look back, what do you think is your biggest learnings here in terms of what's worked, what hasn't worked? Yes, just reflections on your time as CEO. Rudolf Gijsbert van den Brink: Thank you, Trevor. And certainly looking forward to a cold one, with all of you together tomorrow end of day, always a -- yes, a happy moment to look forward to. Yes, I actually just realized that today, it's February 11, and it was on February 11, 2020, that I was informed that I was going to be nominated as the next CEO of Heineken. And I was living in Singapore at that moment, and it all looked rosy. And I was really worried about how to step in the footsteps of Jean-Francois, given the incredible momentum, the role, the category, the business was happening. And little did we know that living in Singapore, it was just days or 1 or 2 weeks later that COVID erupted in Asia and then later in the world. And I took a plane on May 25, was a one-way plane with KLM and air stewards were wearing ski goggles because people still believe that the virus could penetrate your eyeball, it was just bizarre. And then starting in June 1 from home, sitting behind the screen, trying to figure out this team's thing and what have you, this Zoom thing. So it has been a bizarre period. What I'm super proud of Trevor is that already before COVID, I felt that we had to pick up the pace of change in the company because the pace of change in the world was accelerating. And again, that pace of change in the world has capital accelerating time and again over the last 6 years. And EverGreen as we designed it with the executive team in the second half of 2020 was explicitly designed to future-proof the company in a fast-changing world. And we did that across different dimensions. It was future-proofing our footprint by exiting some markets and doubling down on high-growth markets with good fundamentals like India, South Africa and now more recently with FIFCO, it was doubling down on growth segments like premium beer, low and no beer and beyond beer with varying levels of success, some things moved more smoothly than other. We always knew, and I remember speaking with some of you 6 years ago, that you said Heineken is fantastic and the brand and the culture, but you guys don't do cost productivity. And we very explicitly tried to change that. I am proud of the progress we have made, taking EUR 3.5 billion of cost out, and there's still more to do. And that's what EverGreen 2030 is all about. We were behind on digitizing the business, including the boring ERP part of it, and we're really advancing at pace, making considerable investments not just in money but also in organizational resources to make sure that our digital backbone is future-proofed. And we did it on sustainability and people, too. All in all, proud of the progress, incredibly proud of the 87,000 people at Heineken. We lay the foundation, we were not done. More is needed. We are humble in that sense. And I hope you got that spirit and tone when we were together in Seville. And EverGreen 2030 is our sharpened clear expression of our ambition levels building on progress and learnings and at the same time, very clear in the priorities for the company. And as such, it was the toughest decision of my career, if not my life because I love this company dearly. It is the right moment for me personally to take a professional and personal reset, but I do that with full confidence in the future of this beautiful company and that I'm leaving the company in very capable hands with Harold and the rest of the executive team and with a clear strategy. So thanks for that question, Trevor. And again, looking forward to expand if needed over a beer or otherwise when we see each other tomorrow end of day. Raoul-Tristan Van Strien: Thank you very much. We will see most of you tomorrow afternoon. Take care. Harold Broek: Thank you. Rudolf Gijsbert van den Brink: Thanks, everybody. Bye-bye. Operator: Thank you. This now concludes today's call. Thank you all for joining. You may now disconnect your lines.
Haj Narvaez: Good afternoon, ladies and gentlemen, welcome to our earnings call to discuss BPI's results for the fourth quarter and full year of 2025. I'm Haj Narvaez, your moderator for this session. Just as a reminder, we're conducting this briefing in a hybrid manner with our BPI speakers and panelists here in our headquarters at Tower 2 of Ayala Triangle Gardens, Makati City. We also have some participants who are dialing in remotely. I am pleased to introduce you to our speakers and panelists this afternoon. First, TG Limcaoco, our President and CEO; Eric Luchangco, CFO and CSO. They will also be joined in the panel for the Q&A by Tere Marcial, Head of BPI Wealth; Ginbee Go, Head of Consumer Banking; Louie Cruz, Head of Institutional Banking; Jenny Lacerna, Head of Mass Retail Products; and Dino Gasmen, Treasurer and Head of Global Markets. We are also joined by the rest of the BPI leadership team in this call. This afternoon's agenda will begin with opening remarks from our President and CEO, TG Limcaoco, followed by our CFO and CSO, Eric Luchangco, who will walk you through the fourth quarter and full year performance highlights as well as provide updates on our digital platforms and strategic initiatives. The floor will then be open to questions from the audience. Please note, the call is being recorded and legal disclaimers apply. Now let me turn you over to TG for his opening remarks. Jose Teodoro Limcaoco: Thank you very much, Haj, and very nice. Welcome to everyone joining us on this call today, both here at Tower 2 and virtually. Very happy to report that despite the domestic issues that this country faced, though it's the second half of last year, BPI managed to a 7.4% increase in our net interest -- net income after tax to PHP 66.6 billion, the details of which our CFO, Eric Luchangco, will go into. This was really driven from my perspective by our disciplined funding and our disciplined pricing on loans, which also grew 14.7%, much faster than the industry and allowed us to maintain our NIMs. Our net interest income grew 14.7% for the year. We also managed to keep OpEx growth at 9.9%, much slower than previous years. And really for me, one of the big achievements here was our ability to manage our tech spend, which if most investors will recall in the early years was growing at 28%, 25%. Previous year, we grew at about 14%. And this year, we only grew at 12%. We see that, that tech spend should continue to moderate going forward as we make changes in our tech stack and look at other vendors to supply our technology. Part of Eric's presentation today will also be to give more details on our provisioning. I know there's been some questions about that. And so we're happy to present some of our thinking behind it and also to take questions in detail about our provisioning and the risks we are taking as we shift our book to more consumer-oriented. Eric will also delve into a review of our progress on our strategic initiatives, but I'd really like to point out our success in 3 fields: our sustainability, our transformation of our branches and our agency banking. Then finally, I think we'll have a Q&A at the end, where I will be joined by our major business leaders as well as the rest of the senior team is here physically present. So in line with our real desire to be as open to our investors, we'll answer any questions. So with that, Eric, I'll turn it over to you. Eric Roberto Luchangco: Thank you, TG, and good afternoon, and thank you to everybody joining us for our fourth quarter and full year 2025 earnings call. We're pleased to report that the bank delivered another year of strong results, leading to another year of record income, the highlights of which are as follows: on profitability, the bank delivered a solid full year net income of PHP 66.62 billion, a 7.4% increase from the previous year, driven by strong revenues and positive jaws. Fourth quarter earnings of PHP 16.13 billion, up 14.7% year-on-year, highlights strengthened profitability. without the typical seasonal boost. Overall, sustained performance led to a robust full year return on equity of 14.5% and return on assets of 2%. The balance sheet continued to expand with loans up 14.7% year-on-year to PHP 2.6 trillion, while deposits rose 8.6% to PHP 2.8 trillion. The bank maintained a solid financial position with liquidity and capital buffers comfortably above regulatory minimums. Capital strength remains robust with an indicative CET1 ratio of 13.9% and a CAR of 14.7%. Overall, asset quality remained healthy with sufficient cover. The NPL ratio stood at 2.18%, rising 6 basis points year-on-year, but improving 11 basis points quarter-on-quarter. Coverage remained adequate with NPL cover at 94.9%. The bank continued to expand its consumer -- its customer franchise, growing its client base to PHP 18.2 million. Our nationwide reach accelerated through a network of 7,000 agency banking partners, enabling faster and more accessible services. Our wealth management business strengthened its role as a key growth driver, achieving record net funds contribution and record AUM of PHP 1.9 trillion. In the fourth quarter, we delivered a net income of PHP 16.13 billion, down 8% on the sequential quarter, primarily from higher provisions and the usual spike in operating expenses that we experienced in the fourth quarter. Compared to the same quarter last year, net income rose 14.7% as strong revenue expansion more than compensated for the 8.9% increase in expenses and a 233.3% increase in provisions. Total revenues grew 19.3% with net interest income up 15.5%, supported by a 14.7% loan growth and a 22 basis point improvement in NIM. While fee income increased by 16.3% pre-provision operating profit rose a robust 32.1%. For the full year 2025, we delivered a record net income of PHP 66.62 billion, up PHP 4.57 billion or 7.4%, supported by record revenues that more than offset higher operating expenses and provisions. These results included revenue of PHP 195.28 billion, up 14.8%, driven by record net interest income of -- which was up 16.0%. Trading income of PHP 8.29 billion, which surged 21.3% as we capitalized on declining interest rates in the third quarter to lock in some gains. Record fee income of PHP 38.96 billion, up 9.1% on sustained volume growth in key fee businesses. Operating expenses were up 9.9% from volume-related expenses and continued investment in people, products and technology. Pre-provision income at PHP 103.17 billion was up PHP 16.83 billion or 19.5%. Provisions increased 168.9% to PHP 17.75 billion, resulting in a net income of PHP 66.62 billion. Looking at the shareholder returns, earnings per share grew for the fourth straight quarter -- for the fourth straight year, reaching PHP 12.62 per share, a 7.1% increase from the previous year. Sustained earnings supported profitability with ROE at 14.5% and ROA at 2%. Moving on to the balance sheet. Total assets reached PHP 3.65 trillion, reflecting a 10% year-on-year increase, driven by higher loans and securities investments. Gross loans grew by PHP 2.62 trillion, up 14.7% year-on-year and 8.5% quarter-on-quarter with broad-based expansion across all segments. Deposits increased 8.6% year-on-year to reach PHP 2.84 trillion, primarily from growth in time deposits. CASA ratio finished the year at 60.7%, while the loan-to-deposit ratio reached 92.4%. Credit demand remained strong with gross loan growth accelerating 8.5% in the fourth quarter. Year-on-year, loan growth eased from 18.2% in 2024, but remained robust, increasing by PHP 336 billion or 14.7% and outperforming the 9.7% industry average for universal and commercial banks. Non-institutional loans accounted for close to half of that growth, rising PHP 163.9 billion or 25.8% year-on-year. Non-institutional loans posted steady gains with SME loans up 79.7%, credit card loans up 31.9%. Personal loans up 28.3%. Personal loans include PHP 16 billion of teachers loans, which increased 83% year-on-year. Auto loans was up 22.9% with auto loans including PHP 5 billion in motorcycle loans, which also increased 23% year-on-year. Mortgage loans was up 15.7% and microfinance loans up 15.3%. This loan expansion highlights the bank's strong momentum even against a higher base following robust expansions for noninstitutional loans in 2024 and 2023. On NIMs, our annual NIM has expanded consistently since 2021, reaching 4.59% in 2025, up 28 basis points from last year, fueled by a 26 basis point jump in asset yields, supported by a larger share of retail and SME loans and a slight decline in funding costs. On a quarter-on-quarter basis through -- on a quarter-on-quarter basis, though, NIMs fell by 4 basis points to 4.58%. This was mainly due to a drop in loan yields from the institutional loans as this segment adjusts faster to the policy rate movements. Please note that in the left chart, we also show a risk-adjusted NIM, which is based on NIM adjusted for the net NPL formation. Despite the drop in policy rates, risk-adjusted NIMs for 2025 hit 3.97%, up 36 basis points year-on-year, which is our highest figure over the past 5 years. On funding, we're optimizing funding by shifting from time deposits to bond issuances, which are supported by incentives for sustainable financing, resulting in a lower effective yield versus top TD rates. While deposits remain the core funding source, borrowed funds grew 37% and now account for 7% of total funding. Key funding ratios remain fairly stable with a loan-to-deposit ratio of 92.4% and loan to total funding at 85.7%. We continue to prioritize strengthening our deposit base with greater focus on CASA. Our CASA mix remains predominantly retail, comprising 77% of the total, including contributions from microfinance and SMEs. Growth in CASA is being driven by the core mass and mid-market segments, driven by expansion in the client base and higher average balances. We saw sustained growth in fee income, up 9.1%, led by our biggest fee businesses, cards, wealth management and insurance, which collectively contribute about 60% of total fees. Card fees grew by 13.8%, driven by an 8% increase in customer count, 17% increase in transaction count and 4% increase in average transaction amount, contributing to a 21% increase in billings from retail, cash advances and installment loans. Wealth management fees increased 6.6% on record net contribution from clients. AUM soared 18.7% to close the year at PHP 1.91 trillion, led by a 16.2% increase in private wealth, 23.7% increase in personal wealth and a 17.7% jump from the institutional business. Wealth's client base reached 1.46 million, up 26.3% year-to-date September -- year-to-date September, our market share in the trust industry rose by 35 basis points to 21.1%. And we hold a commanding market share in investment funds at 31% and a 30.5% market share in employee benefits. Income from insurance, up 11.4% is comprised of: one, equity income from joint ventures; two, royalty fees; and three, branch commissions. In 2025, equity income was up 13.6%, royalty fees up 21.6% and branch commissions up 4.6%, following a high base in '23 and '24, driven by the launch of new products. These increases were partly offset by the decline in fees from retail loans, which was down 10.2%, largely due to the absence of last year's one-off collections from housing loan penalties and late payment charge adjustments following the curing of CTS accounts. ATM and digital channels down 3.9% as the bank discontinued its e-wallet loading service for GCash and Maya. Remittances down 2.8% due to heightened competition from a new market entrant, leveraging InstaPay and PESONet-enabled transfers. Branch service charges down 2.6%, owing partly to 4 fewer banking days versus last year and the continued migration of over-the-counter transactions to online channels. Credit quality remains healthy even as portfolios expands into higher-yielding segments. NPLs increased to PHP 56.9 billion, but the NPL ratio remained broadly stable at 2.18%. Provisions totaled PHP 17.75 billion, bringing credit cost to 75 basis points for the year. NPL coverage remains adequate at 94.9% and strengthens to 122.9% under BSP Circular 941, providing a solid buffer against potential credit losses. Across segments, except for institutional loans and in particular, SME -- SME, mortgage, microfinance and auto loan segments, all recorded year-on-year increases in their respective NPL ratios. The credit card NPL ratio increased by 38 basis points year-on-year to 4.68% and remained stable quarter-on-quarter. The rise in NPL is largely driven by test programs, which account for 59% of the volume, while regular programs account for the remaining 41%. Delinquencies are concentrated in 3 groups: younger clients, aged 40 and below, lower income borrowers earning less than PHP 40,000 per month and post-pandemic acquisitions booked between 2022 and 2024. The personal loan NPL ratio also increased, rising 172 basis points year-on-year to 7.16%. Similar to cards, deterioration is coming from younger and lower income borrowers, including 2025 vintages, accounts sourced through -- and accounts sourced through universe expansion programs. To mitigate further deterioration, we tightened credit score cutoffs with early post-implementation results showing reductions in NPL ratios. We also enhanced early-stage delinquency detection and strengthened collection efforts. These measures are expected to support improved NPL performance in 2026. The microfinance NPL ratio increased 25 basis points quarter-on-quarter and rose by 277 basis points to reach 13.3%. The rise was primarily driven by a test program that offered higher loan amounts and longer tenures to existing clients. The quarter-on-quarter uptick increase reflects the impact of recent typhoons in the Visayas, which disrupted operations of certain BanKo borrowers. Overall, however, recent loan bookings are performing better than -- better following the tightening of credit score requirements. SME NPL ratio remained stable, but increased 192 basis points year-on-year to 7.25%, largely driven by strong loan growth. SME loan balances doubled in 2024, which initially kept NPL ratio low. As loan growth more recently moderated slightly, the NPL ratio normalized into the 7% to 8% range, which reflects typical SME portfolio behavior. NPL formation is mainly coming from regular or non-program loans in the lower ticket segment, select high-ticket exposures -- sorry, and select high-ticket exposures. While high-ticket cases represent less than 1% of the total NPL accounts, their larger loan sizes impact the overall NPL levels. No significant concentration has been observed by industry or by geography. Delinquencies are broadly distributed, indicating portfolio-wide, not sector-specific drivers of NPL formation. Finally, in addition to NPL coverage, we report ECL coverage at 100.9%. As shared during our previous earnings calls, our provisioning approach is anchored on ECL, which provides a forward-looking estimate of potential losses. Operating expenses rose by 9.9% year-on-year, primarily driven by technology, manpower and other expenses, which includes marketing, rewards, business volume-related expenses and third-party fees. These investments have strengthened the bank's position. We added 2 million new customers since the start of the year, bringing our total customer count to 18.2 million. We enhanced our nationwide reach in a cost-effective way, rationalizing our branches while expanding our agency banking partners. We achieved operational efficiencies, reducing cost-to-income ratio further to 47.2% in 2025. CET1 capital stood at PHP 401 billion, up PHP 34.9 billion from last year on net income accretion. The CET1 ratio declined 115 basis points quarter-on-quarter, but was flat year-on-year as earnings generation offset the drag from a higher dividend payout and robust loan growth. Capital ratios remained well above regulatory and internal thresholds and sufficient to support continued loan expansion. Strong earnings has supported sharp increases in capital distribution with the implementation of the variable dividend payout effective 2022. In 2025, the bank declared a total cash dividend of PHP 4.36 per share, up 10.1% from 2024 and 142% from the fixed dividend payout -- dividend amount paid out in 2021 and the prior years. We show here a table that shows the revenues associated with loans, covering the full year 2025, 2024 and 2023 and the respective net NPL formation for each loan book for the periods. From 2023 to 2025, revenues across the loan book increased by PHP 40.4 billion, which is more than 3x the PHP 12 billion increase in net NPL formation. The non-institutional segment contributed PHP 33 billion in revenues, surpassing the PHP 17.3 billion increase in net NPL formation, a pattern observed consistently across all loan segments. The loan revenue uplift is driven by the sharp growth in noninstitutional volume, which in turn drove the shift in loan mix toward higher-yielding segments and the increase in fee income associated with higher loan volume. Revenues have outpaced the cost. Despite the rise in provisions, the pivot toward noninstitutional loans has delivered value and validates the bank's direction to grow the share of noninstitutional portfolio in the loan mix. While institutional loans are and will remain a core part of our portfolio, noninstitutional loans have -- are the segment with a greater growth opportunity, consistently delivering loan yields averaging above 12%, even after factoring in credit costs or net NPL formation. Non-institutional loans continue to show grower -- greater risk-adjusted returns. Non-institutional loan growth has outpaced institutional loan growth, contributing to the uplift in overall profitability as there is greater availability of untapped opportunities here. Just to highlight again the higher relative returns on the noninstitutional segment, we show you a comparison of the return on assets for both the institutional and noninstitutional lending segment as well as the resulting ROA for the bank's lending business. For this exercise, please note that we used ECL formation, which largely dictates our current provisioning rather than the net NPL formation or our actual provisions in arriving at the ROA. This way, we net out the effect of higher overlays in prior years as this can be seen -- as can be seen, the non-institutional lending business has delivered ROA of around 4% or higher over the period versus the sub-3% ROA of the institutional lending business. The increased share of noninstitutional loans results in a blended ROA for the lending business of 3.2% in 2025, above the bank's overall ROA of 2% for the same year. Segments that posted the highest adjusted ROE with each enjoying a figure north of 3.5% were personal loans, credit cards and microfinance. We believe this justifies the increased allocation of resources towards the noninstitutional loans and shows that the risk-adjusted returns of the noninstitutional business, including those of unsecured segments, remains stellar, notwithstanding concerns about periodic spikes in the rate of the NPL formation. At this point, allow us to update you on what we have accomplished in 4-plus years since we first shared with you our key strategic initiatives, which include increasing the share of consumer and SME loans or the non-institutional segment in our loan book, establishing ourselves as the undisputed leader in digital banking, using branches as sales stores more than service points, closing the gap in funding leadership and promoting sustainable banking. Our lending business continues to show strong momentum, underpinned by sustained growth across all segments. Our loan growth -- our loan portfolio expanded PHP 2.62 trillion -- to reach PHP 2.62 trillion, rising 14.7% year-on-year and posting a solid 14.3% 3-year CAGR. Both institutional and noninstitutional segments contributed significantly, but noninstitutional lending remains the primary growth engine, growing at an exceptional 29.5%, 3-year CAGR, while institutional loans accelerated at a very respectable 9.5%. This faster growth has driven a big shift in our loan mix. By 2025, noninstitutional loans accounted for 30.5% of total loans from only 21.1% in 2021. This achievement places us 1 year ahead of schedule in reaching our loan mix target of 30% noninstitutional, which underscores the strength of our execution and growing relevance of our consumer franchise. Overall, we've gained significant market share since 2021, as shown on the right-hand table. Market share in gross loans was up 170 basis points, credit cards up 245 basis points, auto up 520 basis points and mortgage loans up 465 basis points. As expected, the expansion of noninstitutional loans increased the NPL level, but the NPL ratio continued to decline due to the faster growth of the loan portfolio and write-offs in the noninstitutional loan book. Credit cost was 93 basis points in 2021 or 18 basis points higher than in 2025, reflecting the elevated provisioning during the COVID-19 period to maintain sufficient NPL and ECL coverage. In line with our commitment to digital leadership, the bank continued to scale 7 client engagement platforms, which are delivering steady growth in enrolled and active users. Transaction volumes continue to shift toward digital channels, supported by new partnerships, enhanced functionalities and continuous platform improvements. Starting from the left, the BPI app, our main operating app for retail clients, now includes a buy-and-sell U.S. dollar facility, regular subscription plans for investments, mobile check deposits and virtual privileged cards, which broadened the app's role in facilitating everyday financial transactions. We also enhanced payment efficiency by reducing the InstaPay fee to PHP 10 and adding over 600 new billers. In addition, BPI to BPI transfers remain free and continuous refinements to the consumer interface and navigation are improving overall ease of use. For VYBE, our e-wallet, sign-ups have reached 2.5 million with 78% being VYBE Pro users. The BPI BizLink facility for corporate clients introduced key upgrades, including web approvals via SMS OTP, mobile multifactor authentication, pay foreign with multicurrency and express check deposit to seamlessly migrate clients to the mobile app and provide ease of transaction approval. The BPI BizKo app for SMEs now serves nearly 30,000 users boosted by e-payroll and salary on-demand services, which aim to bring unified payments for clients and drive usage. The BPI BanKo app remains central to financial inclusion, offering simplified deposits and access to accessible revolving credit. BPI Wealth Online serving high net worth individuals grew active users to 2,800, up 82% year-on-year through sustained activation initiatives. Finally, BPI Trade continues to strengthen engagement among equity investors, with higher transaction count in 2025 and new features such as eRegistration, eDeposit and eReserve to widen accessibility. Across all platforms, we continue to expand capabilities and open banking -- in open banking and improve UI/UX for a more seamless experience. As of December 2025, we have 131 API partners, up from 74 in 2019, supporting over 17,000 brands, up from only 749 in 2019. Despite our strong push towards digitalization initiatives, we continue to invest in our physical network by opening branches in targeted growth areas, even as we consolidate and co-locate branches to optimize our footprint. In 2025, we further rationalized our branch footprint, opening 3 and relocating and consolidating 37 others. The remaining branches will be redesigned into phygital, prime phygital and flagship format, depending on the target segments, customer experience and location. This approach allows us to deliver a differentiated customer experience by leveraging on our both physical stores and digital capabilities. Our branches have undergone a significant shift in their role from primarily handling day-to-day transactions to serving as advisory centers. A few years ago, only 30% of branch personnel time was dedicated towards advisory, while 70% was spent on operations. As of December 2025, operations work has decreased to 46%, while advisory now accounts for 54%, a significant shift that reflects our transformation towards higher-value customer engagement. At the bottom of the slide, we highlight the branch performance following its transformation into a physical -- into a phygital format, 6.5% increase in monthly gross acquisition, 31.8% increase in average monthly net acquisition, 8.6% increase in deposit ADB, 11% increase in digital customers and an improvement of 15.5 percentage points in the internal NPS survey for branch stores. Closely linked to our branch rationalization initiative is our growth in our agency banking, which continues to strengthen the bank's presence beyond branches. We expanded the agency banking network to 32 partners and 7,000 partner stores, driven largely by partnerships with leading brands that strengthened our footprint, particularly in Visayas and Mindanao. What began as product onboarding partner stores has scaled rapidly. 987 of these stores are now enabled for a deposit-withdrawal transactions across 18 partner brands, thereby broadening our ability to serve customer segments nationwide. In 2025, all products -- in 2025, total products sold reached [indiscernible], a fivefold increase from the [indiscernible] recorded in 2024. This growth was supported by a significant jump in productivity to 74 from only 15 in 2024, with insurance and deposit as a primary product. Deposits and withdrawal transactions grew sharply, supported by an increase in enabled stores and stronger marketing efforts. Transaction value and volume were nearly 12x that in 2024, reinforcing agency banking as a viable initiative to increase deposits. More clients can now access a transaction facility with the rollout of RRHI touch points, covering 7 brands and 474 stores using a barcode generated in the BPI mobile app. Looking ahead to 2026, we will accelerate the expansion of transaction capable stores to 2,000 and elevate the customer experience. We will deploy dedicated brand ambassadors who will guide clients through product increase applications and cash transactions within partner stores. The bank delivered a solid deposit growth from 2021 to 2025, with deposits rising 45.2% to PHP 2.8 trillion. Both CASA and time deposits increased, although the growth was led by time deposits, resulting in a decline in the CASA ratio by 16 percentage points to 63.2%. Despite the headwinds in CASA, market share in total deposits improved 67 basis points to 12.04% in 2021 to 12.71% in 2025. Corporate CASA growth remains challenged, while enrollment and transaction activity on the BizLink -- on BPI's BizLink increased overall penetration and client engagement show room for improvement. To address this, we continue to enhance our capabilities to become the main operating bank of our clients and capture the full ecosystem of their transactions. This includes positioning BPI as the aggregator by enabling real-time payments and notifications, multichannel reporting and innovative collection solutions. These initiatives aim to strengthen client engagement and accelerate CASA growth. Retail deposit acquisition continued to be our core strength, the number of new-to-bank deposit clients grew at a 30% CAGR over the past 5 years, driven by digital onboarding which surged 240%, far outpacing the 14% CAGR for branch-acquired accounts. By December 2025, CASA booked via digital channels reached 38x its 2021 level. We also managed to increase the average balances of existing or tenured CASA year-on-year. Our client base now stands at 18.2 million as we onboarded 2.2 million customers in 2025, further advancing our financial inclusion efforts. The year was marked by major ESG milestones, including the bank's larger sustainability bond, the PHP 40 billion SINAG bond, which was 8x oversubscribed, the conversion of 70 BPI branches to 100% renewable energy and BPI's pioneering membership in the Alliance for Green Commercial Banks in Asia. This Friday, we will issue and list the 2-year peso BPI Supporting Individuals to Grow, Lead and Achieve bonds or BPI SIGLA bonds. This will carry an ASEAN Social Bond label as affirmed by SEC. Other highlights include, under responsible banking, 4 new sustainability-focused products in insurance and remittance, BPI-developed AI programs for environmental and social due diligence on global and local investments, numerous ESG-focused financing deals with key deals supporting solar, wind and water projects in the Philippines and Southeast Asia. For responsible operations, BPI is the first Philippines bank to publish its decarbonization strategy road map for Scope 1 and Scope 2 GHG ambitions. By December 2025, we had a total of 44 IFC EDGE-certified green branches, doubling from 22 last year. The bank expanded its customer touch points through the May BPI Dito initiative to 32 partner brands and over 7,000 stores nationwide. Finally, for sustainability, governance and risk management, BPI expanded its sustainability framework, adding 17 new eligible green, blue and social categories. The bank also refined its E&S exclusion list and introduced a consolidated human rights policy aligned with the united declaration of human rights. Allow me to conclude with a summary on profitability. We delivered continued improvement in profitability for the fourth consecutive year of record income led by revenue growth. On the balance sheet, we delivered strong broad-based loan growth led by noninstitutional segments, while the bank's liquidity and capital positions remain above regulatory thresholds. On asset quality, we remain -- we maintain strong asset quality with sufficient cover. Finally, we sustained strong ROE and delivered increased dividends. We closed 2025 with confidence in our strategies and momentum. We navigate a challenging environment. We remain focused on delivering consistent performance and creating value for all our stakeholders. Thank you, and we will now open the floor for questions. Haj Narvaez: Thank you, Eric. Before we open the floor to your questions, please allow us a minute or 2 to set up at the venue. [Operator Instructions] For those on site, you may use any of the mics available at the floor or you may raise your hand, and we will have someone hand the mic to you. Just as a reminder, please identify yourself by your name and company, so we can address you accordingly. For the benefit of everyone attending this call, whether in person or online, we would like to encourage you to ask your questions during the session. Please note that we will refrain from taking questions after we end this call. Joining us here in front with TG and Eric, our senior leaders. First, Tere Marcial, Head of BPI Wealth; Ginbee Go, Head of Consumer Banking; Louie Cruz, Head of Institutional Banking; Jenny Lacerna, Head of Mass Retail Products; and Dino Gasmen, Treasurer, and Head of Global Markets. Perhaps we can take -- if there's anyone in the audience to ask questions. Please go ahead, DA. Daniel Andrew Tan: DA from JPMorgan. First question on asset quality. Fourth quarter, if you look at NPL formation, we estimate it to be around PHP 7 billion. It's higher than third quarter. So I just want to understand, any reason behind it? Any one-offs in fourth quarter that, that moved up? Eric Roberto Luchangco: No specific one-offs. Really, it's just some of the movements that we saw, the movement in the -- movements in -- for one thing, like I said -- like we've said, we're focusing on the ECL as one of the -- as the key basis on which we're going to be providing because, again, it's forward-looking. There were some adjustments to the MEVs. That's when you saw the weak GDP numbers from the third quarter move into our model, and therefore, that created some of the adjustments that we're looking at. Daniel Andrew Tan: But if you look at NPL formation, any -- which segments drove the formation in the fourth quarter? Eric Roberto Luchangco: So it was credit cards was one of the significant contributors to that. Actually, that was probably among them, probably where we saw the bulk of the movement. Daniel Andrew Tan: And so your fourth quarter credit costs around close to 100 basis points? Just fourth quarter, right? Going forward, what do you expect these looking into 2026? Eric Roberto Luchangco: So moving forward, credit cost, we estimate in the kind of 80-ish -- in the 80-ish basis point range. Daniel Andrew Tan: And the drivers behind is what you mentioned earlier on the tightening of credit standards and so on. Is that fair? Eric Roberto Luchangco: The driver to keep it in check. Daniel Andrew Tan: The driver to keep it lower than fourth quarter. Eric Roberto Luchangco: Yes, yes. Daniel Andrew Tan: All right. So that's my question on asset quality. Just another one on growth. So looking into this year, given the macro situation as well, we've beaten actually loan growth in fourth quarter. But do you think this year, what's the outlook on that one? Eric Roberto Luchangco: So overall -- obviously, we kind of carry forward this, in a sense, a lack of momentum that we've had over the third and fourth quarter into the beginning of the year. And yet, we remain -- we continue to believe that there is the opportunity for this to turn around quickly. A lot of the slowdown has been sentiment-driven rather than fundamentals-driven, which means that with a turnaround in sentiment, which can happen quickly, things can turn around. That being said, we approach the year with a fairly cautious approach, but with the mindset that we will retain the ability to move quickly as we see the circumstances turning around. Daniel Andrew Tan: Any guidance on growth and across segments? Eric Roberto Luchangco: Loan growth, you mean? Daniel Andrew Tan: Yes. Eric Roberto Luchangco: So loan growth, we expect to be in the low teens. So basically, weaker than the 14.7% that we saw last year, but still in double-digit territory. So call it in that kind of maybe 12% to 13% range. Daniel Andrew Tan: And just last one for me on treasury, I think last year, pretty punchy number around PHP 8 billion. Any thoughts on how we should think about this year? And also within the PHP 8 billion, how much would you say is customer flow or more recurring type of treasury? Dino Gasmen: Yes, thank you for the question. Good afternoon, everyone. Well, last year's trading income was driven really a lot by changes in monetary policy, the BSP cut by, I think, about 125 basis points. The Fed also was cutting last year. So I think that provided the opportunity to generate trading gains. Looking at 2026, I think the expectation is much less cuts. Our own economies are saying probably 50 basis points from the BSP. In the U.S., I think the forecasts are very diverse. Some say none, some say 2 to 3. So I think this year, trading gains are probably going to be less. The opportunity, I think, is on the steepness of the curves, a lot of -- well, the carry should be good this year because of the steepness of the curves. Lastly, on close. I think -- I'm not sure right now, but I think about 20%, 30% of that workflows. Haj Narvaez: We actually have a question in the Q&A box. The first question -- the question in the Q&A box is from Yong Hong Tan of Citibank. I'll actually passes over to Louie Cruz. How is corporate client sentiment for this year? Are they turning more cautious or more positive after the government budget? And are CapEx loans coming back? Luis Geminiano Cruz: Thank you, guys. Good afternoon. Okay. For this year, comparing it to last year, when we started 2025, we had a very good visibility of the pipelines of all the projects. And you can see significant projects. For this year, it's slightly lower versus last year, but the thing is, they have standby facilities. So it's -- I guess, you can see how corporates are taking now. They're more cautious. But they're also seeing opportunities given how the market would go first half or second half, depending on how this whole issue would come out this year. So the facilities are there, but the visibility compared to last year is slightly lower. Now for institutional banking overall, the growth that we're seeing, we're seeing about 8% to 9% still on the growth based on the visibility. But all this will all depend also on the working capital and the opportunity on that because not most of them will really avail at this point. But given where the rates are going, again, companies will have that opportunity to borrow. And the facilities will -- are there ready, and it all depends on the utilization now to bring up the growth moving forward. Haj Narvaez: Thank you, Louie. Actually, Yong Hong also has a question on consumer growth. I think the answer here's we're looking at low 20% level in terms of year-on-year growth in consumer. Jose Teodoro Limcaoco: Let me just put it in perspective. The target for this year for the bank is to try to grow our loan portfolio anywhere from 11%, 12%. 12% to 13% actually is what we're aiming for. But of course, like anything else, that's what we feel we can achieve, but it all depends on how the macro situation turns out. From segment basis, we're looking at corporate loans -- sorry, institutional loans about 9% -- 8%, 9% and the consumer sector growing maybe 20% to 25%. Now as Eric said, the malaise we feel in this country today is, for me, really driven by confidence. I don't think there's anything structural in the country. It's just people feeling uncertain about what's going on, looking for direction. And I think that's something that can turn very quickly. And so the bank is prepared if things turn very quickly. Of course, there are some other things that we need to watch out for. You have to look at what the sentiment of the auto distributors are. When you talk to them, they're quite bullish, right? They're looking at some growth this year. When you look at the mortgage business, you're looking at 2026, and you have to realize that in 2026, we are now really 4 years, 5 years away from the pandemic when nothing got started, right? No new projects. So that's got to play in. So if we can see 20% growth in the consumer sector, which is about 30% of our book and you see 9% growth in the corporate sector, which is about 70%, that will give you something like 12.5% growth. And that's why we feel that's something that should be achieved. The cards business is something that we continue to be quite optimistic about, but also it's a business that we watch very carefully. In the fourth quarter last year, we had significant NPL. We had scored degradation and therefore, we took provisions for that. But that is something that we have looked at and that we are correcting. Again, it's part of our process where we experiment, we look for new cohorts, we look for new clients, run a few programs. And if it works, we expand it. If it doesn't work, then we cut it very quickly. Haj Narvaez: Thank you, TG. We also have a question that was typed in from Felix Mabanta of Metro Bank. He's asking for some color on the credit card loan growth of 31.9%. Is the growth more a function of existing loans being rolled over? Or is it coming from new credit card customers? Jenelyn Zaballero Lacerna: So to answer that question, it's really a combination of growth in different parts of the business. If you recall, pre-pandemic, we're just acquiring about 200,000 cards per annum, and we're at 400,000 cards per annum post-pandemic. And our retail sales is growing at about 21%. But one of the things that's driving our growth would be installment, which is growing at about 37%. So the installment loans are the ones that you see in the stores, where you can actually purchase appliances, bigger ticket items at terms, and also loans which are targeted offers to customers, who we feel are qualified for our loans. So it's really a combination of those 3 things. Thank you. Haj Narvaez: Thank you, Jenny. Wanted to check if anyone from the audience had questions. Go ahead. John Liam Limbo: I am Liam from F. Yap Securities. I just have a couple of questions. The first question is, with the less than ideal sentiments and possible sunsetting this year of the interest rate easing, what can we expect for provisioning in 2026? Eric Roberto Luchangco: So for provisioning, I think that's about -- in the -- about in the 80-ish basis points, 80 to 89 basis points in that range is kind of what we're expecting. John Liam Limbo: All right. For my second question is for the dividend payout ratio related to the factors that I have discussed earlier. What can we expect for -- in terms of the ratio for 2026? Eric Roberto Luchangco: It's still a bit early to be very specific about that. Obviously, our dividend payout ratio is a result of where we think loan growth is going to be versus how much income we're generating. But just as a rough guide, given the fact that we think loan growth is going to be a little more muted this year, there's probably room to increase dividend payout ratio a bit. Haj Narvaez: We have a question that's also typed in by Rafael Garchitorena of Regis. Could you please break down the 11 basis point Q-on-Q drop in loan yields. Presumably, it was led primarily by the institutional book. Rafa, confirming this, I think we mentioned this in the call -- in the message earlier, it's primarily driven by the institutional book. If you'll notice also, the weight of the institutional book also went up Q-on-Q given it was quite strong on a Q-on-Q basis. Thanks. We have actually another question. This time, it's from Abigail Chiw of BDO Securities. May we know the outlook for NIMs and NPL levels this year as BPI continues to build up the consumer loan book? Eric Roberto Luchangco: Yes. So in terms of the NIMs, we expect that NIM should be fairly stable given that we think that rates are still on a slightly easing trend, right? As mentioned by Dino, our forecast is 2 more rate cuts over the course of this year. But the rate cuts from last year will actually also be filtering into the book, so that will create downward pressure on our NIMs. However, we expect to continue to shift the loan book -- to continue to shift the loan book towards the noninstitutional segment, and that should provide a balancing effect. So NIM should be fairly stable. And then on NPLs, I think we're looking for it to remain kind of within the range, but slightly growing because of the continued shift towards the noninstitutional loan book should create some -- a little bit of a lift there, but that's consistent with the direction that we're heading in. Haj Narvaez: Thank you, Eric. Another -- well, at this time, it's a question on asset quality that was typed in. This time, it's from Melissa Kuang of Goldman Sachs. She's asking on the auto loan side. Could you please elaborate on the key factors contributing to the observed increase in auto loan, nonperforming loans during this period? Ma Cristina Go: Yes, Melissa. Thank you for the question. The pressure on the NPL for auto loans is coming from our strategy of really going more expansive in our market. So it's coming from the lower income, lower risk score segments, which we've then after that tightened as we go into more and more lending programs, we adjust, we tighten the score and the underwriting parameters. So we've seen the source of these accounts to be coming primarily from dealer-generated accounts. And therefore, we've shifted our books into more of the branch-generated accounts, focusing on our prequalified depositor programs. But not to say that we will totally stop or terminate our lending programs. We are looking at balancing risk and reward. So pricing for risk and -- because we still see a lot of opportunities as we go more down market. That's really where the growth opportunities would be. Haj Narvaez: Thank you, Ginbee. Again, we'd like to open the floor to any questions from the audience. Okay. There's a question about -- sorry, there's a question here from Yong Hong Tan again of Citibank asking for the average risk weight of the corporate versus noncorporate segment. And I guess I'll direct this towards you, Eric, but just a question about the capital position looking ahead. Eric Roberto Luchangco: Risk weighted, 100% for corporate, right? And then mostly 100% across the noninstitutional except mortgage is what, 20%, right? Haj Narvaez: Yes, [ it was less ]. Eric Roberto Luchangco: And then sorry, what was the second part of the question? Haj Narvaez: Next question is actually about how we feel about our capital position moving forward. Eric Roberto Luchangco: Actually, what we think we've got more than sufficient capital, right? This level of practically 14% is more capital than we think we need. It gives us room for continued loan growth. And in fact, we think we can bring it down from where we are, which is why -- part of the reason why I also mentioned there's potential for dividend payout to increase moving forward. Haj Narvaez: Thank you, Eric. Okay. There's a question from Priya Ayyar. She's actually asking about the consumer lending space. Are we seeing any deterioration in the client profile? How much do we see the share of consumer moving forward, I guess, over the medium term? Jose Teodoro Limcaoco: Well, I guess the strategy has always been to try to increase the share of the consumer book as part of our total loan book. Therefore, we will continue to aggressively grow the consumer loan book. Growth in the consumer loan book arises from 2 things. One, it's taking more market share from our core clients, meaning, obviously, we have bank clients, depositors who bank with several banks. We try to get those clients as borrowers at the branch. Then you also have the core -- what would be the traditional client base, I guess, the upper segment of what we would call the easy to lend to. That one, we try to get them and try to get market share from our competitors by working more closely with dealers, with brokers, giving them offers. The other way to grow your loan book is by targeting new segments. And that's where we have to use our data. That's where we have to be a little more aggressive, and that's where we're willing to take risks by opening up into new markets, studying them and working very closely to shut it down if it doesn't work as it did in, I think, the -- sorry, the third quarter in 2024, and to grow those segments where it's successful. And maybe here, this is where we go, and I'll turn it over to Ginbee to talk about some of the programs where we're targeting the lower -- with our nontraditional segments, the lower end of the market as we try to expand our customer base. We have a MyBahay program and we had some programs auto side. Ma Cristina Go: Yes, TG. So on the new markets that we're looking at, again, we mentioned this earlier, we really want to make credit accessible to more Filipinos. That's part of the bank's aspiration to be more financially inclusive. In which case, we've introduced a number of programs to this end. One was the MyBahay and MyKotse, which TG mentioned. It basically addresses affordability, and that means extending the loan tenure, lowering the down payment. And so it's not just about interest rates. Because the lower income segment, monthly amortization -- budgeting for monthly amortization is more important. So that's how we're able to also manage the risk because the yields on these assets would be higher to be able to cover for the higher provisioning or credit cost. So new markets and the use of data would be critical for us to be able to manage the risks on this front. Other opportunities for us would really be on process improvements. We do realize that the ability to turn around and process loans will be critical for us to get and book high-quality accounts. So the faster you are, the better quality accounts will go to you. And that's what we're continuously addressing. And on this end, we're really looking at AI, piloting agentic AI for -- particularly for auto loans this year, but eventually rolling off to other types of loans. Third would be the OneScore. We're looking at it as a credit scoring at customer level because we understand that our customers have different loan borrowing needs. And so the ability to look at it from a total customer standpoint and manage the risk of that customer will also be critical for us, not just capturing opportunities, but managing the risks. Jose Teodoro Limcaoco: And then the last area, obviously, the new products which we're offering, which traditionally have not been. So ever since we took Robinsons Bank, we have motorcycle loans, which was totally nonexistent for us in 2023, it started 2024. And that's a very different model because we work very closely with our shareholder who runs the dealership. So there's quite good synergy there. We're not doing it with all dealers. We're just doing it with dealers of our shareholder. We also have grown a business in teachers loans. Today, that book is PHP 16 billion when we took over Robinsons Bank. I think that was PHP 4 billion, right, so in 2 years. And the secret with teachers loans is really distribution. So today, whereas Robinsons Bank was only doing it through Legazpi Savings, which very limited reach, today, we're distributing teachers loans across the country through our 800 branches plus even some of the BanKo branches. Then finally, cannot let go -- not notice the success we've had in our business bank, the SME book, which 4 years ago, was a PHP 16 billion book, and last year ended at PHP 64 billion. And that's really working with SMEs trying to understand who are the SME, standardizing the product, standardizing the distribution and working with the channels to get it there. And that one is a great success story because they're, we've used data first to identify the businesses that couldn't qualify just looking up by their cash that goes to our accounts. And then secondly, we actually turned it around and looked at individual accounts and look at their data and identify them as actually SMEs banking with us as individuals and turn them into SME clients. That's a secret for growth. We -- these -- just these 3 products alone can contribute to a significant share to the growth of our consumer. Haj Narvaez: Thank you, TG. We have a question from Aakash Rawat from UBS. Aakash Rawat: Great. So three. the first one is, so TG talked about environment which is not looking very positive, strong demand-wise. I'm just wondering what drove very strong loan momentum in the last quarter of 2025? Is it a few chunky downs from some corporates, any particular sectors? And have you seen that momentum in 2026 year-to-date? That's the first question. Jose Teodoro Limcaoco: So let me get this. You're asking the -- if we can -- any color on the strong fourth quarter loan growth, right? Louie, any big ones on the corporate side. Luis Geminiano Cruz: For the fourth quarter, it's quite clear and it's very public that the one that drove loan growth was really power, and the projects that were supposed to be completed in 2025 were mostly completed in 2025 despite the macro issues that we were experiencing. This was -- actually, this was really the growth that drove the fourth quarter. Now will this momentum continue in 2026? Unlikely during the first half, but you still see a good flow of CapEx in projects that remain significantly present. So -- but it was real purely on a timing and opportunistic basis. Aakash Rawat: The second one is, what is the loan exposure to the BPO industry? And are you seeing any change in the demand outlook there? Or is it broadly stable over the last 12, 18 months? And when these companies set up their facilities in Philippines, do they borrow from the local banks or the majority of the funding comes from the parent? Luis Geminiano Cruz: For the BPO, our exposures mostly on working capital short-term basis, and we service the flows. So basically, on the loan side, it's very limited in terms of the portfolio. I don't think it's generating even close to 2%, but I can check on that. But generally, the borrowings is from the parent. Aakash Rawat: The working capital loans is 2% of the loan book. Is that correct? Luis Geminiano Cruz: In and out based on outstanding, that's correct. Aakash Rawat: And the last one is just on your thoughts on [ RRR ]. Do you think we see any cuts this year or not? Jose Teodoro Limcaoco: Frankly, Aakash, I don't think there will be any this year. I would like some, but I don't think he'll give it to us this year. Haj Narvaez: Okay. Eric, there's actually a question from Julian Roxas from Philippine Equity Partners. He's asking for OpEx growth outlook for 2026 and our view on CIR for 2026. Eric Roberto Luchangco: OpEx loan growth, I think we'll continue to try and keep that in check. As I think in 2025, we were able to keep that a bit tighter than it had in the previous years. And we'll look to kind of replicate that performance for 2026, which means that the CIR will depend on revenue growth. Of course, the less revenue grows, the more we're going to force the tightness on the cost-to-income ratio. So we saw actually a very strong improvement in cost-to-income ratio in 2025. I think that will not necessarily be -- we may be a chance to try and replicate that in 2026, but we'll try to keep to at least that cost-income ratio, at least maintain. But I'll always be pushing for tightening up in that area. Haj Narvaez: Thanks, Eric. Before we proceed, any questions from those in the audience? If none -- this is actually a 2-part question. I think I can pass it to Dino, then to Eric. With regard to our shift towards bond funding, could you just kind of describe the benefits of going to the bond market versus paying for top rate TDs? And maybe you can talk about some of the incentives that come along with that or are the other benefits? And then what's our view in terms of incremental issuance in 2026? Dino Gasmen: The intermediation costs on bonds is much less, particularly on the research side if the issuance is ESG themed. So there is a requirement of such issuance is 0 compared to 5% for regular time deposits. So that's a huge advantage already for bond issuances. Apart from that, it's very long term, usually long term. So more steady than regular time deposits. What are the prospects for this year? Well, we just issued our new bonds, yes, SIGLA bonds. We may go back. I think we'll probably go back to the peso bond market as well as the U.S. dollar bond market later this year. Yes, I think that's it. Haj Narvaez: Actually, Danielo Picache has -- Danielo actually was the one who asked the question, Danielo of AB Capital Securities. But he has -- the second part of this question is on NIMs. Reminding -- wanted to be reminded again of the NIM sensitivity per 25 basis point BSP cut. And what's the -- what lift do we get from a shift in mix towards noninstitutional loans? Eric Roberto Luchangco: Yes. So same as -- the NIM sensitivity is the same as we've said over the last few years. It's -- we're looking at per 25 basis point cut in policy rates, approximately 4 basis points of NIM movement after 1 year. So no change from the previous years. Haj Narvaez: Thank you, Eric. And we also have a question from Daniela Hernandez of IFC. She's asking which segments will be driving the consumer loan growth or the noninstitutional loan growth? Eric Roberto Luchangco: Yes. So I think -- more or less, we expect generally those that were strong this year, which is most of them, that they will continue to be strong. So the trends remain essentially the same. Ginbee, in case you want to add? Ma Cristina Go: Yes. So wee see -- we're still very optimistic on the growth of the consumer loans, primarily driven by unsecured lending, which would comprise of credit cards, personal loans, micro finance, SME loans. And then, of course, we still see loan growth coming out of our secured mortgage and auto loans, but probably more tepid on mortgage, as TG mentioned earlier, we are already seeing that the turnovers of housing projects 4 years ago has contracted coming from COVID. And then on the vehicle sales, we're also seeing some softness there. But we have been bucking the trend, which means that all our lending programs and our focused initiatives to drive faster and more affordable loans are coming into fruition. And so we're -- we continue to look at defying the trends in both mortgage and auto. And that's why we still are continuing on our guidance of 20% mix growth. Haj Narvaez: Okay. Go ahead, TG. Jose Teodoro Limcaoco: I just want to add to what Dino was saying on bonds. I'm like one of the biggest guys who keeps on forcing Dino to try to look at more bonds. Not only is there an advantage in the reserve requirement if they're green or blue. But the fact that there's no deposit insurance, saves some. The fact that your -- if you do a bond over a year, the effective DSD cost is significantly lower. The fact that if you do a bond, you -- it's better for your LCR ratios, which allows you to be more nimble on your lending. So much more advantages to doing a bond than the typical deposit. Deposits, we're competing with our friends across the street every day. Some days, there's illogical pricing, whereas bonds, you can manage it very well. And over time, you fix your funding. So I'm a big believer in funding with bonds. So Dino, please. Haj Narvaez: Okay. Are there any more questions over there? It's Gilbert, go ahead. Unknown Analyst: What's the -- can we say operating expenses of 10% increase is the new normal annually? Unknown Executive: It's only a target. The 10% is the budget. Haj Narvaez: Thank you, Gilbert. Anyone else from the audience? Okay. Go ahead, DA. Daniel Andrew Tan: Sorry. Can I have a follow up on that? Any scope to lower -- go lower than 10%? I know you're potentially rationalizing some branches still, tech expense as well and so on. Jose Teodoro Limcaoco: It's really -- I mean, you have to set a budget, right? You set a budget because you need to plan on what you'll spend at the start of the year. A lot of that is manpower, right? So that one is, more or less, we can fix. Then the next one is premises, that one we can fix. The premises are -- is growing because we're depreciating our build-out with the renovation of the branches. We certainly want to transform the role of the branches more from the transactional -- and you have heard me say this many times, right? We need to bring them into the phygital world so that we can sell. And that's driving the expanse in what we call, premises. Then there's technology. Technology is something we have invested because we had that tech debt. So I think in '22, it rose 23%; in '23, it rose 24%; in '24, it rose, I think, only 14% or 15%; and last year, it was only 12% or something. I think we're beginning to get our tech spend under -- get it to be normalized this year. We are transitioning out of a major vendor on managed services into a new vendor and another global vendor, where we think we'll see savings of about 30% to 40% on that, and we intend to do that more and more with some of our major tech vendors. So there's a whole process there. And finally, the last component is like marketing costs, which are really driven by -- a lot of that is variable, right? We spend because it generates revenues. And as long as there is a marginal lift in the revenue from the spend, we're willing to do that. So I don't think you should be very focused on what's the growth in the marketing -- sorry, what's the growth in the OpEx spend. But really, is it driving also -- what's it a percent to your revenues because we do have a lot of what we call variable. For example, the rewards we do, right, the points we offer, the rewards and commissions we offer, that's all variable. Daniel Andrew Tan: Okay. Very clear. Can I ask one question on wealth? Just this year, you've been mentioning PHP 1.9 trillion in AUM. Just want to understand how much is the growth? And how much is net new money versus portfolio growth? And then going forward, what are your thoughts on the outlook? Maria Marcial-Javier: So DA, for 2025, I think it's about 19% in terms of AUM growth. Net new money would account for bulk of that. On average, depending on the portfolio, it could -- the -- so one is net new money, the other one is the return on the portfolio. So depending on the portfolio, it could range between maybe 5%, 6% for conservative and maybe for some of our products, as much as 30% for growth products. So -- but in large part, 19% is net new money. Haj Narvaez: Thank you, Tere. Any more questions from the audience? Go ahead. Unknown Attendee: Just one question on the consumer loans, particularly on credit cards. Can you share with us the mix between discretionary spending and nondiscretionary spending in 2025? And how does it differ in 2024? Unknown Executive: So we look at it as essential spending and discretionary spending. So for 2024 -- beginning 2024, we really see a lot more essential spending, basic necessities, basic needs. But there's some certain -- there are specific categories within the discretionary spending that are outpacing essential, like travel for certain segments. So it's difficult to answer as a whole portfolio because we really do segments across the portfolio and not just one whole. So essential, obviously, is something that has been growing for the past couple of years, but definitely in the discretionary spending, we see pockets where travels are more higher than essential and higher-end dining can also be higher than essential in certain segments. Unknown Attendee: Can you give us an idea on like percentage points how they increased year-on-year? Unknown Executive: Retail spending is increasing about 21% per annum. So that's where the essentials and the discretionary spendings are launched. Unknown Attendee: Congratulations on a great set of results. For Tere, I guess, on BPI Wealth, the 19% growth in net new money, is that -- how is that in perspective historically? Is it above your average growth in net new money? And maybe you can give us color what's driving that 19% growth? How BPI sets itself apart from a lot of other banks that want to grow the wealth segment nowadays. I think everybody wants to grow in the wealth segment. Maria Marcial-Javier: So in terms of -- Gino, in terms the 3 subsegments within wealth, so we look at private wealth, we look at personal wealth and then we look at institutional. As mentioned by Eric earlier, the highest growing -- the highest growth in terms of those -- across those 3 segments was personal wealth. And that's really because of rising affluence. I think it grew almost 25%. And then almost equally, about 16%, 17% was the growth we saw in private wealth and institutional. How does that compare versus -- in the last 3 years, we've grown at about that clip, maybe 15% to 18%. And if you look at our chart in terms of AUM over the past 5 years, we have shown a significant increase in our market share. Just last year alone, I think it was around 30 basis points. We only have up to September. So it's been really encouraging. It's a function of the market because we're seeing really a lot of shift towards wealth products. And at the same time, this whole rising affluence will show faster growth, especially on the retail as well as the mass affluent and even the high net worth, given the growing sophistication. So we're still quite positive towards -- for 2026 and beyond. Haj Narvaez: Thank you, Tere. We have a question that was put in by [ Chang Ki Hong ] of JPMorgan. He mentioned that -- I mean, we did hear a few times that segments of younger consumers, consumers with income below about PHP 40,000 are driving higher NPLs in auto, personal and credit cards. Generally, how much do these customer segments account for a lot of the growth? And if you scale back on these consumer segments, will the growth outlook for these loans be brought down? Ma Cristina Go: Maybe I can answer that, [ Chang Ki ]. We have seen the growth of the younger consumers, the appetite for credit to really be high potential. And so that's why we continue to have lending programs to be able to test the ability of these segments to manage their credit. And a lot of our lending programs are really around the lower income, as I mentioned earlier. As well as the younger segment because naturally, if you're younger, then you naturally have lower income as well. How -- they've contributed to the NPL formation and we actually expected that primarily because they're new to credit. And usually, it takes time before they get seasoned. Now what we're trying to do is as we tighten the parameters, increase the required credit score, increase the required income level, we also see opportunities in the higher quality segment, and that's what we are trying to unlock. Peeling the onion further through data, looking at opportunities to cross-sell and be able to provide additional loan and credit to those that are existing to bank and therefore, with bank transactions that we can underwrite, but also to others who are outside of the bank, the new to bank but are existing to credit. So these are the opportunities that we're looking at unlocking the potential of credit scores, such as TransUnion and CIBI so that we can capture opportunities that may not necessarily be just within the books of BPI. Jose Teodoro Limcaoco: And let's just to be very clear, there is nothing wrong with NPL as long as you're pricing it properly. And I think that's the beauty of the diverse products we have. Now certainly, there is an interest rate cap on card. So that one, we're a little bit limited as to how far down market we can go. But that's why we have personal loans where we can do smaller ticket items, price it properly. We have -- clearly, we have, like SME, we can price based on the risk of the particular SME, we can price anywhere from 14% to 27% depending on the risk. Certainly, when you face what I would call the traditional consumer products like mortgage and auto, there you're a little limited because of the competition, right? And some of my friends have been burned by not understanding. And that's where I think BPI understands the market better than anyone else. Yes, we can go down market there, but it's got to be priced properly, and we're prepared to walk away when the pricing is wrong for the kind of risk that people are offering. Ma Cristina Go: I will also add, we talk a lot about underwriting, but we don't talk enough about recoveries and collections. And that's really another big opportunity for us because we're able to use data and able to use our branches and our expanse networks to be able to really recover and improve our collections. We monitor our curing rates and our flow rates very, very intently, and that's how we're able to do that. That's why we have also very good LGDs in our -- particularly in our collateralized or secured loans. Haj Narvaez: Thank you, Ginbee. Thank you, TG. Just wanted to check again any more questions from the audience? Okay. We've actually gone through our questions. Thank you, everyone who's put up some questions. Again, we'd like to highlight, BPI is always welcome, we always welcome your feedback and likewise, take them into careful consideration. Before we end the call, maybe call on TG for some final thoughts? Jose Teodoro Limcaoco: Thank you, Haj, and thanks again to everyone for participating in this call. And thanks to my colleagues here for joining me and being more transparent with our investors. To be frank, 2025 actually ended better than we had thought when we were looking at the way we thought the year would end. Back in September and October, we were a little more bearish on what the results came out. So we're very pleased with the final results. January has started actually not so bad, not so bad. And so it gives me hope that 2026 will be a decent year. Now my gut feel here is that, yes, I've called it the malaise of -- what sentiment of the economy. But it's -- guys, it's really about confidence. There's no structure. We don't have a war. We don't have -- it's purely sentiment driven. And I think that sentiment can turn very quickly. And therefore, as an organization, we're being prepared for that. We do have our plans for the year. We do want to be more capital efficient this year. So we have hinted at increasing dividends and a higher dividend payout because we think we have sufficient capital, and we want to maintain the return on equity that's closer to 15 than the 14.5 that we added. So with that message, I think let's look forward to 2026. Again, thanks to everyone for participating today. Thanks, Haj, for being a great host, and we'll see you in 1 quarter -- sorry, at the ASM. Haj Narvaez: Yes. Thank you, TG. Thank you, TG, Eric and the rest of the BPI senior management team. Ladies and gentlemen, this concludes today's earnings call. Thank you again for your participation. Those likewise joining online, you may now disconnect. And for those on site, please do join us for some refreshments. Thank you.
Ivan Vindheim: So after this energetic start to the day, good morning, everyone, both in the room and online. And thank you to -- thank you that you are joining us this morning at our first quarterly presentation here at Salmon, our new Exhibition Center and showroom at Aker Brygge in the heart of Oslo. The Salmon is actually Norway's most visited exhibition center for farming of Atlantic salmon for natural reasons and came in with the Nova Sea acquisition. The Salmon is also Oslo's best fish restaurant according to TripAdvisor, so then it must be true. Everyday, Joe is always right about food and food experience. So if you have happened to be in Oslo, and you're looking for something good and healthy to eat, you now know where to go. And here we also find Mowi's only Mowi cooler in Norway with an assorted selection of our fantastic products. So for those of you who are physically present in the audience this morning, if you haven't already, please take a look on the way out after the presentation. I think it will be worth your while. That was this morning's marketing. My name is Ivan Vindheim. I'm the CEO of Mowi. And together with our CFO, Kristian Ellingsen, I will take you through the numbers and the fundamentals this morning, and to the best of my and our ability, add a few appropriate comments to them. And after presentation, our IRO, Kim Dosvig, will routinely host a Q&A session. For those of you who are following the presentation online, can submit your questions or comments in advance or as we go along by e-mail. Please refer to websites at mowi.com for necessary details. Disclaimer is both long and extensive. So I think, we leave it for self-study, as we usually do. So with that out of the way, I think we're ready for the highlights of the quarter. And to begin with, and on a general note, after a year of soft prices, following unprecedented industry supply growth last year of 12%, prices increased as expected towards the end of the year after a rather slow start to the quarter, I think, is fair to say. And for our parts, that translated into an operational profit of EUR 213 million in the quarter on quarterly record high operating revenues of EUR 1.59 billion, thanks, first and foremost, to seasonally record high harvest volumes of 152,000 tonnes. The latter is slightly above our guidance. Otherwise, our realized weighted production costs for our 7 production countries of EUR 5.36 per kilo in the quarter was good, I would say, and slightly lower than the third quarter, and down by 5.8% year-over-year, or in absolute terms, down by EUR 47 million in the quarter and EUR 176 million for the year as a whole or NOK 2.1 billion, which are considerable amounts. And further on that note, our standing biomass cost was further down in the quarter and is now at its lowest since 2022, which is a good starting point for our P&L farming cost in 2026. So I think it's fair to say that we expect further cost reductions in the coming year, although the first half of the year will be higher than the second half as always due to our harvest profile, which is following the sea temperatures and the growing conditions in the sea, and consequently impacts our dilution of fixed costs. And this also applies to the first quarter when compared to the fourth quarter. A cost position, which was further strengthened, I would say, by our recently announced strategic feed partnership with Skretting/Nutreco, one of the world's absolute leading aquaculture feed producers, if not the leading and which in short means that Mowi will produce its feed on Skretting formula going forward in addition to capitalizing on Skretting's purchasing power. So this, I think we have ensured the best feed for Mowi farming, now also at the lowest possible cost, which is the best of the 2 worlds. And in total, we expect to save at least EUR 55 million annually in Mowi Farming, whilst also retaining our earnings in a highly profitable feed business, which is an important element in this because we expect the feed market to tighten in the years to come after a decade of overcapacity. And overcapacity, in all fairness create ourselves, and we built our 2 feed mills back in the 2010s, and from which our farming peers have benefited greatly, I think, it's also fair to say, but -- which has now worked itself out. So the table has, in many ways, turned because by piggybacking Skretting, we're offsetting the weaknesses that come with being a small feed producer like ourselves, with limited resources, including R&D, and perhaps the most important input factor in salmon farming, whilst also keeping the advantage of being vertically integrated. So firstly, I'm convinced this will make us a better farmer. I'm also convinced that this is the solution that maximizes our cash flow given our opportunity space. So this is good stuff for us. Carrying on, Consumer Products and Feed, both delivered 2 reasonably good quarters, I would say, at least all things considered, if we get back to the details later. And finally, as the last bullet point on this slide reads, our Board of Directors has decided to distribute a quarterly dividend of NOK 1.50 per share after the fourth quarter. I think that does it for the highlights of the quarter. Then we can move on to our farming volume guidance. And if we begin with taking stock of the year, we are just left behind. 2025 was another record-breaking year for us in terms of harvest volumes with 559,000 tonnes after several upward adjustments of our guidance during the year. And this is equivalent to a growth of as high as 11.4% year-over-year. As for 2026, we uphold our farming volume guidance of 605,000 tonnes, now with Nova Sea on board, and that translates to a further 8.3% growth year-over-year, which means that Mowi most certainly will outperform the rest of the industry on farming volume growth in the coming year once again. And finally, as you can see from the chart here, and as the last bullet point here says, we reaffirm our organic farming volume targets in 2029 of at least 650,000 tonnes. And the latter, we will achieve through increased smolt stocking and by means of post-smolt among other things, because we have still unutilized license capacity in Mowi in several of the countries where we operate. And post-smolt, we can increase the productivity on licenses already in operation, which are to be set into operation. So Mowi's idiosyncratic farming volume growth continues unabated after the rather quiet 2010s and is surpassing that of the wider industry and our listed peers by a large margin, cementing our #1 position in the market for the Atlantic salmon. Then from the overall farming volume picture to key financial metrics for the quarter and the year, there are a lot of numbers on this slide. So I think we'll have to focus on the most important ones now and leave the rest for later at Kristian's session. And turnover and profit in the quarter, we have just been through. So I think we can skip them here. But for year, however, turnover was EUR 5.73 billion or NOK 67 billion, which is the highest so far, but only slightly higher than 2024, as you can see from the table here due to the already addressed soft prices because our volumes were significantly up last year. And soft prices also impacted full year. Operational EBITDA of EUR 949 million or NOK 11.1 billion and full year operational profit of EUR 727 million or NOK 8.5 billion. Furthermore, net interest-bearing debt stood at EUR 2.65 billion at the end of the year. Now with Nova Sea fully consolidated and paid for. And by extension, we have increased our long-term debt target accordingly to EUR 2.70 billion, supported by a strong balance sheet and an equity ratio of 45% in addition to improved debt service capacity as a result of significantly higher volumes in all divisions, which are in the end of the day, the mainstay of our business model and the platform of our earnings. Speaking of earnings, underlying earnings per share was EUR 0.26 in the quarter and EUR 0.92 for the year, whilst annualized return on capital employed was 15.5% in the quarter and 13.3% for the year, which I would say is decent in 2025, characterized by low prices, and weak results for the industry. So when 2025 is fully settled and accounted for, I feel quite confident that Mowi once again will stand out as one of the absolute most profitable farmers in the industry, which is an important element in this. Then further on prices. I think these charts illustrate the whole value because prices were off to a good start last year actually before they began to fall, following unprecedented industry supply growth as a result of very favorable growing conditions across the board, especially in the first half of the year. And the introduction of so-called liberation day tariffs did not exactly help the situation either. So then prices remained low until we saw, as expected, an increase towards the end of the year. And after a rather brisk start to the new year in terms of supply as a result or as a final contribution from last year's exceptional growth, industry supply growth has now finally normalized, and is hovering around 0%, which stands in stark contrast to the 12% we saw last year, and which bodes well for the market balance for the remainder of this year. And yes, I would like to add to that because we believe in our tight market balance going forward in the coming years because in our view, there is no way the industry can manage to replicate previous decades, represents annual supply growth in the coming years with current regulatory limitations and technological constraints, 1% to 2% will be more than hard enough in our view. And last year, demand was 5% according to our numbers, which is a number of most groceries and proteins and meals. So with these numbers, demand should far outstrip the supply going forward. So this will be interesting to follow. Then our own price performance in the quarter, which I would say was good as it was 7% above the reference price, which is the price we measure ourselves against, positively impacted by contract share 24% in the quarter and contract prices above the prevailing spot price, in addition to good quality of our fish. But it's negatively impacted this time around by timing effects and size mix. So with that, I think we are ready to start drilling down into the different business entities, and we begin, as usual, with Mowi Norway, our largest and most important entity by far and the locomotive of our business model. And if you take the numbers first, operational profit was EUR 199 million for our Norwegian operation in the quarter, whilst the margin was EUR 2.02 per kilo and harvest volumes 98,000 tonnes, in a rather troublesome quarter biologically for 2 southernmost regions, Region West and Region South, I think it's fair to say due to issues with gills and plankton. But having said that, our farming P&L cost is still down in the quarter year-over-year, as we can see from the chart here. And the outstanding biomass cost in Norway was further down in the quarter and is now at its lowest since 2022 at the end of the year, which is a good starting point for our P&L farming costs in Norway in 2026. Whilst our 2 southernmost regions struggled somewhat in the fourth quarter, it was once again margin slam dunk by Region North with an impressive margin of EUR 2.61 per kilo on strong biology followed by Region Mid and a margin of EUR 2.26 per kilo. So hats off for that. But also our overall margin for Mowi Norway in the quarter of EUR 2.02 per kilo, I would say, is reasonably good, all things considered. Then the harvest volumes in Mowi Norway. Last year was another record-breaking year for us in Norway with 332,000 tonnes harvest volumes, which is equivalent to a growth of as high as 9.4% year-over-year. And for 2026, we maintain our volume guidance of 380,000 tonnes, now with Nova Sea on board, and that translates to a further 14.5% growth year-over-year. But our short-term goal on these assets is still 400,000 tonnes, which we hope to reach in the not-too-distant future, and which would be our next milestone in Mowi Norway, at least in terms of harvest volumes. Then our sales contract portfolio for Mowi Norway, and this one is important. Contract share in the fourth quarter was 23%, and was with that spot on our guidance, and these contracts contributed positively to our earnings in the quarter. As for 2026, since we believe in market recovery in 2026, we have chosen to be relatively low on contracts, at least so far with approximately 15,000 tonnes per quarter. So let's see how that plays out. That was the last slide on Mowi Norway, and we can have a look at our 6 other farming countries, and we begin with Mowi Scotland. Autumn is always a challenging time of year in Scotland biologically due to high sea temperatures and generally demanding environmental conditions. And in the fourth quarter, we also harvested out some high-cost sites in Scotland. So in light of that, I would say an operating profit of EUR 17 million for Scottish operation in the quarter is a good result with a margin of EUR 1.39 per kilo on 12,000 tonnes harvest volumes. And as we are talking about Scotland, it's also worth mentioning that last year was a milestone year for us in Scotland in terms of harvest volumes, as we crossed the 70,000 tonnes mark for the first time with our 72,000 tonnes. Now for this, our standing biomass was at a record high at the end of the year with cost back at 2022 levels, also in this region, which is a good starting point for new records in 2026. Then overseas to Chile. Mowi Chile continues, unfortunately, to wrestle with soft prices following high supply also out of Chile due to very favorable growing conditions in Chile, as well last year in addition to some farmers having switched to Atlantic salmon from Coho, a Pacific salmon species after doing the reverse a few years back. So just for that, I would say an operational profit of EUR 10 million for Chilean operation in the quarter is a good result on our 26,000 tonnes harvest volumes, thanks once again to the lowest cost in the group in the quarter. Otherwise, our organic growth of our farming volumes in Chile continues unabatedly with 78,000 tonnes last year and 82,000 tonnes targeted for this year. Then farming off to Canada. Mowi Canada also wrestled with soft prices in the fourth quarter and even more so as our cost level in Canada in general is higher than in Chile, which is best-in-class. But in the fourth quarter, also due to knock-on effects from the third quarter and biological issues at that time, particularly in the East. And this resulted in a loss of EUR 50 million in Canada in the quarter. But on the positive side, biology is now satisfactory in Canada, both in the East and in the West. And our costs or biomass cost is back at '22 levels, also in these regions, which should provide the basis for good earnings again in Canada, once prices recover, which brings us the two smallest farming entities Mowi Ireland and Mowi Faroes. In Ireland, we harvested close to nothing in the quarter. So there's not much else to say really over and that biology is now satisfactory in Ireland after rather troublesome 2025 biologically. In the Faroes, however, we harvested 3,500 tonnes in the quarter, ending a record year for Faroes operation with almost 15,000 tonnes harvest volumes and with a margin of EUR 1.68 per kilo in the quarter and operational profit of EUR 6 million, which I would say is a good result, considering that we have 100% spot price exposure in the Faroes. And as the last bullet point on this slide says, biology was once again strong in the Faroes in the quarter. Then further out into the Atlantic Ocean and to Iceland and Icelandic Farming Operation, Arctic Fish. And to begin with, I have to say it's very encouraging to see that we are below EUR 6 again in production cost in Iceland, which gave rise to a small, but still a positive profit contribution from Iceland this time around. So hopefully, with more normal prices going forward, we can put the time of negative results in Iceland behind us. Otherwise, we harvested almost 15,000 tonnes in Iceland last year, which is the highest so far. For this year, we aim to harvest 7,500 tonnes, which is an important element in this because lack of scale in Iceland costs us at least EUR 0.5 in production cost. So more scale would have brought our cost level in Iceland closer to that of the Faroes and the results we see there. But more scale requires more investments and more investments require sensible framework conditions. So everything is connected to everything else also here. So I hope the Icelandic authorities know how to act on this. So this humble request at the end. I, think we can conclude Mowi Farming, and we want to Consumer Products or downstream business. Higher prices for farming mean higher raw material costs for Consumer Products, and more normal prices mean that the time of windfall profits for downstream business is over for now. But we shouldn't be too sorry about that because better prices are never wrong for a farmer, not even an integrated one like ourselves, although the transition phase is always a bit troublesome downstream before the higher prices find their way to the shelf. But having said that, I would still say that an operational profit of EUR 46 million in the quarter is a good result, actually, our second best fourth quarter ever, ending another record-breaking year for our downstream business in terms of earnings with an operational profit of EUR 197 million last year or NOK 2.3 billion, an all-time high sold volumes of 265,000 tonnes product weight, the latter also demonstrating good demand for our products. Then last one out this morning, Mowi Feed. The fourth quarter marks the end of another record-breaking year for our feed business as well with operational EBITDA of EUR 20 million in the quarter and EUR 67 million for the year, on 161,000 tonnes sold volumes in the quarter and 585,000 tonnes for the year. Faroes performed well last year, I think, is correct to say. And with our strategic feed partnership with Skretting, one of the world's absolute leading aquaculture feed producers, if not the leading, I think we have the very best starting point to do even better going forward, because by piggybacking Skretting, I think we have ensured the best feed for Mowi Farming now also at the lowest possible cost. And as we said earlier this morning, in total, we expect to save at least EUR 55 million in Mowi Farming annually, whilst also retaining our earnings in our highly profitable feed business in our feed market, we expect will tighten in the years to come. So once again, personally, I'm convinced this will make us a better farmer. I'm also convinced that this is the solution that maximizes our cash flow given our opportunity space. So with that, Kristian, the floor is all yours. So you can take us through the financial figures and the fundamentals. Thank you, so far. Kristian Ellingsen: Thank you very much, Ivan. Good morning, everyone, both who follow us online and those who are present here at The Salmon in Oslo for the first time. As usual, we start with the overview of profit and loss, which shows record-higher revenue for the year on all-time high volumes. Q4 operational EBIT was EUR 213 million and EUR 727 million for the year. These figures are equivalent to a return as follows: underlying earnings per share of EUR 0.26 and EUR 0.92, respectively, for Q4 and for the full year. Return on capital employed was 15.5% for the quarter and 13.3% for the year, both above the 12% requirement level, even in the year with market headwinds. When it comes to the items between operational EBIT and financial EBIT, the biomass fair value adjustment was positive in the quarter on positive price movements. Income from associated companies includes a revaluation gain on Nova Sea related to the acquisition. Net cash flow per share includes the cash payment for the Nova Sea shares and Nova Sea is fully consolidated now from Q4 onwards. Net financial items were as expected and relatively stable from Q4 '24. We then move on to the balance sheet, which shows a strong financial position. Equity ratio is 45% or 47% measured on the covenant methodology. Here is the cash flow statement. The full year '25 in cash flow items on working capital, tax, CapEx, interest paid were in total as guided, although with some internal differences between the individual items. Closing NIBD was EUR 2.65 billion, the new NIBD target is EUR 2.7 billion following the Nova Sea acquisition and volume growth through the value chain. Credit metrics based on the new target are consistent with a solid investment-grade rating. When it comes to cash flow guiding for 2026, we estimate working capital tie-up prudently EUR 200 million on further growth in farming and the rest of the value chain. CapEx is estimated to EUR 400 million, with the increase from prior years is explained by completion of 2 large construction projects in Nova Sea related to processing and freshwater amounting to approximately EUR 60 million. Interest payments are estimated to EUR 210 million and taxes to EUR 190 million. We have a solid financing in place, and the change here from the last quarter is the EUR 382 million in 5-year green bonds, which we issued in the quarter, which mature in December 2030. We issued the bonds at EURIBOR plus 1.18%, so attractive terms. Moving on to cost, starting with feed, which, of course, is a significant driver. The positive development in feed prices has led to lower cash cost and lower realized P&L costs. Feed prices have been trending down since 2023 and are down 25% from the peak. This will lead to a further P&L cost improvement in 2026. Into Q1, we see overall relatively stable raw material prices. In 2025, we saw a decline in realized P&L costs. This was driven by lower feed prices, but also other cost components were improved. The realized P&L effect in 2025 was EUR 176 million. And we expect full cost to be further reduced in 2026, but due to the impact from volumes and scale effects, cost is always lower in the second half than the first half. So there will be a temporary increase in P&L cost in Q1 as usual. We maintain a strong cost containment and cost leadership focus. As communicated in our CMD in '24, we have identified a cost reduction potential of EUR 300 million to EUR 400 million until 2029 with 2 main components. The main one is operational improvements, including post-smolt Mowi 4.0, efficiency, other initiatives. The other component is the cost savings programs, including the productivity program. And we maintain our good relative cost position with the #1 or the #2 position in the various countries we operate as illustrated in the graph below. In 2025, we identified EUR 65 million in annualized cost savings related to the cost savings program, some with effect in '25, but also with some cash and P&L effect going forward. Total -- sorry, total cost savings 2018 to '25 amount to EUR 392 million, of which EUR 251 million in farming. And there's a total of over 2,100 initiatives across different categories, including boats, treatments, nuts, health, procurement, automation, energy, travel and other items. And we have set a new target for 2026 of EUR 30 million in annualized savings. In addition to bottom-up initiatives, we have identified clear goals for various spending categories based on analysis and comparisons. And this comes in addition to the EUR 55 million net savings related to our feed partnership with Skretting. An important part of the cost saving program is the productivity program. Salary and personnel expenses represents the second largest cost item in Mowi amounting to EUR 759 million in 2025. This cost item is something we can influence through our efforts to work smarter, become more productive. And after that program was initiated in 2020, we have grown harvest volumes in Mowi from 436,000 tonnes to 605,000 tonnes, which is the guiding for this year. And in the same period, then FTEs are down from approximately 15,000 to down to 14,200 approximately. So this is an impressive productivity improvement in the period. And we have set ourselves a new target for 2026, on reducing FTEs by another 250 through the productivity program. And this is being achieved through natural turnover, through retirement, reduced overtime, reduced contracted labor, and automation and rightsizing. And this slide shows the productivity effects for different parts of the business. So a good track record here for Mowi. Then we move on to market fundamentals, starting with industry supply. In Q4, the year-on-year volume growth was 9% compared with 12% for the full year. And the increase in the fourth quarter was driven by Chile. The biomass composition in Chile indicates continued high supply in the short term, followed by a more moderate development. For the industry in Norway, the biomass composition year-end and the improved productivity experienced in 2025 for the industry. should limit the potential for significant volume growth during 2026. Demand was good in the quarter. Estimated demand growth according to our numbers, was 8% in Q4 and 5% overall for the full year of 2025. The improved demand due to lower shelf prices in retail is expected to continue in 2026. In Europe, consumption was relatively stable and in line with the development in supply. Retail demand was good and also helped by additional Christmas demand. In the U.S., consumption increased as much as 13% driven by the retail channel with the fresh pre-packed segment being the main contributor. And in Asia, we see that consumption was strong in all major markets, helped by market conditions, but also an ongoing structural shift in sales channels with more home consumption continuing to drive demand in Asia. While prices in '25 have, of course, been impacted by the unprecedented supply growth, it's worth noting that prices improved somewhat in Q4 as a positive response to gradually decreased supply. And while there is some short-term industry volume growth potential in the biomass composition, particularly in Chile, the figures indicate that there is a limited supply growth potential for 2026 overall. Our estimate is 1% industry supply growth for 2026, and we believe in modest growth, also in the coming years. But due to previous investments and measures, we estimate a higher growth for Mowi compared with the industry. The guidance of 605,000 tonnes represents 8.3% annual increase. And we also have a good track record of not only delivering on our volumes, but actually over-delivering, as shown here, based on the statistics for the last 5 years, with plus 2.2% for Mowi, which is very different from the average 5.9% miss for our peers. So with that, I conclude my walk-through, and then we are ready for Ivan and some comments on concluding remarks. Ivan Vindheim: Thank you for that, Kristian. Much appreciated. And it's time to conclude, as Kristian said, for some closing remarks before we wrap-up with our Q&A session hosted by our IRO, Kim Dosvig. And to begin with, I don't think it's very controversial to say that the fourth quarter closed out rather disappointing year in terms of prices following unprecedented industry supply growth last year of 12%. But disregarding that, I would say 2025 was another strong year for Mowi operationally with record high volumes by a large margin in all divisions to name a few. And speaking of margins, we also saw our farming margins once again at the top end of the industry scale in the regions where we operate, indicating a competitive cost position for Mowi. And further on that note, we saw our farming P&L costs come down by a whopping EUR 176 million last year, or NOK 2.1 billion, and outstanding biomass cost was further down during the year and is now at its lowest since 2022, which is our good starting point to push our farming cost a tad further down in 2026. Otherwise, we have maintained our farming volume guidance for this year this morning of 605,000 tonnes, and that's equivalent to a growth of as high as 8.3% year-over-year, which means that Mowi more certainly will outperform the rest of the industry on farming volume growth again. And finally, our downstream business clocked once again up record high earnings last year, demonstrating the strength of our vertically integrated value chain, especially when the going gets tough like last year. So once again, a big thank you to all of my colleagues who made all of this happen. It's of course, much, much appreciated. Then from one thing to another, the market balance is looking much better now with industry supply growth hovering around 0%, which stands in stark contrast to the 12% we saw last year. And if you look further ahead, as we said earlier this morning, there is, in our view, no way the industry can manage to replicate previous decades, 3% annual supply growth in the coming years with current regulatory limitations and technological constraints. 1% to 2% will be more than hard enough. And demand was 5% last year according to our numbers. So these numbers demand should far outstrip supply in the coming years. So this will be interesting to follow. And last but not least, I have to say, we are very happy about having landed our strategic review of the Feed division because truth be told, this has been a headache for us for years, as we have seen that our feed has been more expensive than that of our peers, after first having a feed that did not perform. And either is, of course, acceptable to the largest salmon farmer in the world. So by partnering up with Skretting/Nutreco, one of the world's absolute leading agriculture feed producers, if not the leading, I think we have ensured the best feed for Mowi Farming going forward now, also at the lowest possible costs. And as we said earlier this morning, we expect to save at least EUR 55 million annually in Mowi farming whilst also retaining our earnings in our highly profitable feed business. In our feed market, we expect will tighten in the years to come. So once again, I'm convinced this will make us a better farmer. I'm also convinced that this is the solution that maximizes our cash flow given our opportunity space. So this is good stuff for us. So with those closing remarks, Kim and Kristian, I think we are ready for the Q&A session. So if Kristian can please join on the stage, and then you, Kim, can administer the mic and orchestrate questions from the audience and the web. I don't know who wants to start, Kristian. Christian Nordby: Christian Nordby, Artic Securities. With your new net debt target, I assume that you want to stay around that target, not necessarily only below, and you believe in a very tight market ahead, as you said. Should we believe that all excess cash flow will just be paid out? Or do you think you will find other ways to grow beyond what you guide on? Ivan Vindheim: Over time, confirmative, but we will also, of course, continue to grow, but then the finance whatever it is separately. Unknown Analyst: [indiscernible] Carnegie. So in Chile, there's a new government and the industry seems to be quite positive in terms of deregulations could you maybe speak about that potential, both on the cost side and potentially more growth coming from Chile? And the second question just on the feed savings. When do you expect that to start hitting the P&L? Ivan Vindheim: Two good questions. If we start with Chile. So now in Chile, I've been talking about growth as long as I have almost lived and not much has happened in the past few years. And our President is only elected for 4 years, and it takes 3 years from egg to plate in this industry. So let's see things take time in this industry. So I've heard the same, but I would also like to see it. There are some constraints in Chile. So our take is what you saw on our long-term supply/demand slide earlier this morning. The next 5 years, it's really, really hard to see that this industry in total can manage to deliver much growth. So let's see. We are not visors, but at least we have some data points we are following. Feed, yes. So we have started. We have started. But you know, the circle, first, it goes to inventory and balance sheet, and then it ends up finally in the P&L. So in the P&L, I think you should think 2027 because of that. But in terms of cash, we expect to see that this will start to impact the cash flow already in March. And already in the second quarter, we expect to see considerable savings, but back to the P&L, that takes longer time. Kim Dosvig: Okay. Then we have a few questions from the web from Alexander Sloane in Barclays. He's got a question on supply. You point to 1% global supply growth in 2026, but 5% to 8% growth in Q1. What gives you confidence in this tightening? Could you have a year of another positive supply surprise? Kristian Ellingsen: Yes. Of course, we are dealing with biology here. So there is always a general disclaimer. That being said, our views on this matter is based on the biomass composition, and also recent developments and temperatures, et cetera. If you look at the biomass composition, we see that we are down on a number of individuals, both in Norway and also for the industry in general. We see that average rates are somewhat up, giving some short potential for volume growth in the near term. Reference to the question, we have seen that also now in Q1, but we believe that for the year as a whole, I think 1% is a more reasonable number. Kim Dosvig: Okay. And then his second question is on demand, 5% global demand growth in 2025. Can this be sustained at the same level in 2026? And which regions are better or worse? Kristian Ellingsen: We believe in good demand also going forward. If you look at the Q4 demand growth estimate, that was 8%. So i.e., higher than the overall a 5% figure for '25. It's also been 8% on average per year, the previous decade, as Ivan showed on the slide. So we believe in continued good demand growth. And I believe that there's a good potential also going forward. We see especially good growth in Asia, also good demand growth in the U.S. We see in the U.S., particularly good developments in the prepacked segment with 24% volume growth now in '25 on our numbers. So the potential is definitely there also going forward. Kim Dosvig: Okay. Then another question from the web from Andres in Berenberg. He's got a question on CapEx. Could you please put the EUR 400 million target for this year in a long-term context? Is this the level of investments driven by specific one-off projects or in line with a reasonable long-term trend? Ivan Vindheim: I think you should see 2026 as one-off and allocated to a transition effect related to the acquisition of the Nova Sea. So I think last year's level, adjusted for size is much better estimate for the future. Henrik Knutsen: Henrik Knutsen, Pareto Securities. Could you elaborate on your biomass status in Norway with or without Nova Sea? Ivan Vindheim: Can you please elaborate a little bit more on the question? So what are you? Henrik Knutsen: You're saying biomass is up 8.7% year-over-year, which is all regions, but Norway specifically. And yes, I guess, you're going to say that Norway is higher. Yes, but is that because you didn't include Nova Sea last year? So the question is, if you could sort of pro forma adjust your Norwegian biomass. Ivan Vindheim: Okay. A complicated question. I think we take it after this session. Henrik Knutsen: Let's do that. Wilhelm Dahl Røe: Wilhelm, Danske Bank. You mentioned sort of cost of living still impacting the American demand. I'm just wondering with new contracts going into 2026, do you see any impact of tariffs, even though you have most from the U.S. with the lower tariffs? Ivan Vindheim: Yes, absolutely. So there is no free lunch. So tariffs impact demand, but that effect I've already seen. And back to the 5% figure, Kristian just explained, that 5% figure included tariffs. But definitely, tariffs play a role here, they do. But still with 5% and the supply growth we expect for this year and going forward, this should be a tight market balance. Kim Dosvig: Okay. No more questions from the web nor the audience here. Ivan Vindheim: Okay. Then it only remains for me to thank everyone for the attention. We hope to see you back already in May, if not before, here at The Salmon. So please feel free to take a trip to The Salmon and try out some of our delicacies. I think it will be worth the trip. So with that in mind, folks, take care and have a great day ahead. Thank you.
Operator: Good morning, ladies and gentlemen, and welcome to the Siemens Energy's Q1 Fiscal Year 2026 Analyst Call. As a reminder this call is being recorded. Before we begin, I would like to draw your attention to the safe harbor statement on Page 2 of the Siemens Energy presentation. The conference call may include forward-looking statements. These statements are based on the company's current expectations and certain assumptions and are therefore subject to certain risks and uncertainties. At this time, I would like to turn the call over to your host today, Mr. Tobias Hang. Please go ahead, sir. Tobias Hang: Thank you so much, Moritz. Good morning, and a warm welcome to the Siemens Energy Q1 Fiscal Year 2026 Results and Analyst Call. As always, all documents were released at 7:00 a.m. on our website. Our President and CEO, Christian Bruch; and our CFO, Maria Ferraro, are here with me. Christian and Maria will take you through the major developments during Q1 fiscal year 2026. This will take approximately 30 minutes. Thereafter, Christian and Maria are available to answer your questions. For the entire conference call, we have allowed 1 hour. Christian, over to you. Christian Bruch: Thank you very much, Tobias, and good morning, everyone, and welcome to our quarter 1 analyst call also from my side. Thank you for joining us today. I'm pleased to report that Siemens Energy had a very strong start into fiscal year 2026, capitalizing on the favorable market momentum and successful execution of the backlog. The global energy system continues to transform with increased pace shaped by electrification and the increasing need for security of supply and our portfolio is excellent, aligned with these long-term needs. In the first quarter, we booked orders of nearly EUR 18 billion, the strongest quarter in our company's history. And this demand was broad-based across regions and business areas. The market momentum remains positive for our core portfolio. As a result, our order backlog has grown to a record of EUR 146 billion, giving us strong visibility for this fiscal year and beyond. Our very strong free cash flow performance in this quarter was supported by significant order momentum and customer prepayments, including reservation agreements, especially in Gas Services, and Grid Technologies. These businesses continue to demonstrate strength, high market demand, disciplined execution and particularly in Gas Services, high service intensity, all of which contribute to high-quality cash generation. At Siemens Gamesa, we remain on the path towards breakeven. The underlying operational measures show impact in particular, the improved productivity in offshore increased service profitability and reduction of structural cost in onshore. Please note that profitability in quarter 1 also benefited from some timing effects and was therefore less negative than expected, meaning the trajectory might not be strictly linear across the different quarters of the year. I'm also pleased to announce that we have received the first order for our SG 7.0 wind turbine that is a successor to the 5.X platform. We will supply 6 turbines for 42-megawatt wind park in Germany. Given the strength of our underlying markets, clear visibility from our order backlog and the strong start into the year, we are fully on track to achieve our fiscal year 2026 guidance. While the first half of the year is historically stronger than the second half, this performance clearly demonstrates deeper operational momentum across the company, momentum built on backlog quality, disciplined execution and exposure to markets with long-term trends. Demand remains strong and broad-based across all business areas and across all regions in the first quarter. Gas Services delivered its strongest quarter ever in terms of order intake, booking 102 gas turbines. That means we matched more than 50% of last year's unit volume within just 1 quarter. The momentum was brought across all turbine frames. In total, we booked around 13 gigawatts of new gas turbine orders in quarter 1. 12 gigawatts were converted from existing reservation agreements and at the same time, we added 12 gigawatts of new reservations. This increased total commitments to a total of 80 gigawatts even after delivering 3 gigawatts during the quarter. In the data center segment, we have commitments of 22 gigawatts, of which 15 gigawatts are reservation agreements. But I want to emphasize, our growth trajectory does not depend on data centers. Demand is driven by broader structural trends, electrification, industrial expansion and the increasing need for resilient energy systems. And these fundamentals remain firmly intact. While demand for gas turbines is especially strong in the U.S., data centers still represent only 1/4 of our total global commitments. Roughly 60% continues to come from traditional applications while the rest is related to peaking, marine or FPSO applications. Grid Technologies delivered another strong quarter, driven by robust demand across both products and solutions. The U.S. contributed with several data center-related orders amounting to a high triple-digit million euro volume. And just to remind you, last year, we booked in that space around EUR 2 billion. We also saw continued demand for grid stabilization in the U.S. reflected in large [indiscernible] orders with a total amount of a low triple-digit million euro value. Globally, customers are accelerating investments in transmission capacity to integrate renewables, meet rising demand and strengthen stability. Recent events underline the importance of energy security and resilience. The sabotage of a cable bridge in Berlin, leaving more than 45,000 households and over 2,000 businesses without power for days and the winter storms in the U.S. where around 1 million people lost electricity both highlight how mission-critical modern grid infrastructure is. Such events raise awareness and increased demand for grid stabilization technologies like our synchronous condensers. Regionally, the Americas, but particularly the United States showed excellent performance. Orders grew nearly 60% on a comparable basis and revenue increased by around 25%. This means the Americas are now nearly at parity with EMEA in order intake, a remarkable milestone that reflects the rising importance for the global energy transition. That said, EMEA also remained very strong with almost 20% growth in both orders and revenue. Significant wins in Poland and Turkey further demonstrate customers' trust in our technology and long-term reliability. In Asia and Australia, we also recorded more than 20% order growth. Revenue moderated due to a very strong prior year comparison from large offshore wind project in Taiwan but the underlying demand picture remains solid. Regional diversification continues to be a priority. A good example is the well-balanced gas services order backlog. The U.S., Middle East and Europe account for roughly 80%, almost evenly split among the 3. Quarter 1 orders in Gas Services were 40% from the U.S., 35% from Europe and 15% from Middle East and China. Across Gas Services and Grid Technologies, the pricing environment remained favorable and supported high-quality profitable growth as it is accretive to our backlog margins. In Gas Services, favorable pricing momentum continues with current reservation agreements being signed with higher pricing versus current orders. Let me now give you a progress update on our Elevate program, which we introduced in detail at our Capital Markets Day in November. We are fully on track with our capacity additions. And last week, we communicated more details around our U.S. investment program, which we already indicated at our Capital Market Day. I will provide more details on this on the next slide. In Europe, our grid technologies expansion is also progressing strongly. We have tripled production for wind transformers in Austria and together with our partner, KONCAR, opened a new transformer tank manufacturing facility in Croatia in January. We continue to strengthen our supply chain resilience through long-term partnerships. Our investment in ASTA Energy, a company which listed publicly on January 30, ensure secure access to critical copper components for our grid infrastructure portfolio. And both S&P and Moody's upgraded our credit ratings, reflecting the improved balance sheet, improved cash performance and stronger resilience of the company. We also drive forward the implementation of our new operating model, simplifying structures, reducing overhead and increasing accountability across the organization. As part of that transformation, we also increased AI capabilities and our workforce to work more efficiently and unlock new productivity improvements across the company. Across all 3 pillars, Elevate is continuously making a meaningful contribution to our performance. Progress can be seen in our margin development, cash conversion and operational stability. Let me provide you more details on our U.S. investment program. We currently execute investment projects for around $1 billion to expand manufacturing in the United States and expand our workforce as part of this effort. This includes also strengthening of the supply chain and establishing 2 training centers for qualification of workforce. Across 6 states, we are particularly strengthening the Grid Technologies and Gas Service business. In Mississippi, we are building a new high-voltage switchgear plant and expand the transformer capacity. In North Carolina, we are resuming gas turbine manufacturing as already indicated at the CMD and increasing large transformer capabilities while expanding also research and development. In Florida, we are boosting our blade and vane production and upgrading our innovation center, including an AI grid lab together with NVIDIA. In Alabama, we are scaling production of key generator components, and in New York and Texas, we are also upgrading compression equipment facilities. This expansion will add 1,500 new jobs on top of our 12,000 excellent employees in the U.S. And last year, the U.S. accounted for 29% of our global order volume, underlining its strategic importance. We are fully committed to supporting the growth of electricity in the U.S. market by driving local capacity exactly where the market needs it. Let me briefly focus on Grid Technologies, where we are scaling at an impressive speed. I am proud of the progress we made with our new production sites in Austria and Croatia. In Austria, Siemens Energy has opened a new wind transformer plant in Wollsdorf, following an investment of more than EUR 100 million creating around 100 new jobs and at the same time, tripling our wind transformer production. The facility was completed in just 13 months and has more than 25,000 square meter of production space enabling an annual output of up to 2,000 offshore wind transformers for customers in 70 countries. Combined with our long-established right side, Siemens Energy now supplies transformers for 80% of the world's offshore wind parks, solidifying our leadership in this critical segment of the energy transition. Moving to Croatia. The opening of our new Transformer tank factory near Zagreb, our joint venture with KONCAR adds more than 400 manufacturing jobs and provides capacity for approximately 160 custom large power transformer tanks per year, strengthening our global supply chain. And this is part of a broader EUR 260 million expansion program aimed at doubling regional transformer capacity to 45,000 MVA by 2031. The new factory also bolsters Europe's manufacturing resilience by supplying heavy-duty tanks for HBDC, generator step-up transformer and auto transformers up to 550 kV supporting the accelerated grid build-out required to integrate renewables at scale. And with this, I would like to hand over to Maria. Maria Ferraro: Thank you, Christian, and good morning, everyone, from my side. Very pleased to be here with all of you, and let's start to go through the details of Q1 fiscal year '26. Moving on to Slide 10, looking at the group results. Orders reached a record high of EUR 17.6 billion, up 34% year-on-year on a comparable basis. Our book-to-bill ratio was 1.82 and as Christian mentioned, order backlog hit a new record of EUR 146 billion. This is up from EUR 138 billion in Q4 of fiscal year '25. That's more than EUR 8 million in addition. Again, giving us excellent visibility for fiscal year '26 and beyond. Revenue was EUR 9.7 billion, up 12.8% year-over-year on a comparable basis, with all segments contributing to revenue growth. Just as a note, foreign exchange headwinds, primarily driven by a weaker U.S. dollar weighed on the top line by roughly 400 basis points year-over-year. Looking at profit before special items. This was EUR 1.159 million with a margin of 12%. This is more than double last year's 5.4% or up by 660 basis points. And regarding FX impact in profit, just for clarification, looking at our currency movements, it does not have a material impact on our profitability. And again, this goes to what Christian was mentioning earlier. It's due to our global footprint with strong local for local sourcing and affecting hedging strategies. Looking at net income, this rose to EUR 746 million, up EUR 494 million year-over-year. Special items was negative EUR 152 million, mainly due to the sale of the Indian wind business. However, strong operational performance led to notable earnings improvement overall. Free cash flow reached a record EUR 2.9 billion, nearly doubling last year's result. This was driven by strong orders, reservation fee and some timing effects. Cash flow continued to show strong seasonal patterns at the start of our fiscal year. Now let's take a quick or a closer look into our order backlog. Order backlog, as mentioned, reached a new high of EUR 146 billion. 45% of our backlog relates to service business. Again, this is recurring profitable revenues for many years ahead. For the current year, revenue coverage stands at approximately 90% for the remainder of the year. Already for next year, fiscal year '27, we have approximately just over 70% coverage. The growing backlog demonstrates increasing resilience due to broad-based demand geographically as well as across all businesses. Additionally, our order backlog margin further improved as a result of the positive pricing development and environment. Therefore, overall, our growing backlog and healthy margin, again, provides a strong foundation for our financial performance. Now let's talk about the drivers of free cash flow in the next slide. As mentioned, cash flow was very strong this quarter. Free cash flow pretax was EUR 2.9 billion, driven by strong profit development and customer advanced payments, including reservation fees. This is linked to our increase in orders. Regarding CapEx, we had a slow start for cash out relating to CapEx with EUR 347 million year-to-date. However, we are expecting roughly 5% of revenues or approximately EUR 2.5 billion of CapEx for this fiscal year. Quick update on Siemens Gamesa quality anticipated cash out. This amounted to EUR 101 million for the quarter. And as a reminder, for the full year, we indicated and still expect a mid-triple million amount similar to fiscal year 2025. Therefore, we closed the quarter with EUR 11.8 billion in cash and cash equivalents and EUR 3.8 billion of debt, therein EUR 2.4 billion long-term debt. This results to an adjusted net cash position of EUR 7.6 billion at the end of Q1. This is compared to an adjusted net cash position of EUR 4.8 billion at the end of September or last fiscal year. At our Annual General Meeting, which is upcoming on February 26, we will propose a dividend of EUR 0.70 per share for fiscal year '25. This will result in cash out of approximately EUR 600 million anticipated in the second quarter. In addition, the announced share buyback, which was announced at the Capital Market Day up to EUR 6 billion until fiscal year '28, is intended to commence in March. And just again, an update regarding our investment credit grade ratings, which were upgraded in December 2025. Our rating by S&P was upgraded to BBB with a positive outlook. And Moody's rating was Baa1 with a stable outlook. So now let's look at the quarterly financial performance, starting with our Gas Services business on the next slide. Here, we see Gas Services delivered an outstanding performance and another strong quarter in Q1 of fiscal year '26. Orders amounted to EUR 8.8 billion. This is up 81% year-over-year, the highest order intake ever and again, driven by large unit -- new unit projects in the U.S., Poland, Turkey and Taiwan. Book-to-bill for Q1 was an impressive 2.83, leading to a record order backlog for GS of EUR 60 billion, again another all-time high. Q1 was characterized by a very strong gas market for gas turbines greater than 10 megawatts with the largest markets in the U.S. and Europe. Gas Services booked a total of 102 gas turbines for power generation and oil and gas in Q1 of fiscal year '26. Therein, 19 were large gas turbines and 83 were industrial gas turbines. Our Q1 market share for gas turbines greater than 10 megawatts stands at 43%, securing the #1 position. Revenue for Gas Services rose by just shy of 14% at 13.9% and compared to last year, again driven by strong performance in new units, which saw nearly 51% comparable growth. Profit before special items was EUR 515 million with a margin of 16.6% and up from 14.6% last year, again reflecting improved margin quality of the processed order backlog and better underlying productivity. A gentle reminder on seasonality, our H1 or half -- first half year profitability in GS is always stronger than the second half just because of the service mix. Free cash flow pretax was EUR 1.9 billion, more than doubled, benefiting from advanced payments as mentioned on large orders. Overall, a very strong quarter for GS. And now let's take a look at our Grid Technologies business. Grid Technologies continues its strong performance. Orders were EUR 6 billion, up 22% year-over-year with strong demand specifically in our product business and partly driven by data centers in the U.S. as well as large HVDC order in the U.K. Book-to-bill ratio stood at 1.95, resulting again in a record order backlog of EUR 45 billion. Revenue reached EUR 3.1 billion. This is up 26.9% year-over-year, a substantial increase mainly driven by the solutions business, but also supported by the transformer and switchgear business. Profit before special items was EUR 538 million with a margin of 17.6%. This is up 520 basis points year-over-year, again driven by continued strong operational performance. Free cash flow pretax was EUR 1.8 billion. This, again, significantly increased by around EUR 600 million year-over-year, reflecting strong operational performance and milestone payments. Another strong quarter for our Grid Technologies team, well done. So now let's move on to Transformation of Industry, which again delivered a solid quarter. Orders were EUR 1.6 billion, up 11% year-over-year, and this was supported by compression and electrification, automation and digitalization projects, including a major order in the Middle East. Book-to-bill for Q1 stood at 1.21, resulting in an order backlog -- a stable order backlog of EUR 8 billion. Revenue came in at EUR 1.3 billion, again, stable on a comparable basis to Q1 of last year. Profit before special items was EUR 154 million or 11.8% unchanged, and free cash flow pretax was EUR 94 million. This was just down due to some timing effects looking at the previous year. So thank you to TI. And now let's move on to Siemens Gamesa. As Christian already mentioned, we are seeing progress in the turnaround at Siemens Gamesa. Here, orders were EUR 1.6 billion for the quarter. This is down from last year due to timing and a large offshore order that was booked in the prior year quarter. Revenue came in at EUR 2.4 billion, this is 3.9% up on a comparable basis, supported by offshore and service business growth. Profit before special items narrowed to negative EUR 46 million. This is a significant improvement from negative EUR 374 million just a year ago. The positive development was mainly due to productivity increases in offshore and progress in the service business. Additionally, we benefited from preponements or timing effects in the quarter. Free cash flow pretax was minus EUR 545 million, and this, again, as a reminder, included the EUR 101 million quality-related cash out. So with that, I want to sum up our achievements in Q1. We had a very strong start to the fiscal year in all of our businesses across all main KPIs, order intake, revenue growth, profitability and cash flow. So now moving to the next slide, our outlook slide. Here is our outlook for fiscal year '26 and targets for fiscal year '28, which remain unchanged. However, we do acknowledge that the year started with a very strong performance. At the same time, we remain mindful of the seasonality with a stronger first half than second, that typically influences our results each year, particularly within our Gas Services business. Bookings and associated cash flow did exceed in some areas expectations. However, it's too early to draw firm conclusions from this first quarter momentum. We will continue to monitor developments closely and will provide an assessment at the half year mark. So with that, I'd like to thank you for your attention and would like to hand back to Christian. Thank you. Christian Bruch: Thank you very much, Maria. So Siemens Energy is positioned really excellently to deliver sustainable shareholder value in a strong market. We see really good structural demand, a record high and high quality order book and disciplined execution across all segments. Our long-term value creation rests on 5 levers, profitable growth, margin expansion, strong cash generation, resilient balance sheet and consistent operational excellence. And across each of these, we are making tangible progress. I am very grateful for the commitment of our people, making this company every day a bit better and supporting our customers. Well, we know that we need to deliver, and we are fully focused on doing just that, reliable execution and consistent performance. And with this, let me hand back to Tobias for question and answers. I look forward to your questions. Tobias Hang: Thank you so much, Christian and Maria. [Operator Instructions] And the first 3 people going for the questions will be first, Alex Jones from Bank of America, Max Yates from Morgan Stanley and Ajay Patel from Goldman Sachs. Alexander Jones: Maybe I can focus on gas orders. At the CMD in November, you talked about 36 gigawatts of orders over the next 12 months, but you've clearly started ahead of that run rate with 13 gigawatts this quarter. And I think Christian, on the press call earlier, you said you wouldn't call Q1 exceptional or one-off given how strong market demand is. So therefore, is there upside to that 36 gigawatt number, given the demand you see? And could momentum continue at a similar rate as Q1 in the coming quarters? Christian Bruch: Thanks for the question. And what I said in the press call is that I continue to see strong momentum in the market. It obviously will also play out how many slots we have available and how quickly 29 fills up. So don't -- I would always say don't multiply it by 4. But at the same time, obviously, we're trying really our best to continue on this. I would still be on a 36 gigawatt planning base for the time being. We might be higher than that. It could be, but it's really something where it depends on certain larger commitments. The specialty at the moment in the market is also what you see is obviously, multi-train bigger orders. And this is what moves the needle also in terms of the gigawatts. So as Maria said, for the other comments, it's a bit too early to tell to see how the things are moving, but I'm definitely positive on the market on GS. Tobias Hang: So the next question goes to Max Yates. Max Yates: So I guess my question was just around pricing. Could you give us a feel of how much of the order growth that you're getting year-over-year is driven by pricing? And then maybe as an extension of that, we know there's pricing in kind of new equipment. Could you talk about pricing on some of the longer-term service agreements as well that you're receiving with these new orders? Are you also seeing a sizable step-up in the service contracts and specifically the longer-term service agreements that you're signing with the new equipment at the moment? Christian Bruch: Yes. Thanks, Max. I mean, obviously, we see an improvement year-on-year on the margins. And we also -- the other statement, obviously, what we make, we see the incoming orders higher than the older orders. So we see continuous appreciation of the pricing on the gas turbine side. It is -- on the service side, I'm just thinking through it at the moment. As we always said, this is slightly going up, not as distinct as for the new units. Even so, obviously, I'm very positive whenever the proportion to the service business increases because it's a good service business and keep one thing in mind, you're only going to see that after '28. So, so much to put this into perspective. Tobias Hang: So the next question goes to Ajay Patel. Ajay Patel: I just wanted to ask around cash flow. Is there any reason that the shape isn't similar on cash flow this year to last year? And then in the event that we do run ahead on cash flow, is it fair to assume the capital allocation works as in 1/3 of cash flows would be allocated towards cash returns? Just want to make sure that link is the case if we do end up better than we expected? Maria Ferraro: Thank you. And of course, yes, as I mentioned earlier, we did have a really excellent start to the year, and we started in a very strong position. And I think what -- maybe to your point of how to look at the shape of free cash flow and how that develops, it is clear that, of course, the main drivers are a few, but certainly the strong order intake. And again, to what Christian said earlier, the market continues to be very positive. However, it was quite a strong quarter for orders and not to take that and divide or multiply rather by 4 and say, here's what we can expect. And in addition, one other thing. I think one of the dynamics that perhaps is not fully, let's say, understood is we do have reservation fee agreements. And in light of how that momentum is going, this is actually quite a sizable number. And also, in addition, I think one of, let's say, the efforts that we started from a while ago, is looking at our operating working capital and how do we unlock cash. So that's something that doesn't look like linear in fashion in some of our, let's say, difficult countries where we've seen that we've been quite successful in receiving some of the overdue payments there. But again, I would just state again, we had a strong year start. This is connected to volume in some areas, but we need a bit more better visibility as the year continues, and we'll come back to you. Tobias Hang: So the next 3 questions will be going to Sebastian Growe from BNP Paribas, Richard Dawson from Berenberg and Gael de-Bray from Deutsche Bank. Sebastian, please go ahead. Sebastian Growe: My question is regards to the GT segment. apparently very strong momentum, both in regards to orders and also execution and not least free cash flow. So how should we think about the order pipeline in that business? Are you in a similarly favorable position as for GS, i.e., to sell also slots to customers? And what I'm trying to better understand here is what explains the massive free cash flow strength in the quarter in GT in particular and how it might trend from here? And if I may just quickly follow up on one of your earlier remarks, Maria, that there's a sizable impact from those reservation fee agreements. Could you quantify those? Christian Bruch: Maybe you take the cash, I just briefly on -- I hope we have heard you correctly, Sebastian, because quality was very bad. So if it was about the order pipeline momentum in GT, if I have heard you correctly. And that is obviously something which continues also to be strong. And you can bet then always every quarter who is ahead, Gas or Grid, but I think in that regard, both look very strong on. Also their data centers have an impact, maybe not as distinct. It's more around the general grid replacement and stabilization. But I obviously see this strong outlook also for the year. And I think we also indicated on the Capital Market Day that we will be -- expect the orders to be higher than last year. Maria Ferraro: Correct. And maybe just to add to what Christian mentioned there with respect to GT. I mean profit also has a part to play with that and also driven by strong orders, which we anticipate and continue to anticipate in Grid Technologies. We also indicated in the GT slide that some of that was related to milestone payments, some of those slipped into Q1 as well. And of course, we expect a very strong operational performance and underlying performance within GT and that is all reflected actually in the very, let's say, strong free cash flow. There's also an element of reservation fees for GT. I think that's also important. That plays, let's say, a factor when, of course, delivery perhaps can be even further expedited. So with respect to reservation fees, no, we do not disclose the amount of reservation fees that does change, of course, in line with, as Christian outlined earlier, how much, let's say, in GS, how many gigawatts are reserved, et cetera. And the reason why is that it just it varies. It's quite variable depending upon the contract and the size and the customer. Tobias Hang: Next question goes to Richard Dawson from Berenberg. Richard Dawson: Just a follow-up on these reservation agreements. Have you started to see any customers maybe thinking twice about signing a reservation agreement given thinking gas turbines, the lead time of delivery is so long? And can you make any comments on how Q2 is shaping up for those reservation agreements? Christian Bruch: What is shaping up, sorry? Tobias Hang: Q2. Christian Bruch: Q2 is shaping up. Sorry. Well, obviously, the key thing is when can you deliver. That's the first question every customer ask and it's obviously all about '28, '29. And you get, obviously, the further you reach out 2030, 2031, and in the meantime, that goes all up to 2032. Obviously, there is a bigger hesitation than to immediately agree because everybody wants something in '28 or '29. In that sense, however, I think the fundamental interest in the reservation agreement has not changed. It's more like can you deliver certain things? And obviously, we're trying each and everything to build bridges for the customers. And I also see this, in quarter 2, continuing on the same level. However, we have to recognize that, obviously, our delivery times continue to increase, and this is simply the fact of the matter. But I hear -- let's say, I've been, last week, seeing a lot of customers myself. Interest is as high as before. Tobias Hang: So the next question comes from Gael de-Bray from Deutsche Bank. Gael de-Bray: I guess I'm wondering if the flattish service revenue you had in the Gas division this quarter was in line with your own expectations? And how we should think about that for the remainder of the year? And since that's probably a very short question. I have a second one on the pricing side. I mean, you've talked a bit about that. But when I look at the backlog increasing by 10 gigawatt on a sequential basis and by EUR 6 billion in value terms. So I guess the back of the envelope calculation is that the price per gigawatt is around EUR 600 million this quarter, which is a major step-up compared to what we saw last year, I think. So maybe some comment about that? Because I think you said prices were only going up slightly. Christian Bruch: Maybe I'll take the last one and you -- and my feedback would be no, I would not break it down in this because I think it starts to get confusing by looking on the backlog and trying to apply the percentages. So I would refrain from breaking it down in more detail. Maria Ferraro: Of course. And let me take the comment on our service revenue. As mentioned, overall, revenue had quite a substantial FX headwind of 400 bps. And this can be directly attributed by the way, to our service revenue, as you know, we have a large installed fleet in the U.S. in which that could -- that does play a part. If you take out the FX impact, I actually don't see it sluggish at all. It's actually -- for the quarter is, let's say, slightly flat. There was some onetime topics of prior year. And for the fiscal year, going in line with the pricing, we do see growth, and that's exactly what we've indicated at the Capital Markets Day. So it is FX-related, Gael. Tobias Hang: So the next 3 questions go to Phil Buller from JPMorgan, William Mackie from Kepler Cheuvreux and Lucas Ferhani from Jefferies. Phil, please go ahead. Philip Buller: Obviously, the demand environment is very strong. I was hoping to ask about the supply situation, please. The CapEx, as you say, started a bit slowly. I think it's 3.6% of sales versus a guide for 5% for the year. Should we be reading anything into that? Are there any supply issues in ramping up the output perhaps in GS or perhaps in GT? Anything changed relative to what you're expecting on the supply side? Christian Bruch: Thanks. First of all, on the build-out of the capacity, no, you should not read anything into that. I mean that's more, let's say, the classical phasing, when does the planning come? When do the contractors get their contracts. So that's more like, let's say, normal course of business. No concerns really at the moment in terms of the execution of our own capacity expansions. On the supply chain, yes, that is something which we need to watch very carefully. We had some negative impact in quarter 1 on the supply chain, in particular, obviously, on the gas turbine side. Not surprisingly, it is also on the supply chain market for the respective supplier, which is good. And we see them, obviously, also there increasing prices. We continuously work with our suppliers in terms of what can we do to expand supply chain, co-investing and the likes. But this will be by seeing this impressive demand on the gas services side, to be continuously with us over the next 2 years, I would say. And you will also see it on the customer side. That's not so much us. That's really the EPC contractors, the civil and whatever that this brings up the total installed cost, but we will need to watch this very carefully. But we are on it. And this was also the reason why we decided to invest further money -- why we invest further money in Florida in our blade and vane manufacturing. Tobias Hang: So the next question will be going to Will Mackie. William Mackie: My question will build on Phil's really. Could you -- can we check in could you remind us where you stand with regard to your ability to serve the demand in '26, '27 in GS and GT. What I mean is, what should we be planning or thinking with regard to gigawatt install or deliveries across large and industrial turbines and across the main elements of the product business in GT? Christian Bruch: Will, I have to admit you overstretch my memory a bit. I'm trying as good as I can in terms of -- I mean, the big thing in '26, which comes online is on the midsized gas turbine. That's the increase in Finspong, which is the SGT which will towards the end of the year come in. The large gas turbine pieces, obviously all come in '27. And keep also in mind that the numbers we have showed on the Capital Market Day included also a steam portion for the larger gas turbines. So in terms of delivery for '25, before I state no wrong number, I think we have to come back to you in terms of the exact planning, Tobias will get back to you on that one. Tobias Hang: So the next question will be going to Lucas Ferhani. Lucas Ferhani: It would be on the SGRE business, just on the timing effects you talked about on the margin. Can you give us a bit more information about what they are and maybe the number behind them, what would be the underlying margin be? And also just on the order side in onshore. Obviously, it's a good start, but I'm wondering what do you have in budget for full year '26 in onshore order intake? What would you think is kind of successful for the relaunch? Maria Ferraro: Yes. Let me try. I do apologize because it was difficult to hear you. So if I -- I hope I understood it correctly, but let me -- I think the first part of that question was relating to the onetime or timing effects in the quarter 1 profit. And the second one was relating to the order intake for onshore. So let me start with the Q1 profit. So of course, the Q1 profit was negative EUR 46 million, again, supported by timing effects. Particularly, I have to say, coming probably the majority more from Q2 and again, to put that into context, it was -- in total, the range was likely around a mid-double-digit amount. So some examples are the -- some of the hedging effects, so positive hedging effects and of course, those are reversed or also evened out, of course, as we continue to execute in the quarters to come. There was, as you would expect for a large project business like Siemens Gamesa, some project benefits and shifts. It happens, right, where customers take over projects or even earlier than expected. And that's what has happened also in Q1 and again, kind of to counter that and something that to think about when you think of quarter by quarter, there is, of course, ongoing uncertainty regarding tariffs. And we said that last year that in the wind power business, actually, the tariff impact was the most substantial of all of ours. So of course, we're watching that very carefully. Again, our assumptions relating to tariffs for the year fully embedded our guidance. There's nothing to indicate at this point. But nothing was additionally booked in Q1 with wind power, but perhaps could be coming to fruition in further quarters. With respect to orders for Q1, again, with respect to onshore orders, Q1 was in line with previous year. And don't forget, I think Christian just mentioned that there's some orders forthcoming. We're now having some let's say, success with the new frames, but it was in line with last year, I think, of EUR 0.8 billion, just shy of EUR 1 billion, and that was as expected. Christian Bruch: Yes. To put it briefly into perspective. So we have, let's say, on the trajectory on where we want to get it. I mean we want to achieve the, let's say, last year's order intake. Keep one thing in mind, we limited ourselves to say, look, that is the amount of turbines we want to sell for the first phase and ensure that, obviously, every -- let's say, we test really everything out, and we are very careful. And in that regard, that's the main thing. So -- but we are, I would say, bang on plan. Tobias Hang: Thanks a lot. So the next 3 questions will be going to Chris Leonard from UBS, Sean McLoughlin from HSBC and Alex Virgo from Evercore. Chris, please go ahead. Christopher Leonard: Yes, maybe as an extension on the wind side and focusing on the offshore -- European offshore wind development. Is there any comment from your side as to what we should expect in terms of potential U.K. offshore wind allocation of orders for you in '26 or '27? And equally, any comment would be helpful as well on recent European plans for the North Sea. Christian Bruch: Yes. Thanks very much for the question. Maybe a couple of comments to offshore wind. If you look on the quarter 1 order intake, also just to flag it up, there's also one offshore order in Poland, which contributed to the order intake in quarter 1. U.K., auction around 7, still ongoing discussions, not yet fully clarified, so it's too early to say. But yes, we are also looking obviously in certain projects there and discussions are ongoing. On the 15 gigawatt, which came out of the North Sea summit of 15 gigawatt per year -- out of the North Sea Summit, yes, I believe, obviously, this will be actually great for the offshore industry or good momentum. We have to see now on how this is converted into auction schemes. You may know that Germany pushed its scheme out and is rediscussing the framework, which is fundamentally a good thing because at the end, it's not about the auction, it's about the FID. So I would expect that out of this North Sea Summit, we see obviously momentum also creating in the offshore industry going forward, potentially not in '26. It's more than coming in '27 '28. Tobias Hang: Next question goes to Sean McLoughlin. Sean D. McLoughlin: Just a question on the gas turbine mix. What's your current lead time on a new midsized turbine? And how does that compare with lead times for heavy-duty equivalent? Christian Bruch: Yes, it depends really what type of midsize, what type of turbine and keeping, let's say, flexibility there. As I said before, they see and there are some slots also '27, '28, which we try to balance, and these are the midsized gas turbines than with multiple trains. There's also a decent amount of reservation agreements on the midsized gas turbines. But I would say today, you're talking about, let's say, minimum a year shorter than the large gas turbine simply because of the supply chain situation. Sean D. McLoughlin: And just a follow-up, if I may. Just thinking about the huge increase in CapEx commitment that we've had from the main hyperscalers. I mean, I guess that puts emphasis on urgency. I mean, are you seeing more interest in midsized turbines that they can effectively obtain more quickly? Or is the mix still across all your turbine types? Christian Bruch: No, absolutely. They are -- let's say, the timing effect is a predominant decision criteria at the moment. So if you can deliver faster, smaller turbines, they go from more smaller turbines. And you see also some solutions, which I deem not ideal from an efficiency perspective, if I look on lots of small gas engines or so, which we do not do ourselves, but I see some solutions discussed just to bring power to the sites. What we are seeing is -- and what is really, really good for us, we're seeing a very strong demand across all different frames of gas turbines even below the midsized gas turbines, so in that regard, we can play the full breadth of our portfolio, and that's superb. Tobias Hang: So the next question goes to Alex Virgo. Alexander Virgo: I wondered if you could just expand a little bit on that last one there. The 83 units that you've had on the industrial turbines and the color around the order backlog exposure to hyperscalers. I wondered if you could just talk a little bit about whether that number in the industrial turbines is really what's driving and underpinning the hyperscaler exposure? And the sort of extension of that, your U.S. peer has just signed a big framework agreement, multiunit framework agreement. And I think you alluded, Christian, to that in your -- maybe it was an earlier answer on your prepared remarks, you talked about the trend to multiunits in the context of the customer discussions you're having. I wondered if you could give us a sense of whether it's likely that you're able to sign something similar? Or you're seeing that in the discussions you're having? Christian Bruch: I hope also there. I heard you correctly because our -- the worst qualities from time to time on the call is not good. I mean, looking across the, let's say, how should I say, diversity of the order book. And this is what I believe I heard from you, Alex, in terms of the different areas. Obviously, it's relatively evenly distributed around the frames. I mean, yes, the biggest chunk in terms of numbers more than obviously 50% is the midsized gas turbines. You have it evenly distributed really across the different regions. Roughly 40% is U.S., as I said, 35% EU, 15% release in China. If you see the order book, for what we're currently having is roughly 2/3 is a new unit, 1/3 is service. So that is roughly the distribution around it. If you take the data centers on the 29 -- on the orders, and if you talk about the 29 gigawatts of reservation agreements which we have outstanding, it's only half of this is data centers and half of this is conventional business is what we are seeing which also means only half of this is U.S. So this is obviously the diversity, which we have in the order book. There was a second part of the question? The multiunit -- thank you, the multiunit contracts. Yes, absolutely, we see it. We not only see it in data centers. There are some applications. We don't so prominently communicate it because not every customer wants that. But there is also bigger multiunit contracts outside the data center framework, which we have been taking and will continue to take. But we also see in the data center field framework agreements for several years and obviously, lots of units under discussion and also under conclusion in our order book. Tobias Hang: So now the last 3 questions go to Vivek Midha from Citi, Vlad Sergievskii from Barclays and last a follow-up from Phil Buller. Vivek, please go ahead. Vivek Midha: Hope you can hear me well. My question is on Grid. The margin of 17.6% is very healthy and in the upper half of the full year guidance range. Historically, Grid is not a business with that obvious seasonality. So should we see the upper half of that range is a better guide for the full year margin? And can you maybe talk about the continued fixed cost degression effects you talked about last year versus pricing impact and so on? Maria Ferraro: Yes. Thank you, Vivek, for that, and thank you for asking a question on our very nice profit development at Grid Technologies. So just maybe to preface this a little bit. So they did have a strong margin in the first quarter. There are also some underlying topics like sometimes FX, hedging, et cetera, onetime positive effects but I don't want to focus on that too much for grid technologies. What they have done and what they continue to do is execute through their backlog very efficiently, looking at things like productivity. So underlying, we see a very steady positive development. And actually, you can see that not only quarter-over-quarter, but also year-over-year. So I wouldn't expect -- I mean it was high. I would really look at their guidance of 16% to 18%, right, and see how that, let's say, is quite stably developing in the next quarters. Tobias Hang: So next question goes to Vlad. Vladimir Sergievskiy: So gas turbine orders, obviously exceptionally strong in the first quarter. Could you give us an idea of how much did it extend your backlog duration in Gas Services? And also more conceptual question. Is there a natural limit to how long backlog duration could get to? Is there a point when it becomes hard for customers to plan that far upfront? Christian Bruch: Yes. Maria, do you want to take it or [indiscernible]? Maria Ferraro: How about I take the first one. Vlad, and again, please correct us. Again, it was a bit difficult to hear. But in terms of our backlog, which I showed earlier, the EUR 146 billion, of which 45% is service. This plays very nicely into the backlog of gas services. And I think we showed that quite nicely also at the Capital Market Day, where we saw a step-up in the margin not only on new units, but also on service. And what's nice about the backlog and Gas Services, which is at EUR 60 billion, by the way, overall, a new record for them is that if you look at the new units, you tend to have, depending on frame size, I think Christian just nicely described that earlier. It depends on the frame size on how long that remains in our backlog before ultimate execution. Large frames are 3 years, maybe 3 to 4 years, perhaps the smaller frames are between 12 and 24. But what's really nice about the backlog of Gas Services is the service backlog there in. And that has an average duration in terms of our long-term service program contracts of around 13 to 14 years. So that's what -- when I talk about visibility in the EUR 146 billion backlog, I don't just talk about the next year or the year after. I really talk about the visibility that we have beyond -- towards the end of the decade and beyond. And again, I think EUR 10 billion of the backlog that we see right now around will continue to be executed until the end of fiscal year, if you think about it from that perspective and then an additional, let's say, more than that between EUR 10 billion and EUR 20 billion executed into the next fiscal year '27. As a rule of thumb, again, it all depends on how much we refill the backlog and, of course, what we execute there in. Thanks for the question. Tobias Hang: So the last question now goes to Phil, once again. Philip Buller: I think a lot of the questions are trying to disaggregate the more traditional customer environment in GS versus the data center customers. So I was hoping just to clarify a little bit. I think you said a quarter of the backlog is data center now for new units, but is the book-to-bill in Q1 for those traditional customers comfortably above 1? Reservation agreements, I know you don't disclose what the cash component is, but are there any reservation payments at all from traditional customer sets? And is there -- are you seeing signs of price elasticity, specifically for that traditional customer set? I know in aggregate, pricing is very good, but I'm just trying to drill down on the situation for that more traditional customer set, please? Christian Bruch: Yes. I mean what you have to see in quarter 1 revenue on Gas is roughly EUR 3 billion, right? And you see the order intake on EUR 8.8 billion. So -- and the answer is yes. I mean you have a book-to-bill above 1 on the very conventional base. And this is why I was giving this 25% indication also. And we feel comfortable also with the existing other market. That's why I continuously say, we are not dependent on the data centers. But they are the cream on the cake. And obviously, if you have a, let's say, early slot, you can really make nice profit around this. But obviously, going forward, if we now -- and then also in terms of reservation agreements, right? These things are also in discussions with classical customers. But the timing pressure is a little bit more flexible, I would say, for utility-driven customers. But keep in mind, we have the upcoming 10 gigawatts discussion in Germany, right? I mean -- and absolutely, we are already long-term planning this in, and we want to serve this market, and we will be in and but this is all considered at the moment. So I think across the board, it's a good market for gas. Tobias Hang: So with that, we would conclude the Q&A. And Christian, I don't know if you want to have some closing remarks just at the end? Christian Bruch: No, just an invitation also to the AGM to join us there in terms of giving a look back and a look forward. No, thank you really for participating in the call. It has been an interesting quarter. I'm very, very proud of our organization on how they execute through a demanding time, I have to say, seeing the geopolitics and everything and the high workload. Big thanks to everybody who was on the call, big thanks to the team purple here at Siemens Energy. Tobias Hang: Thank you so much, Christian. So with that, we conclude the call. And if you have any questions, you can always reach out to us at the Investor Relations team. Thank you. Bye-bye. Operator: That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. A recording of this conference call will be available on the Investor Relations section of the Siemens Energy website. The website address is www.siemens-energy.com/investor-relations. Have a nice day. Bye-bye.
Sonja Horn: Welcome to Entra's fourth quarter presentation brought to you here from Oslo. Let me start by enlighting you on what you can see on this picture. This is Christian Krohgs gate 2 in Oslo, our planned redevelopment project, which we, in the quarter announced that we have entered into a partnership with Skanska to develop. So moving on to the highlights. Rental income of NOK 787 million in the quarter. That is NOK 20 million up compared to same quarter last year, meaning also that the effects from previous divestments have been offset by an increase through projects feeding into the management portfolio. Net income from property management of NOK 425 million in the quarter, that is up with NOK 108 million compared to same quarter last year, mainly explained by the completion and divestment of our project in Trondheim. The net value changes in the quarter were NOK 56 million. And in that, we have also included the positive value uplifts on the investment properties of NOK 111 million. Profit before tax of NOK 476 million in the quarter, and our EPRA NRV is up with NOK 2 per share to NOK 169 in the fourth quarter. We've had a good quarter in respect of operations with a positive net letting of NOK 4 million, and we have also completed 3 projects this quarter, one new build project in Trondheim, which also has been forward sale. So upon closing of that transaction, we have taken a gain of NOK 101 million in the fourth quarter. And our Board has decided to propose a dividend of NOK 1.10 per share for the second half of 2025, and this will be then decided at the Annual General Assembly on April 21. In addition to that, the Board has also decided to initiate a share buyback program of up to 0.5% of the company's shares based on the gains realized on the Trondheim transaction. Moving on to operations. We have, as I said, had a good quarter in respect of letting. Pleased to see that gross letting came in at NOK 183 million in the quarter. And if we look at the year as a whole, it's also been an active letting year where we signed a total of NOK 555 million. So right up there with historic best levels. If you look at our terminated contracts, NOK 80 million in the quarter. Out of that, approximately 57% is related to contracts which have been resigned in the Entra portfolio and the net letting then of NOK 4 million this quarter. A few comments on the largest contracts you can see at the bottom of the page. We were pleased to see that we prolonged and renegotiated with the Police, getting a good uptick on rent and signing 9.5 years new lease there. We will do some refurbishments for the Police here. And upon completion of that, we will prepare this asset for sale seeing that it's in a nonstrategic area for us. In Christian Krohgs gate 2, Skanska has signed 7,500 square meters. I'll get back to that shortly. In Kaigaten 9, Tide has signed 2,000 square meters, and that's also a project which we now will be preparing to start a refurbishment of this building, which is located right next to the train station in Bergen. Our occupancy is down with 40 basis points in the quarter to 93.8%. And as I have commented on in previous quarters, we expect to see more fluctuations in our occupancy ratio going forward, explained by a mix of factors. Firstly, the terminations and negative net letting we've had in the past quarters will potentially affect the occupancy going forward if we do have not let those vacated -- terminated space before the new leases -- sorry. This may translate into increased vacancy if we do not sign new leases on this space before the existing tenants move out. This is, however, fully reflected in our rental income bridge. If we take a look at also the timing of new projects will affect the vacancy and also the completed projects returning back into the management portfolio with some remaining vacant space will typically also affect the occupancy. So this quarter, the increase in vacancy is explained by the fact that the Brynsengfaret 6, one of our projects is feeding back into the management portfolio with an occupancy ratio of 83%. So if we move on to the projects which were completed in the quarter, Brynsengfaret 6, we had a refurbishment project here of 35,000 square meters. This has been completed in line with expectations, leaving us with a yield on cost of 5.8% and the building has now reached an energy class of C in line with the EU taxonomy. In Sandvika, we have a small project, 3,400 square meters, which is a courthouse building let to on a 20-year lease to the courthouse administration. This has been completed with some increase on costs, leaving us with a yield on cost of 4.6% versus the initiated reporting of 5.3%. And finally, in Trondheim, the new build project, which we completed is also part of a larger project totaling 48,000, which has been realized in 3 phases over the last 6 years. So when concluding this project, we have built 2 sections here, the new regional office for the Norwegian Broadcasting Corporation and one section of office. Both have been sold to the 2 buyers, the Norwegian Broadcasting Company and the existing previous buyer of the Trondheim portfolio. The total project cost here is NOK 611 million. That is NOK 73 million lower than what we initially started reporting on. And this is reflecting several factors. Firstly, we have managed to materialize some learning effects compared to the second phase, which was done with the same contractor and also the same team. We did a very favorable timing on that contracting. And also, we have transferred some of the lease-related risk and cost to the buyers as part of the forward sale. The transaction value of NOK 845 million includes also a tenant-specific outfitting of NOK 77 million for the Norwegian Broadcasting Company, which was settled as part of the transaction. And the return on investment on the project here is 25%. So this also is from a sustainability project perspective, quite an impressive project right up there amongst the top buildings in Norway, which also is part of the reason why we managed to do a decent or very good, I would say, transaction pricing on this building. If we move -- look at the completion of the entire Holtermanns project, I would say that it is a very good example on how we manage to combine high-quality development, disciplined risk management and transactions and creating good value. If you took a look at the ongoing development portfolio, we only have 2 projects on this list now. Both of them are progressing according to plan with the remaining CapEx of around NOK 270 million. And in Nonnesetergaten 4 in Bergen, we have increased the occupancy from 83% to 91% in the quarter. The cost is up slightly with NOK 5 million, but that is also financed through tenant investments. And the Drammensveien 134 project at Skoyen, also here, we've seen that up slightly in the quarter. We continue to have a disciplined approach to investment, prioritizing CapEx to solving the letting activity on vacant space. And as already mentioned, we will now prepare to start the project in Kaigaten 9 in Bergen and start reporting on that from the second quarter. That building is located right next to Nonnesetergaten on this list, meaning that we also expect to benefit a bit from the lease activity or letting activity and lease pipeline we already have on Nonnesetergaten 4. We also announced that we did a transaction in the fourth quarter with Skanska, where we sold 50% of the share in our building in Christian Krohgs gate 2 as part of a larger JV structure established for the redevelopment of this asset. This asset is located only 3 minutes walk from the central station, which you can see is around the high-rise buildings in the background there. And the transaction was based on a gross property value of NOK 550 million, which was 2.7% above our Q3 book values. And as part of the transaction, Skanska has also signed a lease contract for 7,500 square meters in 10 years in the new project. And they have also prolonged their existing lease with us in their current location at Sundtkvartalet, which is located, you can see on the map, the top right corner of this picture. That was a project which was materialized in the same JV structure with Skanska almost 10 years ago. And in addition to that, Skanska will act as a turnkey contractor for the construction of this project. And we clearly see that this partnership provides a very capital-efficient way for us to start the redevelopment of this project, which also will benefit this very strategic area for Entra, enhancing the qualities of the neighboring surroundings. The transaction closed in the first quarter and the project start is planned for the second quarter this year with the completion in the end of 2029. So that leaves us also with 4 years to solve the vacant -- remaining vacant space, seeing that we start the project with a pre-let ratio of 35%. I would also like to take the opportunity to update you a bit on the ongoing transformation on the area around the Oslo Central Station. Entra has approximately 190,000 square meters in their management portfolio in the area surrounding the Central Station. And this part of the city is going through a transformation. This is the most central communication hub in Norway. And I remember when I came into Entra more than 10 years ago, we started setting targets that we would push rent levels about NOK 3,000 per square meters in this high-rise building, where you can see that the current top rent is now around NOK 5,000 per square meter, which means that we, in the past 10 years, already have seen a 60% increase in rents in this area. Now on the photo on the right side here, you can see that the CBD East, which has been developed over the last 20 years in Oslo. In this area, top rents are now at NOK 6,500 per square meters. While on the north side of the tracks, rents are between -- top rents between NOK 4,000 and NOK 5,000 per square meter. So we clearly see that this gap is going to be narrowed over the years to come and the projects which start in the neighboring area will also reinforce and strengthen this transitioning, which has already started. So we also continue to work on optimizing our project in Stenersgata 1 Phase 2, which is located in the bottom left of this picture next to the NOK 4,000 mark. That's the Phase 1 of that building project. And once we get the anchor tenant we're looking for, we will also be able to start that project. A few words on the Norwegian economy. It has remained robust through the global market volatility in 2025, and we are well positioned with the Norwegian oil fund also to stabilize the economy through fiscal policies and public spending. Mainline GDP growth is expected to be somewhere around 1.5% and 1.7% going forward. Employment growth has remained stable around 0.7% in the last couple of years and is expected to stay around those levels also going forward. In Oslo, however, we've seen that in 2025, the employment growth was lower, around 0.3%, and that was also mainly driven by the public sector, which currently is transitioning into more space-efficient workplace strategies, meaning that we are not getting much tailwind from the employment growth in the Oslo market currently. The key policy rate has been reduced to 4% in September. Expectations from Norges Bank has been that we could potentially see further rate cuts with cut per year over the next 3 years. CPI for January, however, came in higher than expected with an adjusted CPI of 3.4% versus the Norges Bank's forecast or estimates of 2.9%. So forward interest rates now indicate lower probability of rate cuts in the near term. Entra's contracts are indexed based on the November index. And from January, that means 3% indexation for our portfolio. If we move on to the letting market, we have seen that the total volumes signed in 2025 were in line with expectations, slightly lower maybe than what would have been expected based on the future expiries in the market database. We have, however, seen that the tenant search activity picked up through the fourth quarter coming also into the first quarter and are currently also seeing quite a lot of activity in the letting market. The vacancy is currently around 7% in Oslo, expected to remain around those levels with some variations between clusters, some clusters also above 10%. Same goes for Bergen vacancy levels. Now if you look at the expected market rental growth for the next 3 years, according to our consensus report top right, the growth is expected to be around 12% over the next 3 years. If we look into Areal statistics database, we have actually seen that in the inner city center of Oslo, the area which I previously showed on the map, the market rental growth from the fourth quarter in '24 until the fourth quarter of '25 in the top segment was actually 13%, which clearly supports that there is willingness to pay for the CapEx required to deliver projects in this area. New build volumes are expected to remain low in the next years with -- seeing that we also have had a few new project starts in the recent years. A few words on the transaction market. The financing markets are available and lending sentiment is positive with credit margins tightening through the fourth quarter, both in bank and bonds. The transaction volumes for 2025 came in at around NOK 87 billion, slightly below normal historic levels. We saw that the segment split, office represented 22% of that volume, while more normal levels would be between 40% to 45%. So more activity than within segments like logistics and also residential portfolios. The prime rent in Oslo -- sorry, prime yield in Oslo is currently around 4.5% and is expected to remain around those levels going forward according to our consensus report. We can see that we have seen transactions supporting those prime yields and also that there is continued interest for prime assets and also central city offices in the market, primarily from equity buyers on these current yields. And our assessment is that at these yield levels and with the forecasted consensus on inflation, equity buyers are still able to achieve their return targets with 7% to 8% potential. And that we also see that the market players are confident or comfortable that we will see a real rent growth also in the years to come. So that also supports the current yield levels. Okay. I think that leaves it for me for now, and we'll get some more details from you, Ole. Ole Gulsvik: Thank you, Sonja. In Q4, our financial performance improved compared to previous periods. Rental income came in at NOK 787 million, up from NOK 767 million in the fourth quarter last year. We had positive -- net positive impact from realized projects of NOK 19 million and also a positive impact from CPI growth of NOK 17 million. This was partly offset by negative like-for-like of NOK 10 million due to increased vacancy as well as a negative NOK 5 million due to divestments. The rental income is NOK 15 million higher compared to the bridge that we presented in the third quarter. This is a larger than normal deviation due to a combination of positive one-offs as well as letting effects. Net income from property management came in at NOK 425 million, up from NOK 317 million in the fourth quarter last year. In Q4, we had positive gain from the forward sold development project, Holtermanns veg in Trondheim of NOK 101 million. Adjusted for this gain, we report underlying result improvement in the quarter, supported by both rental income growth and by reduced financing costs. Profit before tax came in at NOK 476 million, which includes both the mentioned gain from the Holtermanns veg project as well as positive NOK 56 million in net value changes. In the fourth quarter last year, we had net value changes positive of NOK 457 million, which explains the reduction in pretax profit from the fourth quarter last year to the fourth quarter this year. I have already gone through the rental income part, but I will give you some more flavors on the other P&L items. OpEx came in at NOK 80 million or 10.2% of rental income. This is above previous quarters. In Q4, the OpEx was particularly high due to timing of maintenance cost and to a certain degree, higher vacancy cost. The OpEx percentage level for the full year of 2025 is a realistic indication of the cost level also going into 2026. If we look at other revenue, other costs, this was net positively impacted by the gain of NOK 101 million on the forward sold Holtermanns veg project in Trondheim, as mentioned earlier. Admin cost is up to NOK 55 million due to increased personnel costs and a couple of nonrecurring items in the quarter. We have managed to scale the admin costs for several years by offsetting some of the wage increases with efficiency measures and other cost reductions, and we target to continue to improve the admin cost ratio also for 2026. Net realized financials came in at NOK 336 million, which is down NOK 10 million to previous -- or to the last quarter. This is due to lower debt following the settlement of Holtermanns veg. Value changes in our investment properties were positive with NOK 111 million, and I will come back with more on this later on in the presentation. We had negative value changes in our financial instruments of NOK 55 million, and this is mainly due to 1 quarter shorter duration in our positive market value positions from 2021 and 2022. And the value of the interest rate hedges will gradually be reduced until maturity. And this gave then a profit before tax of NOK 476 million. Moving then to our rental income development. Looking forward, the model indicates rental income in the first quarter to be NOK 794 million. This is NOK 13 million higher than the bridge we presented in the third quarter. For 2026 as a whole, the total rental income in the bridge is up nearly NOK 40 million compared to the bridge that we presented in the third quarter, of which nearly NOK 10 million is due to higher-than-expected CPI, about NOK 15 million is related to letting effects. And lastly, some of the compensation we did for one-offs in Q3 was too conservative, and we, therefore, rebalanced our model slightly. This graph is not the guidance. It just highlights the rental income based on reported events in existing contracts. There is upside to this bridge as also presented in previous quarters. Firstly, we aim to let out existing vacant space, which has a total rental income potential of NOK 211 million. In addition to this, we have available vacant space in the reported ongoing project portfolio with an annual rent potential of NOK 21 million. And lastly, there is a market rent reversal potential of NOK 161 million. Moving then to our property value, which is slightly down to NOK 63.6 billion in the quarter. Divestments of negative NOK 841 million is related to the sale of Holtermanns veg. Value changes were positive with NOK 111 million in the quarter, which is a limited value increase of only 0.15%. The positive value impact is predominantly a slight increase in the CPI for 2026 compared to the estimates in previous quarters, and this was partly offset by a rent reduction on certain specific assets in the quarter. The deviation between the appraisals has come gradually down over the last few quarters and is now only 0.5%. CapEx in the quarter was NOK 249 million, which has also come gradually down over the last few years. We will continue to have a disciplined investment strategy going forward and prioritize defensive CapEx to increase occupancy and realize market rent uplift. The portfolio net yields now stands at 5.04% and 5.70% fully let at market rent. On the right-hand side, you can see that the net asset value increased from NOK 167 per share to NOK 169 per share in the quarter. In addition to this, we also paid out NOK 1.1 in dividend in the fourth quarter, which brings the total dividend since the IPO to NOK 38 per share. Moving then to our debt metrics, which continued to improve in the quarter. The ICR looks like have bottomed out and improved to 2.14 measured over the last 12 months. Leverage ratio also improved going from 48.8% to 48.0% and the net debt-to-EBITDA is down to 11.0. The debt metrics in the fourth quarter is supported by the gains of the Holtermanns veg sale. However, we will continue to have a conservative approach when it comes to both leverage and interest risk going forward. And we, therefore, expect a gradual positive development in our debt metrics going forward. This is supported by the running cash flow from our property management, a conservative and disciplined capital use as well as potential for value increases in our property portfolio over time. We have created a solid financial platform in 2025 with an average time to maturity for total debt of 3.6 years. The debt capital market was open with tightening spreads also during the fourth quarter. We issued NOK 750 million in new green unsecured bonds, both 6-year fixed bonds, which we swapped to NIBOR plus 118 basis points, and we did floating bonds at 5.5 years at 113 basis points. In total, we have issued NOK 6.7 billion in bonds during 2025, and the debt capital market remains attractive and open in the beginning of 2026. As you can see in this graph to the right, we have undrawn bank credit lines of NOK 7.7 billion committed until 2028. We have reduced our bank lines during the quarter to optimize our funding cost, but we still have ample available liquidity in the next 24 months. We also see that the bank spreads are coming in during the quarter, and we will continue to work to optimize our total funding costs during 2026. On the left-hand side, you can see that 68% of our debt financing is now green, and we have the capacity to issue more green debt with our existing environmental-friendly property portfolio. Moving then to the cost of debt. The all-in net financial cost is down to 4.31%, while interest rate on our interest-bearing debt is slightly up to 3.97% in the quarter. The forward curve has shifted slightly upwards in the fourth quarter. However, our interest rate forecast is more or less unchanged from what we presented in the third quarter as we compensated higher interest rate outlook with lower credit margins in our bank debt during the quarter. As you can see in this graph, we estimate slightly increasing but relatively stable interest rates going forward, and this is due to improved credit margins, our existing hedges as well as future policy rating cuts according to market expectations. As Sonja mentioned earlier, the Board has proposed to pay out NOK 1.1 per share in dividend for the second half of 2025. This corresponds to 32% of the cash earnings or the underlying cash earnings in the period. This is the same amount as we paid out in the first half of the year, which gives a total dividend of NOK 2.20 per share in 2025. In addition, the Board has decided to initiate a share buyback program of up to 0.5% of the outstanding shares with the proceed from the gain from the Holtermanns veg project in the fourth quarter. This totals approximately NOK 100 million in value. The shares will be proposed to be canceled at the Annual General Meeting at the 21st of April. The Entra share is currently trading at approximately 33% discount to net asset value. And with the share buyback, we are efficiently buying our own assets at 15% discount. And we believe this is a good investment and creates shareholder value. Dividends and buybacks combined total capital distribution yield of approximately 2.4% and 36% of the cash earnings in 2025. The capital distribution level is in line with the revised dividend policy to distribute a minimum 30% of cash earnings with room to distribute more capital over time as financial conditions permits. Sonja Horn: Okay. Thank you, Ole. So before I do some closing remarks, I think it's good to also reflect a bit about on the achievements we've had through 2025. First of all, we improved our financial performance and debt metrics. We have had solid gross letting volumes in what I would describe as a more muted demand environment in the Oslo market. We have had property value changes. So we're back in the positive territory here. And the financial flexibility has been secured through the restructuring of our bank facilities and also by reestablishing Entra in the bond market. We have clearly articulated our return targets and supported that by capital discipline across the portfolio and resumed semiannual distributions to our shareholders. We are also well positioned now to capitalize on previous investments in environmental qualities with an already very energy-efficient portfolio. And from that to a few closing remarks, we've had -- pleased to see that we are now once again proposing cash dividends of NOK 1.1 per share and also that we are initiating a share buyback program based on the proceeds from the Trondheim sale. In the fourth quarter, we also see examples that we are able of unlocking value from the project development and transactions with the successful divestment in Trondheim and also the capital efficient and very value-accretive project realization we expect to see in Christian Krohgs gate 2. The letting market fundamentals continue to look promising, supported also by a stable Norwegian economy, where we expect to see also positive employment growth going forward. And I'm pleased to see that the activity in the tenant market picked up during the fourth quarter and also feeding into the first quarter this year. And we are now also seeing the first signs of market rents reaching the breakeven levels we need to see to have accretive projects, particularly in the city center of Oslo. So Entra will continue to deliver future rental income growth driven by CPI, letting of vacant space and capturing the reversion potential in the portfolio and also selective projects going forward. So when we look forward, the priority is clear. We continue to focus on improving profitability through increasing the occupancy and capturing reversion potential through selective project development and asset rotation and continue to have a disciplined approach to capital allocation, preserving our balance sheet strength and funding flexibility and also deploying capital where we find it to be most accretive or also through capital distributions. So I think that sums it up for today. And let's see if we have any questions, Isabel? Isabel Vindenes: Yes, we have got one question in. Can you please provide more details on the rental market demand and discussion with potential tenants and the risk for higher vacancy? Sonja Horn: Okay. So that's 3 questions. Let's see. A bit more flavor on the market. As I said, we are in a market where we have employment growth, which is a positive. What we saw through 2025, however, is that in Oslo, the employment growth was driven by the public sector tenants, which are currently reducing their space when renegotiated -- renegotiation. And in the private sector, we have experienced through 2025, more wait-and-see mode. I hope to see that we'll see more activity also within the private sector going forward following that we have at least had a few rate cuts. So hopefully, a stable demand side, that's our base case going forward. And if you look at where do the tenants want to go? They want to go more into the city center. So the tenant search activity, which we see now are much more heavily dominated towards the city center locations. And if you look at the city center locations, our products are in the less expensive parts of the city center compared to CBD. So we can offer relative more value in our products than other locations in the city center. So I'm very confident that we will be able to bring our occupancy up. Having said that, we also experienced that the letting processes are very timely because our tenants need time to reassess how they want to sit and work. And we can easily use on the large searches more than a year before they conclude. And on the shorter ones, the absolute shortest is 3 months. So it will take time to get the contracts signed. But based on our leads pipeline now, we have good activity, progressed also leases but then again, there's competition. So if you get -- if you win them, I'm very confident that we'll see occupancy come up in the short term, but we probably also will lose some of these competitions we are in. So I'm -- I think it's difficult to give clear guidance exactly on how our vacancy will develop in the short term. But I'm very confident that we're going to bring occupancy back about north of those 95% over time. But where we'll be through this year, somewhere between 93% and 95%, maybe, but it's difficult to be very precise on that. Maybe also a few notes on net letting because we know also that we have 3 large tenants in this -- 3 of our large tenants in Entra who are on lease searches, and they will probably also conclude through 2026. So we're well prepared, work very well to ensure that we are going to be the preferred landlord. But at the same time, if you lose one of those, it will also affect our net letting through 2025. So it's a bit binary how we end up. But these large leases, they will still be sitting with us 1 through 2027, 1 through 2028 and 1 through 2029. So that also tells you that tenants are planning 4 years ahead, giving us time to solve the letting if they should choose to go elsewhere. So a long answer. I hope that was helpful, but we are, of course, available for chat if somebody wants more flavor on that. Isabel Vindenes: Thank you, Sonja. There are no further questions today. Sonja Horn: Okay. Thank you all for following us, and feel free to get in touch if we can help with some more information. Have a nice day.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the CECONOMY Q1 2025-2026 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I will now hand over to Fabienne Caron, Vice President, Investor Relations and Communications. Please go ahead. Fabienne Caron: Thank you. Good morning, everyone, and welcome to our Q1 results. I'm joined today by our CEO, Dr. Kai-Ulrich Deissner; and our CFO, Remko Rijnders. Before we begin, a brief reminder. Today's discussion will include forward-looking statements. Please refer to the disclaimer in the presentation for important information. This call is being recorded, and the recorded (sic) [ recording ] will be available on our website later today. With that, I'm pleased to hand over to Kai to walk you through the key highlights. Kai, over to you. Kai-Ulrich Deissner: Thank you, Fabienne. Good morning, everyone. Thank you for joining us today. Together with my partner in crime, our trusted CFO, Remko Rijnders, I will soon take you through the results of our first quarter in financial year '25-'26. But let's first recognize, Q1 is a very important quarter for us. It includes the full peak season around Black Week and Singles Day and Cyber Week and Christmas. And in that quarter, we see millions of customers visiting our stores and our app. So at least statistically, you personally will have been part of those customers, too, and hopefully, even in real life and not just statistically. But effectively, it's a stress test for us, a stress test to our business model and how well we serve customers. So the key message here today is we've delivered, and we have successfully completed that stress test. Now over the past many quarters, we said it time and again, we have been on a clear strategic journey, transforming CECONOMY from a traditional retailer into what we call a true omnichannel service platform. Quarter-by-quarter, this strategy is paying off also in this quarter. Just to remind you, we're tackling this transformation from 2 angles. First, we're building our business beyond traditional retail with some significant growth areas, as we call them, that continue to perform really well. On a full year basis, this is now already a EUR 1 billion business. But the second, the real driver here is our customers because they fundamentally changed how they think about shopping and therefore, what they expect from us. Now every team member across our 11 markets understands this shift and is very focused on delivering what we call experience electronics, putting the customer experience at the heart of what we do every day. We're creating shopping journeys that match what people today want and today need. Even though we still have a lot of work to do naturally, we're making real progress, and we're committed to getting better every day. The results we present to you today underline this, that we're on a path of progress, growth in sales and profitability and customer satisfaction and online share and in our growth businesses. We think this is an exceptional achievement in our sector, particularly in a retail environment that remains highly competitive and volatile. Together, all these elements are a strong foundation for future growth and of course, to reach our midterm targets by the end of this financial year '25-'26. For us, this makes this year so important. It's the finishing stretch of our journey since the Capital Market Day in 2023. Ladies and gentlemen, CECONOMY is on the right path strategically, operationally and financially. Our consistent performance gives us confidence, and that is why we are also confirming our positive outlook for the full year '25-'26. With that, now let's look at those details of Q1. Let me start with an overview on Slide 3. This quarter sends a very clear message. Our strategy is continuing to work and our business continues to have strong momentum because we are ruthlessly putting the customer in the center. Two points to back this up. One highlight I'm particularly proud of, our online share is at an all-time high, 30%. This is not just a number. It's a clear sign of our successful transformation from traditional bricks-and-mortar into an omnichannel retailer. Customers are choosing us across all touch points. And this seamless integration between online and offline is our core strength. Second, at the same time, we've achieved a record NPS, Net Promoter Score, so the recommendations by our customers of 61 in Q1. We read this as a signal of trust from our customers for our focus on service quality, for personalized advice and for simplifying their customer journey. Customer satisfaction is not an add-on to our strategy. It's the core of our experience electronics approach. And when you look at these 2 records together, online share and Net Promoter Score, we are strengthening our foundation and building the basis for future growth. We're improving convenience through our omnichannel capabilities, and we're elevating the experience through service and expertise. That balance is exactly what differentiates us, and it positions CECONOMY with MediaMarkt and Saturn for sustainable long-term growth even in the future. Let's turn to Slide 4. You will see here that our growth continued across all key financial KPIs. Sales, EBIT, EPS, our major performance indicators, all moved in the right direction. We grew our profitability now for the 12th quarter in a row, 3 years quarter by quarter by quarter. That's uniquely meaningful considering the challenging economy that all of us in this sector are facing. Second, sales grew by 3.4% to now EUR 7.6 billion. Adjusted EBIT in absolute figures grew by EUR 31 million or 11% to EUR 311 million in the quarter, and EPS was up 23% to now EUR 0.37. The basis of all of this, our strong sales development, was driven by 2 key factors. First, the increase reflects the strength of our international portfolio of countries. We will tell you more about our countries a bit later. Second, our growth businesses gained even more momentum, proving once again how critical they are now for our long-term profitability profile. Taken together, these developments do give us confidence, confidence that our strategy is working, that our organization is executing with discipline and focus. And that's once again why we are reiterating our full year guidance today. More on that at the end. Let's take one step further and go deeper into the operational performance with the next slide, that's Slide 5. In summary, what you can see here is the strength and the resilience of our business model during peak season. Online sales grew by 6.9%, and I will repeat that our online share increased to an all-time high of 30% and our bricks-and-mortar business also grew during that first quarter. Profitability increased for the 12th consecutive quarter, and our free cash flow was strong at EUR 1.4 billion with an equally strong liquidity position underneath. Even more customers now trust us, become my MediaMarkt or my Saturn members. We grew our loyalty customers to now 57 million. Next, our growth businesses now scale rapidly. This is becoming a defining element of our strategy. As you can see, Service & Solutions income increased significantly and so did Retail Media income. And here's an interesting one. Refurbished unit sales grew almost 400%. There is clearly more and more customer demand for affordable and sustainable options, and we are meeting it. Several of our key countries delivered excellent performances. Turkiye, Spain, Hungary, Italy, all achieved strong sales momentum and better profitability. Now we did see a softer demand in Germany and Austria, but this only shows how valuable our diversified international portfolio is, gives us balanced stability and multiple engines of growth. Overall, Slide 5 demonstrates we're scaling the right businesses. We're executing consistently across the markets, and we're thus building a more resilient and more profitable CECONOMY and MediaMarktSaturn that will continue to grow in the future. The next slide, #6, you will probably recognize. We presented each quarter to give you transparency about the development of the 9 KPIs that we introduced at our Capital Markets Day back in 2023 because these 9 KPIs represent the essence of our strategic focus. And we are getting to the finishing line now. Across the various business fields, Retail Core, Service & Solutions, Marketplace, Space-as-a-Service, Retail Media, we took big steps towards all those targets that will become due on the 30th of September 2026. You take a step back, retail at the core, strong momentum in our growth fields and all of that with a focus on the customer. That's the architecture of our journey that I've outlined. And you can see how this materializes in numbers on this slide. When you look at the structure of our EBIT development, it becomes very clear how significant our growth businesses have become for the group. Our revenue and profit mix is becoming more diversified, more resilient and more future-proof and most importantly, with more growth. As you've seen over the past quarters, this is not just a temporary effect. It marks a structural shift in how value is created within CECONOMY. We're no longer dependent on the traditional retail cycle alone. Instead, we're building a balanced portfolio that combines the stability of our Retail Core with the high margins of Service & Solutions, Marketplace, Private Label, Space-as-a-Service and Retail Media. Now next, a closer look at our peak season on Slide 8. In summary, what we can say, our teams executed exceptionally well across all major product and service categories. Let's start with product. In our Retail Core, we saw strong performance, especially in gaming hardware, floor care, toys and computing. Here's what's sold best, the Nintendo Switch 2, the PlayStation 5, as well as robot vacuum cleaners. And interestingly, we had a substantial sales increase in toys. For example, LEGO, I'm told LEGO flowers are really hot on the market at the moment. So you can see that products that are beyond our core assortment can also become favorites for our customers. PCs also sold very well, mostly driven by laptops. And in this context, here's another interesting detail. We've also just released our very first private label, so own gaming laptop. It's called the [ Experian ]. Now in parallel to this Retail Core business, at the same time, Retail Media grew substantially across the whole portfolio, nearly doubled its web shop ads volume. This business is really scaling rapidly now. And we're -- also, as we anticipated at the end of last year, we're extending our customer base for Retail Media with customers outside the traditional consumer electronics sector. For example, Opel. Opel showcased the new Opel Frontera in various MediaMarkt stores in the Netherlands, another example outside Retail Core. Services & Solutions delivered another strong quarter. This was primarily driven by bundling campaigns and by preparation of those bundles and value-added services in central warehouses, so a more efficient way of producing this. These bundles are key for us to reduce complexity for customers, it's easier to buy and of course, reduce complexity for employees as well. So they drive on the one hand side attachment of service and income, and they also drive efficiency for us. Two examples. We launched maintenance packages in Turkiye. These are designed to extend the lifespan of the device that the customer may have, improve long-term energy efficiency and even help with hygiene conditions, in particular, for household appliances at home. Now, in real life, each maintenance procedure is carried out either on site at the customer or at the service workshop by specialized technical personnel. Second example is the successful launch of what we call the SparKette bundles in Germany. Here, we focus on subscription contracts like antivirus or Microsoft 365 licenses, combined with devices like smartphones and tablets, and there's always a clear price benefit for customers. Final milestone and interesting detail here is the collaboration between our growth field Service & Solutions and Marketplace because we now also offer insurances, not just for the products that we sell in our retail business, but also for Marketplace in Germany, so for third-party products from independent sellers. As you can see, our peak season performance was really broad-based, fully in line with our strategy and operationally really strong. Now before I hand over to Remko, let me have a closer look at one of those longer term trends that we continuously emphasize, and it's circular economy on Slide 9, because this really had some extra momentum in Q1. Customers are actively choosing more and more sustainable and from their perspective, affordable alternatives. You can see that in the numbers. The BetterWay sales share increased another 2 percentage points to 16%. Now those of you who follow us more often and more regularly, please note, we had to redefine our BetterWay scope. So what you're seeing here is the new BetterWay logic. Why? Because new energy labels are being introduced on an EU level. So we withdrew categories [ without ] such a label, that's, for example, vacuum cleaners and coffee machines, and we also introduced new criteria for smartphones. That's why it's the new BetterWay scope increasing 2 percentage points to 16%. But most strikingly, perhaps and importantly, refurbished sales, mainly on the Marketplace for us, grew significantly by 380%. This came from more and more specialized sellers and thus a broader assortment. In December alone, one in 4 products sold on the Marketplace was refurbished. And finally, trade-In numbers also grew. In Spain, we already launched a more efficient trade-In platform for us internally, and it shows promising results. The technology that underlies this simplifies the customer journey, and it increases conversion, and it gives us a better return as a retailer. We'll roll out this platform in more countries throughout this year. But as you can see with all of these developments, we're not just responding to customer expectations. We're actively shaping a more sustainable, more innovative and future-oriented retail model around circularity. Now let me hand over to Remko for a closer look at those financials. Remko? Remko Rijnders: Yes. Thank you, Kai, and good morning to all of you. Now let me share some more details of our Q1 results. We will start with Slide 11. As Kai already highlighted in the beginning, this is our 12th consecutive quarter with positive EBIT growth, and this in a market which is volatile and competitive. So we can and are extremely proud of this result. Let's look at the headline numbers. We grew sales in Q1 by a solid 3.4%. This number is adjusted for currency and portfolio changes and pre-IAS 29. And our like-for-like sales grew by 3%, that is if you count only comparable selling space and stores already opened 1 year ago. Compared with our overall economic development, particularly in retail, this is a very good result. Now let's look at our regions, starting with DACH and sales. Over the peak season, we faced intensive competition and many customers held back on spending. This was most pronounced in Germany and Austria, leaving sales down with 2.9% versus last year in the DACH region. We balanced that with a better gross margin, thanks to our growth business and by running a tighter cost base, especially our location costs. Overall, EBIT margin was up 10 basis points in the quarter. In Western and Southern Europe, sales rose by 4.7% with growth in every country. Spain and Italy were particularly strong performers. On profitability, EBIT increased strongly with EUR 11 million and margin expanded by 30 basis points. Moving to Eastern Europe. Sales were once again driven by Turkiye. We are pleased to see that our restructuring measures in Poland are gaining traction, leading to a double-digit million improvement in adjusted EBIT in the quarter. For the region overall, adjusted EBIT reached EUR 46 million, equivalent to 4.1% margin, a very strong result, and we are extremely proud of a starting turnaround in Poland. Now let me turn to our largest growth business, Service & Solutions, on Slide 13. In Q1, sales grew by nearly 14% with momentum across both online and in-store channels, truly omnichannel. All service categories increased with extended warranties showing the strongest growth. We are pleased to share that extended warranties are now available on our marketplace in Germany and are being well received by all our customers. We plan to roll this out to additional countries soon. Then to online. Our first-party online sales grew also with 6.9% to EUR 2.2 billion. We recorded a particular strong performance in Hungary, Poland, Switzerland, Turkiye and Spain. And on the back of this, our online share reached a record 30%, the highest level since COVID, a very strong performance in my view. So let me come back to our EBIT development on Slide 15 in more detail. Our gross margin increased by 40 basis points in the quarter, driven by our growth businesses. This highlights that our strategy is working and helps mitigate the impact of a challenging environment. Now on cost. Our adjusted OpEx ratio improved by 20 basis points, thanks to a relentless focus on cost. We are more efficient in marketing while maintaining a stable share of voice in the market. We have also taken measures to further optimize location costs. We will remain disciplined on cost for the remaining part of the year, particularly in DACH region given the market environment. Turning to the full overview on Slide 16 from adjusted EBIT to net profit. Walking down from the adjusted EBIT of EUR 311 million, we recorded limited nonrecurring items. The bulk of those are due to IAS 29 hyperinflation accounting. Consequently, our reported EBIT reached EUR 293 million, which is a robust increase of EUR 64 million year-on-year. Our net financial result improved, thanks to Turkiye. Overall, Q1 delivered higher reported net income and EPS. EPS rose by 23% to EUR 0.37, a solid performance. Then let me continue with free cash flow on Slide 17. Overall, we generated EUR 1.4 billion of positive free cash flow, a very solid performance. This was driven by strong operating performance and seasonal working capital inflows typical for the peak season. We closed the quarter with a strong net position of EUR 2 billion. This completes then as well the financial section, and let me now hand over back to you, Kai. Kai-Ulrich Deissner: Thanks, Remko. Now what you've just heard from both of us, we continue to have positive momentum strategically, operationally, financially. And we do expect this to continue for financial year '25-'26. That's why we are confidently confirming our outlook. You can see that on Slide 19. We continue to expect a moderate increase in currency and portfolio adjusted total sales with all of our regions contributing to that sales growth. Secondly, we continue to expect an adjusted EBIT of around EUR 500 million. This is still the target for the financial year '25-'26, that we first communicated at our Capital Markets Day in 2023 and ever since. This improvement this year will be driven by the DACH region and the Western and Southern Europe. Finally, as we look ahead, let me give you a perspective on the innovation trends that will long-term shape customer demand in the future. We can see them on Slide 20. First, in household robotics, we expect major progress that will bring smarter, more autonomous solutions into everyday homes, like this picture that you can see here of a floor care robot that can actually climb stairs. We also see strong momentum in smart glasses, where the next generation will finally bring the form factor out of the niche and closer to the mass market. Finally, health tech is another innovative field that we think caters to a larger trend because in this day and age, who doesn't want to be fit. We see fast improvements in health tracking and the use of data here, new devices, new services emerging every month. For us, all of these trends will support traffic, demand and category expansion over the coming quarters. They fundamentally reinforce our belief that consumer electronics will remain one of the most dynamic retail segments. And so we're happy to be in that particular segment. Most importantly, we are ready for this and now stronger than ever. Our stores, our online platforms, our omnichannel infrastructure are well positioned to bring these innovations to consumers in Europe with advice, with service, with installation, with a full set of solutions around the product. And yes, with our partner, JD.com. But to be sure, today was about our Q1 performance, but you will have seen the result of the tender offer, and you will have seen the progress of regulatory approvals. Of course, we will continue to update you always on our website and personally at every major milestone. But to reiterate and to confirm, we continue to expect closing of that transaction within the first half of this calendar year. Now let me conclude with Slide 21, a brief summary of what this quarter tells you about CECONOMY today and about the foundation for the future. Our experience electronics strategy continues to drive higher customer satisfaction, NPS and deeper engagement, even stronger loyalty. The combination of expert advice, seamless online journeys and a growing set of value-added services is clearly resonating with customers. Our Q1 the stress test, as I called it, performance demonstrates we have a strong and balanced portfolio. Our growing high-margin businesses make us stronger. Together, they make the company more resilient, more profitable, exactly what we set out to achieve with our transformation in 2023. By now, our growth business are an integral part of our business, and they continue to grow. In all of that, [ core ] focus remains very disciplined on cost, liquidity and profitability. And with our new strategic partner, JD.com, we now have a unique opportunity to accelerate this development over 12 quarters even further in technology, in logistics, and assortment and many more. Last but not least, we're confirming our outlook for financial year '25-'26, we expect a moderate sales increase and adjusted EBIT of around EUR 500 million. Ladies and gentlemen, these are the main takeaways. We stay confident for the rest of the year. Our execution is in full swing, and we're on a path of future growth. We've started this year with strong momentum, and we're well on track to deliver on our ambitions. Thank you for your attention so far. We're now really looking forward to your questions. Operator: [Operator Instructions] We are now going to proceed with our first question. The questions come from the line of Matthias Inverardi from Thomson Reuters. Matthias Inverardi: Can you hear me? Kai-Ulrich Deissner: We can hear you perfectly well. Proceed. Matthias Inverardi: Not so surprising, I have a question concerning your Fnac Darty shares. Have you decided yet if you're going to sell them to Mr. Kretinsky or not? Kai-Ulrich Deissner: Yes. Look, we're still waiting for the concrete and detailed offer. We will then look at that offer in detail and analyze it, and then we will take a decision. No decision has been made yet. Operator: We have no further questions on the phone line. So I'll hand back for any written questions. Thank you. Kai-Ulrich Deissner: Caron tells me that we should wait for 1 minute or 2. So please do feel encouraged to ask questions. We're really very willing to engage in whatever conversation you may have. So we'll give you another minute. Operator: Currently, we have no further questions. [Operator Instructions] Fabienne Caron: Thank you. We've got a question on chat from Alex Zienkowicz from mwb research. The first part of the question is regarding gross margin. Is it purely driven by mix? Or did you benefit from a lower promotion share? Or were you better on price? Kai-Ulrich Deissner: Yes. Alex, thanks for your question. So we have stated a couple of times already that we are very [ rigous ] on to grow, but to grow profitable. So first of all, we are really analyzing the profitability per category. It's not mix driven. That's what I can already tell you. So it's a benefit on the gross margin of really [ rigous ] negotiation and pushing the products and offering the products with a better margin. That's true. But it's also related to how we do the customer journey online and offline with better accessory attached, for example, and that helps also in the mix because, of course, the average margin on accessories is for sure, much, much better. So it's a mix effect on accessories and of course, the goods margin as such by being very [ rigous ] where we want to grow and profitable to grow based on customer demand. Fabienne Caron: The second part of the question is on Poland. Can you provide more color on the EBIT improvement in Poland, please? Kai-Ulrich Deissner: This is Kai again. I'll take the question on Poland. Remko will take the next one. Now as Remko said, we are actually very proud of the initial signs of turnaround that we've seen in Poland. As you know, we are operating there in a very competitive environment. So we've done several things actually. We set up a new management structure with a new CEO and CFO, both of whom are now on board. And in particular, we improved our capabilities in online and in Service & Solutions. So the positive results in Q1 that we're here reporting are largely due to online, a much better performance in online also in technical capabilities. For example, if you remember, we introduced the Marketplace in Poland only last year. In parallel to all of this, of course, we are reviewing cost structures to get further efficiencies out of the business. But I would -- what I would highlight is, in particular, the new management structure and our increased online performance and capabilities. Fabienne Caron: The next question is from Philip Brandlein, Lebensmittel Zeitung. First part of the question, looking at the DACH region, how do you plan to improve sales and EBIT? Remko Rijnders: I will take this question. So looking at the DACH region, we started Q1 slightly below expectation from an EBIT perspective, mainly driven by top line. So what we have an -- a customer demand decreasing. So the next implementation that we are doing at the moment is to simplify it. We have a clear action plan in place where we have on the top line a lot of focus on the top 200 products. So of course, we have many more products, 15,000 SKUs online, but we focus on 200 products that make around about 40% of our sales. And what are we doing? We secure really end-to-end for these 200 products together with our partners, our suppliers that there is always availability on the products that we are really on par with pricing, that we have visibility online but also offline. So to explain, when you as a customer enter the store, these products are immediately visible. And these products also generate 40% of sales. We also make sure that the right accessories are there next to it, both on and offline to make sure that you have the right experience as a customer. On the EBIT side, we have also implemented a very strong cost program. And this cost program, we already mentioned it, is focusing on location costs, but also a lot on indirect spend. So we see that the cost percentage in Germany, percentage of sales has potential also compared to other countries. So we are really benchmarking the cost between the countries, making sure that we get on par with the cost. So to summarize it, on the top line, a extreme focus on the top 200. And on the cost line, it's really making sure that we get for every cost line in Germany on par with the benchmark of our company. Fabienne Caron: I will bundle the 2 questions together. First is from Philip Brandlein, and the next one is Paul Dean from Churchill Capital. So it's both regarding JD. First, you stated that CECONOMY is ready to accelerate with JD. What will that look like? Is that true that the Joybuy Express service will be available for MediaMarkt soon? And the second part of the question from Paul is asking regarding the AU FSR review, which has been in pre-notification stage since August last year. If you could provide more color on how is this progressing? Kai-Ulrich Deissner: And I'm happy to do that. Thank you, Philip and Paul, for the questions. Now first of all, on what's our plan with JD. Now let me remind you and reiterate, this is all about growth. So think of this as both top line and profitability growth in the future, centered around what has been the essence of our transformation here as well. So an omnichannel approach, both companies believe in both online and bricks-and-mortar and an approach centered on delivering excellent customer service. So that's the big headline what this is about. Now we've also highlighted a few areas in which we believe there is most potential for them -- for that future growth. One of them is indeed logistics. So we will be looking at faster delivery, better delivery, more reliable delivery quality for our customers. At this stage, however, it is too early to comment on specific services like Joybuy Express. But what I can confirm and what I can reiterate is that delivery capabilities are very much in focus of what we think as growth opportunities together with JD.com. That's on the first part of the question. On the second part of the question on FSR, I cannot give you any color on this. We are in very constructive discussions with JD, and we are in very constructive discussions with all regulatory approval authorities, including the European offices in Brussels, and it is all progressing, as I said, as we had anticipated to be concluded in the first half of this year. Fabienne Caron: The next question from chat comes from Darja Lema from Bloomberg Intelligence. With EUR 311 million EBIT achieved in Q1, can you provide more color on how you plan to achieve EUR 500 million by the end of the year? Does it involve cost cutting or a significant uplift from your growth businesses such as Retail Media or Services? Remko Rijnders: Yes, this is Remko. Thanks for your question. So in our EBIT, to start off with, there is always a seasonality, right? So in Q1, we reached 64% of our EBIT ambition or budget and in Q2 at 6% normally, Q3 is around about 1% and then Q4 is -- our Q4 is 29%. So looking at Q1, that's why also Kai already mentioned that our Q1 is and was extremely important to reach our EUR 500 million ambition, and we are right on track with our, yes, projection of the around EUR 500 million EBIT achievement. Now to answer your question a bit more in detail, when it comes to cost, we have said from the beginning, and we keep on doing that, when there is a soft line in DACH, mainly at the moment, we are very [ rigous ] on costs. So especially on the indirect cost, we are taking the initiatives, but also on location costs, for example. So the cost in percentage of sales needs to stay in par of reaching that EUR 500 million. Other than that, our strategy is working. That's what we have seen also in Q1. We keep our strategy. And yes, a big part of that strategy is focusing on accelerating on our growth businesses. And that's what we will do, what we believe in, has paid off for 12 quarters in a row, still paying off. And with that, we will reach the EUR 500 million. Operator: There are no further questions at this time. So I'll now hand back to Dr. Kai-Ulrich Deissner for closing remarks. Thank you. Kai-Ulrich Deissner: Yes. I'll take a deep breath to give anybody a chance to still raise their hand, but -- and wait for one more minute before I will close with a few additional comments. But just give everyone one more minute. Okay. Look, thank you for your time and your questions this morning. If you want to engage with us any further through our official channels, we're always very happy to continue those conversations. And if you can't wait for another 3 months to speak to us again, you're very welcome to join our Annual General Meeting. It happens exactly a week today. There are dial-ins for the press available, and you get to see more of this wonderful company in a week's time. And we will be happy to present our Q2 results to you on May 13. Until then, Remko, Fabienne and I wish you all the best. Thank you for your interest, and see you very, very soon. Goodbye. Remko Rijnders: Thank you. Goodbye. Operator: This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you, and have a good rest of your day.
Operator: Good day, and thank you for standing by. Welcome to the Mips Year-end Report 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Max Strandwitz, CEO of Mips. Please go ahead. Max Strandwitz: Thank you, operator. Good morning, everyone. My name is Max Strandwitz, and I am the CEO of Mips. With me today, I also have our CFO, Karin Rosenthal, and we will take you through the Mips presentation of the Q4 year-end report of 2025. So if we start with the key highlights, it was a good end of the year. Strong development with 18% organic growth in the fourth quarter. We did grow in all categories despite the challenging conditions. And our year-to-date organic growth ended at 21%. Of course, with year-to-date, we mean full year. The good momentum in Europe continued. We saw an organic growth of Europe of a little bit more than 30%, which is, of course, a fantastic number given that we grew 137% the year before. So despite a very strong comparator, we continue to see good performance in Europe. And if we look at the full year split of sales, Europe actually contributed to 43% of the total net sales of Mips, which is something that we have been very happy about and of course, part of our ambition to be less dependent on the U.S. market and having a better sales split between Europe and U.S. market. But also the U.S. sales developed well. We did grow close to 30% organically also on the U.S. market, which is a little bit surprising given the challenging consumer market that we see. We saw a little bit of a change in momentum when it comes to the U.S. market, and I will come back to that a little bit later in the presentation, but good performance also in the U.S. market. When it comes to the Asian market, not our biggest part of our sales, we saw a softer market with soft development, especially relating to the Chinese market, where we saw a very hesitant consumer. Of course, we did a very exciting acquisition in December through the ingredient brand Koroyd, great complementary portfolio to Mips and the brand with global potential, which is also something that we appreciate a lot. I will talk a bit more about that also later in the presentation. We had a good development of the underlying profitability. A lots of ins and out in the quarter. The decrease in EBIT that we saw is fully explained by the impact of legal cost, the ForEx headwind and transaction cost. And if we would adjust for the negative impact of the legal cost and the transaction cost related to the acquisition of Koroyd, we would actually be very close to a 40% EBIT margin, actually 39.8%. We have had a legal dispute that will continue. And we will continue to support our customers in the defense of the legal dispute, similar level to 2025 expected also in 2026. And just as a reminder, in 2025, we spent SEK 43 million in this legal dispute. The Board of Directors is proposing a dividend of SEK 2.50 per share, which is corresponding to 55% of net earnings, a little bit ahead of our financial ambition of having a dividend distribution of at least 50% of net earnings. And of course, also adding Koroyd to our business, we remain confident in our long-term strategy and the journey towards our financial targets. So if we start with the Mips Group's acquisition of Koroyd and a summary of what we actually did acquire. We see it much more as a merger rather than acquisition because, of course, it's 2 great companies coming together. But first of all, strategically, really important to look at the strategic fit. And actually, when it comes to the acquisition, we actually see that it strengthened 2 out of 3 already existing strategic pillars. The first one, of course, of our pillars is to grow our existing business of rotational protection solutions in helmets for Sports, Moto and the Safety category. That, of course, will remain unchanged because that's Mips key focus areas. But if we look at other areas like capture new opportunities within helmet safety, of course, Koroyd and impact technology is a great addition to that. And also the third one when it comes to opening up new channels and markets, of course, having the opportunity to expand into body protection, also having customers in tactical and so on, of course, opens great opportunities for further growth. If we look at the culture fit, which is, of course, extremely important when you look at acquisitions, Koroyd has many similarities to Mips. First of all, it is a very vision and purpose-driven company to make active life safer. It's market leader within its niche. Ingredient brand, which is, of course, trusted by consumers and leading product brands. It's very much a science-led and technology-driven company. They have world-class testing and simulation capability, just like Mips. Scalable asset-light supply chain, high EBIT margin despite significant R&D spend. Important to note that Koroyd will continue to operate as an own brand. The current strong leadership and operational team will continue to lead the Koroyd business. But of course, both brand teams see many synergies when it comes to product development and of course, product portfolio expansion. If we look a little bit more on the details of the transaction, the purchase price amounts to EUR 40 million on a cash and debt-free basis, corresponding to a multiple of 8x adjusted 2025 EBITDA. In addition, the sellers have the possibility for an additional earn-out up to EUR 25 million, corresponding to a multiple in total of 13x if we compare against the same adjusted EBITDA of 2025. The transaction was financed through a combination of existing cash, and we also have arranged with a credit facility. And of course, the acquisition is expected to contribute positively to Mips earnings per share, EBIT sales growth, both on a short and a long-term basis. And I think it's also important to note that Mips and Koroyd will be consolidated under the same group first time in the Q1 reporting. If we look at another very important area for us, it's, of course, what we do in sustainability, and we are really proud about the work that we have done there. We have had great development also in 2025. First of all, Mips was ranked #1 in Carnegie's sustainability rankings within consumer goods, which is something that we are extremely happy about. AAA rated at MSCI and also top rated at small and mid-cap enterprises at CDP. So really starting to get also great recognition externally for our sustainability work. Of course, when it comes to sustainability, it's not the awards that really makes a difference. It's what you actually do. And of course, we have 3 key targets, which we delivered against. And the first one is, of course, to continue to reduce our emissions, and we did that during the year. And including 2025, we have now delivered 49% of our 2030 ambition. And that, of course, is in line with our long-term ambition. We have also been quite successful when it comes to increase the usage of recycled materials in our products. And today, and that is, of course, in 2025, the usage amounted to 34% of our total usage. And Mips has also, of course, a well-developed factory audit program. And we have increased our average score from social audits to above 90%, which is actually ahead of our 2030 ambition. So really happy with the progress that we did in sustainability. In Sports, we see that the progress continues. We are happy with the development that we see there. Good quarter with 17% organic net sales growth in Sports. We did see strong growth in the European market. And like I said, that's on the back of a very strong comparator last year where we actually grew 137% in total. So we now had 6 really, really strong quarters in Europe and of course, start to see that the impact, of course, also showing up in the total sales of Mips as a company. We did see also good growth when it comes to the challenging U.S. market. We saw in terms of market data, a little bit of a trend shift when it comes to Mips addressable markets. And if you look at bike, for instance, we saw actually for the first time in a long time that the addressable market grew 1% when it comes to volume in bike, and it actually grew 5% when it comes to price. So of course, a lot of the customers have initiated and taking price increases to compensate for tariffs, but good to see that also in terms of volume growth in bike helmets, we saw that there was a positive progress. Then when it comes to snow, same ratio, 2% volume growth. If we look at the total market when it comes to U.S. dollar and price, it actually grew with 6%. So of course, still soft market, but at least it has started to go into positive territory. We also see that our customers coming from quite a low inventory level, now have started to refill their inventory. Every one of them, as you have seen in previous quarter, has been a little bit careful in terms of filling up their inventory because of the uncertain tariff situation. And of course, it's also good to see that bike continues to develop well overall. We had the ninth quarter in a row with growth in bike, which is something that we're also happy about. And of course, we continue to see good volume growth also in snow, both in the quarter and year-to-date. We did launch our collaboration with Mikaela Shiffrin, of course, the greatest Alpine skier of all time. So something that we think is a great ambassador for the Mips brand that also can help us to increase the awareness of Mips globally and of course, committing to the overall vision of Mips of driving the world to safer helmets. And I think it's also important to note that the shift that we have really been doing in snow, where you only take a difference of the last Olympic versus the current Olympics. When we look at our athletes this time, we actually see that more -- a majority of the people that are wearing a ski helmets is actually a helmet equipped with Mips. So something that, of course, we are very happy to see. And the long-term positive outlook in the Sports category remains. If we look at the development in Moto, we saw good development also there. 32% organic net sales in Moto in the quarter, year-to-date net sales now amounting to 22% organic growth. And we saw good development also in both off-road and on-road category. And good to see that the volumes are coming back in Moto after a challenging period and the impact of the U.S. tariffs. We continue to roll out a lot of new innovations in the Moto category and, of course, are quite excited about 2026. And no change to the long-term outlook, good opportunity to continue to grow in the category. In Safety, we saw organic net sales growth of 41% in the quarter. If we look at the year-to-date performance, it's 42%. We, of course, have seen during the year and also the quarter that performance is impacted by the implementation of tariff and related cost increases where we have seen some delay in ordering. If we look at the underlying in-market performance, we actually see that we have great sellout with new brand wins and also new products. And of course, during the quarter, it was also the world's largest fair when it comes to occupational health and safety. In Germany, it's only every second year. And there, of course, again, the interest for Mips in the industry was confirmed. The long-term ambition remains unchanged. It's also good to see that the acquisition of Koroyd can also accelerate our growth in this category and make our offering even more relevant in the category as such. So if we look at the category performance, like I said, in Sports, Q4, 17% organic growth, 20% full year. In Moto, 32% in the quarter and 22% full year; and Safety, 41% and 42% full year. With that, I hand over the presentation to Karin. Karin Rosenthal: Good morning. I'm Karin Rosenthal, CFO of Mips, and I will take you through the financial part of the presentation. We saw a good development in the fourth quarter with an increase in net sales of 2% and adjusting for FX due to a stronger SEK versus U.S. dollar, net sales increased 18% organically. Gross profit increased with 2% and a good gross margin of 72.9%, same as last year. We saw an underlying improvement in profitability. EBIT was down 24% to SEK 47 million versus SEK 62 million last year, which is fully explained by legal cost of SEK 7 million, transaction costs due to the acquisition of Koroyd of SEK 5 million and ForEx. EBIT margin decreased by 11 percentage points to 31.8% versus 42.9%. Excluding legal costs and transaction costs, EBIT margin was 39.8% in the quarter. The higher spend in OpEx is fully explained by the legal costs, the acquisition costs and the ForEx. So we have also continued to invest in our strategic priorities. We had a good operating cash flow in the quarter with SEK 52 million. And if we look at the financial KPIs, organic growth of 18%, 32% EBIT margin and operating cash flow of SEK 52 million. If we turn to next page and look at the development for the full year. Net sales increased with 10% and adjusting for the FX due to a stronger SEK versus U.S. dollar, net sales increased 21% organically. Gross profit increased with 12%, and we saw a gross margin of 73.4% versus 72.5% last year. And the increase was mainly explained by the increase in sales and the sales mix. We have an underlying improvement in profitability. EBIT was down 11% to SEK 156 million versus SEK 174 million, which is mainly explained by the legal costs of SEK 43 million and the FX. EBIT margin decreased 6.9 percentage points to 29.2% versus 36.1%. And excluding legal costs and transaction costs, EBIT margin was 38.2% for the full year. So the higher spend in OpEx is fully explained by legal costs and the ForEx, and we have continued to invest in R&D and marketing during the year. We had a strong operating cash flow of SEK 148 million versus SEK 142 million last year. So the financial KPIs, 21% organic growth, 29% EBIT margin and operating cash flow of SEK 148 million. If we look at the balance sheet and cash flow, we have cash and cash equivalents of SEK 214 million versus SEK 382 million last year. During December 2025, Mips obtained a revolving credit facility of SEK 300 million to finance the acquisition of Koroyd. The net debt versus adjusted EBITDA amounted to 0.5x. The operating cash flow in the quarter was SEK 52 million, and the Board proposes a dividend of SEK 2.5 per share, corresponding to 55% of net earnings. And then over to you, Max. Max Strandwitz: Yes. So if we then summarize the quarter and the full year, good year -- good development in the quarter with 18% net sales growth. We did grow in all our 3 categories despite challenging conditions. Good performance also year-to-date, of course, with 21% organic growth. And of course, as we are growing significantly faster than the market, we are gaining market share, of course, both in U.S. and the important European market. We do expect the positive development to continue with, of course, less hampering effects from the tariffs, which we saw in 2025. Good to see also, I wouldn't say it's a turnaround, but a little bit positive signs of the U.S. consumer in Q4 when it comes to helmet. And of course, good to see also that the U.S. brands are also refilling their inventory again. Of course, the exciting complementary acquisition of the ingredient brand, Koroyd, will, of course, strengthen our position in helmet safety further and offer possibilities for product extensions in adjacent categories, which is, of course, something that we are quite excited about. Good underlying improvement in profitability. The decrease that we saw is fully explained by legal cost, ForEx headwind and transaction costs. And we remain positive on our long-term outlook and of course, the delivery of our financial targets. And with that, we open up for questions. Operator: [Operator Instructions] The first question comes from the line of Emanuel Jansson of Danske Bank. Emanuel Jansson: Hope you can hear me. And a couple of questions from my side. And on the organic growth seen here in the quarter, can you provide some color on the sequential development during the quarter, maybe especially regarding the U.S. market. And so did you see any acceleration or de-acceleration over month-over-month? Max Strandwitz: Yes. I think, I mean, overall, it was relatively equally spread. I would say that in the end of the quarter, we saw a little bit of an uptick of the U.S. market, of course, potentially also from a little bit stronger sales, at least than we anticipated from the U.S. market and, of course, refilling the stock. So it ended a little bit better than it started. Emanuel Jansson: And given that the Chinese New Year falls later this year versus what it did in 2025, can we assume that some of the normal Q4 sales has shifted into the first quarter of 2026 regarding especially bike sales or bike helmet sales? Max Strandwitz: Yes. Given that, of course, during my 10 years at Mips, I don't think that the Chinese New Year has been so late, which means that they have at least 1.5 months more to produce and, of course, ship. So yes, we see a good momentum also into Q1 when it comes to order momentum and so on. And part of that is, of course, attributed to a later Chinese New Year. When you normally see an earlier Chinese New Year, of course, then to be able to make the season, of course, you produce maybe a little bit more in Q4 because, of course, then the Chinese New Year comes and you don't have time to hit the market before the season starts. Emanuel Jansson: That's very clear. And jumping back to the U.S. market, where I think the growth was quite impressive. And can you maybe share us some insights on which categories or customers that drove this growth most strongly in this quarter? Max Strandwitz: Yes. I think, I mean, first of all, if we look at the total market, which means, of course, not only the addressable market for Mips, it was actually shrinking with 1%. So it was slightly down and the addressable market was up. And when we look at the addressable market for Mips, we look at helmets above USD 30. There is a couple of brands that is doing really well on the market at the moment. Giro, which is one of our bigger customers is doing exceptionally well, and they're gaining a lot of shares. Also, we see Smith Optics also doing well, especially in the mountain bike segment, and we also see that the Fox brand is doing well. So a couple of brands that is really outperforming at the moment. And of course, all of those are heavy Mips customer, and that helps a lot. Emanuel Jansson: And should that also be attributable to more premium type of helmets that are doing better versus the -- towards the end consumer? Max Strandwitz: Yes. I think when we segment the market, and of course, there is different ways of slicing the market. I would say top premium market, we have never seen actually especially weak market. It seems like that consumer is immune to whatever setbacks happen. So they seem to buy products anyway. And then we talk really premium product. What was a little bit of a shift in this quarter is that we also see in mid-price levels that the consumer is coming back, which is a bit of a change. And of course, with that consumer also comes quite a lot of volume. And of course, that has a direct contribution to the volume development. Emanuel Jansson: Perfect. That's really interesting. And heading then back to -- heading to Europe, I mean, 50% organic sales growth during 2025 and you increased your market share and increased market penetration, what should we think is a sustainable growth rate in 2026, you think, given that you have grown into size, but you still have plenty more to do in that region? Max Strandwitz: Yes. I think, I mean, we do have fantastic momentum in Europe, would be fantastic even if Europe can pass ahead of the U.S. market would be really a good sign of the really establishment that we have done in the European market. So I do expect continued good growth in Europe. There is a couple of regions where we have started, of course, in a fantastic way. Germany has been very favorable for us. We see good development there. Then, of course, we also see in France that the market development is really, really good for us. Switzerland, of course, not a lot of market data, but really high penetration. Nordic is a good region. What has been the key change also is that we see that the south of Europe is starting to also appreciating, first of all, helmet use and of course, also helmets with rotational technologies like Mips. I think what also was a bit fantastic for 2025 is, of course, that in Italy, they also started to mandate helmets when you're skiing and so on. And of course, that, in general, of course, start to increase the awareness on helmet safety in general, but also, of course, these type of mandates from governments also help to make people more safety conscious. So there were a couple of different things helping, and we see that trend continuing. And also what has been a big change for us in Europe is that we don't only sell well in premium helmets, but we see also that we can reach down and, of course, target consumers also in lower price points. And again, with lower price points comes also higher volumes. Emanuel Jansson: Perfect. And last 2 questions here. On the Koroyd acquisition, can you share anything about how the business developed during Q4? Max Strandwitz: Yes. I mean we do not comment too much about it because, of course, it was not owned by Mips as such. And of course, those numbers has not been audited by us as was not part of the due diligence and so on. They continue to see good momentum. They have developed well when it comes to safety and of course, also sports, and that was the key growth driver. So no change to the momentum than they have seen prior quarters. And of course, we expect that to continue also into 2026. And then, of course, we do see some customer synergies across the board, both ways, where, of course, we have been talking to a lot of customers, a lot of brands are excited of combining both Mips and Koroyd into helmets, which is something that, of course, is part of the strategic rationale of the acquisition. For us, Koroyd will always be a premium offering. And of course, we will work with a select amount of brands, but at least the start of the discussion has been very positive. So I think we can also get some sales synergies and of course, really excited to show what we can do both in 2026. But of course, as helmet project sometimes takes a little bit time, of course, also in 2027. Emanuel Jansson: Perfect. And final question here. And correct me if I'm wrong, but I just think that the previous communication regarding legal costs indicated that it would gradually decrease during 2026. But I mean, given now the rhetoric now in Q4, it seems to be more or less in line with 2025. Has anything changed? Or what should we expect here going forward in the nearest quarter when it comes to legal costs? Max Strandwitz: No, you're correct when it comes to the previous communication, we did expect slowdown of cost, which you partly saw already in Q4. We are, of course, still preparing for the case. We are doing a lot of investigations and of course, preparing us to make sure that we are as prepared as possible. It's always difficult when it comes to legal cases. Sometimes they can end very quickly. And of course, that's normally the best resolution. But since we do not know exactly how long it will go, we decided to take a little bit more cautious communication on this. So I wouldn't say that nothing have materially changed. It's more us being a little bit more cautious on the communication. The only thing we know is what we spend in 2025. And then, of course, it's probably the best to assume a similar kind of momentum in '26. I hope I'm wrong, but I think the cautious view is probably better at this moment. Operator: The next question comes from the line of Carl Deijenberg of DNB Carnegie. Carl Deijenberg: So a couple of questions from my side. First of all, if I could ask on the quarterly seasonality in the acquired entity, how does that compare relative, let's say, legacy Mips when we look at the quarterly distribution going into '26? Is that a material difference on net sales and earnings contribution on a quarterly level? Or how should we think about that? Max Strandwitz: Yes. Just to make sure I understand. So it was in terms of the quarterly phasing when it comes to Koroyd. Carl Deijenberg: Right. Exactly. Max Strandwitz: Sorry. So yes, you do see a similar pattern to Mips, where you have the smallest quarter when it comes to Q1. Of course, that's normally the case all the time because, of course, you have Chinese New Year, factories close and so on. So it has a similar phasing pattern than Mips when it comes to Q1. When it comes to the rest of the quarter, which means Q2 to Q4, given that they are a little bit more exposed to safety, they have a more, I would say, flat phased, maybe that's not the right word, but they have a more equally spread sales across the rest of the 3 quarters. Carl Deijenberg: Okay. Perfect. And then I also wanted to ask on a similar topic. I mean when you look at their '25 development, did they have any quarters that were exceptional in any way when we look at the sort of quarterly comparisons also going into '26. Did they, for example, see a similar development as you did in Q2 on Liberation Day and so forth or anything to keep in mind there when we model the quarters? Max Strandwitz: Yes. I mean everyone in the industry, of course, had quite a hiccup when it comes to liberation. They -- at least the ones that have U.S. exposure. And of course, they have a big U.S. exposure and so on, even bigger than we had. So of course, they saw an impact of that. So I wouldn't say it's materially different. It's difficult for us, of course, to comment too much of the quarters because, of course, -- this is a relatively small company and, of course, focused mainly on full year delivery and so on. We have a quarterly split, but without having audited quarter-by-quarter, it's, of course, difficult to give too many comments. But it seems like quite a normal seasonality from a business exposed to industrial safety and snow as such. Carl Deijenberg: Okay. Good. Then I also wanted to just follow up on the sort of guidance on the legal costs going into '26. And then, yes, for the full year, you were right about SEK 40 million and roughly SEK 7 million here in Q4. And I'm also just wondering a little bit on the phasing here because annualizing that guidance, that's obviously quite a step-up relative to the exit rate of SEK 7 million here in Q4. So is the run rate now going forward, is that going to be around SEK 10 million per quarter? Is it going to be come up already here in Q1? Or could you say? Max Strandwitz: No, I think SEK 10 million is probably a fair assumption. And of course, given that these costs tend to fluctuate, I think it's much better to have like an even phasing of SEK 10 million per quarter. Carl Deijenberg: Okay. Great. Then finally, also, I just wanted to ask geographical development for you or at least what you disclosed. Just if you could share a little bit more details on the development in China, particularly given it's obviously a quite big contraction here year-on-year and also sequentially relative to Q3 despite the seasonality. So any further granularity to add there? Max Strandwitz: Yes. I think, I mean, as any company exposed to the Chinese market, of course, especially when it comes to consumer demand, you see a very hesitant Chinese consumer. It's not a huge part of our business. It's actually quite a small part of our business. We see that the Chinese consumer is much more hesitant. You have also seen at some of the big retailers shutting down a lot of shops because, of course, the Chinese consumer, a lot of them has a lot of money invested into property. And that, of course, has been everyone's pension retirement plan and so on. Now there is a big uncertainty what happens on the property market. The Chinese consumer appreciate cash and, of course, have started to save a lot of cash, and that means that they are not spending. You see that across the board when it comes to all consumer brands. Some of the partners we talk to, they say that the market is down 70% to 80%. I think that's a little bit rough, but at least we see a very soft Chinese market at the moment. There has been some initiatives by the Chinese government, but they don't seem to have that effect yet. But of course, we know that China normally can change a lot of things. And of course, we see quite a lot of excitement when it comes to winter sports. We also start to see that Viking is a big category. So I think the Chinese consumer will come back. But for me, it's very difficult to speculate exactly when. So I will continue to have quite a negative view at least on the Chinese consumer for 2026. Operator: There are no further questions via the phone. I will now hand over for questions via the webcast. Max Strandwitz: Yes. So the first question was about legal costs, which we have explained. Then the second question is, what is the medium term to expand in Moto industrial segment? And what is the impact of tariffs that you see in U.S. in 2026? And then the third, based on the same question, do you see demand supply pricing has normalized. So when it comes to Moto, like I said, we started to see an uptick in volume already after the implementation of tariffs. I think it's great to see that the off-road category is really coming back also in terms of volume. And we start to see more customers also on the on-road segment, which is something that has been lagging behind. We do see a lot of attention to the new standards that is coming into play and making it a lot tougher for helmet brands to pass the new standards without the rotational technology. And of course, that's what we do. And that, of course, is supporting the plan. And of course, this is not something that has happened overnight. But when it comes to development in motorcycle helmets, development time can easily be 3 years. So a lot of these projects has already been done. And of course, that's what we are rolling out, and that will generate the growth that we have been seeing. When it comes to industrial safety, I think most companies will probably 41% in the quarter organic growth, 42% full year is a great number. I think we should be able to do more. Of course, we were a bit surprised by the tariff implementation and of course, the pricing effect. And it's not so much about the helmet, but it's normally quite big companies. And of course, helmets is a small portion of what they actually sell. And sometimes, of course, they need to price up their whole segment when it comes to tariffs and so on. And then, of course, the attention to helmet is pushed back. We have a couple of really big volume projects with so-called round or brim helmets, full brim helmets for the U.S. market, which is very much what is in style. They will be launched during -- or have already been launched, but will start to be produced in Q1 and onwards. And that, of course, will generate a lot more volume. Then, of course, adding Koroyd business, also industrial safety, we were a lot more relevant. And of course, we can do even more when it comes to helmet. So I think in industrial safety, when it comes to our customer acquisition plan, I think we have all the customers that we need in order to reach the plans that we have set. For us, it's really making sure that we support the sell-through of the Mips equipped product and making sure that we get bigger penetration in their total portfolio. So quite excited about what happens in safety. Like I said, 42% is a good organic growth. But of course, I'm not always known as a patient man and of course, want to have more, and that's what we are gearing up for in 2026. And then when it comes to our recruitment plan for 2026, of course, Mips is a company that is growing. We also plan to grow the Koroyd business. And of course, the key focus that we have at the moment is to add more people in R&D. We have always had a ratio of Mips and a ratio I like because it's very simple, one engineer, one person in the rest of the company, and that's really a ratio that I think is effective. when you are a company which is very innovation focused and so on. Koroyd is 1 to 3 at the moment. So I really hope that we can get that up to the same ratio as Mips and continue to do a lot of innovations. And like I also explained in the report, we are doing a lot when it comes to creating a lot more innovation. We're also stepping up in terms of the amount of innovation. So we see a lot of new great Mips products coming out. Koroyd has a fantastic portfolio, especially when it comes to adjacent areas like body protection, gloves and so on. So really happy to share what we are going to do there. So key recruitments will be engineers. And then, of course, as any company that scales up, even though we both have a fantastic scalable business model, we need to add also resources everywhere else, but it, of course, will be in a much more scalable way. We are an asset-light model and so on. And of course, the amount of headcount will not increase in line with the growth that we expect to see in 2025. And then it's -- can you provide any update on project volumes versus the prior period, given that the revenues came down a little bit during the year. So we actually saw in Q2 and it started to stabilize in Q3 that a lot of our brands, they focus very much their engineering resources around relocations. So relocations outside China. And then, of course, we start to see that the volume is coming back again. And already in Q3, we saw on par with previous year and so on. And at the moment, we have great project momentum, and we can actually not do all the projects that we have in the pipeline. And of course, that's why we're also recruiting more engineers. And then, of course, it's a question on you can talk about the developments of new safety models or customers over the period, given the significant trade shows like World of Concrete that took place over the quarter. And of course, World of Concrete was in January. There, of course, we supported a lot of our brands. And the key focus there was, of course, to really drive the rollout of the full brim helmet. Full brim helmets is a big thing in the U.S. That's where you have the main part of the volume. Mips was first implemented in more like climbing style helmets. And now we see that we also go into full brim helmets. That's where you also see a much bigger part of the volume. And that's also where you see a big part of Koroyd's business is in full brim helmets. That's where they see most part of the volume. So I think that's basically all the questions that we have. Of course, if there is any follow-ups or you need to find out more, you know where to find us. If not, then speak again next quarter. Thank you for listening in. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.